and their characters unimpeached for knowledge of business, integrity, and exemplary conduct; yet such were the incidents that characterized the panic of 1836.

....

FOREIGN LOANS.

I have said that, among other causes, the creation of foreign loans in Eng. land will cause a demand for bullion

"There was another panic in 1839, which may be said to have extended it- for export, and, consequently, cause self by a series of fits and convulsions all fluctuations in the quantity and value through the years 1840 and 1841, at which of money, and, in proof of this, I refer to date our commercial system was reduced to the Edinburgh Review, of 1826, which the lowest ebb of distress. The number of gives a table showing in detail the sums banks which stopped or disappeared during advanced by England on loans to Prusthis interval was unusually great, the diffi-sia, Spain, Naples, Denmark, Colomculty of getting money as rigid as ever, bia, Chili, Poyais, Peru, Portugal, and the stagnation of our commerce, the scarcity of good mercantile paper, extreme. Austria, Greece, Buenos Ayres, BraLate in 1840 began the storm which, zil, Mexico, Guatemala, Guadalaxara, continuing to rage all through 1841, and not which, with other advances on French, even as yet [in 1842] blown over, has Russian, and American securities, made swept away, during its protracted and ruin- the sum $522,692,500 advanced by Engous course, an unusual number of banking land, on foreign account, during the establishments. A history of these misfor-eight years, from 1818 to 1825 inclutunes, in their various details, is here out of sive. It is apparent that the advances the question; to trace the separate cases to their source, and detail at length their consequences, would fill a volume, and then, in all probability, leave the subject unexhausted. I had prepared a summary of the losses occasioned by the different failures the private and joint-stock banks during the last two years, but the amount appears so formidably large on the one side and so small on the other, that it would be invidious to publish it."

among

made upon these loans must have created an extraordinary. demand for specie in England, and it is obvious that, as the loss of five and a half millions of dollars, in 1857, by the banks of New York, created results so disastrous, as described by Gibbon, the export of so large an amount to pay off the foreign loans, produced the overwhelming losses, bankruptcies and The cause of these disasters is ex- distress, so forcibly referred to by plained by the eminent banker, Jones Hardcastle and the Edinburgh and Loyd, who, speaking of the crisis of 1840, said:

66

London Quarterly Reviews, and that that monetary crisis was caused by. Against the actual exhaustion of its the fact that the currency of England treasure by a drain through the foreign ex- was convertible into specie, and that changes, the bank, under almost any cir- the demand for specie thus produced, cumstances, has the power of protecting compelled the bank, to use the words herself; but to do this she must produce of Jones Loyd, quoted above, to upon the money market a pressure ruinous

from its suddenness and severity; she must save herself by the destruction of save herself by the destruction of all around all around her."

her."

CHAPTER XIII.

FINANCIAL.

I

GIVE the following from the Lon-works and mines, have scarcely been redon Quarterly, of September, 1832, duced at all, nor can we get them effectually reduced, because the law enforces the payillustrating the effect of ment in full.

CHANGING A PAPER INTO A METALLIC

CURRENCY.

"As a single specimen of the condition of our internal trade, we give the memorial of the iron and coal masters of Shropshire, Staffordshire, and Wales, presented to Earl Grey by a deputation in October last, after being signed by more than three fourths of the trade in those great manufacturing districts:

"We, the undersigned, iron masters and coal masters of the Staffordshire iron and coal districts, think it our duty respectfully to represent to His Majesty's government the following facts:

"3. The prices of the products of our industry having thus fallen within the range of the fixed charges and expenses which the law compels us to discharge, the just and necessary profits of our respective trades have ceased to exist, and in many cases a positive loss attends them.

"4. Under these circumstances, we have long hesitated in determining what line of conduct our interest and our duties require us to adopt. If we should abandon our respective trades, our large and expensive outlays in machinery and erections must be sacrificed at an enormous loss to ourselves, and our honest and meritorious workmen must be thrown, in thousands, upon parishes already too much impoverished by their present burdens to support them; and, if we should continue our present trades, we see nothing but the prospect of increasing distress and certain ruin all around us.

