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stitutional currency, an event which round and pivoted upon the paper systhe present state of things will shortly tem of England ;-a system which, bring about.

vicious in itself, was originated in a The decennial portion of the nine- period of the world when the comteenth century, which expired with merce of mankind was not only very the year 1840, was marked with the much inferior to what it now is, but mosi violent and extraordinary changes was restricted and confined to compain the financial and commercial world, ratively small circles, by slowness of chiefly affecting the three great nations intercourse, by the barbarous restricof France, the United States, and the tions imposed upon trade, and, above Empire of Great Britain. The period all, by the almost continual hostilities alluded to commenced under circum- of the leading nations against each stances calculated to produce the hap- other. This system, which, on the respiest effects in promoting the commer- toration of peace in 1815, was revived cial and social intercourse of the na- and placed upon as good footing as tions of the earth, on a basis productive possible, was yet so precarious in its of mutual benefit. These circum- nature that Mr. Huskisson stated at the stances, taking their rise the general time, that “the government did not cessation of hostilities in 1815, had de- contemplate the possibility of the Bank veloped the commercial principle in continuing to pay specie during a conlegislation, which gained strength in a linuous large import of foreign corn. period of fifteen years of profound Such was the uncertain foundation for peace, until in 1830 it exercised a pow. the extended operations of trade under erful influence upon the governments the new order of things. This Bank of the respective nations. No country was the centre of that system whose had made such rapid advances as prosperity was speculation and extraFrance in the prosecution of the peace- vagance, and whose reverse was ruin ful arts. Its results were seen in the and want. Knowing no medium, it revolution of 1830, which placed the converted England and the commercial "citizen king" upon the throne, and world into a species of stock exchange, paved the way to liberal principles in where gambling establishes its empire commercial legislation. In the United with all its train of factitious emotions States a revolution of a less violent and excitements, and sudden rises and character had taken place, and the de- falls. mocratic ascendency in the Federal During the period subsequent to government had justly began to exert the great revulsion of 1825, the its influence upon commercial regula- operations of the Bank in England, tions. The effect was speedily seen in like that of the National Bank in the the enactment of the compromíse law, United States, continued remarkably providing for a gradual return to unre. steady. Undisturbed by violent fluctustricted trade from the high protective ations in the movements of the banks, tariff of 1828. In England a similar the commercial classes in both counchange had taken place, and the party tries were unusually prosperous. In avowing the most liberal doctrines on 1830 the violent change in the French the subject of commercial intercourse government caused a momentary loss had come into power. Thus it hap of confidence and stagnation in busipened, that in the three leading nations ness, which exhibited itself in an exof the earth, the progress of events had cess of the currency of England as placed in power, simultaneously, the compared with that of France. parties in each most inclined to favor consequence of that derangement was national intercourse on the broad basis a continued diminution of the bullion of mutual advantage. It was natural held by the Bank of England from to suppose that such a combination of July, 1830, to the spring of 1832, when powerful leading causes should have the gradual restoration of credit on the produced effects extraordinary in them- continent gave a favorable lurn to the selves and of the greatest consequences exchanges, which continued until 1833, to commerce at large. These results when the Bank held £11,000,000 in bulwere only to be dreaded from the fact lion. At the time that the exchanges that the combined movement of all became favorable to England began three countries in connection with that the general extension of paper credits of the commercial world, revolved in all these countries. After the great


revulsion of 1825 in England, the Bank banks were established, and one hunof England, at the suggestion of Lord dred and thirteen private banks were Liverpool, then at the head of the gov- turned into joint stock concerns. In ernment, established branches in differ- France there were many new banks ent parts of England, as it was said, to established, principally under the incontrol the issues of the private banks. fluence of Lafitte, and the Bank of At the same time provision was made France established seven branches in by Parliament for the establishment of different departments. In the United joint stock banks. During the season States the banking mania was still of steady prosperity which succeeded, more apparent, and over three hundred up to 1832, however, that liberty was new banks were established. The not much availed of, not more than progress of these bank credits in the twenty banks having been established. United States and England, where In 1832, however, seven banks went they were carried to the greatest into operation, and up to 1837, one height, may be seen in the following hundred and two new joint stock table:


1828 1833 1834 1835 1836 1837 1838 1839 1840

Bank of England


Joint Stock Banks.


U.S. Bank Loans Banks estan ished.

