This _a priori_ conclusion is in perfect harmony with mercantile experience. The last hundred years have furnished repeated illustrations of its truth. After the enormous export of gold in 1795–6 for war-loans to Germany, and to meet bills drawn on the Treasury by British agents abroad; and after large advances made under a moral compulsion by the Bank of England to the Government; there followed an excessive issue of bank-notes. In 1796–7, there were failures of the provincial banks; a panic in London; a run on the nearly-exhausted Bank of England; and a suspension of cash-payments—a State-authorized refusal to redeem promises to pay. In 1800, the further impoverishment consequent on a bad harvest, joined with the legalized inconvertibility of bank-notes, entailed so great a multiplication of them as to cause their depreciation. During the temporary peace of 1802, the country partly recovered itself; and the Bank of England would have liquidated the claims on it had the Government allowed. On the subsequent resumption of war, the phenomenon was repeated; as in later times it has been on each occasion when the community, carried away by irrational hopes, has locked up an undue proportion of its capital in permanent works. Moreover, we have still more conclusive illustrations—illustrations of the sudden cessation of commercial distress and bankruptcy, resulting from a sudden increase of credit-circulation. When, in 1793, there came a general crash, mainly due to an unsafe banking-system which had grown up in the provinces _in consequence_ of the Bank of England monopoly—when the pressure, extending to London, became so great as to alarm the Bank-directors and to cause {331} them suddenly to restrict their issues, thereby producing a frightful multiplication of bankruptcies; the Government (to mitigate an evil indirectly produced by legislation) determined to issue Exchequer-Bills to such as could give adequate security. That is, they allowed hard-pressed citizens to mortgage their fixed capitals for equivalents of State-promises to pay, with which to liquidate the demands on them. The effect was magical. £2,202,000 only of Exchequer-Bills were required. The consciousness that loans could be had, in many cases prevented them from being needed. The panic quickly subsided; and all the loans were very soon repaid. In 1825, again, when the Bank of England, after having intensified a panic by extreme restriction of its issues, suddenly changed its policy, and in four days advanced £5,000,000 notes on all sorts of securities, the panic at once ceased.