The Bank Restriction Act 1797 (37 Geo. 3. c. 45) was an act of the Parliament of Great Britain which removed the requirement for the Bank of England to convert banknotes into gold. The period lasted until 1821, when convertibility was restored. The period between these two dates is known as the Restriction period.
| Act of Parliament | |
 | |
| Long title | An Act for confirming and continuing for a limited time, the restriction contained in the minute of council of the twenty-fifth of February one thousand seven hundred and ninety-seven, on payments of cash by the bank. |
|---|---|
| Citation | 37 Geo. 3. c. 45 |
| Territorial extent | Great Britain |
| Dates | |
| Royal assent | 3 May 1797 |
| Commencement | 27 September 1796[a] |
| Expired | 2 December 1797 |
| Repealed | 21 August 1871 |
| Other legislation | |
| Amended by |
|
| Repealed by | Statute Law Revision Act 1871 |
| Relates to |
|
Status: Repealed | |
| Text of statute as originally enacted | |
Reasons for restricting
editAn increasing number of people were trading their banknotes for gold. The overprinting of banknotes caused the Bank of England to loose its supply of gold, and due to the gold standard, the value of each banknote was diminishing.[1] The timing of the act, which had been under consideration for a few months owing to runs on banks in Newcastle-upon-Tyne, Sunderland, and Durham that had in turn requested monetary support from the Bank of England,[2] was the invasion of Britain on 22–24 February 1797 by French forces in Fishguard. When news of this event, now known as the Battle of Fishguard, became known in London, a much greater run on the Bank of England was feared, had a large number of holders of banknotes attempted to convert them into gold when bullion reserves were heavily reduced. However, because the total face value of the notes in circulation was almost exactly twice the actual gold reserves held (£10,865,050 of notes, compared to £5,322,010 in bullion),[3] this would have bankrupted the Bank, and Parliament decided to suspend these "specie payments" with immediate effect; this suspension was renewed annually until 1821.[4]
Reasons for overprinting
editBritish banknotes were overprinted by the government of William Pitt the Younger after Britain declared war on revolutionary France in 1793.[5] The Bank Restriction Act released the government from the fear of mass redemption of such convertible banknotes, and by the end of the war in 1814 the banknotes in circulation had a face value of £28.4 million, yet were backed by only £2.2 million of gold. However, by 1821, and with radical economic policies instigated by Sir Robert Peel (the future Prime Minister, acting as Chairman of the Bullion Committee), this situation was reversed, and with £2,295,360 of notes in circulation being backed by £11,233,390 of bullion,[3] the British government resumed "convertibility" on 1 May 1821 (two years ahead of schedule).
In popular culture
edit
After the passing of the act, Richard Brinsley Sheridan publicly bemoaned the way in which the Bank of England had fallen under the influence of William Pitt the Younger by describing the institution as "An elderly lady in the City, of great credit and long standing who had unfortunately fallen into bad company". This in turn led to James Gillray’s famous cartoon entitled Political Ravishment; or the Old Lady of Threadneedle Street in Danger, which depicts Pitt seducing the Bank of England, personified as an old lady attired in £1 and £2 notes, for her fortune.[6] This cartoon is the origin of the Bank's nickname of "The Old Lady of Threadneedle Street", still in use today.
Subsequent developments
editThe act was amended and continued until the end of one month after the start of the next session of parliament by the Restrictions on Cash Payments Act 1797 (37 Geo. 3. c. 91).
| Act of Parliament | |
| | |
| Long title | An act to continue for a limited time, an act, made in this present session of parliament, intituled, "An act for confirming and continuing, for a limited time, the restriction contained in the minute of council of the twenty-sixth day of February one thousand seven hundred and ninety-seven, on payments of cash by the bank, under certain regulations and restrictions." |
|---|---|
| Citation | 37 Geo. 3. c. 91 |
| Territorial extent | Great Britain |
| Dates | |
| Royal assent | 22 June 1797 |
| Commencement | [b] |
| Expired | 2 December 1797 |
| Repealed | 21 August 1871 |
| Other legislation | |
| Amends | Restriction on Cash Payments Act 1797 |
| Repealed by | Resumption of Cash Payments, etc. Act 1819 |
| Relates to |
|
Status: Repealed | |
| Text of statute as originally enacted | |
The act was further amended and continued until one month after the conclusion of the present war by definitive treaty by the Restriction on Cash Payments (No. 2) Act 1797 (38 Geo. 3. c. 1).
| Act of Parliament | |
| | |
| Long title | An Act to amend and continue, until one month after the conclusion of the present war, the provisions contained in an act, passed in the session of parliament of the thirty-sixth and thirty-seventh years of his present Majesty, chapter ninety-one, videlicet, on the twenty second of June one thousand seven hundred and ninety-seven, for the restriction on payments of cash by the bank. |
|---|---|
| Citation | 38 Geo. 3. c. 1 |
| Territorial extent | Great Britain |
| Dates | |
| Royal assent | 30 November 1797 |
| Commencement | 30 November 1797[c] |
| Repealed | 2 July 1819 |
| Other legislation | |
| Amends | Restriction on Cash Payments Act 1797 |
| Repealed by | Resumption of Cash Payments, etc. Act 1819 |
| Relates to |
|
Status: Repealed | |
| Text of statute as originally enacted | |
The act was further continued, as amended, until 1 March 1803 by section 1 of the Continuance of Laws Act 1800 (39 & 40 Geo. 3. c. 17).
