Economy 1811 – 1844 – part 2

Sat 25th May 1811

Huskisson has published a paper on Money called ‘The Question Stated’.[99]

Paper money is supposedly representative of gold and silver. It provides a convenient medium in which the values of all other commodities can be stated. So long as paper money is readily convertible to gold and silver it retains popular confidence. The utility of paper money rests both on its convenience and on the confidence that people have in its ability to retain its face value.

In our domestic economy the price of goods increases or decreases with the supply of money. More money – more expensive goods; less money – cheaper goods. To an international observer it would appear that the value of gold rose and fell in our domestic economy depending on its supply.

The British guinea is 5dwts (pennyweights) plus 9.398 grains (c. 83.6 grammes), comprised of 11 parts pure gold and 1 part alloy. The Laws of England since the 39th year of George III’s reign make gold the only legal tender for transactions over £25.

Since the reign of Charles II, one Troy Pound of gold (11 ounces gold + 1 ounce alloy) is equivalent to 44½ guineas, each worth 21 silver shillings and anyone may take gold to the Royal Mint and have it converted to coin at that rate without charge.[100] Before 1797 everyone could expect to exchange 83.6 grammes of gold for every guinea. A Troy Pound of gold was exchangeable for £46.14.6d.

The merchants who bought the Charter of the Bank of England have been permitted for over a century to issue Promissory Notes in lieu of their gold holdings and these now constitute a large part of the circulating credit of England. These Chartered merchants act as the government’s banker and its Agent for payment of dividends due to public creditors. For a century there was no interruption of convertibility of the Bank’s Promissory Notes.

When the Bank was approaching bankruptcy, the Legislature enacted that legal provisions for protection of creditors should be suspended in its respect. This was an astute move by the MPs – had they tried to force the Bank’s paper onto the people in substitution for gold, and made it the legal tender of England, it would have caused an insurrection once the public gained an understanding of the real value of the circulating paper. Instead the House of Commons voted for a suspension of the Bank’s liability to its creditors and this slipped passed almost unnoticed. Since then the suspension has become permanent.

Today the overseas exchange value of £46.14.6d in paper is about 10 ounces of gold alloy and it now requires £56 of paper Sterling to buy 1 Troy lb of pure gold. Clearly the value of the Bank’s paper has reduced in respect of gold and that reduction inevitably applies in respect of every other article of exchange. It is apparent that since 1797 gold has no longer been the criterion of value of our currency.

It is also apparent that the cause of this devaluation has been the over-issue of paper money. Had the Bank been able to maintain a stock of gold sufficient to discharge that small percentage of the total currency requisite to provide exchange on demand (that part of the Bills coming back for discount on a daily basis – probably less than 5% of the note issue), it should have remained solvent, but as the note issue increased, large capitalists recognised the risks inherent in paper and withdrew their gold from the Bank. That brought-on the suspension of payments.

Sat 25th May 1811

5th December 1810 – 3% consols 67½; 3% reduced 66, Omnium 5 discount.

Sat 15th June 1811

London news, 1st January 1811 – the public revenue for 1810, and the comparative figures for 1809, has been reported in Pounds Sterling as follows:

1809 1810
Consolidated Fund 37,838,084 40,048,244
War Taxes 20,798,444 23,027,442
Total Revenue 58,636,528 63,075,686

The item for Excise receipts, which is an indicator of domestic prosperity, increased by £1,450,000

Sat 15th June 1811

There is an absurdly large accumulation of coffee in the West India and London Docks. We have 60 million pounds of the stuff in warehouses, there are very few domestic drinkers and we have no-one to sell it to. The owners will accept 6d per pound if the buyer will take a large amount – that would give them £1½ millions for the lot.

This is the commercial reality behind the Licensing system which the ministry has been operating. Too great a quantity of both colonial goods and British manufactures have piled-up in the warehouses and cannot be sold. We have ruined European mercantile competition but the surfeit of goods is asphyxiating our own traders. Effectively, the capital of English trade has gone into storage at the docks and cannot be re-cycled. Even smuggling, which has had every assistance that the ministry and the commercial sector can devise, is inadequate to move all this great mass of goods. Smuggling across the Channel is done using small waterproof packets that English manufacturers provide. If we put the coffee in similar packaging, it would require tens of millions of packets.

Only the Licensing system has a prospect of moving all this stuff and the big merchants are desperate enough to pay government the immense Licence fees required. By licensing sales to the enemy, we can rehabilitate European commerce – shop-keepers are the true friends of the English system.

Sat 15th June 1811

The Bank of England says the government owes it £18 millions. It is one of the reasons the Bank Directors privately adduce for continuing the suspension of payments.

Huskisson, for the ministry, has replied robustly. He says he has the Bank’s prior agreement not to call for £6 millions of the debt until the war is over and he has their agreement not to demand the balance for twenty years.

He adds that the Bank’s loan to government is separate from the suspension of Bank payments. The loan was a payment to procure an extension of the Bank’s Charter under which the shareholders derive immense advantage – receiving all government revenue, printing money, marketing Exchequer Bills, paying the dividend on government stock – and if they resent having made the loan, they may petition parliament for leave to surrender the Charter.

