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CHAP. subject of special congratulation and notice in the speech
from the throne.* Statistical facts demonstrate how great a start bad 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 cent.t 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 the greatest pleasure in being able to inform you that the trade, commerce, and manufactures of the country are in a most flourishing condition. The favourable change which has so rapidly taken place in the internal circumstances of the United Kingdom, affords the 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."-PRINCEREGENT'S Speech, Jan. 21, 1819 ; Parliamentary Debates, xxxix. 21.
+ IMPORTS INTO GREAT BRITAIN.
Wool. Cotton. Manuf. Tallow. Linseed. Colonial
Tons. Tons. Qrs. Produce. 1816 1,137,922 8,117,864 93,920,055 18,473 20,858) 70,892 £26,374,920 1817 1,177,693 14,715,843 124,912,968 22,863 19,298 162,759 29,916,320
1818 2,101,618 26,405,486 177,282, 158 33,020 27,149 237,141 35,819,798 - TOOKE On Prices, ii. 61, 62.
branches, and daily discovering new channels of profit CHAP. and enterprise, at the very time when the scarcity of money on the Continent was involving all classes in 1819. 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 of the curworse timed contraction of the currency. At the moment rency. 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-yeart-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, re-, quiring the Bank of England, at no distant period,1 to iv. 3 78.“ resume cash payments, thereby rendering the currency
1 Ante, c.
* This opinion was strongly expressed by the most intelligent persons at the time. “ Both trade and manufactures are in a flourishing condition, and likely to improve still further. There appears to be little speculation beyond the regular demands 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 orders, and consequently wages are fair and reasonable."--Lord SHEFFIELD to Lord SIDMOUTH, 17th Dec. 1818 ; Sidmouth's Life, iii. 242.
+ MONEY COINED AND ISSUED AT THE MINT. 1817,
7,954,444 -PORTER'S Parl. Tables. Alison's Europe, chap. xcvi., Appendix.
1810. Which, in the the retent
on the Bank issues.
CHAP. dependent on the retention of gold- the very thing
– which, in the circumstances of the country, could not 9. be retained.*
The effects of this extraordinary piece of legislation Its effects were soon apparent. The industry of the nation was
speedily congealed, as a flowing stream is by the severity of an arctic winter. The alarm became universalas 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, had 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 Dudley's Letters, 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 first 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 all the ideas of government in the minds of men. It disgraces us personally, and renders us less 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's Life, ii. 329.
commence on 1st February 1820;* and this enabled that CHAP. establishment, in the preceding autumn, when the crash – began, not only not to contract its issues, but even in a 10 slight degree to increase them.t
The effects of this sudden and prodigious contraction of the currency were soon apparent, and they rendered and on the next three years a period of ceaseless distress and all suffering in the British islands. The accommodation dities. granted by bankers diminished so much, in consequence of the obligation laid upon them of paying in specie when specie was not to be got, that the paper under discount at the Bank of England, which in 1810 had been £23,000,000, and in 1815 not less than £20,660,000, sunk in 1820 to £4,672,000, and in 1821 to £2,676,000! | The effect upon prices was not less
rices of all commo
-Parliamentary Papers quoted in Alison's Europe, chap. xcvi. ; Appendix to TOOKE On Prices, ii. 129.
Mr Sedgewick, of the Stamp Office, estimates the contraction of country bank-notes as follows :1819,
8,798,277 - TOOKE On Prices, ii. 128. + CIRCULATION OF THE BANK OF ENGLAND.
Bullion. 27th February 1819, . £25,126,970
£4,184 620 31st August 1819,
3,595,360 -TOOKE On Prices, ii. 96.
I PAPER UNDER DISCOUNT AT THE BANK OF ENGLAND.
2,662,000 - TOOKE On Prices, ii. 381-383.
CHAP. immediate or appalling. They sunk in general, within
six months, to half their former amount, and remained at that low level for the next three years.* Imports sunk from nearly £36,000,000 in 1818, to £29,769,000 in 1821 ; exports from £45,000,000 in the former year, to £35,000,000 in the latter.t Distress was universal in the latter months of the year 1819, and that distrust and discouragement was felt in all branches of industry, which is at once the forerunner and the cause of disaster. The Three per Cents, which had been at 79 in January, gradually fell, after the Bank Restriction Act passed, to
65 in December ; and the bankruptcies, which had been 1 Ann. Reg. 1819, 301, 86 in January, rose in May to 178: the total in the year 306; App to Chron. was 1499, being an increase of 531 over the preceding
The effects of this panic, and consequent distress, especially in the manufacturing districts, speedily appeared ;
* PRICES OF THE UNDERMENTIONED ARTICLES IN THE YEAR, AND WHEAT IN
DECEMBER OF EACH YEAR.
Year. Wheat, Cotton, Iron, Rice, silk, Tea, Wool, Sugar, Beera | per qr. per lb. per ton. per ton. per Ib. per Ib. per lb. per cwt.
— TOOKE On Prices, ii. 390, 397, 420.
£45,180,150 £35,845,340 1819,
36,176,897 29,432,376 - Alison's Europe, chap. xcvi., Appendix.
# Mr Tooke, whose industry and talents entitle his opinions to the highest respect, has laboured hard to show that the contraction of the currency in 1819 had no connection with the distress of that and the three following years, but that it is entirely to be ascribed to overtrading; and in this opinion he is followed by Miss Martineau. With wbat success their arguments are founded may be judged of by the facts above stated. Mr Tooke's arguments are based upon an idea which every one acquainted with the real working of commerce knows to be fallacious—that the effects of monetary changes, if real,