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bankers in England as 1825-6. The number of bankers who became bankrupt at the former period was even greater than at the latter, at least up to the period when the return was made.*

Capital applied to war purposes was set idle by the termination of the war. The continuing defalcation in the supply of gold and silver from the mines continued to raise the exchangeable value of money, whereby so much less of capital and currency became necessary for the purposes of industry; but this consequence of a rise in the exchangeable value of money was not ad

* The number of bankers in England who became bank

rupt in

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The numbers in 1815–16 are taken from the Appendix to the Lords' Report, 1819, p. 426. The numbers in 1825–6 are taken from vol. xxii. of the Sessional Papers of the House of Commons, for 1826, p. 6.; which, however, gave only the return down to the end of February, 1826.

Scotland evinced the superiority of her banking establishments at both periods. None of them failed in 1825–6; and the only one that failed in 1815–16 was the Falkirk Union Banking Company, a company of little note, the whole of whose debts proved amounted to no more than 51,009). 5s. 8d., of which 45l. per cent had been paid at the period of the return. (Appendix to Report of Small Note Committee, 1826, No.5.)

CHAP. VI.

CAUSES OF REVULSION.

43

verted to, and the Bank continued to issue as usual. These were the causes of the revulsion in 1815-16, which induced mercantile men to embark largely in purchases of colonial produce and other commodities, for which it was expected there would have been a great demand upon the Continent from the return of peace. But depression of price having come upon all commodities, from the continuing rise in the exchangeable value of money, distress was experienced upon the Continent as well as here; and such expectations having been disappointed, those who had entertained them were not able to stand their ground, and involved with them the bankers who had discounted their bills of exchange.

Similar causes produced the revulsion of 1825-6. We had the most abundant harvests ever known in 1820 and in 1822. The consequence was, that we imported of foreign corn, in 1821, only 257,654 quarters; and in 1822, no more than 125,804 quarters. The importation in 1823 was brought down even to 53,641 quarters; and in 1824 it reached only 610,037 quarters.

But in 1819 we had imported 1,707,510 quarters, and in 1820, 1,341,850 quarters. The capitals required for these large

*

* Parl. Paper, 1832, No. 426.

importations, thus rendered useless, in 1821, 1822, 1823, and 1824, run riot in quest of employment in 1825, when the defalcation in the supply of gold and silver from the mines still continued, without a corresponding diminution in the issue of bank notes.* To this cause of rise in the exchangeable value of money was added the further cause arising from the cheapness of

* When these sheets went to press, no account had appeared of the issues of the Bank in the last week of February in the present year ; but it is understood not much to have exceeded 17,000,000l. If this be so, the Bank has pronounced its own condemnation.

I am no foeman to the Bank; but I wish to render it useful, and to prevent it from continuing to be mischievous to the country, and to make it more beneficial withal to its own proprietors. I have elsewhere said, “ There should be “ but one receiver and one payer, with whom the responsi“bility of every payment should rest. Upon this principle, " the Exchequer should merge in the Treasury; which should “ receive such additional assistance from officers in the Ex“chequer capable of active service, and such others, as the “ new and increasing duties of this superintending esta“blishment require. All public monies should be paid into “ the Bank of England, upon accounts to be opened under “ the direction of the Lords of the Treasury, subject to their “ order, and that of the persons authorised by them (with a

proper check and control), to operate upon such accounts. “ The Bank of England should be to the state what a private “ banker is to an individual ; and the same certainty, regu

larity, and simplicity of account should be introduced into

every department of the public service that is observed in “ the well managed concerns of an active and prudent indi“ vidual." (Revision of our Fiscal Code, 1828.)

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CHAP. VI.

IMPOLICY OF INTERFERENCE.

45

abundance, and the continuance of the issue of bank notes as usual, in ignorance of all these causes which rendered less currency necessary. All sorts of schemes were in consequence resorted to, in order to employ this excess of capital and currency. Many of those who embarked in them became involved ; and bankers who had discounted their paper were involved with them.

Capital and activity will always seek employment; but they are not always guided by knowledge and skill, which the legislature cannot impart, even if it possessed both; nor are they always exerted under favourable circumstances, which the legislature can still less command, though, unfortunately for industry, it is too apt to make the attempt. In periods of prosperity, however, the exuberance of capital and activity is termed enterprise; in periods of revulsion it is termed speculation : but the principle is still the same.

The consequences of interference may teach us the wisdom of non-interference with the natural course of things. Whenever we attempt to regulate matters which an Almighty Providence has so constituted as to regulate themselves, results never fail to follow altogether different from what we expected, and oftentimes contrary to what we intended.

The revulsion in 1825-6 did not differ from

the revulsion of 1815-16, nor much from that of 1810-11, or even from that of 1793-4. But “ the principal source of it was said to be found “ in the rash spirit of speculation which had per“ vaded the country for some time, supported, fos

tered, and encouraged by the country banks *,” who, in truth, were the victims, not the causes, of it: and, at all events, small notes, which have been assimilated, but have no more resemblance to coin than bills of exchange have to commodities, had no share in producing it; nor could the prohibition of issuing them improve the paper of bankers, or enable the country parts of England to sustain a currency of gold.

Under a contrary impression, however, the minister violated the law, by commanding the Commissioners of Stamps to suffer no more small notes to be stamped: and the legislature was prevailed upon to cause them to be discontinued after April, 1829. +

The minister was not less violent against the exclusive privilege of the Bank, the removal of which certainly would have improved the paper of bankers; but here he was not equally successful. The Bank would only consent to

* Letter of the First Lord of the Treasury, and the Chancellor of the Exchequer, in January 1826, vol. xix. Finance Accounts.

+ 7 Geo. 4. c. 6.

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