Huskisson has no doubt that another group of capitalists could be found ‘within the hour,’ to pay-off and replace the Bank’s shareholders. The new owners might agree even better terms with government that the present owners did.[101]

Sat 29th June 1811

The shortage of domestic supply of grain caused the British distilling industry to shift from grain to sugar as its raw material.[102] Since the turn of the century the consumption of sugar for distilling has been about 200,000 Hogsheads a year. With our control of maritime trade, the import of sugar to Britain has increased. In 1807 it was 270,000 Hogsheads. The result of increased supply has been an increased demand from the distillers who now process 250,000 Hogsheads. The actual production of cane sugar has declined due to the abolition of slavery in parts of West Indies. Sugar is accordingly the one colonial product that is not glutting our market.

This nullifies Napoleon’s boast that his captured sugar colonies will be returned to him at the peace in better condition than when he lost them – in point of fact the abolition of slavery in West Indies (commenced by France and continued under our military governments of occupation) has deranged the island economies and several will be unproductive for decades.

Sat 29th June 1811

Letter from a London merchant, 19th November 1810:

The immense increase in our commerce has been paralysed by the French ‘continental system’. For the last three months England has been in a commercial crisis. The Gazette every week lists 50-60 bankruptcies around the country.[103]

The difficulty is that Heligoland, which is our entrepot for all colonial produce into Germany, is stuffed with merchandise but we cannot get the buyers to visit and take it off – its just too far out in the North Sea. Coffee was recently sold there at 6 French sous; sugar at 3 sous. Both prices are less than the freight and insurance to send the goods from London to Heligoland.

Apart from the delivery difficulty, the King has become personally highly unpredictable and the ministry is opposed to a proper Regency, recognising that they will assuredly lose their places – we have both commercial and political crises to contend with.

Sat 3rd Aug 1811

Lord Holland has referred the House of Lords to the case of a debtor named William Cullum, gaoled in Marshalsea Prison, who, according to the Coroner’s Jury, died in January of starvation whilst detained. The Coroner got the verdict amended to ‘want of food, clothing and medication’ but it still sounds bad.

The law requires a creditor to pay the subsistence of a debtor he has caused to be imprisoned. The amount is 6d per day but, owing to the slow process of law, these payments seldom commence much before the end of about five month’s imprisonment. Holland said that, if the Lords were truly concerned for the people, they would strictly attend to the administration of justice.

Sat 21st Sept 1811

The adverse circumstances of British trade together with our immense military costs abroad have contributed to make the Pound’s exchange rate weak. The Pound trades at Hamburg and other European financial centres at 25-30% less than the value it is accorded in London.[104] This weakness has continued and increased since 1807. It is due to the depreciation of the Pound in comparison to other currencies.

Our paper money has been over-issued and the foreign exchanges have consequently marked Sterling’s value down. The Bank has long suspended payments. It is supposed to regulate currency value but this involves not only tracking the price of bullion, which it does, but also the exchange rate for our paper money abroad, which it does not.

There is only one security against a central Bank that over-issues its paper – that is the conversion of its paper into bullion, but this has been proscribed by parliament. The legislature’s suspension of payments by the Bank punishes all Englishmen who cannot go abroad and all foreigners who choose in invest in English funds.

Sat 28th Sept 1811

A former Bombay resident, married with three sons, has written from London to notify his ex-colleagues of the recent great increase in cost of living in England. He regrets leaving India when he did as he expects to need more money than he has.

A house in one of the new streets in the west-end of London costs £2,000 for a 99 year lease. The ground rent is £17 a year. Taxes, poor rates and interest on the house purchase loan equate with £200 a year. A house rental costs about the same. You can rent a place in Westminster for £40 a year less but all the ex-India nabobs live in the new West End streets and a Westminster address lacks style.

Furnishings will cost £1,100 assuming you brought your old table- and bed-linen from India. You will need some resident to help you shopping because the range of retail prices is enormous and you might easily be over-charged.

To maintain appearances you will need a footman, housemaid and cook (and nursery maid if you have young children). These plus fuel will cost £1,400 a year minimum.

To furnish a reasonable cellar will cost £250 a year. Port wine has become prohibitively expensive and Madeira has displaced it as the sweet wine of choice.

On top of this is the household maintenance expenses, clothing for the family, education, medical costs and charitable donations. You should expect to spend £1,500 a year to maintain your establishment.

Bread, beef and mutton have doubled in price in the last 3-4 years. Fish, poultry and game are prohibitively priced and, in any event, seldom available. A carriage costs £200 a year. Every manufactured item with the exception of cotton cloth and garments has doubled in price in this few years.

Many people are leaving London to avoid the absurd rents. Bath has been popular but is now almost as expensive. People who brought their property in Bath a few years ago can now live on a quarter or a third of the costs required of new arrivals, solely due to escalating property prices.

I estimate that only 20-30% of returning India Company staff have the resources to live in England as they lived in India. The others will have to change the habits of a lifetime in order to survive here.

The problem derives from the excessive circulation of paper money. This is issued by both the Bank of England and some 700 country banks. These capitalists have between them created a paper circulation of £52 millions although they have hardly a guinea between them. The consequent devaluation has hit hardest the retirees and people who derive their income from the funds. Landowners are hardly affected at all – they just increase their rents. Most people suppose that the ministry cannot find anything new to tax and that its revenue will remain the same.

The income tax is 10% of your nett income wherever it comes from. You cannot avoid this tax. Tax Commissioners are paid a commission on the revenue they collect – they are diligent in enquiries and collections. If you invest your capital in British funds, income tax will be deducted from dividends before you even receive them.

