CHAP. credit, or the extension of any relief to the industrious and suffering portion of the community.

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1826. 2.

The general distress, as usual in such cases, led to seriActs of riotous acts of riot and disturbance in several of the manufacing in various places. turing districts. On all sides the most appalling proofs of wretchedness were afforded, and in some quarters alarming disorders took place. The recent improvements in machinery were generally regarded as the main cause of the general suffering; and in Lancashire the indignation of the operatives against what they deemed an invasion of their birthright, broke out in various and most melancholy acts of outrage. It was a woeful spectacle to see the streets of Manchester, and the chief towns in its vicinity, filled with vast crowds, sometimes ten thousand in number, whose wan visages and lean figures but too clearly told the tale of their sufferings, snatching their food from bakers' shops, breaking into factories and destroying power-loom mills, and throwing stones at the military at the hazard of being shot, rather than relinquishing an object on the attainment of which they sincerely believed their very existence depended. Serious riots took place in Carlisle, in the course of which a woman and child were shot dead; and in Norwich, where twelve thousand weavers were employed, an alarming disturbance, attended with great violence, ensued. In all the iron districts, strikes to arrest the fall of wages took place; and in Dublin and Glasgow immense crowds of operatives paraded the streets entreating relief, which was in some degree afforded by munificent subscriptions opened by the wealthy classes, and which, being judiciously laid out in the purchase of the fabrics of these poor 1826; people, instead of merely giving them money, relieved distress to triple the amount which it otherwise could have done.1

1 Ann. Reg.

Chron. 49,

72, 94.

The universal suffering attracted, as well it might, the anxious attention of Government, although, unfortunately, they were so blind to the real causes of the calamity that

XXI.

1826.

3.

speech on

and letting

they brought forward measures intended to avert, which CHAP. in reality had only the effect of perpetuating it. In the King's speech the all-absorbing theme was thus alluded to: "His Majesty deeply laments the injurious effects King's which the late pecuniary crisis must have entailed upon the subject, many branches of the commerce and manufactures of the out of bondUnited Kingdom. But His Majesty confidently believes ed grain. that the temporary check which commerce and manufactures may at this moment experience, will, under the blessing of Divine Providence, neither impair the great sources of our wealth, nor impede the growth of national prosperity." Yet, while the attention of all classes was riveted on this all-important subject, the only measure of relief which was afforded consisted in a bill which allowed the bonded corn in the ports, estimated at 300,000 quarters, to be sold in the country without paying the duty imposed by the Corn Law, which, after encountering considerable opposition from the landed Parl. Deb. interest, passed both Houses, but afforded scarcely any 796; Ann. relief to the country. What was wanted was not food, 3. but money to buy food.1

xv. 795,

Reg. 1825,

4.

of the dis

its remedy.

What Government should have done at this juncture was then distinctly pointed out by some of the ablest Real causes and most experienced men in Parliament, though un- tress, and happily without any effect. The terrible crisis which the country had just gone through was obviously owing to something wrong in the currency; but a great difference of opinion prevailed as to what that error was. The partisans of Administration, and the whole Whig party, were unanimous in holding that the mischief had all originated in the extravagant speculation of the two last years, which had been unduly fostered by the perilous and excessive issue of bank-notes by the country bankers, great part of whom had no sufficient capital to support them; and the only remedy they could devise was to suppress small notes altogether, and render the currency not only in all its parts dependent on the retention of

XXI.

1826.

CHAP. gold and silver, but below £5 to consist entirely of it. The friends of the country bankers, on the other hand, maintained that nothing could be imagined so perilous, as at this time, when the country had so recently come through a severe monetary crisis, to tamper with the currency, and, in endeavouring to put it on a more stable footing, in a great measure to extinguish it altogether. The debates are of the highest interest, for they relate to one of the most momentous and decisive changes recorded in English history, and which was attended with the most important results; and they are extremely curious and instructive, as affording an example of the ease with which a powerful party can succeed in deluding the public mind, and conducting a nation, amidst universal applause, to the very measures most destructive to its prosperity, and in the end subversive of its institutions.

5.

by Minis

port of the

bill suppressing

small notes.

