1819: The Bank and the Chancellor
On the morning of Sunday, 26 February 1797, an emergency meeting of Cabinet had sanctioned a striking innovation in the British monetary system. The previous day had seen a run on the coin and bullion reserves of the Bank of England, a run engendered by fear concerning the invasion of Ireland by the French. With the Bank expecting it would not be able to meet its liabilities when trading resumed on the Monday, Cabinet issued an Order in Council which restrained the Bank from paying gold on demand to holders of its notes. The Order received immediate support from a meeting of London merchants who undertook to accept bank notes and use them in payments, despite their non-convertibility. Confidence re turned speedily, and the Bank began the issue of one-pound notes to supplement those of larger denomination to which its paper currency had been confined previously.
KeywordsPolitical Economy Cash Payment Exchequer Bill Silver Coin Monetary Opinion
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- 1.On the events and economic literature of the period of suspension of cash payments see Frank W. Fetter, Development of British Monetary Orthodoxy, 1797–1875 (Cambridge, Mass.: Harvard University Press, 1965), Chs 2 and 3.Google Scholar
- Consult also Jacob Viner, Studies in the Theory of International Trade (London: Allen and Unwin, 1955), Ch. 3.Google Scholar
- 10.See also T. S. Ashton, ‘The Bill of Exchange and Private Banks in Lancashire, 1790–1830’, in T. S. Ashton and R. S. Sayers, Papers in English Monetary History (Oxford, 1953)Google Scholar
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