Investments in land and mortgages pay 3-4% clear of tax but to make your money adequately productive like an Indian investment you need to enter the dodgy market of canal shares, dock shares and trading company shares which can pay 7+% but you would be foolish to place more than a small part of your income in such ventures.

Sat 28th Sept 1811

Lloyd’s of London has presented a piece of plate to Joseph Marriot MP for his indefatigable opposition to the new Marine Insurance Bill in the House of Commons.

Sat 9th Nov 1811

The commercial disruption of Europe is having serious effects on the continent as well as on London.

Baron Roll, the Russian Imperial banker, has failed. So has Gros D’Avilliers & Co, the great French House. So has Hasselgreen & Co at Amsterdam. All these famous Houses were actively trading and the disruption in the money-go-round caused by their inability to honour their Bills will bring-on many more failures.

The French accuse England of delayed settlement of continental claims on London thus exacerbating the difficulty. To evade this aspect of our commercial war, a Decree has been published in Paris making it a capital offence to draw or negotiate a Bill on London.

Sat 2nd Nov 1811

The Court of Exchequer Chamber has been hearing arguments over the availability of guineas, i.e. gold. One case is King v Wright and another is King v de Jong. They involve the rental payment term in Lord King’s tenancy agreements. The Court seems unable to dispose of the cases. It has adjourned further argument to next season. The barristers King, Best and Marriott are involved along with the AG.[105]

Sat 8th Feb 1812

Some cases are coming before the Courts concerning people refusing to accept bank notes at face value. King v de Jong is one of them. Ellenborough at King’s Bench at first refused to hear this case saying a similar case (Wright) had been before the Court of Common Pleas and was to be argued before the 12 Judges of King’s Bench whereafter he would deal with de Jong. When the 12 Judges ruled that the charge in the similar case did not come within the meaning of the statute, he ordered the de Jong trial further suspended.

Mon 13th Jan 1812 Extraordinary

Lord Stanhope’s Gold Coin & Bank Notes Bill has passed the Commons on 24th July and received the assent of the Prince Regent. It legislatively maintains the parity of value of paper money and gold. It is now illegal to prefer gold to bank notes or to distinguish a difference of value between them.

British gold coins in circulation are the guinea worth 21/-, the half-guinea worth 10/6d and the 7/- coin. Stanhope moved the Bill when he learned that a large landowner (Lord King) had notified his tenants that with effect from the summer of 1811 he would receive rents only in gold and, should they pay in bank notes, he would discount them at 80% face value.

The ministry seemed unable to act, perhaps owing to the nobility of the landowner, and it fell to Stanhope to move the Bill. If everyone starts discounting bank notes, he said, England no longer has sufficient gold to settle accounts and we will be in serious trouble. In a credit economy, once paper stops circulating, exchange reverts to barter. The British legislature always threatens punishment and seldom stimulates social conscience, hence this Bill.

The Earl of Liverpool said Lord King was a friend and he doubted any bad effect from his rental agreements. He proposed the Bill be tabled and read again after three months. This was rejected.[106]

Sat 22nd Feb 1812

Muir has been arrested at Dumfries on the application of M/s Kay and Freshfield, solicitors for the Bank of England. He is accused of forging a dividend warrant which the Bank paid by mistake. The lawyers neglected to issue a warrant in England and the Scottish arrest and imprisonment is deemed illegal as no offence occurred within that jurisdiction. Muir is suing them and has just been awarded damages in London. He previously got damages in Scotland in respect of the acts of the magistrate there.

Thurs 7th May 1812 Extraordinary

The unemployed workers of Nottingham are rioting and considerable damage has been done to the town.

Sat 6th June 1812

Lloyd’s Names held a Meeting on 6th June 1811 to consider means of better regulating their business. They met again on 31st July and 15th August and the proceedings are now published. The extraordinary meeting was called to reassure Names concerning the immense losses sustained by underwriters pursuant on the loss of the Baltic convoy of 700 ships. Names were provided with a perceptive analysis of the Licensing System:

Lloyd’s Underwriters were emboldened by their success in insuring ships and cargoes with simulated papers on voyages from English ports to ports of the enemy. We increased our investment in these hazardous enterprises until an unprecedented amount of British capital was in Baltic ports whereupon Napoleon confiscated the lot. Lloyd’s paid out £6 millions. Underwriters at the outports and the two Chartered marine insurance companies were also involved in this market and their claims payments were also quite substantial. The amount of this loss to the British economy is a gain to the French.

In the Spring of 1810, before the Baltic was re-opened to our commerce, Perceval foresaw that the French would be attracted by the extent of British trade and proposed, instead of risking our ships in enemy ports, that we take an island in the Baltic as a depot to which the enemy might come for supplies (Rügen). Had we warehoused our goods on such a secure island, not only might we have continued our trade without risk, but we would also have been able to freight the goods there in British bottoms. This would have transferred an immense amount of freight from foreign ships to British ships, although it would have ended the government’s revenue from the sale of Licences. Perceval’s advice was ignored as a majority of the cabinet preferred a licensing system.

