LAISSEZ FAIRE
40) ies but for unlooked-for difficulties which arose during the month
of February 1797.
and poli In December 1796, the French expedition which had
Si of “" been prepared for the invasion of Ireland was dispersed, but
threatening the mere attempt created a sense of insecurity which was
felt in all parts of the country and especially on the coasts.
The excitement among the neighbouring farmers caused
a run on the bank at Newcastle, and the Bank of England
was quite unable to meet the demands for cash which came
upon it from all quarters. The Directors were obliged in
self-defence to curtail their issues; and as private bankers
found it necessary to take a similar course, the mercantile
community were put to the greatest straits in order to meet
their engagements. Still, in spite of all efforts at retrenchment,
 the reserve at the Bank fell so low, that Pitt consented
 to issue an order suspending the obligation of the
Bank to pay its notes in coin. When relieved from this
necessity, the Bank was able to lend more freely and thus

694

hat the
Bank had
to suspend
sash
payments,

25th day of February last £17,597,280; and that the result is, that there was on
the 25th day of February last a surplus of effects belonging to the Bank beyond
the Amount of their Debts, amounting to the sam of £3,326,890, exclusive of the
above-mentioned permanent Debt of £11,686,800 due from Government.
«And Your Committee further represent, that since the 25th of February last
considerable Issues have been made by the Bank in Bank Notes, both upon
Government Securities and in discounting Bills, the particulars of which could
not immediately be made up; but as those Issues appear to Your Committee to
have been made upon corresponding securities, taken with the usual care and
attention, the actual Balance in favour of the Bank did not appear to Your
Committee to have been thereby diminished.” First Report, reprinted in Reports,
a. p. 120.
\ «Your Committee find, that in consequence of this apprehension, the farmers
suddenly brought the produce of their lands to sale, and carried the notes of the
Dountry Banks, which they had collected by these and other means, into those banks
{or payment; that this unusual and sudden demand for Cash reduced the several
Banks at Newcastle to the necessity of suspending their payments in specie, and
of availing themselves of all the means in their power of procuring a speedy
supply of Cash from the metropolis; that the effects of this demand on the Newcastle
 Banks, and of their suspension of payments in Cash, soon spread over
various parts of the country, from whence similar applications were consequently
made to the metropolis for Cash; that the alarm thus diffused, not only occasioned
an increased demand for Cash in the country, but probably a disposition in many
to hoard what was thus obtained; that this call on the metropolis, through whatever
 channels, directly affected the Bank of England, as the great repository of
Oash, and was in the course of still further operation upon it, when stopped by the
Minute of Council of the 26th of February.” Third Eeport, in Reports, XI.
pp. 121-2.