THE BANK OF ENGLAND.

BY MERCATOR.

(Continued from page 260.)

We now come to 1710, when, by various stratagems and numerous negotiations with the minister, the Directors succeeded in having the capital, increased to £6,577,340 17s. 10d., and in obtaining an extension of their privileges until the 1st of August, 1732. From their persevering efforts to achieve the latter object, we may reasonably conclude that they found banking for the nation not a bad trade; but during this year the Government observed that its monetary friends in the city, who had derived so much advantage from a lengthened connection with it, were beginning to imitate "little Moses" in the School for Scandal, and bleed reluctantly, and, moreover, that they had been guilty of some other naughty practices, it therefore resolved to apply both spur and rein, and a bill was introduced and passed to compel the Bank to exchange bills on demand for ready money, and to prohibit any person becoming Governor, DeputyGovernor or Director of the Bank of England and of the East India Company at the same time.

In taking a review of the progress of the Bank, we are struck with the continuous exertions upon the part of the Directors and successive administrations, the one side ever desirous to prolong its monopoly, and the other equally anxious to sell its favors at the highest possible price. Thus in 1713 we observe there was another bargain, and the charter was renewed until the 1st August, 1742, by the Statute 12 Anne, cap. 2, which provided that if it should be determined at the expiration of that period to withdraw the privileges, twelve months' notice of the intention to do so would be necessary, and the debt due to the Corporation should be paid in full. This favor was acknowledged by the Bank agreeing to advance a further sum of £1,300,000 at the rate of three per cent. per annum, and an additional sum of £8,000 per annum until all the current Exchequer bills were paid off. To enable the Directors to act in this generous manner, they were allowed to call upon the proprietors for additional capital.

While all was going on thus prosperously and harmoniously, another storm arose in 1714 in consequence of the declining health and ultimate death of Queen Anne, and the stock of the Bank fell from 126 to 116, and a sharp run for gold was again experienced; but it was of brief duration, as the old Queen was soon forgotten, and when George I. ascended the throne and the rebellion of 1715 was quellen, the privileges of the Bank were again extended, for which it agreed to cancel £2,000,000 Exchequer bills at five per cent., and to accept an annuity of £89,751 7s. 10d. in lieu of £186,501 13s. 5d. for Exchequer bills previously cancelled.

The year 1720 was a most unfortunate one for the Bank, as the South Sea Company, encouraged by the Government, entered into competition with it, and outbid it in an offer to take all the redeemable and irredeemable assets of the Exchequer and the Bank. The proposal of the South Sea Company was accepted by Parliament, and its stock rose to 850 per But the bubble, though supported by leading statesmen and other influential persons, was fated shortly to explode. In September, 1720, its

cent.

stock had fallen to 175, and its bonds were at a discount of 25 per cent., and it soon blew up with a crash worthy of a gigantic swindle. When the schemes of petty rogues are denounced, let us not forget, the South Sea bubble, which owed its existence to the patronage and support of ministers of the crown, members of both Houses of Parliament, and persons moving in the highest ranks of society. The result of this explosion was a run for cash upon the Bank of England and the private banks, many of which stopped, thereby reducing thousands from splendor to abject want. Numbers of these unfortunate persons, it is related, died heart broken, and others left the country never to return.

In 1742 there was another renewal of the charter until 1764, by the Act 15, George II, Cap. 13, for which, as usual, a quid pro quo, or bribe was given by the Governor and company agreeing to lend the Government a further sum of £3,200,000, at three per cent., which was secured by the Excise. The debt, which, when James II. abdicated, only amounted to £664,263, now had increased to £10,700,000, which in future years was to be enormously augmented by the aid of paper money. In 1745, Charles Edward Stuart, known as the pretender, made another abortive attempt to obtain the throne of his ancestors, and penetrated into England as far as Derby, at the head of a body of enthusiastic Highland followers. The event caused the funds to descend to 49, and the customary run on the Bank took place, when, to avoid bankruptcy, it has been stated it was necessary to have recourse to a curious stratageme.

Parties were employed to present notes at one door, which were paid in small coin to gain time, and to re-enter by another with the cash they had received. Francis in his "History of the Bank," jocularly observes that by this device, "the bona fide holders of notes could never get near enough to present them." The employment of such an artifice, though creditable to the ingenuity of the Directors, proves that the Bank in 1745 could not have been in a very solvent condition.

