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pounds, or more, for the purchase of degree with his own notes; he must clothes, or some other purpose. When do it almost wholly with what the Wages are low and work is scarce, those same to him as gold or Bank of Engwho can procure employment can only land paper. earn what will supply them with ne- The manufacturer is paid chiefly cessaries, and they are compelled to with bills, and he needs large discounts part with their note or sovereign as for the wages of his workmen ; but he soon as they receive it. Great num- pays for what he buys chiefly with the bers are unemployed, and have never

biủs that he receives, or his accepta so much as a pound in their posses- ances, both of which are generally sion. If five millions of the population payable in London. If he speculate, he keep on the average two pounds more cannot do it with the notes of his each in their pockets, this renders ten banker; and if he need assistance in millions more, in notes or sovereigns, his speculations, he must receive it in necessary, without any rise of prices the same way as the merchant receives or increase of trade.

it. When we look at all these things, All but small tradesmen buy nearwe are thoroughly convinced that the ly everything with bills. If the tradesadditional amount of currency put man pays his London or other cominto circulation was not the CAUSE,

mercial travellers with country notes, but the Effect, of the rise of prices they immediately take the notes to the and the increase of trade. It, no bank to obtain bills for them. But he doubt, did, occasionally, for a mo- does not so pay them. If he take to ment, operate, in a trifling degree, as his banker gold, or Bank of England the cause, but looking at its operation notes, or the notes of the different from first to last, as a whole, it cer- banks of the place in which he dwells, tainly, in our judgment, was the effect. he has credit given him for the sum Of course, we imagine that nothing in his account, as cash; if he procure could well be more simple and absurd from his banker a bill in exchange, he than the assertion made by the lead has discount allowed him for the time ers of that portentous and fatal Coali- that the bill has to run. His traveltion which the Ministers and the lers will take in payment good bills at Whigs and Burdettites now form, that two months, on the same terms as the speculations, &c. flowed from the they will take sovereigns, without deincrease of paper put out by the Eng- manding discount. He therefore prolish country bankers.

fits considerably by paying with bills The merchants, manufacturers, and instead of notes. In country towns, tradesmen whom these bankers supply, good bills that have not more than do not speculate with bank notes, if two months to run are taken by most they enter into speculations. The men of business as cash, although the merchant carries on his business chief- banks regularly charge, or allow disly with bills; he gives his acceptance count, on receiving or paying them ; for what he buys he receives an ac- and in consequence, in paying for the ceptance for what he sells; and these goods that he buys of his own townsacceptances are, almost always, pay- men, the tradesman has a profit in able in London. When he receives a paying with bills instead of notes. If bill, he takes it to his banker, not to

