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Chap. which was extended, by a convention in December 1818, x' from nine to eighteen months.1 It was not surprising

i 'si9- that such a financial crisis should have taken place on the § 76. '*L Continent at this time, for the loans negotiated by its different governments in the course of 1817 and 1818 amounted to the enormous sum of £38,600,000,* of which £27,700,000 was on account of France. At least threefourths of these loans were undertaken in London and Amsterdam by Messrs Baring and Hope; and as the whole sums they had to pay up under them required to be remitted in specie, the drain which in consequence set in upon the Bank of England was so severe»that its accumulated treasure, which in October 1817 had been »Tookc,on £11,914,000, and in February 1818, £10,055,460, had 51-96.'' sunk, on 31st August 1818, to £6,363,160, and on 27th February 1819 was only £4,184,000.2

It was the suspension of cash payments by the Bank Great pros- of England in 1817 and 1818, -which, as already menEngiand in tioned, alone enabled this country to prosper during this ami spring8 terrible crisis, which was acting with such severity upon of 1819, other states, and occasioning so fearful a drain on its own

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sionofits metallic resources. But that suspension had not only, currency. ^ providing it with an adequate internal currency, averted the catastrophe so general at that time on the Continent, but had given it at the very same time an extraordinary degree of prosperity. "In consequence," says Mr Tooke, "of the great fall in the French funds, combined with the great and sudden fall of the prices of grain on the Continent, extensive failures occurred in Paris,

* Loans Raised In Europe In 1817 And 1818.

France, ...... .£27,700,000

Prussia, ...... 2,800,000

Austria, ...... 3,600,000

Russia, ...... 4,500,000

£38,600,000

—Appendix to Lords' Com. on Cash Payments, 1819, p. 424.

Marseilles, and other parts of France, as also in Holland Chap. and in Hamburg, in 1818, before any indication had ap- x' peared of discredit, or of any pressure on the money 1819market of this country. A loan had also been negotiated in 1818 for the Russian government, the payments for a large proportion of which were made in bullion exported from this country, thus adding greatly to the pressure on the money market, and at the same time exhibiting the phenomenon of prices falling rapidly on the continent of Europe—much more rapidly than here—while bullion was flowing there from hence."1 It is not surprising it was ,Tooke, ii. so; for the Continental states, during 1817 and 1818, 95' had no paper adequate to sustain their industry during the scarcity of money, owing to the immense pressure on their money market, whereas England enjoyed in the highest degree that advantage. The paper circulation of Great Britain had greatly increased during the drain on the precious metals, and compensated for their want, and in the last of these years had reached £48,000,000 in England alone, a higher amount than in any year of the war. Hence the prosperity in this country which coexisted with the most serious pressure and distress on the Continent.*

The consequences of this abundant supply of the currency in Great Britain had been an extraordinary degree Great inu-rof prosperity to the country in the last months of 1818 and first of 1819, accompanied by a corresponding andcountrya too sudden start in speculations of every sort. It was so great, and the change so rapid, that it was made the

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Chap, subject of special congratulation and notice in the speech x' from the throne.* Statistical facts demonstrate how 1819. great a start uacl at the same time taken place in all our principal articles of imports and manufactures, and in the general rise of prices of all sorts. The former had more than doubled, the latter advanced fully 50 per ccnt.f The unavoidable consequence was, that prices were high, but not unreasonably so: they had not advanced so as to afford grounds to fear a reaction. Wheat, on an average of 1819, was at 72s., while during the scarcity of 1817 it had been 116s., and at the lowest point of the great fall of spring 1816, 52s. And that the imports, how great and increased soever, as compared with the distressed years which had preceded it, were not excessive, or running into dangerous speculation, is decisively proved by the facts that the imports and exports of Great Britain in 1818, as compared to its population and revenue, were not half what they have since become, not only without risk of collapse, but with the most general and admitted prosperity. In a word, the British empire, in the whole of 1818 and commencement of 1819, was beginning to taste the blessed fruits of peace and prosperity; and industry, vivified and supported by a currency at once adequate and duly limited, was flourishing in all its

* "The Prince-Regent has tho greatest pleasure in being able to inform you that tho trade, commerce, and manufactures of the country aro in a most flourishing condition. The favourable change which has so rapidly taken placo in tho internal circumstances of tho United Kingdom, affords tho strongest proof of the solidity of its resources. To cultivate and improve the advantages of our present situation will be the object of your deliberations."—PrixceRegent's Speech, Jan. 21, 1819 ; Parliamentary Debatet, xxxix. 21.