"1. That, for the last five years, ever since what is called the panic of 1825, we have found, with very slight intermissions, a continually increasing depression in the prices of the products of industry, and more particularly in those of pig and bar iron, which have fallen respectively from upward of eight pounds per ton to under "5. In our humble opinion, the great three pounds per ton, and from fifteen cause which has been mainly instrumental pounds per ton to under five pounds per in producing this depression and distress ton. in our respective trades, and among the "'2. Against this alarming and long-con-productive classes of the country generally, tinued depression, we have used every pos- is the attempt to render the rents, taxes, sible effort in our power to make bread. royalties, and other various engagements We have practised all manner of economy, and obligations of the country, convertible, and have had recourse to every possible by law, into gold, at three pounds thirteen improvement in the working of our mines shillings and ten and a half pence per ounce. and manufactories. Our workmen's wages This low and antiquated price of the have in many instances been reduced, and metallic standard of value is no longer such reduction has been attended with, and capable of effecting a just and equitable effected by, very great distress; but the distribution of our products between the royalties, rents, contracts, and other engage- producer and the consumer; it renders ments, under which we hold our respective incompatible the permanent existence of

""6. That, until the establishment of a circulating medium of a character better suited to the various and complicated demands of society, and to the increased transactions and population of the country, and more competent to effect an interchange, and preserve a remunerating level of prices in the products of industry generally, we can see no prospect of any permanent restoration of the prosperity of our trades, or of the country being able to escape the most frightful sufferings and convulsions.

remunerating prices, without such a reduc- revolutionary fires. Difficult and obscure, tion of taxation as we cannot hope to see indeed! Yes, the subject is difficult, just as effected in time to afford us any relief-and difficult to the public comprehension as is a it thus tends, ultimately and surely, to de-juggler's trick, by which, with a 'heigh, stroy the industry, and the peace and happi- presto!' he conjures the half-crown we ness of the country. thought we had safe in our pocket into his own. How the money vanished it is not so easy to say; but it is nevertheless certain that we had it, and ought still to have it, but he has got it. So it was exactly with the currency juggle. Few of the sufferers can explain or understand how it happened, but the fact is very plain to them that they have somehow lost a great deal of money, and other persons have got hold of it. A little consideration, however, may, we think, render the nature of the trick intelligible to the simplest. It is very clear that those who are in business pay nearly the same sum in taxes, at present, as when the goods they deal in sold for double their present prices; so that they really pay two hundred weight of wool, or of cheese, or of sugar, or two pieces of cloth, linen, or calico, or two tons of iron or hardware, to the taxgatherer, for one that they formerly paid; and the taxes, reckoned in goods, which is the only sure way of knowing their cost to the producers of goods; by whom they are paid, are clearly twice as high at the end of sixteen years of peace, as they were at the close of a long war! Is it wonderful, then, that the productive classes are laboring

"We, therefore, most respectfully, but very earnestly, request the early attention of His Majesty's government to these great facts and considerations, and we insist that they will recommend to Parliament the speedy establishment of some just, adequate and efficient currency, which may properly support the trade and commerce of the country, and preserve such a remunerating level of prices as may insure to the employers of labor the fair and reasonable profits of their capital and industry, as well as the means of paying the just and necessary wages to their workmen.””

.

under severe distress? That Peace, who

Such are the views of practical working men in England of the opera- usually brings plenty, has thrown away her tion of contracting a debt in paper emblematic horn, and selected hunger for money at the rate of one hundred her motto? And can there be any doubt and fifty dollars for one hundred, that the fall in prices, which has wrought and paying the interest of three per this fearful evil, is the necessary result, cent. on it in specie. If such was the foretold by ourselves and many others at effect there, what will be the effect here of paying the interest, in specie, on so large a debt as we have contracted, at the rate of two for one?

the time, of the legislation of 1819 and 1826, which, by crippling the banking sys tem of England and attempting a currency of dear metal for one of cheap paper, has caused a continually increasing scarcity of money and contraction of credit? .

"If we succeed in showing that the unjust restrictions, kept up by the present laws, on the circulating medium of exe change, have had the effect, within a few

THE LONDON QUARTERLY SAYS: "Our country gentlemen must learn to penetrate the arcana of the exchanges, and fathom the depths of the banking system, if they mean to preserve their broad acres from the grasp of the mortgagee, and their years past, of silently but forcibly transfertitle deeds and mansions from the blaze of ring a vast amount of property from the

possession of one class to that of another, necessity of preserving the national faith who had no just right or title to it-of cov-inviolate is thrown in their teeth. They ertly despoiling, in short, one portion of the ask, with bitterness, and with justice too: community, namely: the persons engaged "Is faith to be kept only with the in industry, for the benefit of another por- moneyed interests? Was no good faith to tion, the owners of fixed money obliga- be kept with the landholder, the merchant, tions, payable out of the labor and capital the manufacturer, the vast laboring popuof the former-it will be acknowledged lation who bore the weight of the national that, until the laws which have perpetuated struggle, who cheerfully made great and and continue to sanction this wholesale numerous sacrifices during the war, and swindling are repealed, there is is no safety who continue the real strength and greatfor property; nor can there be any reliance ness of the kingdom? No faith whatever on the stability of those institutions, of was kept with them. They, through their which a confidence in the security of prop-representatives, engaged themselves to a erty is the indispensable foundation."

