330

NEGOTIATIONS FOR PEACE-DEATH OF CATHARINE II. [1796.

the embassy, has left a very interesting account of what he observed. Many of the houses on the road from Calais to Paris were shut up; very few of the churches appeared to be open; but the land throughout was in a state of high cultivation, though there were comparatively few men at work. The farmers had become wealthy proprietors, by receiving depreciated assignats for their produce, and buying estates-national domains-with that paper money, at the sum which it represented. In Paris the streets were crowded, the shops tolerably well supplied, the theatres well attended, some private carriages, and a great number of public vehicles: "All this," says the sensible attaché, "brought to my reflection how very difficult a matter it must be to destroy a great country."*

It would be tedious to follow the course of this negotiation. Lord Malmesbury arrived at Paris on the 22nd of October; he left Paris on the 21st of December. The points of difference between the two governments were too serious to be overcome by any anxiety of the prime minister of Great Britain for peace, even if the French Directory, rendered more warlike than ever by the successes of Bonaparte, could have regarded the real welfare of France more than its false glories. Lord Malmesbury required, as a sine quá non, that the Netherlands should not be annexed to France. M. Delacroix, the French minister for Foreign Affairs, held that the banks of the Rhine were the natural limits of France. It was in vain to diplomatize. Mr. Pitt had to call upon his country for new sacrifices, and the French Directory had to send new armies to seize the means of subsistence in the lands which Bonaparte was revolutionizing.

At a period of less public excitement than was occasioned by other events which marked the close of the year 1796, the death of Catharine II., Empress of Russia, on the 10th of November, and the retirement of Washington from the Presidency of the United States, in December, would have been fruitful sources of political speculation. The sudden decease of Catharine, who for thirty-six years had been the autocrat of all the Russias, was in some degree a triumph for the French republic; and that event probably decided the Directory in suddenly breaking off the negotiation for peace with England. She was preparing to take part in the coalition against France. Her successor, Paul, was inclining to the French interests. The retirement of Washington interrupted the continuance of that system of neutrality by which he had preserved the American republic from the dangers attendant upon the extreme opinions of the federalist and the democratic parties-the one disposed, however timidly, to take part with England in the great European crisis; the other, of which Jefferson was the head, manifesting hostility to the mother-country and favour to France, in a manner that savoured more of evil passions than of wise statesmanship. Washington regarded with alarm the Societies, modelled upon the Jacobin clubs, which had sprung up in the United States; and his expression of this feeling produced in the democratic party a violent hostility to the treaty which had been concluded under his auspices with Great Britain in 1795. Washington's retirement was preceded by manifestations of party spirit against the policy

"Court, &c., of George III.," vol. iii. p. 355.

1796.] RETIREMENT OF WASHINGTON-FRENCH FLEET IN BANTRY BAY. 331

of the great founder and preserver of the republic. Had his nature been different had his ambition been less under the control of his virtue,-he might have taken up the sword, and, sweeping away his enemies, have raised himself to supreme power upon the ruins of his country's liberty. He retired to his estate of Mount Vernon, to pass the rest of his days as a private citizen. At this period, the young conqueror of Italy was meditating upon plans of rising to what some would deem the pinnacle of human greatness. His scheme of glory was accomplished. He founded a military despotism. Washington's scheme of glory was also realized. He had been a ruler of free men-ruling by the power of law. He laid down his authority when he had done the work to which he was called, most happy in this, that ambition of a selfish order could never be justified by his example.

