A.D. 1689 
—1776. 
was fol- 
lowed by a 
re81S 
which the 
Bank 
failed to 
minimise. 
The 
conditions 
of issuing 
convertible 
paver 
452 PARLIAMENTARY COLBERTISM 
merchants was gazetted, and the results were felt imme- 
diately all over the country. The bankers in Newcastle 
made a gallant but ineffective struggle. It is said that of 
the four hundred country banks in England at that time 
no fewer than one hundred failed, while many others only 
succeeded in weathering the storm with the greatest diffi- 
culty. The banks in Exeter and the West of England 
escaped most easily, but the wave of disaster spread over 
the North and the panic extended to Glasgow. There was 
a total destruction of credit, and substantial houses were in 
imminent danger of failure. It is not perhaps possible to 
say that this disaster could have been prevented, but it has 
been generally maintained that the directors of the Bank of 
fngland acted with undue precipitancy; the suddenness of 
their refusal to allow the usual accommodation, gave a shock 
to credit, which would have been much less severe if their 
action had been more gradual. Besides this, the extra- 
ordinary over-issues of paper in France were causing a flow 
of gold to this country; the exchanges were favourable, and 
under these circumstances the directors, especially after the 
experience of 1782, need not have been so uncompromising 
in their attitude and so timorous for the safety of the 
bank?. Government did much to relieve the tension by 
issuing Exchequer Bills®. 
Other errors arose from a failure to understand how 
important it was that paper-money should be really con- 
vertible, and to see that a bank could only be carried on when 
it had wealth in a form which could be promptly realised 
and used for meeting its engagements. This had been the 
fundamental error in Chamberlayne’ abortive scheme of the 
Land Bank. The public knew better than the projectors 
1 Macleod, 1. 510. 
} Sir F. Baring’s evidence before the Bullion Committee. Macleod, 1. 510. 
3 7b. m. 216. See p. 441 above. 
| The promoters had also made extraordinary blunders in calculating the 
value of landed property. They held that land which a man was entitled to for 
a hundred years was worth a hundred times the rent, and not something like 
twenty years’ purchase, or twenty times the rent. They thus calculated the land, 
not at its present value to the purchaser, but at the accumulated value which 
would accrue by setting aside the rent annually for a century. The prospective 
savings from land a century hence are not the same as the worth of the land now, 
out the present worth of the land is the only satisfactory security as a basis 
1 raising credit now, Dr Chamberlavne’s project had been approved by the