XV. THE BATTLE OF JOINT-STOCK.

THE great political and financial crisis of 1793 showed in glaring light the mischievous effects of the legislation of that day, which, by preventing the establishment of joint-stock banks, encouraged the growth of a numerous class of small tradesmen in the country passing by the name of bankers but undeserving the title. One of the causes, and by no means the least important, of the crisis was to be found in the reckless operations of many of these local banks, particularly their unchecked issue of notes. There were at this period about three hundred country bankers who manufactured paper money, some of them very liberally; and more than two hundred of them issued what were termed " optional notes," payable either in the metropolis or in the country. These little bits of paper, often mere rags, and in nearly all instances but pictorial representations of funds which did not exist, came floating up

to London in great quantities, very unwelcome in the shops, yet taken on the credit of the bearers. Much intrigue was resorted to on the part of the country bankers to push their paper into the great circle of trade; the member for the borough seldom came up to St. Stephen's without having his pocket-book stuffed with the notes of some unknown firm of grocers or haberdashers, and his wife invariably made it a point to settle metropolitan millinery and dressmakers' bills in paper money of native growth. Of course, when the crisis came, the "optional notes" were found to be little better than waste paper, and a cry of distress went through the land when a couple of hundred country bankers all at once suspended payment.

The shock was so violent as to upset the great protecting bank together with the little protected ones. On the 8th of October, 1795, the directors of the Bank of England sent a first message to the Chancellor of the Exchequer claiming assistance in their need. No notice was taken of this communication, nor of subsequent appeals, which came more and more pressing in the spring and summer of 1796. Finally, on the 9th of February, 1797, the Court of Directors ordered the Governor of the Bank

to tell Mr. Pitt that the long-threatening ruin was fast approaching. This last cry for help took effect. On the 26th February, a meeting of the Privy Council was held, in which it was resolved "that the Directors of the Bank should forbear issuing any cash." This order was followed by a notice of the Directors, stating that they were restrained from doing what, in fact, was absolutely impossible for them to do, namely, to give cash for their paper. They added, nevertheless, that "the general concerns of the bank were in the most affluent condition." The statement was received for what it was worth; and the general impression upon the public caused by the bankruptcy of the great Government establishment was shown in an unprecedented fall in public funds as well as in the stock of the Bank of England. A few figures on this subject may serve to illustrate this state of things. The price of the funds was as follows in the month of March, 1792:

had suspended payments in cash, on the 6th of April, 1797, the funds stood thus:

Three per Cent. Consols.

Four per Cents.

Five per Cents.

Bank Stock.

The distress of the Government establishment gave new courage to the friends of joint-stock banking, and fresh attempts were made to upset the monopoly of the Bank of England. On the 30th of May, 1797, Sir William Pulteney submitted to the House of Commons a bill "for the erection of a new bank in case the Bank of England did not pay in specie on or before the 24th of June, 1797." He entered into a detailed history of the Bank, pointing out the mischief produced by monopoly, and urging that it was nothing but a premium for indolence and neglect, and productive of endless mischief to the trade. and commerce of the country. He enumerated a variety of facts to convince the House that the Bank had forfeited its charter by violating its engagements with the public. Mr. Sheridan, who followed, said, “he considered it a farce to call that a bank whose promise to pay on demand was paid by another promise to pay at

some undefined period. It was ridiculous to think of placing confidence in paper, upon any principle but that of its being paid when it became due." The speech made some impression; but all chance of the success of Sir William Pulteney's bill vanished when Mr. Pitt rose, and declared in strong terms in favour of the Bank monopoly. The bill was lost; but the struggle was renewed in the House of Commons in less than three years after. To calm the storm, the Bank had recourse this time to a determined act of bribery. At a general meeting of the proprietors of bank stock, held on the 9th January, 1800, it was resolved that the Bank should make an offer to the Government to advance, without interest, the sum of three millions sterling, on the security of Exchequer Bills payable on the 5th of April, 1806. Parliament accepted the bribe, and in consideration thereof prolonged the company's privileges -prohibiting all partnerships of more than six persons from banking operations in England— from the 1st of August, 1813, the time at which the monopoly would otherwise have expired, till the 1st of August, 1833. Thus, by a judicious expenditure of a fraction of their enormous profits, the shareholders of the one great joint