Gold and the Gold Standard.pdf

GOLD AND THE GOLD STANDARD
Other factors that contributed directly to the
suspension of specie payments were (1) the heavy
demands made by the Government upon the Bank
of England for advances with which to meet war
expenditures-many of which 'required the transfer
of large sums to the continent; (2) the pull on
British gold and silver resulting from a return of
France to a specie basis after her disastrous papermoney
inflation with the assignats and mandats.
During the early years of this inflation, specie had
flowed' in large quantities to England from France
and other neighboring countries for safety. With the
conclusion of the French Revolution, the restoration
of law and order, and the return of France to a
bimetallic currency, much of this specie was 'drawn
home again; (3) the uncertain political situation in
Britain, which contributed to heavy demands on
the Bank of England for specie.
By the spring of 1795, exchange in London on the
principal Continental cities reached the gold-export
point and a' strong outward movement of specie to
Paris, Hamburg, and Lisbon took place. This gold
drain so reduced the reserves of the Bank of England
that the directors notified Pitt in February, 1797,
that the situation was desperate. The Prime Minister
responded on February 26 with a council resolution
providing that
the Directors of the Bank of England should forbear issuing
any cash in payment until the sense of Parliament can be
taken on that subject and the proper measures adopted there-
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