1807-9. Great speculations in flax, hemp, silk, wool, etc.
1810. Recoil of speculation,extensive failures, and great demand for money.
1811. Parliament adopts a resolution declaring a one-pound note and a shilling legal tender for a guinea.
1814-16. Heavy losses and bankruptcies,failure of two hundred and forty country banks,the distress and suffering of the people compared to that in France after the bursting of the Mississippi Scheme.
1819. Law passed for the resumption of specie payments in 1823,after a suspension of twenty-seven years.
1822. Great commercial depression throughout Europe,agricultural distress,famine in Ireland.
1824. Speculations in scrips and shares of foreign loans and new companies, to a fabulous amount.
1825. Recoil of the speculations,run upon the banks,seventy banks stop,a drain of gold exhausts the bullion of the Bank.
1826. Depression of trade,government advances Exchequer bills to the Bank.
1832. A run for gold,bullion in the Bank again alarmingly reduced.
1834-7. Jackson vs. Biddle in America produces considerable derangements in England,drain of gold,great alternate contractions and expansions,severe mercantile distress.
1844. Renewal of the Bank Charter, limiting its issues,great speculations in railroad shares, to the amount of £500,000,000.
1845. Recoil of the speculations,immense sacrifice of property.
1846. Drain of gold,large importations of corn,alarm.
1847. Drain of gold continues,panic and universal mercantile depression,Bank refuses discounts,forced sales of all kinds of property,the Bank Charter suspended.
1857. The experiences of 1847 repeated on a more injurious scale, with another suspension of the Bank Charter Act.
Now this record does not show a brilliant success in banking; it does not encourage the hopes of those who place great hopes in a national institution; for the Bank of England is the highest result of the financial sagacity and political wisdom of the first commercial nation of the globe. A recognized ally of the government,at the very centre of the world's trade,enjoying a large freedom of movement within its sphere,conducted by the most eminent merchants of the metropolis, assisted by the advice of the most accomplished political economists,sanctioned and amended, from time to time, by the greatest ministers, from Walpole to Peel,it has had, from its position, its power, and the talent at its command, every opportunity for doing the best things that a bank could do; and yet behold this record of periodical impotence! Its periodical mischiefs we leave out of the account.
In the United States, we have suffered from similarly recurring attacks of financial epilepsy; we have tried every expedient, and we have failed in each one; we have had three national banks; we have had thousands of chartered banks, under an infinity of regulations and restrictions against excesses and frauds; and we have had, as the appropriate commentary, three tremendous cataclysms, in which the whole continent was submerged in commercial ruin, besides a dozen lesser epochs of trying vicissitude. The history of our trade has been that of an incessant round of inflations and collapses; and the amount of rascality and fraud perpetrated in connection with the banks, in order to defeat the restrictions upon them, has no parallel but in the sponging-houses. A Belgian philosopher, from the study of statistics, has deduced a certain order in disorder,or a law of periodicity in the recurrence of murders, suicides, crimes, and illegitimate births; and it appears that a similar regularity of irregularity might be easily detected in our cyclic bank explosions.
With the sad experiences of other nations before us,with the rocks of danger standing high out of the water, and covered all over with the fragments of former wrecks, we have yet persisted in following the old wretched way. What a humiliating confession! what a comment on the alleged practical discernment of this practical people! what a text for radicals, socialists, and all sorts of Utopian dreamers! If the mischiefs of these monetary aberrations were confined to a mere loss of wealth,2 which is proverbial for its winged uncertainty, we might regard them as a seeming admonition of Providence against putting too much trust in riches; but they are to be considered as something infinitely worse than mere reverses of fortune: the disorders they generate shake the very foundations of morals; and while shattering the industry, they undermine the economy and frugality and rend the integrity of mankind. We doubt whether any of the great forms of evil incident to our imperfect civilizationthe slave-trade, debauchery, pauperismcause more individual anguish or more public detriment than these incessant revolutions in the value and tenure of property. Those afflict limited classes alone, but these every class; they relax and pervert the whole moral regimen of society; and if, as it is sometimes alleged, the present age is more profoundly steeped in materialism than any before,if its enterprise is not simply more bold, but more reckless and prodigal,if the monitions of conscience have lost their force in practical affairs, and the dictates of religion and honor alike their sanctity, it is because of the uncertain principle, the gambling spirit, the feverish eagerness, and the insane extravagance, which beset the ways of traffic. Living in a world in which days of golden and delusive dreams are rapidly succeeded by nights of monstrous nightmares and miseries, society loses its grasp upon the realities of life, and goes staggering blindly on towards a fatal degeneracy and dissolution.
The question, then, is, whether this melancholy march of things should be allowed to proceed, or whether we should strive to do better. Our good sense, our moral sense, our progressive instincts, conspire with our interests in proclaiming that we ought to do better; but how shall we do better? "Why," reply the great Democratic doctors,Mr. Buchanan, the President, and Mr. Benton, the Nestor of the people,"suppress the issue of small bank-notes!" Well, that nostrum is not to be despised; there would be some advantages in such a measure; it would, to a certain extent, operate as a check upon the issues of the banks; it would enlarge the specie basis, by confining the note circulation to the larger dealers, and so exempt the poorer and laboring classes from the chances of bank failures and suspensions. But if these gentlemen suppose that the extrusion of small notes would be in any degree a remedy for overtrading, or moderate in any degree the disastrous fluctuations of which everybody complains, they have read the history of commerce only in the most superficial manner. Speculations, overtrading, panics, money convulsions, occur in countries where small notes are not tolerated, just as they do in countries where they are; and they occur in both without our being able to trace them always to the state of the currency. The truth is, indeed, that nearly all the great catastrophes of trade have occurred in times and places when and where there were no small notes. Every one has heard of the tulip-mania of Holland,when the Dutchmen, nobles, farmers, mechanics, sailors, maid-servants, and even chimney-sweeps and old-clothes-women, dabbled in bulbs,when immense fortunes were staked upon the growth of a root, and the whole nation went mad about it, although there was never a bank nor a paper florin yet in existence.3 Every one has heard of the great South-Sea Bubble in England, in 1719, when the stock of a company chartered simply to trade in the South Seas rose in the course of a few weeks to the extraordinary height of eight hundred and ninety per cent., and filled all England with an epidemic frenzy of gambling, so that the recoil ruined thousands upon thousands of persons, who dragged down with them vast companies and institutions.4 Yet there was not a banknote in England, at that time, for less than twenty pounds, or nearly a hundred dollars.