[Lombard Street: A Description of the Money Market by Walter Bagehot]@TWC D-Link book
Lombard Street: A Description of the Money Market

CHAPTER VII
18/57

After the suspension of cash payments in 1797, the directors of the Bank of England could issue what notes they liked.

There was no check; these notes could not come back upon the Bank for payment; there was a great temptation to extravagant issue, and no present penalty upon it.

But the directors of the Bank withstood the temptation; they did not issue their inconvertible notes extravagantly.

And the proof is, that for more than ten years after the suspension of cash payments the Bank paper was undepreciated, and circulated at no discount in comparison with gold.

Though the Bank directors of that day at last fell into errors, yet on the whole they acted with singular judgment and moderation.


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