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branches, and daily discovering new channels of profit Chap. and enterprise, at the very time when the scarcity of x" money on the Continent was involving all classes in 1819l unheard-of disasters.*

But these flattering prospects were of short duration, and Great Britain was soon doomed to experience, in all Disastrous its bitterness, the disastrous effects of an ill judged and onhTMcu?-n worse timed contraction of the currency. At the momentrency' when the annual supplies of the precious metals for the use of the globe had been reduced, by the South American revolution, to a fourth of their former amount—when the coin annually issued from the English mint had in consequence sunk to only £1,500,000 a-yearf—when the drains of gold on the Bank, to meet the gigantic loans contracted for in this country for the Continental powers, and pay for the immense importations of the year, had reduced the treasure in the Bank from £12,000,000 to £3,500,000, and when the large mercantile transactions recently entered into in this country, and the general prosperity and activity which prevailed, imperatively required, instead of a contraction, a great increase of the currency, Parliament, without one dissenting voice, passed an act, requiring the Bank of England, at no distant period,1 to w. § 711.' resume cash payments, thereby rendering the currency

* This opinion was strongly expressed by the most intelligent persons at the time. "Both trade and manufactures aro in a flourishing condition, and likely to improve still further. There appears to be little /peculation beyond tht regular demand* of the different markets, men without capital finding it almost impossible to'procure credit; so that there is now no disposition to force a trade, and no injurious competition to procure ordors, and consequently wages are fair and reasonable."—Lord Sheffield to Lord Sidmouth, 17th Dec. 1818 ; Sidmouth't Life, iii. 242.

t Monet Coined And Issued At The Mint.

1817, ..... £6,771,595

1818, ..... 3,488,652

1819, 1,270,817

1820, 1,787,233

1821, 7,954,444

Porter's Pari. Tablet. Alison's Europe, chap, xcvi., Appendix.

Chap. dependent on the retention of gold—the very thing

1_ which, in the circumstances of the country, could not

1819- he retained*

The effects of this extraordinary piece of legislation its effects were soon apparent. The industry of the nation was i,s5**.Bank speedily congealed, as a flowing stream is by the severity of an arctic winter. The alarm became universal— as widespread as confidence and activity had recently been. The country bankers, who had advanced largely on the stocks of goods imported, refused to continue their support to their customers, and they were in consequence forced to bring their stock into the market. Prices in consequence rapidly fell—that of cotton, in particular, sunk in the space of three months to half its former level. The country bankers' circulation was contracted by no less than five millions sterling; the entire circulation of England fell from £48,278,000 in 1818, to £40,928,000 in 1820; and in the succeeding year it sunk as low as £34,145,000. Nothing in this disastrous contraction of the currency, at a period when its expansion was so loudly called for, sustained the national industry, or averted a general bankruptcy, but the fortunate circumstance that the obligation on the Bank to pay in specie was, by the Act of 1819, only to

* Lord Eldon, however, hod strongly opposed it in the Cabinet, and wished the project postponed for two years.—Twiss's Life of Lord Eldon, ii. 329. Mr Ward (Lord Dudley) said "Those that are near the scene of action are not less surprised than you are at the turn the Bullion question has taken. Canning says it is the greatest wonder he has witnessed in the political world."—Earl of Dudlev's Lettert, 222. The truth is, Ministers at the period were very weak, and had sustained several defeats in the House of Commons, particularly on the Criminal Law, and they did not venture to face the Opposition on the Bullion question. Lord Liverpool, at the period it was tirst broached in the Cabinet, wrote to Lord Eldon in allusion to their difference of opinion on the subject: "After the defeats we have already experienced during this session, our remaining in office is a positive evil. It confounds nil the ideas of government in the minds of men. It disgraces us personally, and renders us loss capable every day of being of any real service to the country now. If, therefore, things are to remain as they are, I am quite clear that there is no advantage in any way in our being the persons to carry on the public service."—Lord Liverpool to Lord Eldon, May 10, 1819; Eldon'a Lift, ii. 329.

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