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1796.

THE BANK OF ENGLAND.

37

the pressure. The Bank of England maintained its credit undiminished; nevertheless, the Directors thought fit to contract their issues; and as banknotes soon became as scarce as gold, the rate of interest rose to seventeen per cent.* The Directors, also, gave notice to the Treasury, that their advances on Treasury notes could not, in future, exceed half a million. They yielded, nevertheless, to the pressing solicitation of the minister to such an extent, that the coin and bullion in the Bank vaults, which had amounted to nearly eight millions in March, 1795, was reduced, on Saturday, the 25th of February, 1797, to one million two hundred and seventy-two thousand pounds; † and it was certain that the demand for gold on Monday would exhaust this balance. The country was in fact within forty-eight hours of bankruptcy.

The Governor and Deputy-Governor of the Bank hurried to Downing Street, and in an interview with Mr. Pitt, it was determined that cash payments should be immediately stopped by an Order in Council; that a meeting of bankers and merchants should be assembled in the City early in the ensuing week, and that Pitt himself should see some of the principal bankers at his office on the following day. The King, prompt as ever in the performance of his public duty, immediately came to town, and on the following day, although Sunday, a Council was held, at which a proclamation was issued in conformity with the arrangement above mentioned.

On Monday, the Lord Mayor convened a meeting of commercial men, and a resolution was Meeting of unanimously adopted, that the paper of merchants. the Bank should be received and paid as cash in all their transactions. This resolution was afterwards signed by upwards of three thousand persons engaged

* Thornton on Paper Credit, p. 73.

Smith's Wealth of Nations. M'Culloch's Note on Money.

38

BANK RESTRICTION ACT.

CH. XXXVII.

in business. The stocks immediately rose two per cent., and the success of the measure was completely assured. On the motion of Pitt, a committee of the House of Commons was appointed to inquire into the affairs of the Bank of England; and its report was such as to restore public confidence in the stability of that great institution. It appeared that, besides the advances to the Government of nearly twelve. millions in course of repayment, there was a clear surplus of nearly four millions. A bill to prohibit the Bank from paying in cash any sum exceeding twenty shillings, and from making advances to Government of any sum exceeding six hundred thousand pounds, while cash payments were suspended, was passed, after considerable opposition. The duration of the Act was limited to seven weeks; it continued in operation twenty-two years.

Arguments

There were, of course, not wanting many weighty arguments, both in and out of Parliament, against the Act. against the suspension of payments by the Bank of the State, even for a few weeks. It was said, that the Bank should have been permitted to pay in cash while there was a coin in its coffers; and that the interference of Parliament was an arbitrary and unjust alteration of a contract between the Bank and the public, of which every note in circulation was, in itself, legal and conclusive evidence. It was feared, not without reason, that such a proceeding would give a shock to public credit from which it might never recover; and the example of France, led on to bankruptcy and disgrace by the facility of creating fictitious money, which the issue of assignats afforded, was held up as a warning to this country. These arguments were not easily answered; but, like many other arguments apparently as sound, they were refuted by time and experience. Public credit was unhurt, and commerce throve under laws which, so far as they extended, were a legislative declaration

1796.

HOSTILE PREPARATION ABROAD.

39

of national insolvency. Not only was it so, but there arose a school of economists who taught that this anomalous state of things was the sound condition of trade and commerce; that an inconvertible paper currency was the best security for public and private credit; and that a metallic circulation was only fitted for a primitive state of society.

At the same time that the country was in the crisis of a financial convulsion, its soil was in The Dutch imminent danger of foreign invasion. fleet. While Lord Malmesbury was amused with pretended negotiations for peace at Paris, active preparations were making in the harbour of Brest, and in the Dutch port of the Texel. A formidable fleet of lineof-battle ships and transports, destined for a descent on the coast of Ireland, was ready for sea at the beginning of the year; but the prevalence of storms. and contrary winds detained the fleet in port. A few of the French ships and transports, however, succeeded in crossing the Channel, and appeared in Bantry Bay, on the 24th of December; but they were unable, from the state of the weather, to effect a landing; and far from being aided by an insurrection. of the people, as the French had been led to expect by the representations of Irish emissaries, they found that ample preparations had been made for the defence of the island. The expedition, therefore, returned to Brest, with the loss of four ships of the line and eight frigates, which were either sunk or captured.

