back upon its legislative power to preserve the bank
from insolvency. The bank in that case might be the
gainer in the end, but the country at large would be the
sufferer in the loss, disturbance, and confusion that
ensued. This is what happened in 1797, when cash
payments were suspended. The costs of the war had
been enormous, alike in the maintenance of troops and
armaments and in the lavish subsidies which England
bestowed on her allies. To meet this excessive
expenditure, which could only be liquidated in specie,
the Government borrowed largely from the bank, and
then found itself unable to repay the advances. Matters
came to a crisis at the beginning of 1797, when Pitt
asked for a fresh advance from the bank at a time when
the fear of imminent invasion had caused a general panic
and stimulated the demand for specie. The directors
had to tell him that they must either refuse his appli-
cation or disappoint their private creditors--become
insolvent, in fact. On Saturday the 25th February it
was found that there was little more than a million in
the bank in cash and bullion to meet a severe run which
was expected on the Monday morning. Accordingly a
council was held on the Sunday, and an order was
issued forbidding the bank to give cash for its notes
until Parliament had been consulted. The House of
Commons immediately appointed a secret committee to
take the matter into consideration, and in the end
a Bill was introduced, subsequently known as the
Bank Restriction Act, forbidding the bank to resume
cash payments until six months had elapsed after the
conclusion of a definitive treaty of peace. The measure
was passed almost without opposition.

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