592 LAISSEZ FAIRE 
To some extent the difficulties of private traders were due, 
not to the conditions of commerce, but to the state of public 
credit, and the extraordinary demands of the Government 
apon the resources of the Bank of England. This comes out 
very clearly in the financial history of the four years which 
followed 1793. At that time Pitt succeeded in carrying a 
measure, which had been intended to protect the Directors in 
meeting the convenience of the Government, but which really 
gave the ministers of the day irresponsible control over the 
management of the Bank. In the original Act which created 
the Bank, the legislature had been careful to provide against 
the lending of money to Government without the permission of 
Parliament; but a practice had grown up of advancing sums 
to the ministry, which might amount to £20,000 or £30,000 at 
a time, in payment of bills of exchange. The Directors how- 
ever had some doubts as to the legality of the practice; and 
endeavoured to procure an Act of Indemnity for these trans- 
actions in the past, as well as powers to continue them to a 
ohile Pitt limited amount such as £50,000. Pitt succeeded in passing 
sower of the Bill without any specified limitation, and he was therefore 
porrowing le to draw on the Bank as freely as he chose, trusting to 
the unwillingness of the Directors to dishonour his bills. In 
December 1794, the Directors began to find themselves in a 
position of great difficulty, as their reserve was very low? 
A.D. 1776 
—1850. 
1 This was partly due to the war expenses abroad which were estimated at 
£32,810,977 for the years 1793-7, and partly to the advancing of loans to the 
Emperor and the King of Prussia. Third Report from Committee of Secrecy, in 
Reports, x1. 122. There was also an internal drain. “In addition to these causes 
of actual expence, your Committee think proper to advert to various circum- 
stances, which may contribute either to the delay of the due return of commercial 
dealings, or require enlarged means of circulation in the country. Of this nature 
are, the habit of the British merchant to give longer credit to the Foreign 
merchant than he receives in return; the change of the course of trade since the 
Var, and the opening of new accounts with mew customers; the circuitous 
remittance of money from various parts, in consequence of interruptions in the 
means of direct communication, and the state of some of the countries from which 
sonsiderable remittances are due: To these are to be added the increase of 
domestic commerce, the increase of manufactures for home consumption, the 
general spirit of internal improvement in agriculture, and in the formation of 
sanals and other public works: To these may also be added, as producing a further 
aecessity for a greater quantity of circulating medium, other causes of a different 
nature, and in other respects of an opposite tendency, and particularly the 
increased price of freight, shipping, insurance, demurrage, and a variety of other 
articles, generally affecting the trade of the country, both in its former and in its