Between 3 May 1797 and 1 May 1821, the Bank of England suspended specie payments. The Bank’s bullion reserve supported the value of its notes and bills, which were convertible upon request to specie (gold and silver coins). The Bank of England resumed specie payments on 1 May 1821. Image: George Cruikshank, Bank Restriction Note (1819). Used with permission.

The Bank Restriction Act codified the suspension of specie payments for a limited period and authorized the use of Bank of England notes as de facto currency (37 Geo III c. 45). The strict time frame of the Act bolstered public confidence in Bank of England notes by indicating that they would be redeemable for specie payments at a designated point in the foreseeable future. However, despite the Bank of England’s bullion reserve increasing as gold flowed into its coffers, thus enabling specie payments to be made, successive parliaments renewed the Bank Restriction Act annually until 1821. During these twenty-four years, known as the Bank Restriction Period, the Bank of England operated as a wing of the British Government, helping to finance the Napoleonic wars through its bullion reserve and by regulating the issue of credit. The Bank Restriction Act unwittingly encouraged banknote forgery on an unprecedented scale.

Articles

Mark Crosby, “The Bank Restriction Act (1797) and Banknote Forgery”