his banker make him advances to asreceive notes for it, but to pass it to sist him in speculations, he cannot account: if the banker do not pay it pay his accounts in London, Manchesaway, he sends it, when due, to Lon- ter, &c. with notes ; if he pay these don, to receive the amount in Bank of to his own townsmen, the latter imEngland notes, or gold. The merchant mediately take them to their respecdoes not take up his own acceptances tive bankers, and in a day or two they with the notes of his banker, but the are returned to his banker, who has to latter takes them up for him, in Lon- give what is equal to gold for them. don; with gold or Bank of England His banker cannot assist him, to any notes. If he need a heavy advance degree worth mentioning, merely by from his banker, he receives it, not in lending him notes ; if he lend him notes, but in bills, or in the taking up notes, they cannot be kept in circulaof his acceptances in London. If his tion for a week. banker assist him in his speculations, Nearly all the bills that circulate in he can only do it in a very trifling the kingdom are payable in London many of the heavy payments of both In the manufacturing districts of merchants and tradesmen are made in Yorkshire, &c. the distress was mani. bank notes--from the system of bank- festly caused by other things than the ing that prevails, many of the smaller speculations of the manufacturers and traders are not able to open accounts tradesmen. Once more we say, that with the banks. From these and other the circulating medium was in proporcauses, the discounting of bills pre- tion increased more in London, Livervails to an enormous extent. In the pool, &c. than in the other parts of country, where the heavy payments England ; and are we to believe that are made principally in bills that are Bank of England notes and sovereigns payable in London, there is compara- will not enable bankers to discount tively but little of what is really the bills and make loans_will not enable discounting of bills with country. men to form mining and other comnotes, except among the manuface panies, and to enter into great cotton, turers, who have to pay great sums in tallow, and other speculations ? We wages. In London, the notes that cannot, and we will not believe it. circulate are those of the Bank of The charge brought against the notes England, and if the other banks re- of the English country banks was ceive them from their connexions, they most disgraceful to those who made do not return them to the Bank for it. gold. In the country, every banker The truth is, that the new comis in effect constantly labouring to panies, speculations, &c. flowed from drive the notes of other banks out of a profusion, not of circulating me. circulation : immediately on receiving dium, but of wealth, real wealth,-of them from those who keep accounts that which gives birth to, and is rewith him, he sends them to their re- presented by, the circulating medium. spective issuers, to be exchanged for Before the peace, the government, inwhat is equal to gold, or notes of the dependently of the taxes, borrowed Bank of England. Most of the loans almost yearly twenty or thirty milthat the country banker makes are not lions of the savings of the nation, and made in notes; he will only lend notes it immediately destroyed the sum as for particular purposes, and when they capital. The funds constantly offered are likely to be put into circulation; a good and secure investment to all he will not lend them to merchant, the capital of the country which could tradesman, farmer, or country gentle- not be profitably employed in busiman, if these want to pay them away ness; such capital regularly flowed into in one sum, because he is sure that them from all parts, and they dissipathey will at once get into the hands of ted it solely in consumption. This another banker, and be returned to ceased soon after the war terminated; him, to be exchanged for solid money. and it seems to be foolishly imagined From the manner in which business by the leaders of the Coalition, that is carried on in the country, and from the money thus lent was created solely the powerful checks which the coun- by the issues of bank paper, and that try banks impose upon the issues of the ability of the nation to save ended each other, we think it almost impos- with the need of the government to sible for the issues of these banks to borrow. In late years, the country be ever much greater than the fair and accumulated surplus capital, as it did legitimate needs of business call for. during the war; the drain for taking

Where, and by whom, were these it away was cut off, and instead, the speculations entered into, that are sinking fund added to this surplus charged upon the notes of the English capital five or six millions annually. country bankers? They were entered The consumption of capital, if we may into principally in London and Liver- so speak, was, in effect, diminished by pool, by persons who had nothing to perhaps twenty millions yearly, while do with these notes or their issues. the supply remained at any rate the In these places, and among

these per- same, and can any man wonder that sons, the scarcity of money and the this soon made it superabundant ?failures began ; and not much com- The capital which, during the war, plaint has been heard, up to this regularly flowed into the hands of gohour, from Hull, Bristol, and the vernment, as soon as it could be spaother ports which have neither sove- red by its owners to take goods out of reigns nor Bank of England paper. the market and consume them, now flowed into the hands of the town and We say not that good security was country bankers, to seek, and seek in obtained for all the money thus lent; vain, for employment. Every bank on the contrary, we think that much in the kingdom was glutted with mo- of the security will be found to be very ney; and this money consisted, not of worthless. We fear that many of the its own paper, but of sums placed in lenders will soon have great difficulty it, in one way or another, that were in obtaining their interest, and that as solid in their character as land. they will sustain tremendous losses in Mortgages and other good securities respect of the principal. But putting could not be found, and it was almost out of sight the Spanish Bonds, the impossible to employ the money in effect of which was over before public any manner. It was this real, solid, prosperity commenced, and the Greek superabundant capital, and not bank loan, the amount of which was connotes, that made the bankers so li- temptible, the loans in question opeberal in lending and discounting, thật rated up to the beginning of the disenabled large numbers of other peo. tress, as they would have done had ple, as well as merchants, to specu. they been advanced on the very best late, and that furnished the funds for security. The interest, no matter the new companies, &c. At the time how, had been regularly paid, and the of the South Sea bubbles, and in other marketable value of the principal had parts of our history, a similar state of increased. Had this money been kept things produced similar consequences, at home, there is decisive evidence when bank notes were wholly, or als that human ingenuity could not have most, unknown.

found for it beneficial employment. This superabundant capital was put Notwithstanding that it was taken to various employments, and we will away, and that so much more was now endeavour to ascertain what share absorbed by the schemes, there was, each of these has had in producing until long after the beginning of the that distress under which the nation distress, abundance of idle money in is suffering.