It seems that Underwriters assumed that some good level of understanding existed between HM Government and the Baltic powers. This supposition accounts for the absence of underwriting precautions on the policies issued. Those policies were unusual in two ways. They insured the goods not, as is normal, until landed but until delivered into the consignee’s warehouse; and they agreed to pay a total loss on receipt of advice of seizure without waiting for the documentation evidencing condemnation.

Whilst underwriters were misled by government in this way, exporters assumed the new clauses perfectly secured them and leapt into this new field with avidity. Mercantile speculations increased exponentially until the French acted.

Even the weather opposed British interests for fleet after fleet was delayed at Gothenburg by contrary winds until 700 sail had assembled there and it was these ships that Admiral Saumarez took through the Sound to enter the Baltic ports more or less contemporaneously. They were then instantly arrested. Underwriters, merchants, manufacturers and small traders have all been ruined.

Lloyd’s Names have indicted the Licensing System as the cause of this catastrophe. It places too much British property in the hands of the enemy; it provides occupation to 50,000 foreign seamen who crew the ships; it costs British exporters £10 millions in specie annually in freight, which is the cause of the absence of gold and silver in the Bank of England and the depreciation of our paper currency in the foreign exchanges, and, most importantly, it diminishes the principle on which the Orders-in-Council are founded. The Licensing System gives to France both circulation and value. The early Orders set up a retaliatory regime founded on necessity and self-defence whilst this latest Order barters those advantages for licensing fees.

Perhaps someone has calculated how much self-defence we can afford to commute for cash. Two incompatible spirits are at work in this country’s ministerial cabinet. The recent Order might have been done in consideration of American complaints but they have themselves said it adds insult to injury. The first Orders were a defensible interference with the rights of neutrals whereas this licensed trade with the enemy appears to be solely a commercial thing. Had England rigidly adhered to the first Orders we might have carried our point and achieved an amendment of the Law of Nations. The licensed trade has relieved France from pressure, supplied her with necessaries (the lack of which was our sole chance of having the Decrees repealed) and promoted her exports.

Russian trade provides a particularly good example. Last year our goods in Russian ports were confiscated. Russia expected that no more British licences would be granted. This Spring she prepared her own licences for import of British manufactures and colonial goods in exchange for her staple exports. Then she discovered the new British licences continued to be issued, permitting the importation of Russia goods, and without any stipulation in return. The concessions that Russia was volunteering were not required by us. Clearly Russia had expected our retaliatory system to operate but it did not. One may reasonably conclude that, had we rigidly adhered to retaliation, it would have been equally effective against France. A wavering policy by our ministers has abandoned the object of the Orders-in-Council whilst a resolute policy by Napoleon has obtained the object of his Decrees.

We will now tabulate the extent of this disaster in monetary terms:

British property confiscated in enemy ports

Depreciation in value of 60,000 tons of coffee

– “ – in the value of foreign sugar

– “ – in the value of 250,000 bales cotton

– “ – in the value of East India goods

– “ – in the value of manufacturers’ stock

– “ – in the value of metals

– “ – in the value of canal and dock shares

– “ – in the value of British shipping











The depreciation on goods is ascertained from the decline in Prices Current. The depreciation of share prices is from the Stock Exchange. The depreciation in ship values is ascertained from recent sales.

The country should be in no doubt that the Continental System is working and British commerce is feeling its pressure. Commercial distress has occurred and government revenue will predictably fall. The Committee of Lloyd’s believes the country’s best policy is to return to and vigilantly uphold the principle of retaliation on which the early Orders were based. Only thus can we incite a general feeling of distress on the continent and destabilise French support.

We have not mentioned the morality of the Licensing System. The root of commerce is trust, founded on the integrity and morality of the people involved.

We are constrained to say that every Licence granted to a foreign ship is not merely a Licence to commit forgery, perjury and bribery but an obligation to commit those crimes.

Forgery commences with simulated papers printed in England but purporting to be Clearance Certificates from some foreign port that is unobjectionable to France. These require the forged seals and signatures of the foreign Customs House staff and Consul to be inserted. We have become so expert in this work that our facsimiles cannot be distinguished from originals.

The perjury occurs at destination where the Master, and commonly several of his officers and crew, must swear the ship actually came from the place stated on the facsimile documents.

Bribery involves both those crew who are required to perjure themselves and the Customs officers who investigate the documentation.

Our political leadership consider all this as a harmless ruse de guerre. In fact there is increasing evidence that the people involved, once accustomed to deceit, use it indiscriminately for their personal gain. Thus the poisoned chalice returns to our own lips.

Lloyd’s has itself experienced this decline in morality. We give a single representative example. A reward of £100 is being offered in the newspapers for the arrest of Hermanus Vos, lately a merchant of Portland Place, for forging a letter from Amsterdam to induce underwriters to pay him a total loss, which was paid. Vos is a polished man of liberal education, well known in the finest circles of London society. He has all along been trading with the enemy and it seems a reasonable deduction to believe the licensing system induced his crime.

Underwriters have it in their power to collapse this licensing system by not insuring the goods and ships that conduct it. The best foundation of national prosperity is the protection of the British flag and the integrity of the commercial classes. We commend all underwriters to act accordingly.[107]

Sat 11th July 1812

The London Bank, Boldero Lushington & Co, has failed. The immediate consequence was the disability of those country banks that draw on Boldero to meet their commitments.