Another expedition, upon a still smaller scale, and apparently of an experimental character, was despatched in February to attempt a landing on some remote and defenceless part of the south-western coast of the British Islands. Hoche himself had undertaken the command of the force destined for the invasion of Ireland; but for the particular service on the coast of England he was content to detach a small

40

FRENCH FORCES IN PEMBROKESHIRE. CH. XXXVII.

body of twelve or fourteen hundred men, composed of convicts, and volunteers from the military prisons of Brittany and La Vendée. This marauding band was sent forth under the orders of one Tate, an Irish adventurer, who held the rank of Colonel in the French army. Tate's instructions were to enter the Bristol Channel, and to land his troops on the right bank of the river Avon, within five miles of Bristol. He was then to advance rapidly at night; to fire the city, the docks, and the shipping on the windward side. This being done, he was to scatter his force in predatory detachments, so as to spread confusion and dismay through the surrounding country. The main object was to effect a diversion which should aid the grand expedition intended for the regular invasion of the island. This daring scheme might have been attended with a momentary success. It was not improbable that three or four ships should elude the vigilance of the Channel cruisers; and the landing once effected, the march to Bristol, and the destruction of property, might easily have been accomplished. But here the success of the expedition must have ended. The handful of invaders, whether they held together, or dispersed in detachments, must have fallen an easy prey to the local force which would have been assembled in a few hours, unless the whole populace had risen in their favour. But this daring enterprise was not attempted. Instead of obeying his orders by sailing up the Severn, Tate did not even venture to enter the Bristol Channel. On the 22nd of February, the little squadron, consisting of two frigates, a corvette, and a lugger, anchored in a roadstead off the iron-bound coast on the northern extremity of Pembrokeshire; and in the course of the afternoon the French legion disembarked in perfect order at a desolate place called Cerrig Gwasted Point, about three miles from the town of Fishguard. They brought with them a large

1796.

LORD CAWDOR'S PREPARATIONS.

41

quantity of ammunition and small arms, but no artillery. One of the boats, which sunk in the surf, was supposed to have contained some field pieces. The troops, as they landed, dispersed over the country, plundering the cottages and farm houses. On the following morning the whole force, with the exception of a few stragglers, was drawn up on a high hill; and shortly afterwards the French frigates, on a signal from Tate, weighed anchor, and sailed away. The troops, indignant and alarmed at this unexpected desertion, became mutinous; and it was evident to the Commander that no reliance could be placed on their stability. Meanwhile the surrounding country was in motion. Lord Cawdor, who resided about thirty miles from Fishguard, having heard of the landing of the French on Wednesday night, had hurried to Lord Milford, the lieutenant of the county. But Milford, being aged and infirm, delegated his authority to Lord Cawdor; and this nobleman, though only a captain of yeomanry, by his vigour and conduct gathered around him in a few hours all the available strength of the immediate neighbourhood. During Thursday a force of six hundred and sixty men, consisting of the Fishguard volunteers, one hundred and twenty of the Cardigan militia, and his own troop of yeomanry, were mustered under Lord Cawdor's command. None of these men had ever seen a shot fired, but on parade; yet Lord Cawdor hesitated not a moment to lead them against the enemy, and they were equally willing to follow their able and gallant leader. A crowd of country people armed with scythes and other rude weapons were disposed, in such order as was practicable, in the rear of this little army. The French force, comprising many good soldiers, the flower of the army of La Vendée, and numerically superior to the raw levies of the Welsh captain of yeomanry, was drawn up in a position almost impregnable. Nevertheless,

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