The act was further continued until 1 March 1803, as amended, by section 1 of the Restriction on Cash Payments Act 1802 (42 Geo. 3. c. 40).
| Act of Parliament | |
 | |
| Long title | An act to continue, until the first Day of March One thousand eight hundred and three, the Restrictions contained in several Acts of the thirty-seventh and thirty-eighth Years of the Reign of his present Majesty, on Payment in Cash by the Bank. |
|---|---|
| Citation | 42 Geo. 3. c. 40 |
| Territorial extent | United Kingdom |
| Dates | |
| Royal assent | 30 April 1802 |
| Commencement | 30 April 1802[d] |
| Repealed | 6 August 1872 |
| Other legislation | |
| Amends | Restriction on Cash Payments Act 1797 |
| Repealed by | Statute Law Revision Act 1872 |
| Relates to |
|
Status: Repealed | |
| Text of statute as originally enacted | |
The act was further amended and continued until 6 weeks after the start of the next session of parliament by the Restrictions on Cash Payments Act 1803 (43 Geo. 3. c. 18).
| Act of Parliament | |
| | |
| Long title | An act to amend and continue, until the Expiration of six Weeks after the Commencement of the next Session of Parliament, the Restrictions contained in several Acts of the thirty-seventh and thirty-eighth Years of the Reign of his present Majesty, on Payments of Cash by the Bank. |
|---|---|
| Citation | 43 Geo. 3. c. 18 |
| Territorial extent | United Kingdom |
| Dates | |
| Royal assent | 28 February 1803 |
| Commencement | 28 February 1803[e] |
| Repealed | 2 July 1819 |
| Other legislation | |
| Amends | Restriction on Cash Payments Act 1797 |
| Repealed by | Resumption of Cash Payments, etc. Act 1819 |
| Relates to |
|
Status: Repealed | |
| Text of statute as originally enacted | |
The act was further amended and continued until 6 months after the ratification of a definitive treaty of peace by the Restriction on Cash Payments Act 1803 (44 Geo. 3. c. 1).
| Act of Parliament | |
| | |
| Long title | An act to continue, until six months after the ratification of a definitive treaty of peace, the restrictions contained in several acts made in the thirty-seventh, thirty-eighth, forty-second, and forty-third years of the reign of his present Majesty, on payments of cash by the bank of England. |
|---|---|
| Citation | 44 Geo. 3. c. 1 |
| Territorial extent | United Kingdom |
| Dates | |
| Royal assent | 15 December 1803 |
| Commencement | 15 December 1803[f] |
| Repealed | 6 August 1872 |
| Other legislation | |
| Amends | Restriction on Cash Payments Act 1797 |
| Amended by |
|
| Repealed by | Statute Law Revision Act 1872 |
| Relates to |
|
Status: Repealed | |
| Text of statute as originally enacted | |
The act was further continued, as amended, until 25 March 1815 by the Restriction on Cash Payments Act 1814 (54 Geo. 3. c. 99).
| Act of Parliament | |
| | |
| Long title | An Act to continue, until the Twenty fifth Day of March One thousand eight hundred and fifteen, an Act of the Forty fourth Year of His present Majesty, to continue the Restrictions contained in several Acts of His present Majesty on Payments of Cash by the Bank of England. |
|---|---|
| Citation | 54 Geo. 3. c. 99 |
| Territorial extent | United Kingdom |
| Dates | |
| Royal assent | 18 July 1814 |
| Commencement | 18 July 1814[g] |
| Repealed | 5 August 1873 |
| Other legislation | |
| Amends | Restriction on Cash Payments Act 1803 |
| Repealed by | Statute Law Revision Act 1873 |
| Relates to |
|
Status: Repealed | |
| Text of statute as originally enacted | |
The act was further continued, as amended, until 5 July 1816 by the Restriction on Cash Payments Act 1815 (55 Geo. 3. c. 28).
| Act of Parliament | |
| | |
| Long title | An act for further continuing, until the Fifth Day of July One thousand eight hundred and sixteen, an Act of the Forty fourth Year of His present Majesty, to continue the Restrictions contained in the several Acts of His present Majesty on Payments of Cash by the Bank of England. |
|---|---|
| Citation | 55 Geo. 3. c. 28 |
| Territorial extent | United Kingdom |
| Dates | |
| Royal assent | 23 March 1815 |
| Commencement | 23 March 1815[h] |
| Repealed | 5 August 1873 |
| Other legislation | |
| Amends | Restriction on Cash Payments Act 1803 |
| Repealed by | Statute Law Revision Act 1873 |
| Relates to |
|
Status: Repealed | |
| Text of statute as originally enacted | |
The act was further continued, as amended, until 5 July 1818 by the Restriction on Cash Payments Act 1816 (56 Geo. 3. c. 28).