One of Boldero’s clients, the Wakefield bank of M/s Townshend & Rishworth, sustained a ‘run’ for a couple of days. Fortunately the local landowners and merchants rallied around and formed an Association in support of the bank. They all declared their confidence in the bank and their intention to support it to the utmost of their power. Notices were circulated that any drafts of Townshend & Rishworth on Boldero & Co would be honoured by Masterman, Peters, Mildred Masterman & Co, another London bank. This timely action combined with the relatively small amount of Townshend & Rishworth assets in Boldero’s possession reassured the customers.

M/s Fenton, Scott, Nicholson and Smith of Leeds (trading as the Leeds Commercial Bank) also ceased payments in consequence of Boldero’s failure. A group of local capitalists had advertised their confidence in the bank only the day before but they were not prepared to put their money where their mouths were. It seems the Leeds’ exposure to Boldero and Co was proportionately greater.

The practice of country banks for many years has been to place with their London bank a sum more or less equal to the anticipated value of Bills accepted on their account. This effectively means that all the country banks have large sums in London and are exposed to the fortunes and commercial decisions of the correspondent London Bank. The Leeds Commercial Bank had Bills on it to £210,000 at the time of failure and £155,000 credited to its account with Boldero. It received a £20,000 payment from Scott & Co (one of the owners) just as it ceased payment but the government seized it as an asset of Boldero so they are now creditors of Boldero for £175,000. The Leeds Bank is said to have had few notes in circulation which should act to reduce public distress.

A Lincolnshire Bank has also stopped payment.

Sat 11th July 1812

The Licensing System seems to be relieving distress in the City. By mid February coffee had advanced by 12/- per cwt and sugar 2/- per cwt due to extensive orders from Europe. There is a mercantile supposition that peace between Turkey and Russia will allow the latter to renounce the Continental System and open a trade route for us into eastern Europe.

Sun 12th July 1812 Extraordinary

A deputation of Birmingham merchants has interviewed Perceval and reported their distress due to the Orders-in-Council. Perceval said they had made a strong case but there was nothing he could do.

Levison Gower told parliament on 4th March that he had received a petition signed by thousands of distressed manufacturers and workers in Staffordshire addressed to the Prince Regent which he was required to deliver personally. Since then there had not been a Levee for three weeks. Lord Milton is in the same position with a petition of the people of Yorkshire.

Levison Gower suspected ministers were taking advantage of the King’s illness to deny the people their Constitutional right to notify grievances by petition.

Sun 12th July 1812 Extraordinary

The 3% consols are trading at 60 – 60½

Sat 25th July 1812

House of Commons – Wallace of the East India Committee has sought to introduce the report of the committee on India – its intimidatingly bulky:

Creevey said we should consider the approaching Charter renewal. He said there was not a man in the House who knew what the Committee had been doing for the last five years and now we are expected to digest this forest of words in one session. It’s the usual Company thing – either no information or a surfeit of useless information, he said. The Committee’s papers include two voluminous financial reports containing papers that do not tally with each other and which together maintain the esoteric obscurity that always characterises the Company’s accounts.

Creevey said the Company is obliged to pay the government £500,000 a year in compensation to British merchants who are excluded from Asian trade by the Company’s charter. In the last 19 years it has been paid once whilst the government has had to advance £1,500,000 to the Company during the same period. The Company’s debt had now increased to £30 millions and their Bond Debt to £7 millions. The accumulation of £12 millions as security for the Company’s capital that was agreed before the last Charter renewal has never even started to accumulate.

When the Company started business it made good its commitments. William of Orange got a £2 million loan for giving them exclusive privileges. Queen Anne got £12 millions. Since 1765 the Company has been sovereign in part of India and the House agreed the British people should participate more in the Company’s profit but nothing has been paid.

Burke’s Report of 1781 showed the Company was no longer a trading firm but a landowner. They still operated a fleet but it was all chartered London tonnage to carry out the stores of the Company and return the tribute of production and manufactured goods being rent paid.

Since then the Company has no more tribute to repatriate and exists on loans from its employees. The amount of property tax it collected in 1811 was £1.1 million less than that collected in the prior year. The Company could not make good this shortfall from its land holdings or stock of goods – it was defrayed by commercial profits.

The people of Liverpool who are dependent on American trade (which has stopped) are suffering and the number seeking for relief from the Poor Houses has increased from 8,000 to 15,000 in just the last month. Whenever the people of England have been permitted some slight access to Asian trade, the effect has been beneficial. Creevey suggests the Company is incompetent and its trade should be opened to everyone. At least British merchants should get as much access as neutrals.

It’s a funny thing that the Company has financial difficulties whilst the Americans, who get limited access to Asia, are hugely profitable.

Creevey does not recommend transferring the Company’s revenues to the Crown. Its neither in the interest of the shareholders or the country generally. We should just note that the original capital of the Company has been entirely lost and the shareholders are actually exposed to ruin. This is a matter for the whole House to debate, not a secret committee.

General Gascoigne noted all the ports of England were preparing petitions requesting access to Asian trade and the end of the Company’s monopoly.

Charles Grant, one of the Company’s MPs, said the Committee’s report was really very useful. The Company’s account with government was contained in the two reports – on Ordinary Revenue and Extraordinary Revenue – and gave complete information. A careful reading of these reports would allow a fair person to conclude that the Charter should be renewed. Creevey’s references were from the 9th Report which detailed the state of affairs in 1790 and had since been superseded. The annual payment of £500,000 that Creevey mentioned was not compensation for the monopoly. The Company does not exclude British merchants from Asian trade because it fears competition. He was sure that a well-informed man would conclude that opening India to free trade would not be beneficial. Our continental competitors can neither sell European goods in Asia nor Asian goods in Europe. America is a special case because of that country’s neutrality – they carry Indian goods to France and no-one else can.