Loans, Banks in C.S. 6 133,682,905 200,451,214 47 61,695,913 57 54,911,461 324,119,499 68 51,808,739 365,163,834 123 59,232,445 457,506,080 130 57,393,709 525,115,702 131 45,256,571 485,631,687 108 41,618,637 492,278,015 108 36,829,593 462,896,523

Here was an immense inflation of the The rise in England is exhibited in the currency of the two countries. In following table, which comprises the England, the National Bank expanded price of exchange on Paris, and on in eight years, from 1828 to 1836, fifty Hamburg, and the comparative price of per cent., or near $60,000,000. The wheat in England as compared with National Bank of the United States, in fifty other articles promiscuously taken. the five years from 1828 to 1833, ex. For instance in 1833, the price of wheat tended itself $28,000,000, and other and the other articles are considered banks pushed" out their loans $257,- equal, and are represented by unity, 1. 000,000, from 1833 to 1836. The ef- The variation from that figure shows fect of this, was a gradual and im- the progressive rise or fall per cent. in mense rise of prices in both countries. each, as follows:

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This table gives a singular fluctua- January, 1833, to August, 1836, to the tion in exchanges and a gradual rise in enormous extent of 34 per cent. The the prices of fifty leading articles, from figures show that, simultaneously with

this rise in prices, exchange on the paid for by bills drawn on American accontinent fell 2 per cent., and that the count against open credits in London. bank lost $25,000,000 in specie, which The imports into the United States went to the continent in payment for were accelerated by a similar increase goods imported directly into England, of prices arising from the same causes, and also into the United States, and as seen in the following table.

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Hides, Rio
Copper, Pig
English, Annealed Iron
Tea, Hyson
Coffee, Cuba
Wool, Buenos Ayres
Indigo, Bengal
Cotton Bagging, Hemp
Brandy, Otard
Molasses, Havana
Sugar, Cuba Brown

Salt, Turks Island
Raisins, Casks
Hemp, Russia
Aggregate rise


14 10 13 15 14 13 15! 141 14 15 13 16 16 16 17 21 17

18 18

17] 171 41 40 40 42 60 40 38 40

34 28 71 70 70 70 96 82 80 82 72 61 57 91 71 64 50 67 75 75 62 65 71 75 13 123 11 14 12 11 10 11


8 10 10 12 15 9 10 10

9 10 1,35 1,45 1,40 1,33 1,60 1,50 2,00 2,20 1,62 1,40 1,44 15 17 16 22

21 23 18 18 17 21 1,62 1,55 1,30 1,62 2,00 1,70 1,62 1,70 1,00 31 1,75 27 33 23 32 37 32 34 28 1,65 1,55 15 8 8 8 9 9 9 8 8

6 10 11 11 12 13 12 11} 12

64 81 49 47 33

36 42 41
50 40 8

871 28 8,00 5,75 3,50 7,50 8,00 3,125,25 4,12 28 4,12 2,30 2,05 1,60 1,90 1,97 2,25 2,15 2,30 3,50 3,75 2,12 6,25 5,50 5,25 5,50 9,50 8,75 8,50 6,25 2,05 2,35 4,50 1,14 1,10 1,05 1,25 2,00 1,75 2,00 1,32 20 6,25 90


4,50 1,30

22 1,00

7 8



30 29

Showing an aggregate advance of 59 each country caused by this rise in prices per cent., in the years 1835 to 1836, up to 1837, is seen in the following table and a nett advance of 49 per cent., of the exports of each, with the customs from 1834 to 1839.

revenue of each for the period under The movement in the commerce of consideration.


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Such was the extension of trade by growth of grain. The fictitious prosperithe three leading nations of the earth, ty brougbt about by these means had for the period embraced in the table. rapidly increased the consumers of The vast increase of bank credits, the corn, and reduced the number of proconsequent inflation of prices, promot- ducers, both in England and the Uniing such extraordinary movements in ted States; a circumstance which commerce, all depended upon the winds greatly increased the danger to be apand the weather of England, as they prehended from a failure of the crops were favorable or otherwise, to the in England, inasmuch as it would VOL. XI.NO. LIII.


make the deficiency to be supplied from all three countries, until the failure of
abroad greater. However, from 1832 the harvest of England in 1833.
to 1838, no deficiency occurred, and in The following table will show the
all that time the bubble rolled onwards. import of wheat into England, and
Although a revulsion occurred in the the import and export of grain into
United States, in 1836-7, nothing and from France and the United States,
transpired to shake the commerce of in each year.

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Imported Exported Imported Exported
Bushels. Bushels Bushels.


Bushels 1829 13,806,268 5,771,428 628,301

3,760,503 1830 13,306,104 6,614,285 658,371

5,246,500 1831 18,479,760 5,700,000 1,142,892

8,418,500 1832 3,757,216 13,528,571 1,471,476

4,114,570 1833 11,078,000 2,380,520 642,857 1,014,321

4,162,500 1834 8,598,000 1,410,568 528,571 1,059,450 1,225 4,176,760 1835 6,283,000 535,240 525,784 4,114,273 278,769 3,896,980 1836 7,076,000 1,933,944 4,571,428 3,913,574 583,898 2,527,000 1837 4,287,000 4,479,536 2,257,870 2,117,542 3,921,259 1,593,595 1838 10,126,000 10,975,656 2,284,326 3,098,000 894,536 2,440,805 1839 2,522,000 23,004,810 6,714,296 4,814,782 32,884 4,615,755 1840 4,318,000 19,462,120 7,785,717 2,779,546 593 9,487,505 1841 4,290,000 20,968,000