Having thus far traced the career of the Bank, we must pass over an interval of several years, in which the old system was not departed from of receiving money for national purposes, by prepetuating a monoply, and come to that period when Mr. Pitt "the heaven born minister," as he has been called, swayed the destinies of his country, and produced, by a very simple process, an extraordinary revolution in its financial affairs. Archemides asserted he could have moved the world if he had only possessed a fulcroum; but William Pitt really performed wonders through the instrumentality of an immense issue of inconvertible paper. He never looked upon the Bank of England as an institution formed to promote commercial enterprise; but as an engine to assist him in his aggressive policy. A war with France, he knew, was the only chance of maintaining his influ ence with an obstinate and preverse sovereign and a reactionary party, in the country; and he was well aware that money could alone enable him to gratify the passion which his patron and supporters cherished.

It was in 1796 that, finding himself inconveniently pressed for sipplies, he made the modest proposal to the Bank that it should hand over to the Government £547,000 of unclaimed dividends. This demand excited the astonishment of the Directors, and it is creditable to them that they remonstrated against so disgraceful a breach of faith, and even sibmitted to a sacrifice to prevent it. Pitt, however, was soon to be immort

alized by taking a higher flight; and perhaps there never was a bolder measure proposed by an unscruplous Minister in the most despotic country than that by which the Bank was enabled to defy its creditors, and break its solemn promise to them, by refusing them gold for its notes.

Political causes had, in 1792, produced much discontent; and this occurring in a season of general commercial distress, a panic of no ordinary violence was the result. The Bank of England had become more jealous than ever of its rivals, and the private bankers, who had greatly increased in numbers and influence, regarded it on the other hand with feelings of intense hostility. An obstinate and severe struggle proceeded for a length of time upon both sides, during which the commercial interests of the country seriously suffered, but the crisis ultimately arrived, when, upon the 19th of February, 1793, the Bank returned the paper of Lane, Son & Co., private bankers, who stopped payment' next morning for nearly a million sterling. Universal distrust now spread abroad with the rapidity of lightening; every man doubted his neighbor, mercantile relations which had subsisted for years to the mutual advantage of both parties, were suddenly snapped asunder, and credit was almost irretrievably destroyed. If an invading army had traversed the country it would not have inflicted more injury upon the cnuntry than a monetary corporation established under the pretence of promoting its interests, had, by a single false and foolish step, produced. It is melancholy to, even now, pause to relate that by this application of the "screw," upwards of one hundred country banks were compelled to suspend, with ample and valid securities at their command which could not be realized.

The Government became affrighted, and, perceiving the extent of the peril, acted for once with promptitude and segacity. The merchants and bankers, who had begun to feel the shoe pinck, assembled at the Mansion House and drew up a petition, complaining of the contracted state of the circulating medium. Mr. Pitt directly proposed an issue of Exchequer bills on good security for £5,000,000, which had the effect of restoring public confidence and diminishing the pressure. It is worthy to be noted that of this sum not more than £2,000,000 was required to be advanced; and, unlike the Loans given to successive British Sovereigns and Governments, every shilling of it was repaid.

The period we are now approaching was, perhaps, one of the most important and eventful in the history of England. From 1793, when France declared war against Great Britain and Holland, which caused a great drain of gold, Mr. Pitt's difficulties as Financial Minister were gradually increasing, and it was not without great and constant pressure he was able to obtain the accommodation he required from the bank. In 1795, the Directors, who had never before been obliged to issue notes for less than £15 or £10, were compelled, in consequence of the inadequacy of the circulation to supply the demand of the public, to issue £5 notes. This, for a time, afforded relief, but the malady was of too formidable a character to be more than temporarily subdued by so mild a remedy. Ultimately, every expedient failed to establish an equilibrium between the metallic resources of the bank and the vast amount of paper money which it had forced into circulation. What was to be done in circumstances so grave and alarming? Make a call on the proprietors for a fresh capital? Such a demand at the time would have been like calling spirits from the

vasty deep, and would have been disregarded. One course was alone left open, namely, to apply that "term" to a powerful minister which had recently been employed with such tremendous effect upon the public through the sides of a legion of unfortunate private bankers. The court of chartered money-changers assembled, therefore, in Threadneedle street, on the 28th of January, 1796, when the following report and resolution were passed:

"The Governor having informed the Court that notice was this morning brought from the Treasury that certain bills drawn on the Commissioners of the Treasury, amounting to the sum of £201,000, would fall due on Wednesday, the 30th of February, and were directed for payment at the bank, and that the sum now advanced on Treasury bills is £1,157,000,"

"Resolved, unanimously, That the Governor give direction to the cashiers not to advance any money for the payment of the bills, nor to discharge any part of the same unless money shall be sent down for the purpose, in which case such money shall be exclusively appropriated to these bills."

