PAPER MONEY, THE NATION, AND THE SUSPENSION OF CASH PAYMENTS IN 1797

Abstract

AbstractThis article considers British society's response to the suspension of cash payments in February 1797. Although this event marked the beginning of the so-called Bank Restriction Period, during which the Bank of England's notes were inconvertible, there have been no detailed studies on the social and political situation surrounding the suspension. This article provides an in-depth examination of the events leading up to and immediately following the suspension. It questions existing accounts of the suspension as a smooth transition into the nationwide use of paper money and describes the complex process that came into play to avert a nationwide financial collapse. The decision to suspend the Bank's cash payments stemmed from deep-rooted financial instability, exacerbated by recurrent invasion scares that heightened after the French attempt on Bantry Bay, Ireland, in December 1796. Under such circumstances, national support for drastic financial measures could not be taken for granted. The article demonstrates that the declaration movement, which was a form of consolidated and visualized trust in the financial system, played a crucial role in the 1797 suspension crisis.