On the part of Government it was argued by Lord Argument Liverpool, the Chancellor of the Exchequer, Mr Huskisters in sup- son, and Mr Canning: "The monetary crisis which this country has recently undergone is evidently owing to the mad speculation of the last two years; and that speculation has been mainly fostered by the vast increase in the issues of country bankers' notes which took place during that period of delusive prosperity. In 1822, before the mania of speculation began, the stamps issued for country bank-notes were about £4,200,000 annually; in 1824, when the mania set in, it rose to £6,000,000 ; and in 1825, when the mania was at its height, it amounted to no less than £8,000,000 annually. This was the amount of stamps annually issued for new notes the amount actually in circulation was in general about 50 per cent more at each period, and in 1825 amounted to £14,000,000. The notes of the Bank of England had also increased during the same period, but in a much less degree: the increase in that quarter was only £3,000,000- from £19,000,000, in round numbers, to £22,000,000. The great increase in the

XXI.

1826.

currency, therefore, has been in the country bankers' CHAP. notes; and they are chargeable with all the disasters which have ensued. The only way to prevent a repetition of the evil is to lay the axe to the root of the cause from which it sprung.

6.

"Such a measure is no innovation; on the contrary, it is the opposite system which is an innovation. In 1775 Continued. an Act passed prohibiting the issue of bank-notes for a limited time; and in 1777 another passed, which permanently prohibited the issuing of notes under £5. This continued to be the law until 1797, when, amidst the necessities of the French war, the suspension of cash payments took place until two years after a general peace, and it became necessary to legalise and re-issue small notes, as the gold had all been withdrawn. This suspension was not founded on any belief that the smallnote system was at all connected with the prosperity of agriculture, commerce, or manufactures; on the contrary, all parties were agreed that they should be withdrawn as soon as possible, and no one contemplated their continued circulation after the Bank should have resumed cash payments. And yet during the whole of this period, from 1777, manufactures and commerce had flourished notwithstanding the absence of the small notes.

66

7.

The alarm felt on this subject, if founded in reason at all, must be grounded on the idea that the circulation Continued. will be diminished by the whole amount of the notes withdrawn; and doubtless, if that were to be the case, a very serious check to industry and the operations of commerce might be anticipated. But nothing is clearer than that no such danger is to be apprehended. During the three years ending with 1822, twenty-five millions of gold sovereigns had been coined, and of these £7,200,000 were shown by the returns to have been exported, and perhaps £10,000,000 in all had left the country. Of these, £1,000,000 had returned in the close of last year; so that the gold circulation might fairly be taken at

VOL. IV.

D

1826.

8.

CHAP. £16,000,000. The country bankers' circulation, as meaXXI. sured by the stamps issued in 1825, had been £6,000,000 in that year; and supposing double that number to be the amount of notes actually in circulation, the amount will be only £12,000,000-considerably within the gold which has been coined during the three years succeeding 1819. The present amount of country bank-notes in circulation does not probably exceed £4,000,000; while the bank-notes of the Bank of England, in the end of 1825, had risen to £25,000,000. It is chimerical, therefore, to apprehend any undue contraction of the currency from the suppression of small notes; it is only exchanging a perilous and unstable for a firm and secure circulation. "There are two ways of effecting this withdrawal; and Continued. the only question really for consideration is, which of the two is safest, and likely to occasion least inconvenience to the community. The one is, by enacting that no more small notes should be stamped after a certain future period; the other, to allow those already in circulation to run a certain course till a fixed period, and prohibiting any new ones to be created. Government, after mature deliberation, have determined upon the last of these methods. No new notes are to be henceforth allowed to be stamped; those already in circulation are to be allowed to circulate for three years, but no longer. In consequence of certain differences between the banking systems of Ireland and Scotland, particularly the latter, it is not proposed, in the mean time, to extend the Act to either of these countries; though it is difficult to see any good reason, on principle, on which such a difference is to be long continued.

9.

"By cautiously and gradually, in this manner, withContinued. drawing the small notes from circulation, one inestimable blessing will be attained-the poor will in a great measure be saved from the pressure and ruin consequent on a monetary crisis. Who are the persons among whom, in the first place, these small notes circulate? The poorer