1 - The Beginning of the Bank Restriction Period

Summary

Chapter 1 discusses the shift in Britain’s paper currency from being backed by the metallic standard to becoming an inconvertible currency. It explains how Britain’s war against Revolutionary France disrupted the nation’s fiscal and monetary system, leading to the provincial financial panics that preceded the financial crisis of 1797. This chapter highlights the declaration movement, a nationwide phenomenon where people declared their acceptance of paper currency as money. The movement was not limited to the metropolis and English financial centres, but also occurred across English provinces, Scotland and Ireland. This chapter examines the participants of the movement and argues that its success was due to its inclusive nature, which united people despite their geographical, political and economic differences. It concludes that the declaration movement represented the currency voluntarism that Edmund Burke identified as a key aspect of Britain’s democratic monetary system. This belief in the communal and voluntary nature of currency circulation facilitated the transition to the new regime of inconvertible paper money.