632 7,579,085 1842 8,883,000 19,700,338

In this table, in order the more easily States in that year, according to the to compare results, we have reduced late census. The result is evident in the French litres and the English quar- the decrease of bullion held by the ters to bushels, and given the equiva- bank, which fell 10 £2,522,000 during lent in bushels of wheat for the Ame- the year 1839, and the stoppage of rican flour exported. This movement the bank in the fall of that year was of wheat, then, was the key of not only averted only by the loan of £4,000,000 all the commercial movements of obtained from the Bank of France. nearly the whole world, but on it de- Since then, until the present year, pended the wealth and prosperity of England has not had a sufficient harvest. every man in Great Britain and the The consequence has been that the United States. In the years of full Bank of England with the utmost exharvest in England, viz., from 1831 to ertion, could scarcely retain its bullion, 1838, the paper bubble in both hemi- even at the expense of the trade of the spheres was immensely inflated. The country. The large purchases of corn concussion which took place in this from abroad had enriched the continent, country, consequent upon the with- and furnished the means more actively drawal of the London credits in 1836–7, to compete with the manufactures of caused by the alarm of the Bank of England, and therefore to reduce the England, growing out of the immense demand for them. Thus, simultanediminution of its bullion, which, as ously with high rates for food, the deseen in the table, fell from £11,000,000, mand for labor was decreased, unul in 1833 to about £4,287,000 in 1837, the manufacturing districts of England would not have been serious had the were reduced to insurrection and anarharvest in the following year continued chy. The whole country is enduring good. For we find in the table that the the penalties of its own excesses. It is bank succeeded, by cutting off Ameri- infatuated with the idea that it is to can credits, in getting back its bullion manufacture for all the world, and, in the following year, when it again with glutted markets and prices for reached £10,126,000. The harvest was goods too low to pay, it continues to then, however, deficient, and 23,000,000 grind down the wages of its workmen, bushels of wheat were imported—an and to accelerate the ceaseless whirl of enormous quantity, equal to one fourth its machines, whose motive power are of the whole produce of the United paper banks and joint-stock compa

nies. Under the stimulus of their in- promised at one fourth that valuation, stitution in 1835-6, it was estimated or £25,000. It is recorded in the Lonthat the capital employed in manufac- don papers, as an instance of the value turing machinery in Lancashire was of machinery, that the stock in trade doubled, and a similar result was pro- of a hand-loom weaver, which cost duced in all other sections. The £20, was sold for 8s. for firewood. The whirlwind of a paper revulsion has decay of trade in the great iron district now passed over it

, and that descrip- of South Staffordshire is represented in tion of property is comparatively va- the following figures, showing the lueless. Cotton-spinning establish- number of furnaces in blast at different ments which were valued at £100,000, periods :or $500,000, have recently been com



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In 1839 there were in blast 120 furnaces, yielding pig iron, tons 8,400
January 1842

Sept. 1842

2,240 Sept. 24, 1842 17


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Here was a branch of industry re- here wrought a temporary change in duced to about 12 per cent. of its former the Federal government, and the opmagnitude, throwing hundreds and portunity has been seized upon by the thousands of people out of the means party in power to restore the oppressive of bread, by the compressing power of tariff rates of former years. The the Bank, joined to the scantiness of credit system is, however, so far cripthe harvest and the foreign com- pled by the effects of its own excesses petition in manufactures. In the as to be incapable of a speedy renovaUnited States the same cause has tion. The aggregate real wealth of bankrupted individuals, destroyed a the country is however very great, and great proportion of the banks, and left nothing seems to prevent a return of many of the States indelibly stained trade but faulty legislation. We have with the disgrace of repudiation. In a large surplus of produce which, to be France there had been less paper ex- available, must find its way abroad, pansion, and consequently less depres- and the state of affairs in England is sion. The continent became enriched by such as to lead to the hope that a large the money extracted from the United market will yet be found ihere. It has States and England during the inflation, been an old policy with the governand therefore prepared more successful- ment of England, whenever, by finanly to compete with the latterin future.

cial revulsion, the distresses of the We have seen that the period of ten people have driven them to insuryears--1830 to 1840-commenced un- rection, to call in the assistance of the der the happiest prospects and ended Bank, which, by rendering money artiwith the direst reverse. We have now ficially abundant, gave a temporary entered upon a fresh term with a dif- relief and averted the storm. Neverin ferent order of things. In England, the history of England has its danger although the late ministry professed from this cause been so great, deepliberal principles of trade, they did seated and wide-spread as now, and nothing during the long period of ap- revolution seems to have been averted parent prosperity to change the exist- only by the chance of a good harvest ing regulations. A new ministry are giving the Bank power to make now in power, and have been obliged money lavishly abundant,-a power by the prevailing distress to carry out which she has not been slack in using the principles professed by their oppo- during the past few weeks. The fol. nents, and have made bold strides to- lowing is a table of that which consti. wards free trade by the amelioration of tutes the basis of the currency of Engthe tariff. In the United States the land, viz, the circulation and bullion of reverse has taken place: the distresses the Bank at different periods:

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