Remarking upon the Staffordshire memorial, the Review says:

...

“The sufferers here most correctly attribute their losses to the late increase in the value of money, but they seem to look for relief in a deterioration of the standard. In this view we do not concur with them, only because we think so desperate a remedy is not necessary, for that other and unexceptional plans may be resorted to for the relief of industry. . . . . Next to a direct increase of the supply of the precious metals, the most obvious resource seems to be to augment the efficiency of that which we possess, by a degradation of the standard-in other words, by diminishing the intrinsic value of the coinage; cutting, for instance, our sovereigns, shillings, and other pieces of money, into two or more parts, which should each, by law, retain the nominal value of the whole. This is, in substance, the proposal which seems to find most favor with the persons who have spoken or written on the subject of the currency for some years past. It is this, as we have seen, that is advocated by the iron trade, and by their powerful champions, the Messrs. Atwood. It is this to which Mr. Weston, and a large body of agriculturists, have been long pointing as the only practicable mode of permitting them to come to an equitable adjustment with their creditors public and private.

debt of so many pound notes-but not to the same number of sovereigns-to a debt consisting of money, at its then value, but they protest against being held responsible for the same annual sum now that its value has been artificially doubled. Does not good faith require that the scale should be held fairly between debtor and creditor? Was it consistent with the national faith, upon the plea of arresting the progress of depreciation in 1819, to turn the tables wholly the other way, and, by reviving an obsolete standard, to give to moneyed obligations a value that is a command over the produce and property of others, which the persons originally forming those contracts could never have contemplated, and which consigned at once to overwhelming and unmerited ruin, the commerce, the manufactures, and agriculture of the empire ?'

"We freely admit the weight of these remonstrances. We acknowledge that, through an overstrained anxiety for observing the letter of the national faith, the spirit of the obligation was disregarded, and a gross injustice committed on the great body of producers throughout the kingdom, as well as on all debtors. It is true

"Nothing could be more honorable than the feeling which induced our statesmen to return to the ancient standard; but, to our sorrow, their estimate of its effects was much below the mark. They did not see We what a revolution of property would ensue. They consulted our honor, our reputed solvency, but not our real means. Mr. Ricardo told them the change would be

acknowledge, indeed, the force of the retorts levelled by the advocates of this alteration against their opponents, when the

.....

five per cent. Events have proved it fifty. tlement in coined money. Credit money, in some shape or other, always has, and must have, performed the part of a circulating medium to a very considerable extent. And (by one of those wonderful compensatory processes which so frequently claim the admiration of every investigation of civil as well as of physical economy) there is in the nature of credit an elasticity which causes it, when left unshackled by law, to adapt itself to the necessities of commerce and the legitimate demands of the market. The only measures which appear to us to be needed upon the expiration of the bank charter, are: 1st. That all banks be required to deposit security in government stock to the full amount of the notes they issue. 2d. That the law be repealed which forbids the issue of notes under five pounds. 3d. We would make the notes of metropolitan banks only convertible into bars of bullion, on the plan of Mr. Ricardo, and allow the notes of country banks to be paid in those of the metropol itan banks.""

There remains another course for consideration; one which we have urged for some time past upon the public, as the true mode of relief from our monetary difficulties. We mean the removal of the mischievous restrictions which now fetter the circulation of credit through this country, and the concession of the free right of commerce to provide itself with whatever instruments it may require for effecting its exchanges uninterfered with by those officious legislative intermeddlings which experience has sufficiently proved to be fatal to almost everything they touch, but to nothing so much so as to the currency. It is physically impossible to carry on the commerce of the civilized world by the aid of a purely metallic currency-no, not though our gold and silver coins were every tenth year debased to a tenth! Why, in London alone, five millions sterling ($25,000,000) are daily exchanged at the clearing-house in the course of a few hours. We should like to see the attempt made to bring this infinity of transactions to a set-I