The sun., 1878-12-19
Iow the Bnnk of England Resumed.

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Iiow the Bnnk Of England Resumed.
Financial mo- less than political prccc-
dents are often dclu-iVc. for the reason that
history. to uso the current phrase, never
precisely repeats itself There Is apt to he
sufficient difference in the specific condi-
tions and contingencies Of particular
crisis TO Illustrate the most careful calcu-
lation built upon analogous data Yet it is
a satisfaction 10 know that the augurcs OF
eiporicncosrcpropitiuu rather than other
wi-e, and 1t IL interesting therefore, TO
mark what results followed tho two at
tompts at resumption made by the Bank Of
England some iifty years ago.
1t was in February, 1871, that the Bank Of
England suspended specie payments. Grad
ually the price Of gold rose, until after nu-
merous fluctuations it touched its highest
point IN August, 1913, commanding pre-
mium Of some forty per cent. Upon the
abdication OF NAPOLEON, it dropped toabout
eleyen per cent. but during the Hundred
Days again loape'l up very near the highest
figure previously recorded. After Water
loo the price rapidly declined and from
Octoncr to December, 1916, IL ruled under
one per cent. So far the parallel is very close
between the existing state Of things here
aud the situation in England at the time
when the bank made its first venture in the
direction Of resumption. In other RESPECTS.
however. our circumstances are not at all
analogous to theirs.
In April 1917. after suspension Of more
than twenty years, the Bank of England
gave notice Of its readiness TO pay on its
notes of small denominations dated prior to
the preceding year; and six months later IL
volunteered To take up all its notes bearing
date previous to Jan /, 1917. This step
was entirely voluntary on the part Of the
bank, since the restriction on the demand
for specie payment voted by Parliament had
been cXtcndcd to 1919 Now what was the
amount Of the banks paper then uutstand-
tng. and what resources were forthcoming to
reicrm II In February 1917. the total liza
hilitcs of the bank on its notes Of issue and
deposits were Sl9l 100000. At the same date
there were in the vaults some 5000 600.
which -ix months later had increased to up
ward of s5a.OJo,nl0. But most Of this accumu-
lated coin was in the shape of deposits. and
the hank had no available capital for the re-
dcmption of legal tenders beyond its ac-
more than few millions Of pounds stcr-
ling. Owing t. the commercial cmbarrass-
mcnt~ winch followed the premature reso-
luton toresumc a great part OF the deposits
We're drawn out and by February. 1919. the
coin IN the vaults had dwindled to about
$21O09,900, and the price uf gold had sprung
up to over six per cont II wts considered
certain that % continuance of specie pay
moutr would speedily exhaust the bank, and
accordingly Parliament iutcrposcd abso-
lutrly ioroIddng any further EFFORT Tor tine
present in that direction. Thus the first rc-
sumption experiment on the part Of. the
Bank 81 Lux land ,udcd IA signal failure
Much mDr, complete and wary prepare
tiOn preceded the next attempt b. return to
specie payments. No sooner was the re-
-trct.on act of 1913 passed than the bank
began t' contract IL, ISSUES. and the rcduc-
tiOn OF IT, liabilities in four years did not fall
short OF S"2.uu0.OO0. one result Of this policy
was new decline in the price Of gold, which
finally touched par, whore il remained for
some two years prior to the final accom-
plshmcnt of resumption On the lst of
May, 1921 the bank again began to pay Ito
notes IN coin. thus anticipating by just two
years the time fixed 10y Parliament. At this
time the note circulation was in round mum
bors 500 coo, and the deposits had shrunk
tu $4,000, 600. while to Offset these Liabilities
the vaults contained upward Of $50 600.
The result Of this second experiment. where
resources were more -hrewdly graduated to
demands. representing, indeed, almost fifty
per cent. Of the whole Indebtedness. is sun-
clcntly well known Notwithstanding much
financial disturbance and a heavy drain Of
specie which BET in, and which 10y the end Of
1925 had lowered the sum left in the vaults to
about five million dollars, the Bank OF Eng
land maintained unllinchingly its purpose
Of resumption. The gold standard was per-
mancntly restored and within twelve
month the long season Of dependency and
disaster had given way TO an era of pros
peIlty and confidence