the country. The country papers, alA very large amount was advanced most up to this hour, have been conon loan to foreign nations, and some stantly offering heavy sums on morta people make this the leading cause of gage. No one will be so foolish as to the distress. We cannot agree with imagine, that if the money had been them. When a community has more kept at home, no efforts would have capital than it can employ at home, been made to employ it; and no one the best thing, in our judgment, that but an Economist will say, after lookit can do with the surplus is, to lend ing at all the modes in which capital it to friendly foreign governments, can be employed, that it could have provided it can get unexceptionable been employed in any other manner security. These governments imme- without producing evil. Had it been diately annihilate the loans as capital, kept at home, it would doubtlessly and do not employ them to injure thé have been employed in making the trading, or other interests of the lende present overstocks of merchandise and ers. Assuming that proper security manufactures still more destructive; is obtained, loans made by the people' a vast portion of it would have been of this kingdom to other countries lost to its owners, and the existing operate, until the money is repaid, public distress would have been more much as though they were vested in

It was sent abroad-and, up the purchase of estates in these coun. to the beginning of the distress, the tries. It is said, that more than sixty foreign stock was saleable without loss, millions have been lent in this man. and it practically brought three milner in late years ; if this sum pay five lions annually into the country to be per cent, the nations that have bor- expended in consumption. We imaTowed it will have to remit three mil- gine, that the foreign loans were so lions yearly to the borrowers in this far from producing the distress, that country. To the community at large, they operated powerfully to prevent it will have much the same effect as it, and that it would have been much though the proprietors of estates in greater if they had not been made. The those nations, yielding three millions fall in the South American funds must of annual rents, should dwell and ex- have done fearful injury; but it fol. pend their rents constantly here. lowed, and did not precede, the dise



tress : it was not a cause, but a con- distress would have been but little felt sequence.

by the nation at large. We now come to the schemes. How- The fact is, that two very prosperever great the folly and villainy of the ous years had greatly increased the originators of many of them were, we capital of almost every merchant, mamust still do justice. Some of the new nufacturer, and tradesman. This incompanies that took the most heavy crease was altogether independent of sums out of the market are still in bank notes, and bank advances; it being; and they are not wholly with- was solid, unborrowed capital. This, out hope of a small share of success. and the largeness of consumption, inThedistress began before returns could evitably led to the holding of heavy have been expected from any of them stocks, to heavy importations, and of -when very few had been dissolved course heavy exportations, and much and when these few had produced speculation. A great deal of reproach no failures, and no great amount of has been cast upon the merchants for individual loss. The loss occasioned importing so largely; and the increaby the schemes has been divided sed imports of the last two years have amidst a vast number of individuals ; been triumphantly quoted against no very large portion has fallen upon them, to prove that they are principal. each, and very many of them have not ly accountable for the distress of the been in trade. The new companies nation. Now, a single glance at the took a large quantity of goods out of revenue of the last two years, will the markets, and they brought scarce- show that consumption called for a ly any into it; they therefore acted to very large increase of importations; a certain extent as a counterpoise to and we are by no means sure that the the heavy importations which have importations would have been in any been so loudly complained of. In the considerable degree excessive, if conbubbles of former times, families em- sumption could have been kept from barked their all, and lost their all; the decrease, and credit from injury. ruin was evidently produced by the Ministers, who in these days puff bubbles alone. In those of the last their own talents and wisdom in a most two years, people only ventured a part extraordinary manner, declare that of what they possessed ; and they sel- they foresaw the distress in the last dom went beyond their depth. We Session; and that if their cautions had have scarcely heard of a single failure been attended to it might have been that was produced solely by confiding avoided. Now, their cautions were money to the new companies. confined to the new companies, and