Whitbread noted that 4 MPs received full board from the Company.

The Chancellor of the Exchequer thought a good part of Asian trade could be opened to relieve distress at English ports without prejudicing the Company. The reduction in the Company’s rental receipts in 1811 was actually not serious. Many of the 1809 collections had been paid late and appeared in the 1810 accounts. If you took all three years, the trend was up and 1810 was the best year the Company ever had. It was the same with the Indian outports. 1810 was a bumper year and 1811 has been comparatively poorer but still more profitable than any previous year.

Brougham said everyone knew the ministry was negotiating a renewal with the Directors and the terms were said to have been largely agreed. The ministry does this privately and only comes to this House for approval. Actually the Company’s acts are so complex that documents alone are inadequate to reveal its full extent and witnesses are required. All data leaking from the Company was specific and partial and no-one outside the Directors really knew its significance in the big picture.

Concerning free trade, if anyone thinks India is a pot of gold they just have to look at our new South American trade. There the Board of Trade stimulated exports and everyone lost his shirt. It is the latecomers who see the mistakes of the ‘early birds’ and make profits, Brougham noted. There is a very large number of people in England who have been devalued or bankrupted by the ministry’s policies. The desolated people of Liverpool are one small example of a problem that is countrywide.

Brougham was particularly concerned to have a timely report. Too often the committee is appointed late and reports late and there is no time to read the report, which is often vague or incorrect, before voting on renewal.

Lord Folkestone said the ministry’s negotiations with the Company had produced a Report and he hoped the House Committee would not be tempted to act as messenger in bringing that Report before the membership. The real problem in the country was the costs of government – tax after tax, surcharge after surcharge, appeal after appeal – all unredressed.

The House then voted and the East India Committee was revived.

Sat 1st Aug 1812

Liverpool town council 30th Jan – Poor Relief Return for January 1812:

Families Persons
Week ending 3rd January 2,263 8,828
10th January 3,156 11,265
17th January 3,824 13,856
24th January 4,248 15,350

The towns of Lancashire, Yorkshire, Staffordshire and Nottinghamshire are much the same. In Scotland, Glasgow and Paisley are similarly affected.

Sat 1st Aug 1812

House of Commons, 3rd March – Brougham has moved that the Orders-in-Council be rescinded:

We commenced our retaliatory style of war in 1806 and in Jan 1807 an Order-in-Council was issued promoting it. Since then our manufacturers and merchants have difficulty making profit. There are contending opinions about the cost of retaliation. We have permitted a slight relaxation in our policy in respect of America but it is resented by many. I suggest we go into Committee to discuss the effects of the Orders. The Orders are intended to counteract the Berlin and Milan Decrees whereby Napoleon abandoned Europe’s maritime trade intending to destroy ours. International commerce aids us more than it aids France, that is why he is willing to risk its destruction.

In August 1810 the revocation of the French Decrees drew American ships into French ports where they found a new duty of 60 sous per lb on cotton which was equivalent to prohibition. The merchants of Bordeaux and Hamburg protested and Napoleon told them he valued soldiers and farmers more than merchants.[108] Talleyrand has published a book on agriculture. He says commerce attracts people to live in towns whereas agriculture disperses them. It seems that French policy is to discourage trade and encourage agriculture.

Our policy should be to encourage neutral American shipping. The Americans are without a navy, operating under a form of government which makes war difficult. Their products do not compete with ours. Instead we have adopted a policy of constant hostility to neutrals and repeatedly tried to force them into choosing one side or the other in this war. The negotiations between our two countries continue and perhaps an acceptable conclusion will be reached.

Brougham opposed the Orders when they were discussed four years ago.

The French arrangement for American trade welcomes US ships provided they have not visited England. France has little ability to check what ships visit British ports. We concluded that we could force all American ships into English ports to load our goods before they visited France and the French would never know. We issued our Orders-in-Council accordingly. The immediate effect of this was that our trade for 1808 / 09 (imports and exports) fell £15 millions from the previous year.

In April 1809 we rescinded that Order and issued another which is the only Order now in force. This enacts a blockade of the NW European coast and parts of Italy (between Pesaro and Orbitello). Thus the original intent of the Orders to retaliate against France’s Decrees was abandoned and the new scheme introduced ‘against which’, the minister said, ‘France could not succeed and would have to rescind her Decrees’. This new Order was a blockade of the NW European ports and of Toulon and Genoa, allowing trade anywhere else. We were no longer retaliating against Napoleon but acting to increase our exports. Naturally our trade statistics improved but during 1810 the value of British property confiscated in European ports was £9 – 10 millions. This approximates the value we have taken in Droits of Admiralty from friends and allies since the war began.