On the 17th of December, two days before lord Malmesbury left Paris, an expedition went out from Brest, consisting of seventeen sail of the line and thirteen frigates. Its destination was Ireland, with an army of twenty thousand men, under the command of Hoche, who had succeeded in the pacification of La Vendée. A great storm dispersed this formidable fleet. A portion of the squadron entered Bantry Bay on the 24th of December. It consisted of seven sail of the line and ten smaller vessels. The general who was to advance with the troops into the interior-who was to support the disaffected, and revolutionize the government had been separated from the rest of the armament. The officers who were with the troops in Bantry Bay were desirous to effect a landing. The admiral refused to comply with their requisition, and sailed back to Brest. The other divisions of the French fleet also sought to return. Several ships were captured, and others reached the French ports in a shattered condition. Some amongst our statesmen knew the danger, if such a landing as that contemplated by the Directory had been effected. Lord Mornington wrote, in September, "My great fear is a blow in Ireland, before sufficient preparation has been made for our defence in that most vulnerable, and at the same time mortal, part."* Lord Malmesbury, in the middle of November, gave an intimation to lord Grenville that an expedition was meditated against Ireland; that the troops were encouraged to embark by the most exaggerated reports of the temper of the country. Loyal Irishmen were grateful that "the goodness of Providence to us has exhibited a second armada." But even loyal men inquired why the coast had been left wholly unprotected by our fleet for seventeen days; why admiral Colpoys could not follow the French fleet, for want of water and provisions; why lord Bridport was lying at Spithead, not even ready for sea, instead of being off Ushant ?" +

"Life of Sidmouth," vol. ii. p. 474.

+ Ibid. p. 181.

Landing of French in Pembrokeshire-Commercial Distrust-Run upon the Banks-Suspension of Cash Payments by the Bank of England-Extension of the National Industry-War with Spain-Battle of St. Vincent-Nelson boards and takes two ships-Discontent in the Navy-Mutiny at Spithead-Mutiny at the Nore-Proceedings in Parliament-Negotiations at Lisle for Peace-Bonaparte's triumphs in Italy-Revolution at Paris of the Eighteenth Fructidor-End of the Negotiations at Lisle-The "Anti-Jacobin."

THE public expectation of a peace, as the result of the negotiations at Paris, passed into an apprehension of an invasion by France, for which the Directory had been making preparations whilst these negotiations were lingering on. The descent upon Ireland failed, as we have seen. But the fact that a large fleet could cross the Channel from Brest, and a portion of the armament prepare to land on the south-west coast of Cork, shook the national confidence in the power of our navy to protect our shores. On Saturday, the 25th of February, the Secretary of State informed the Lord Mayor of London that four French ships had appeared in the Bristol Channel, and had anchored in the harbour of Ilfracombe; that on the 23rd about twelve hundred men had been landed on the east coast of Pembrokeshire; and that a strong force having been collected by the Lord Lieutenant of the county, the invaders had surrendered at discretion. This absurd

1797.]

COMMERCIAL DISTRUST-RUN UPON THE BANKS.

333

enterprize, although the ready spirit of our countrymen furnished a great cause for exultation, was also calculated to produce additional alarm by showing how accessible were these islands to an invading army, whether large or small. The popular fears took the usual course of producing commercial distrust. The currency of the country was in a condition that was likely to render a general panic, and a wide-spread ruin, almost unavoidable. The circulation of the kingdom mainly rested upon the notes of the Bank of England, and upon the bills of about two hundred and thirty country banks. Both these were payable to the bearer on demand. From the beginning of the year there had been an extraordinary run upon the northern banks; and many of them had been compelled to postpone payment in gold, till, as the banks of Newcastle announced, "they could obtain a supply adequate to the occasion." The expectations of the country bankers rested upon the assistance to be rendered by the Bank of England, through the agency of the London bankers. This pressure upon the Bank of England had been progressively increasing for weeks; and it was becoming doubled, day by day, in the third week of February. But there was another large seeker for accommodation, the Chancellor of the Exchequer, who, as far back as January, 1795, had been told by the Bank Directors that it was their wish "that he would arrange his finance for the year in such a manner as not to depend on any further assistance from them." Thus, the prudent banker always addresses the sanguine private speculator. Mr. Pitt was a speculator upon the greatest scale. He speculated upon having the means always at hand for loans and subsidies to our Allies. Another loan to the emperor of Germany "would go nigh to ruin the country," said the Directors of the Bank. Ireland, at the beginning of 1797, required, under her separate Treasury, financial assistance, and Mr. Pitt asked it of the Bank of England. On the 9th of February he was informed by the Governor, that "a further advance of a million and a half as a loan to Ireland would threaten ruin to the Bank, and most probably bring the Directors to shut up their doors."

