The French attempt to invade south Wales, leading to a modest landing of troops at Fishguard on February 25th, precipitated a rush on the country banks as people tried to convert their paper money into gold. A similar crisis had been averted in 1793 by the government’s issue of Exchequer bills to bankers at risk. On this occasion, the Bank of England’s reserves had been so depleted by the government’s printing of paper money to fund the war that a collapse of the entire financial system seemed possible, so on Sunday 26th, the Prime Minister, William Pitt, obtained from the King an Order in Council suspending cash (i.e. gold) payments for paper money. To ease the liquidity crisis the Bank of England produced its first £1 notes on Thursday March 2nd. These temporary expedients were…
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Citation: Editors, Litencyc. "Banking Crisis and the Restriction Act". The Literary Encyclopedia. First published 01 April 2005 [https://www.litencyc.com/php/stopics.php?rec=true&UID=97, accessed 23 November 2024.]