So far as the national account for 1810 is concerned, £10 millions was transferred from British account to French account. After that, in 1810, Napoleon ordered that British property found in his ports be burnt. It seems we are incapable of influencing him by commercial means and he has constantly maintained his exclusive policy against us. We thought, if we deprived France of Jesuit’s Bark, Napoleon would submit to our views.[109] It was a mistake. The only people benefiting from our current regime are naval officers – the rest of the country is suffering. The Order is implicated in the high number of bankruptcies and in increased poverty in our ports and manufacturing towns. A year ago Liverpool had no-one receiving Poor Relief; just a few weeks ago there were 3,000 people, now there are 16,000.

Irving says the Returns under Vansittart’s Act show our trade has increased. I do not care what the Customs House Returns purport to say. I do not want to hear that our imports and exports are flourishing. We have genuine distress in our ports and manufacturing towns. Last year 2,000 firms failed. Our prisons are overflowing with debtors. The poor houses of the Midlands are filled with paupers. Petitions are flooding into parliament. We should act before distress obliges the people to take the law into their own hands.

Brougham thought it implicit that the Customs House records were wrong and that they had been wrong at least since 1807. They constantly overstate the value of our trade when all the evidence on the street shows it has collapsed.

In fact it appears to be very likely the case that a good part of our ‘flourishing exports’ have either been confiscated in Europe or remain in American and Channel Island warehouses unsold and unsellable. These unsold goods are ultimately returned to swell our import statistics. In any event the Customs House records for 1810 have a discrepancy of £12 millions. They are clearly unreliable – ignore them.

Brougham then considered the Licensing System that took-off in 1807 with the issue of 1,600 licences. In 1810 the ministry issued 18,000. One may readily estimate the percentage of this country’s trade that is carried-on under transferrable Licences. So far as France is concerned, Licences are the final abandonment of our retaliatory policy. Any Englishman who wishes to trade with the enemy may now buy a Licence to do so. Obviously our blockade must have been loosened when 18,000 voyages are being made to Europe in a year (60 per day). This is an abrogation of our posture. Licensed trade is open to France but closed to all neutrals unless they pay our fee. The Licensing System encourages neutrals like the Danes, Norwegians, Swedes and Dutch (all countries under French influence) to carry our trade with France as well as their own trade. We must pay them silver or gold for freight and they get an advantage in training their seamen.

In 1806 and 1807 the amount of British tonnage engaged in trade equalled the amount of neutral tonnage. Since then neutral tonnage has continually increased whilst ours has continually declined. New shipbuilding in 1809 was half the building in 1806. By 1810 foreign shipping exceeded 1.1 million tons and the numbers of seamen employed on foreign-flag ships had doubled. We are creating a European navy for Napoleon to invade us. All this new tonnage is in the hands of potential enemies and is used at the expense of the American shipowners who are the very people with whom we should be nurturing friendship.

The Licensing System is controlled by the ministry. Our international trade is managed by the Board of Trade. We are no longer commercially hostile to France. We have the Trade Department spending their days considering what cargoes are for export and which ports they would be most welcome in – this is what Canning and Rose do. Formerly they knew little about trade, now they are the national experts for it.

Everyone knows that predators prowl the Foreign Office corridors listening for any tittle-tattle that may be commercially useful. The door-keepers and clerks all have their circles of friends. It does not require venal officials for the Licensing System to go drastically wrong, the information readily leaks out and the system is abused. The people one finds involved in this trade are not the usual suspects – Baring et al – but a group of Danes, Norwegians, Swedes and Dutch, all supposed neutrals but under French control and using mainly Jewish intermediaries. These are the Board of Trade’s new customers. No doubt the French government knows the direction and quantity of our trade on a daily basis, and what we need to export or import.

The effect of the Licensing System on business morality has been deplorable. A generation of British merchants are being taught to ‘dissimulate’, as the President of the Admiralty Court quaintly puts it. It has been well said that Licensing begins with forgery, is continued by perjury and ends with fraud – and its our government that is promoting this. In these Licenses one finds phrases like ‘notwithstanding that all the documents represent that the ship and cargo are destined for …’ or ‘to whomsoever such property may appear to belong.’ What HM’s Secretary of State is saying is that ‘notwithstanding that this trade is done by fraud and perjury, we permit the ship and cargo to pass through our naval blockade on payment of £n’. What the ministry does is provide an alternative set of papers to use whenever the real papers are inappropriate. Usually our fake papers carry the Duc de Cadore’s signature (the French Foreign Minister) but I saw one set the other day that was signed by Napoleon. We have papers for every circumstance. This diminishes the morality of merchants but it is the ship captains and crews that are most deeply implicated in immorality – they have to swear to the truth of the forgeries. When they lie that the ship comes from Amsterdam, that is not the end of it. The inspectors will ask the state of the weather and wind at Amsterdam; what other ships were in port; what news was in the newspapers. The extent of lying that the ship’s officers and crew prepare for is enormous.

Brougham then read a promotional letter sent recently to a famous American merchant by a leading British document forger in Liverpool:

“We make simulated papers to the ample satisfaction of our customers. We have full sets of shipping documents for the following ports, (list of 20 ports). I, G B, and my brother J B have two year’s experience and understand all the common languages.”

A part of our commercial men have made a market in this business. Should we feel proud of them? Are they illustrating the superiority and justice of our cause? Napoleon says he will have soldiers and farmers but no traders. Who takes the high moral ground and who sacrifices national honour by a filthy commerce? Is this the triumph over the Continental System for which our fighting men made such great sacrifice. Perceval says if we do not provide the forgeries, others will and we will lose our ability to control the trade. That should sound familiar – it is the argument that kept the slave trade going so long.