The operation of the foreign loans even some of these they sanctioned. had in a great degree ceased when the. Mr Huskisson again and again declamoney was advanced to these compa- rod, when trade was at the highest nies, so that the absorption of money point which it reached, that it would by these loans and companies was increase that it would keep increaperhaps nearly equal in amount in sing--that the new system would careach of the last four years. If we take ry it infinitely above what it then was. this amount at even so much as twen- He and the Chancellor of the Exchety millions yearly, this does not reach quer asserted, that the opening of the what the government often absorbed silk trade would greatly benefit this during the war, without producing trade ; that the new Colonial system any scarcity of money, or any injury would increase our commerce with the whatever. The shares were principal. Colonies; and that the abolition of ly held by people in the metropolis, restrictions would swell out this comand the great body of the merchants merce in every quarter. If this were and manufacturers had nothing to do not calculated to excite the merchants with them. The distress did not be- and manufacturers to cast away caugin amidst the dabblers in shares ; it tion, and carry importing and exportwas not them, but people unconnect- ing to the highest point, we cannot ed with them, who were pressed for tell what could be calculated to do it; money, and were in need of loans and yet now Ministers reproach the merdiscounts. We conceive that the new chants for over-trading, and assert, companies had no great share in pro- that attention to their cautions would ducing the distress ; and that if no- have kept things in their proper course! thing had co-operated with them, this We say this merely in justice to the

merchants, who have been most bar- The stagnation of the silk trade barously dealt with.

greatly reduced the consumption of While importations kept increasing, the large part of the population engaconsumption received some severe ged in it; and it prevented the usual checks. The Combinations did it great orders from being received from Italy injury. They raised wages greatly in for manufactures. some callings; but by this they de- The uncertainty touching the operpressed them in others; those engaged ation of the new system, caused conin them were often idle; and upon the siderable stagnation in the shawl, the whole, much less money was paid in printing, and some other trades. This wages than would have been paid, if injured consumption. they had not existed. They seriously The new system threw the increase injured many of the masters. Theship- in the carrying trade wholly into the wright one, and several others, if they hands of foreigners: this injured conhad kept in employment, would have sumption greatly on the one hand, and taken a large quantity of such goods increased imports on the other. This out of the market as are now supera- system, instead of increasing the exbundant, without producing an excess ports to the Colonies, considerably of others. The merchants had no share reduced them; and this injured conin creating these Combinations. sumption. The merchants had but

The cotton speculation, by greatly a very small share in making the chanraising prices, did great injury to con- ges in our laws and systems; and we sumption. Here a portion of the mere conceive that the injuries done to trade chants deserve the blame.

by these changes operated greatly to The time approached for the admis- produce the distress. sion of foreign silks; the retail dealers From different causes several intedurst not order of the manufacturers, rests began to suffer; workmen were the latter were left without trade, and thrown out of employment; trade bethis did great injury to consumption. came flat; and prices generally began It has been said, that the distress in to fall. We have already said, that the silk trade was produced by the consumption can become a dwarf or same causes which have distressed a giant in a moment. The fall of other trades; but this is contradicted prices left almost all traders without by facts. This trade was in a state of profits, and it subjected very many to stagnation some time before any other heavy losses. An instantaneous reducbegan to suffer, and before the want tion of expenditure followed. The of money diminished the wearing of tradesman who lives at the rate of five silks; the dealers assignel the ap- hundred per annum, can sink to four, proach of the time for the admission and still maintain about the same apof foreign silks as their reason for not pearance in the eyes of the world. All buying. It is, in truth, perfectly ridi. classes were well stocked with clothes, culous to ascribe the distress of every and the buying of manufactures in a trade to the same causes, when causes great measure ceased. The shopkeepthat injured one did not touch another. ers had heavy stocks, which went off The cotton speculations injured the slowly, and they bought very little of cotton manufacturers seriously, but the wholesale people. When prices are they did not reach other manufactu- rising, all the persons between the imrers. The new system injured the silk porter and consumer are anxious to trade dreadfully, but, various other hold; when they are falling, these trades were not affected by it. The persons keep out of the market. The importations caused many descriptions speculators stood still ; the merchants of merchants to suffer fearfully, when lost their customers, and had the whole others had nothing to do with them. weight of the imports thrown upon The real fact is, that one interest was their shoulders. Foreign buyers were distressed by one cause, and another naturally lost with the home ones. by a wholly different cause, until se. Consumption was greatly reduced ; veral of them were distressed, and very little ready money was taken in then their sufferings made distress the shops ; the small traders were begeneral. Many at this moment are hind in their payments, and the scardistressed merely by the distress of city of money became extreme amidst others; and others are distressed by the large ones. things perfectly different.

Meantime, production went on as VOL. XIX

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