famous south Sea Scheme, which being left to common opinion without any restraint has produced the most terrible effects possible. If there had been a possitive Law, making all Bargains for South Sea Stock above some fixed Price as 150. void and making it a legal tender at 100 all these mischeifs would have been avoided but this would have been called compulsive Paper Credit, yet because in Reason it is worth so much as long as the Nation stands and because the Parliament has always kept their engagements all clamors against this would soon have blown over and no enemies would have been found to it but Brokers
To make this appear it is enough to prove, that at the bottom all the present voluntary credit stands upon this very foundation at last & no other
It is very certain that there is no proportion between the Specie & the great quantity of Bank Bills and Bankers Notes, commonly current who lend their notes on the several Branches of Government Securitys and seldom at a Rate under par very often above par When the Government is safe this would do when there is any danger, Common opinion pulls down her own work & Bankers break in abundance, and the Bank itself is put to Extremitys. An Instance of this I remember at the time of the Preston affair — The Bank would have broke in a few days, if the victory there had not happened as soon as it did
And the Reason was plainly this because when they had paid away all their Specie they had nothing left but Exchequer Notes, and such other Securitys to exchange for their remaining Bank Notes and these would have been at such a discount that they must have broke, and compounded for such Payment at the Best
Thus it is plain that the foundation in Reason of the credit of the Bank it self, not to speak of Private Goldsmiths is the Government Security remaining at Par and yet the Parliament is so good as to provide an interest on these Exchequer Bills, and to pay the Bank so much more per cent for circulation whereas in fact when foul weather comes the Bank is a Staff of Reed and must lean on the Government to prop itself up and so increase the load instead of easing it
And this humour keeps up the imaginary value, when there is no real accasion for it ; all Government Securities being at the same time com monly above par But upon any ill News the like Humor beats down all voluntary credit, in the same manner as it does Exchequer Bills &c and really carries the General Discredit as much further than it ought as it had advanced credit beyond its reasonable bounds before and if once the Bank had broke, then all this would have appeared to a demonstration . . .
