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. But when, in 1810, they came to be examined as to their reasons, they gave answers that have become almost classical by their nonsense. Mr. Pearse, the Governor of the Bank, said: 'In considering this subject, with reference to the manner in which bank-notes are issued, resulting from the applications made for discounts to supply the necessary want of bank-notes, by which their issue in amount is so controlled that it can never amount to an excess, I cannot see how the amount of bank-notes issued can operate upon the price of bullion, or the state of the exchanges; and therefore I am individually of opinion that the price of bullion, or the state of the exchanges, can never be a reason for lessening the amount of bank-notes to be issued, always understanding the control which I have already described. 'Is the Governor of the Bank of the same opinion which has now been expressed by the Deputy-Governor? 'Mr. Whitmore, I am so much of the same opinion, that I never think it necessary to advert to the price of gold, or the state of the exchange, on the days on which we make our advances. 'Do you advert to these two circumstances with a view to regulate the general amount of your advances?--I do not advert to it with a view to our general advances, conceiving it not to bear upon the question. And Mr. Harman, another Bank director, expressed his opinion in these terms: 'I must very materially alter my opinions before I can suppose that the exchanges will be influenced by any modifications of our paper currency.' Very few persons perhaps could have managed to commit so many blunders in so few words. But it is no disgrace at all to the Bank directors of that day to have committed these blunders. They spoke according to the best mercantile opinion of England. The City of London and the House of Commons both approved of what they said; those who dissented were said to be abstract thinkers and unpractical men. The Bank directors adopted the ordinary opinions, and pursued the usual practice of their time. It was this 'routine' that caused their moderation. They believed that so long as they issued 'notes' only at 5 per cent, and only on the discount of good bills, those notes could not be depreciated. And as the number of 'good' bills--bills which sound merchants know to be good--does not rapidly increase, and as the market rate of interest was often less than 5 per cent, these checks on over-issue were very effective. They failed in time, and the theory upon which they were defended was nonsense; but for a time their operation was powerful and excellent.