Here, then, we behold that institution styled the Bank of England, virtually declaring the British Government bankrupt. The Directors of the Bank, however, were masters of the situation; they knew that in the end they must triumph, and with confidence they dispatched the Governor and Deputy-Governor to Mr. Pitt to present him with a copy of the above resolution. He took the document, and when he glanced at its contents, his countenance betrayed his agitated feelings, and he tremulously replied that "he would look into the situation of his affairs." What a reply for a "Heaven-born minister" at such a crisis!

Affairs could not have long remained in this state, as the refusal of the Bank to accommodate the Government in its pecuniary embarrassment was the topic of conversation in every circle, and excited the utmost alarm. Simple folk could not well comprehend how Mr. Pitt and his colleagues were to get on in Downing-street without money, and we fancy the Minister himself was equally puzzled upon the subject. In every crisis the merchants and bankers within the sound of Bow Bells, and adjacent to Change Alley, were to be found assembled in some quarter in the city, remonstrating about these grievences, and complaining in unmeasured terms of the numerous sins of omission and conmission with which the Bank stood charged. Who could have thought that the Bank which had been patronised by successive governments-which professed to be a national institution which enjoyed a monopoly upon the assumption that it had rendered long and valuable services to the commercial interests of the country-should have been deserving of the censure which the cream of the mercantile classes of London cast upon it in the following resolutions, passed at a meeting held in the London Tavern:

That it is the opinion of this meeting that there has existed for a considerable time past, and does exist at present, an alarming scarcity of money in the city of London."

"2. That the scarcity proceeds chiefly, if not entirely, from an increase in the commerce of the country, and from the great decrease of commercial discounts, which the Bank of England has thought proper to introduce in the conduct of the establishment during the last three months."

Pitt now hit upon a bold plan to extricate himself, the Bank, and-w3 suppose we must add-the conntry, from difficulty and danger. It was

simply this:-The Bank had promised to pay gold in exchange for its notes when demanded; but to have pressed it to do this would have reduced it to insolvency. This would have placed the Government and him in an unpleasant position, as it owed an enormons debt to the Bank, and it would have been extremely awkward for it upon future occasions, when its necessities might compel it to seek further accommodation in the shape of loans. To prevent, therefore, a stoppage of the Bank and the cutting off of supplies, which were absolutely requisite to enable the wheels of Government to keep in motion, Pitt requested the king to come from Windsor, upon a Sunday morning, to be present at a privy council at Whitehall; and immediately afterwards another meeting was held in Downing Street, which was attended by the Ministers, the Governor, Deputy Governor, and the Directors of the Bank, when the following order was issued:

"Upon the representation of the Chancellor of the Exchequer, stating from the result of the information he has received, and of the enquiries which it has been his duty to make respecting the effect of the unusual demands for specie that have been made upon the metropolis in consequence of the ill-founded or exaggerated alarm in different parts of the country, it appears, unless some measure is immediately taken, there may be reason to apprehend a want of a sufficient supply of cash to supply the exigences of the public service that the Directors of the Bank of England should forbear issuing any cash in payment, until the sense of Parliament can be obtained on that subject, and the proper measures adopted thereon for obtaining the means of circulation, and supporting the public and commercial credit of the kingdom at this important conjuncture. And it is ordered that a copy of this minute be transmitted to the Directors of the Bank of England, and they are hereby required, in the exigency of the case to enforce thereto, until the sense of Parliament be taken as aforesaid."

Mr. Pitt had now obtained his object, and by stepping between the Bank and its creditors, had established a precedent for any British Minis ter, who might find himself embarrassed committing an act of honesty and injustice.

When Parliament assembled, he was indemnified for his conduct, and through his influence, the celebrated British restriction act was passed on the 3d May, 1797. It continued in operation until the 2d July, 1619, when the memorable statute was passed to provide for the gradual resumption of cash payment, and to permit the exportation of gold and silver.

(To be continued.)

BREECH-LOADING ARMS-THEIR INVENTION AND HISTORY.

The recent war in Germany having resulted in the success of Prussia (an event that was deemed very doubtful at the incipiency of the contest), the Powers of the world have unanimously decided that to the breechloading rifle alone belongs the honor of having humbled the power of Austria. This rifle, the zundnadelgewehr or needle-gun, as it is called, was the weapon used by the Prussian armies, and, although it is in reality a very inferior arm, its superiority over the muzzle-loading musket and rifle was made apparent in the battle of Königgrätz and on all of the battlefields in Bohemia. The brilliant successes achieved through its instru