The French war with Napoleon became more exhaustive, and within twenty years from the peace with America to the Peace of Amiens, in 1802, the debt went up from L231,000,000 to L537,000,000 sterling.  From this period to 1815 the debt accumulated annually, until it reached its maximum, or eight hundred and sixty-one millions sterling.

During these severe changes, reverses, extravagance, and extraordinary governmental expenditure, the bank was considered the prop of national finance.  The French Revolution and its consequent war with England led to many heavy outlays by the British Government.  In 1795 the bank desired the chancellor of the exchequer to make his arrangements for the year without ‘any further assistance’ from the bank.  This was again urged in 1796, and the bank appealed again to Mr. Pitt.

’The only reply from Mr. Pitt was a request for a further accommodation, on the credit of the consolidated fund, which the court refused to sanction, until they had received satisfaction on the topic of the treasury bills, and requested Mr. Pitt to enter into a full explanation on this subject, which was not even touched upon in his letter.  This resolution being communicated, Mr. Pitt wrote to the governor and deputy-governor on the 12th August, that ’they might depend upon measures being immediately taken for the payment of one million, and a further payment, to the amount of one million, being made in September, October, and November, in such proportions as might be found convenient.  But, as fresh bills might arrive, he was under the necessity of requesting a latitude to an amount not exceeding one million.’  About the same period the court ’desired the governor and deputy-governor would express their earnest desire that some other means might be adopted for the future payment of bills of exchange drawn on the treasury.’ (Vide ‘History Bank of England,’ pp. 114, 115.)

The circumstances of the nation and of the bank were known to the capitalists and to the people.  Hence various causes of uneasiness and distress.  The bank loaned the public treasury seven and a half millions in the years 1794, 1795, 1796, and the more they loaned to the exchequer, the less they could loan to the people.  Thus followed a diminution of gold in the bank, and hoarding by the people.  Gold was exported more freely to the Continent, and reduced accommodation was given to the merchants.  Finally, on the 26th February, 1797, the king’s council passed an order for the suspension of cash payments.

The bank was on the eve of suspension in the year 1847.  On the 25th of October the cabinet authorized a violation of the charter, thereby acknowledging the inability of the bank to maintain specie payments.  This order of Lord John Russell inspired fresh confidence, and the bank immediately recovered strength, and reduced the rate of interest from 8 per cent. in October to 7 per cent. in November, to 6 and 5 per cent. in December, to 4 per cent. in January, and to 3-1/2 in June following.  The distress and revulsion of 1847 were consequent upon the over-trading and railway mania of 1844, 1845, and 1846, and the failure of crops in Ireland and England in 1847.