The capital of the bank on which dividends are paid hns never exactly coincided with, though it has seldom differed very materially from, the permanent advance by the bank to the public. We have already seen that it amounted in 1708 to 4,402,34- . Between thn.t year and 1727 it had increased to near 9,000,000. In 1746 it amounted to 10,780,000. From this period it underwent no change till 1782, when it vas increased 8 per cent., amounting to 11,642,400. It continued stationary at this sum down to 1816, when it was raised to 14,553,000, by an addition of 25 per cent, from the profits of the bank, under the provisions of the Act 56 Geo. III. c. 96. The Act for the renewal of the charter 3 and 4 Will. IV. c. 98, directed that the sum of 3,671,700, being the fourth part of the debt due by the public to the bank, should be paid to the latter, giving the bank the option of deducting it from its capital. But that has not been done ; and after sundry changes, the capital of the bank amounts, as formerly, to 14,553,000.
The Bank of England has been frequently affected by panics amongst the holders of her notes. In 1745 the alarm occasioned by the advance of the Highlanders, under the Pretender, as far as Derby, led to a run upon the bank ; and in order to gain time to effect measures for averting the run, the directors adopted the device of paying in shillings and sixpences . But they derived a more effectual relief from the retreat of the Highlanders, and from a resolution agreed to at a meeting of the principal merchants and traders of the city, and very numerously signed, declaring the willingness of the subscribers to receive bank-notes in payment of any sum that might be due to them, and pledging themselves to use their utmost endea vours to make all their payments in the same medium.
During the tremendous riots in June 1780, the bank incurred considerable danger. Had the mob attacked the establishment at the commencement of the riots, the conse quences might have proved fatal. But they delayed their attack till time had been afforded for providing a force sufficient to insure its safety. Since that period a consider able military force occupies the bank every night as a pro tection in any emergency that may occur.
Progress of Banking in England down to Restriction Order of 1797.
The business of banking had meanwhile been undertaken in several of the country towns of England. The still existing bank of Messrs Smith &. Co. of Nottingham, the parent of the London establishment of Messrs Smith, Payne, and Smiths, claims to have been established in 1688 ; the Bristol Old Bank (Messrs Baillie, Cave, and Co.) dates from 1750; the Hull Old Bank (Messrs Pease and Co.) from 1754 ; and many other country banks trace back their history to the latter half of the last century. It is believed that all these bankers issued their own notes payable to bearer as part of their business ; and they were not very scrupulous in regard to the magnitude of the sums for which they were given. The Bank of England had not issued any notes for less than 20 previously to 1759, when it commenced the issue of 10 notes; but the country bankers put in circulation notes for such small sums that Parliament enacted, in 1775, that none should be issued for less than 1. In 1777 this minimum limit was further raised to 5, but in spite of this restriction the number and the amount of the issues of the country bankers soon becoiiie dangerously multiplied. The ter mination of the American War was followed by a great industrial and commercial development at home. Agri culture, commerce, and still more, manufactures, into which Watt and Arkwright s inventions had been lately intro duced, immediately began to advance with a rapidity unknown at any former period. In consequence, that confidence which had either been destroyed, or very much weakened by the disastrous events of the war, was fully re-established. The extended transactions of the country required fresh facilities for carrying them on, and these were supplied in the utmost profusion. The number of banks, which in 1784 was certainly under 150, increased so rapidly, that in 1792 they amounted to about 350. In consequence, a banking office was opened in every market- town and in most considerable villages. And such being the case, it is needless, perhaps, to add, that the prudence, capital, and connections of those who set up these establish ments were but little attended to. The great object of a large class of traders was to obtain discounts ; and the bankers of an inferior description were equally anxious to accommodate them. All sorts of paper were thus forced into circulation, and enjoyed nearly the same degree of esteem. The bankers and those with whom they dealt had the fullest confidence in each other. Xo one seemed to suspect that there was anything hollow or unsound in the system. Credit of every kind was strained to the utmost ; and the available funds at the disposal of the bankers were reduced far below the level which the magni tude of their transactions required to render them secure.
The catastrophe which followed was such as might easily have been foreseen. The currency having become redundant, the exchanges took an unfavourable turn in the early part of 1792. A difficulty of obtaining pecuniary- accommodation in London was not long after experienced ; and, notwithstanding the efforts of the Bank of England to mitigate the pressure, a violent revulsion took place in the latter part of 1792 and the beginning of 1793. The failure of one or two great houses excited a panic which proved fatal to many more. Out of the 350 country banks in England and Wales, when this revulsion began, about 300 were compelled to stop payments, and upwards of 50 were totally destroyed, producing by their fall an extent of misery and bankruptcy till then unknown in the country.
Attempts have sometimes been made to show that this crisis was not occasioned by an excess of paper money having been forced into circulation, but by the agitation caused by the war then on the eve of breaking out. But there does not seem to be any good grounds for this opinion. The symptoms of an overflow of paper a fall of the exchange, and an efflux of bullion took place early in 1792, or about twelve months before the breaking out of hostilities.
Suspension of Cash Payments in 1797.
English banking. Owing partly to events connected with the war then carried on, to loans to the Emperor of Germany, to bills drawn on the treasury at home by the British agents abroad, and partly, and chiefly, perhaps, to the advances most unwillingly made by the bank to Government, which prevented the directors from having a sufficient control over their issues, the exchanges became unfavourable in 1795, and in that and the following year large sums of specie were drawn from the bank. In the end of 1796 and beginning of 1797, considerable appre hensions were entertained of invasion, and rumours^ were- propagated of descents having been actually made on the coast. In consequence of the fears that were thus excited, runs were made on the provincial banks in different part.s of the country; and some of them having failed, the panic became general and extended itself to London. Demands for cash poured in from all quarters upon the bank, which, on Saturday the 25th of February 1797, had
only 1,272,000 of cush and bullion in its coffers, with