| Act of Parliament | |
 | |
| Long title | An act for further continuing, until the Fifth Day of July One thousand eight hundred and eighteen, an Act of the Forty fourth Year of His present Majesty, to continue the Restrictions contained in the several Acts of His present Majesty, on Payments of Cash by the Bank of England. |
|---|---|
| Citation | 56 Geo. 3. c. 28 |
| Territorial extent | United Kingdom |
| Dates | |
| Royal assent | 21 May 1816 |
| Commencement | 21 May 1816[i] |
| Repealed | 5 August 1873 |
| Other legislation | |
| Amends | Restriction on Cash Payments Act 1803 |
| Repealed by | Statute Law Revision Act 1873 |
| Relates to |
|
Status: Repealed | |
| Text of statute as originally enacted | |
The act was further continued, as amended, until 5 July 1819 by the Restriction on Cash Payments Act 1818 (58 Geo. 3. c. 37).
| Act of Parliament | |
| | |
| Long title | An Act for further continuing, until the Fifth Day of July One thousand eight hundred and nineteen, an Act of the Forty fourth Year of His present Majesty, to continue the Restrictions, contained in several Acts of His present Majesty, on Payments of Cash by the Bank of England. |
|---|---|
| Citation | 58 Geo. 3. c. 37 |
| Territorial extent | United Kingdom |
| Dates | |
| Royal assent | 28 May 1818 |
| Commencement | 28 May 1818[j] |
| Repealed | 5 August 1873 |
| Other legislation | |
| Amends | Restriction on Cash Payments Act 1803 |
| Repealed by | Statute Law Revision Act 1873 |
| Relates to |
|
Status: Repealed | |
| Text of statute as originally enacted | |
The act was further continued, as amended, until the end of the present session of parliament by the Restriction on Cash Payments Act 1819 (59 Geo. 3. c. 23).
| Act of Parliament | |
| | |
| Long title | An Act to restrain, until the End of the present Session of Parliament, the Governor and Company of the Bank of England from making Payments in Cash under certain Notices given by them for that Purpose. |
|---|---|
| Citation | 59 Geo. 3. c. 23 |
| Territorial extent | United Kingdom |
| Dates | |
| Royal assent | 6 April 1819 |
| Commencement | 6 April 1819[k] |
| Repealed | 5 August 1873 |
| Other legislation | |
| Amends | Restriction on Cash Payments Act 1803 |
| Amended by | Resumption of Cash Payments, etc. Act 1819 |
| Repealed by | Statute Law Revision Act 1873 |
| Relates to |
|
Status: Repealed | |
| Text of statute as originally enacted | |
The whole act was repealed by section 1 of, and the schedule to, the Statute Law Revision Act 1871 (34 & 35 Vict. c. 116).
See also
edit
Notes
edit- ^ Start of session.
- ^ Start of session.
- ^ The Acts of Parliament (Commencement) Act 1793.
- ^ The Acts of Parliament (Commencement) Act 1793.
- ^ The Acts of Parliament (Commencement) Act 1793.
- ^ The Acts of Parliament (Commencement) Act 1793.
- ^ The Acts of Parliament (Commencement) Act 1793.
- ^ The Acts of Parliament (Commencement) Act 1793.
- ^ The Acts of Parliament (Commencement) Act 1793.
- ^ The Acts of Parliament (Commencement) Act 1793.
- ^ The Acts of Parliament (Commencement) Act 1793.
References
edit- ^ "Bank Restriction Act of 1797". Investopedia. Retrieved 10 March 2007.
- ^ "Mark Crosby, "The Bank Restriction Act (1797) and Banknote Forgery" | BRANCH". Retrieved 14 October 2022.
- ^ a b "WAR FINANCE IN ENGLAND.; The Bank Restriction Act of 1797--Suspension of Specie Payments for Twenty-four Years--How to Prevent Depreciation of the Currency". The New York Times. 27 January 1862. ISSN 0362-4331. Retrieved 14 October 2022.
- ^ "The Bank of England Restriction. 1797-1821". The North American Review. 105 (217): 393–434. 1867. ISSN 0029-2397. JSTOR 25108102.
- ^ "England". University of Pennsylvania. Archived from the original on 11 February 2007. Retrieved 10 March 2007.
- ^ "Mark Crosby, "The Bank Restriction Act (1797) and Banknote Forgery" | BRANCH". Retrieved 14 October 2022.
Further reading
edit- Patrick K O'Brien, Nuno Palma, Danger to the Old Lady of Threadneedle Street? The Bank Restriction Act and the regime shift to paper money, 1797–1821, European Review of Economic History