On Saturday evening, the 25th of February, the Chancellor of the Exchequer, having one afternoon's relief from parliamentary duties,-perhaps finding some solace for his public anxieties in a mode of producing pleasant thoughts which his real friends deplored,—was startled by a message from the Directors of the Bank of England that they could pay in specie no longer. So low was their stock of bullion that, it is stated, they had been compelled to pay their notes in sixpences. Pitt at once roused himself to meet the emergency. A messenger was sent to the king at Windsor; and on Sunday morning his Majesty was presiding at a Council, at which eight members of the Cabinet were present. On that Sunday night, Wilberforce writes to lord Muncaster, "Elliot has just been with me to inform me that the Bank is to stop payment, by command of government, to-morrow morning." He records in his Diary that the Cabinet were very averse to take upon themselves the responsibility of the measure; that the Chancellor said, "No-this will never do." * Lord Campbell states that the Chancellor held that the order forbidding the Bank to make any further payments in cash, "although contrary to law, would be in accordance with the constitu

"Life of Wilberforce," vol. ii. p. 194.

334 SUSPENSION OF CASH PAYMENTS BY THE BANK OF ENGLAND. [1797. tion." Lord Loughborough concluded that as in this case, if the Executive Government abstained from interfering, the opinion of Parliament could not be taken till irremediable evils were brought upon the nation, the Executive Government was bound to interfere.* The Order in Council was notified to the Bank on the Sunday night. On the Monday morning the Directors of the Bank published the Order, with a notification that the general concerns of the Bank were in the most affluent and prosperous condition, and that they would continue their usual discounts, paying in bank-notes. There was a great meeting at noon of merchants at the Mansion House, when an unanimous resolution was passed, that “ we will not refuse to receive banknotes in payment of any sum of money to be paid to us, and will use our utmost endeavours to make all our payments in the same manner." The Stocks immediately rose. A weight was suddenly taken off the springs of industry. There was no lack of a due supply of provisions for the capital, as Wilberforce apprehended might be the case. There were no riots; and the prophecy of lord Auckland that "this was the beginning of the throatcutting was altogether a delusion. There was no fever in the State resulting from this stimulant. But a chronic malady was induced which lasted during a generation-a malady which defied every attempt at cure till the principle of a convertible paper currency was again firmly established. Of the lasting effects of this measure, which was only intended to be tempo rary, the government of 1797 could have had no conception. For twentyfour years bank-paper stood in the place of gold, and ministerial financiers were hardy enough to maintain that bank-paper was as good as gold. The benefits and the evils of this measure have probably been each exaggerated. It is not clear that the industry of the country was thus chiefly stimulated to the gain of the capitalist. It is not clear that prices were in consequence raised, to the loss of the labourer. It is not clear that we could not have carried on the war without inconvertible paper. It is not clear that the inconvertible paper added hundreds of millions to the national debt. One thing is clear that Mr. Pitt was relieved from an immediate difficulty; and had not to contemplate a national bankruptcy, in addition to the other perils of the great contest with France.

The measures that ministers carried through Parliament, in consequence of this suspension of cash-payments, were of a nature to continue the restriction upon the issue of specie without absolutely making bank-notes a legal tender. But as bank-notes were to be received in payment for every branch of the revenue, and as the tender of bank-notes in payment of a demand would protect the person of the debtor from legal process, the transition from gold to paper soon became speedy and certain. For all purposes of retail trade the guinea was quickly supplanted by the twenty-shilling note-a currency first resorted to by the Bank of England on the 4th of March. The door was now opened to a most extensive system of forgery, which the fear of conviction, and of punishment without mercy, was wholly inefficient to repress. By Reports of Committees of both Houses the solvency of the Bank of England was perfectly established; and the demand for a circulating capital proportioned to the political engagements of the government, and the

* Lord Campbell; "Chancellors," vol. vi. p. 277.