The Sun.
London, England, 1855-10-17 00:00:00

mitigated form of national bankruptcy which consists in
a suspension of specie payments."
Thus it was. On February 26, 1797, an order in
council empowered the directors rat the Bank of England
to suspend cash payments. The next day came the trial.
IThe bank note ceased to be " convertible "--" national
bankruptcy " commenced—" an act," as Mr. Fox said,
"was done which struck at the foundation of public
credit." The timid were in a state of consternation.
But Government was firm. The Bank was guarded by
soldiers. But there was no need of them. The mer-
chants in the city assembled to support the Bank, for
they wanted bank notes—the instrument of exchange—
and cared nothing for gold. The people 'immediately
understood that the bank note was "convertible" into
all the necessaries of life. In the afternoon—we speak
on the authority of one who well remembers the event—
the troops were quietly withdrawn from the city, and
" national bankruptcy" became fur twenty years a mere
bugbear of the financial imagination.
One solitary individual remained for a few hours,
musing—like Marius amidst tte ruins of Carthage—
over the fallen grandeurs of his country's commercial
credit. It was a young man of lofty literary and finan-
cial aspiratione, engaged by that great organ of public
intelligence, the Times newspaptr, which was then com-
mencing its giant course of fame. But there was nothing
to be done, and little to be said about the affair. And
1 so the young reporter slowly wended his way to his ac-
customed retreat—the Goose and Gridiron, St. Paul's
Church-yard—and there converted his " inconvertible"
11. Note into the supplies of beef-steak and brandy which
the exciting occurrences of the day had rendered
requisite.
How for nearly twenty years this country prospered
and progressed under the suspension of Cash payments,
how from this day of " mitigated national bankruptcy"
we bore up against all adverse circumstances at .home
and abroad,—the gigantic enterprises in which we bore
a distinguished part, the hundreds of millions which this
country raised and expended in the prosecution of the
great European war,—are matters of history with which
all are acquainted.
Was the Bank Note ever, for a moment, " inconver-
, tible ? " The idea is simply ridiculous. Money ceases
to he money the moment it ceases to be convertible.
With this inconvertible paper money we raised armies,
subsidised foreign legions, carried on commerce with the
world, and developed and expanded the industrial
energies of the nation at home. But was the Bank Note
" convertible " into gold and silver ?It was—in the
proper manner—viz., at the market price. The Order
of Council for the suspension of specie payments was
issued on 27th February. On the 6th of March follow-
ing, the Bank issued a notice that, " in order to accom-
modate the public with a further supply of coin for
small payments, a quantity of dollars were ready to be
issued." On the first day of the 'issue of these dollars
the people crowded to get them ' • but the Bank was
'
amply provided • the call for dollars decreased every
day, "and on the 31st October, 1797, these dollars, of
which 2,325,099 had been issued in eight mouths, were
called in." (Francis,) Representative paper money
will purchase gold, iron, tin, copper, or silver at plea-
sure, as easily as a check with the signature of Roths-
child is " convertible " into an estate in the Highlands
or a ship of war. It was the mistake which was made
after the Peace, in 1819, of enacting that the Bank note
should always be exchangeable for gold at a fixed rate,
that has produced a greater amount of ruin, misery, and
disaffection in the country than the world's history has
ever exhibited.

The events of the day confirm all that has been said
for years on the absurd and pernicious effects of the
Peel Monetary System. Why are discounts at 54 per
cent. ? Why are Franco and England fighting for the
po-session of a few millions of a particular metal, in the
struggle to retain which the trade and commerce of both
couniries are severely injured ? Why do we put it in
the power of the Emperor of Russia, by the abstraction
of a few millions of gold, to strike a heavy blow at our
commerce and trade. Ail this is permitted by the mis-
taken principle of making the circulating medium of
nations rest on a metallic basis. What would have hap-
pened in this country had not the gold discoveries of
California and Australia mitigated the effects of our
false principles of currency ? But ari accidental, though
most extraordinary, circumstance, such as the vast dis-
covery of gold, proves nothing in favour of a metallic
currency, or of paper money based on metal, though it
may assist us for a time. A nation's money should not
be an article of merchandise, but purely representative,
exchangeable into every commodity at the market price.
To relieve the pressure of the day, and while the prin-
ciples of monetary science are under the investigation of
the nation, we should therefore hail with satisfaction
that " n.:itigated form of national bankruptcy which con-
sists in a suspension of specie payments." Bet we go
much further : we wish to see not the " suspension "
only, but the total abrogation of specie payments at a
fixed rate.