We should not so readily dispose of our probity and honour. Only by preserving our character can we claim a right to participate in the privileges of humanity. We must have an Inquiry to ascertain the full extent of the disease before we can propose a remedy. I believe that process will result in our deciding to conciliate America and support her neutrality. If we force America into alliance with France we must make war on her.

Rose answered for the ministry:

The impoverished state of the midland workers was due to a reduction of wages (reduced purchasing power of paper money) and not to reduced business in the factories. Birmingham was particularly dependent on American trade and might form a special case. British trade in 1807 when the Orders were introduced was £34 millions, in 1808 the same, in 1809 £50 millions and in 1810 £45 millions. The apparent shortfall in 1810 was due to an exceptional cause. Napoleon had relaxed the Decrees in 1807 and our trade had advanced. In 1810 there was brief reversal of French policy which permitted the seizure of over £9 millions of British property (the convoy of 700 ships taken in Baltic ports). None of this trade was Licensed trade, he said. Trade with America has increased annually from 1807 to 1810 notwithstanding the Non-Intercourse Act of 1809. British tonnage did reduce from 1807 to 1809 but had recovered in 1810 and so had the number of seamen. Foreign shipping had of course increased for that was the main route by which our trade with Europe could be conducted. The problem has been how to distribute the huge stocks in our warehouses before they rot. We could not let our merchants be ruined. As a result of the ministry’s policy France is supplied with British goods instead of American.

As regards the Licensing System all the frauds it requires existed before the Orders-in-Council. The Licences have in fact reduced perjury from the high levels it attained in 1807. Members should recall the company in Emden that charged 2% of invoice value for a set of false documents in those days.

Rose agreed that many petitions had been received but they were full of false signatures and generally involved only the lowest classes.

Brougham thought today’s so-called neutral trade would be better done by the Americans alone.

Rose said people believe that our Orders should be repealed if France repeals her Decrees. That is not the case. The French object is to remove the blockades from her coasts. The Americans only want the Order of January 1807 repealed not the other Orders. If we end the Licensing System the trade of the world will become open to France and America and they will certainly exclude us, he forecast. Our opinion of the Orders is not frivolous – we called a deputation of City merchants to the Board of Trade and took their advice first.

Baring thought there was something fundamentally wrong with the British commercial system:

Whether the Orders or the Licences were factors he would not say although the way the Orders had stopped neutral trade was a major part of the problem. Our trade and neutral trade were both prospering but we wanted the neutral trade for ourselves, hence the Orders. We had successfully stopped neutral trade but had failed to resurrect it to our own advantage.

Baring suspected that Napoleon was hostile to trade – he can import cotton at Liege and Flanders if he chose to do so and the Orders cannot stop the Americans taking it to him but this trade is not exploited.

Baring thought the real danger to British prosperity was the manufacturers of Massachusetts rather than the French. The Orders have stimulated American domestic industry and they have just sent a cargo of their first manufacture (cotton twist) to the Baltic. He expected American trade in the Mediterranean to increase too. Baring thought the best policy was to repeal the Orders and give the neutral trade to America. America is a real neutral whilst today’s ‘neutrals’ are in fact our enemies. America will conduct the trade honourably.[110]

However the ministry has put it about that America has been insufficiently submissive in her relations with England. When France offered to repeal the Decrees on condition that we did likewise, the Americans demanded we repeal in a way that caused the ministry to withhold repeal. It is true that there have been no confiscations since the French repeal – captures yes, confiscations no. We asked America for evidence of the French repeal – its unprecedented. What if the roles were reversed and France had asked America for proof that the Orders were repealed; that she would not accept a copy of the legislation as evidence but only the safe arrival and departure of neutral ships at our ports? Then we would have had real grounds for protest.

The ministry has incited everyone with talk of America insulting our maritime rights. There are three strands to the difference between us – impressment, the Rule of 1756 and blockade. America submitted to our impressment of British citizens found on her ships; she thought the Rule was illegal but submitted to it, correctly assessing it is fundamental to our maritime power; she has no dispute over our blockade. So altogether there is nothing in our claimed maritime rights that should cause us any difficulty with America.

Philip Stephens is the Admiralty chap who drafted the Orders and is considered the ‘father’ of the system:

He said there are many Orders. We are talking about the Orders of Jan and Nov 1807 which were consolidated into and superseded by the Order of April 1809. There is another Order of Nov 1810 against French coastal trade but he thought we were all talking about the April 1809 Order.

He would never agree to repeal that Order because the French would get the European trade through American nominees. In Nov 1806 and Dec 1807 when the Berlin and Milan Decrees were promulgated, our trade shrunk and many ships relanded their cargoes because all the ports of Europe were closed to us.[111] Then the Orders restored some balance and our trade recovered.

Far from ruining our trade, the Orders have saved it. The Orders only apply to a short length of coast in the Low Countries and Italy – they cannot be implicated in the loss of the Baltic convoy that has been mentioned.

The Licences are certainly immoral but they are relieving poverty in the manufacturing districts. They must continue. The trader must have a Licence for protection from both belligerents.

Canning said the Orders had been mitigated to encourage Spanish trade after those people revolted against their Francophile King. It was a flexible system that we could shape for all purposes.

Whitbread reminded the House that the army in Portugal and Spain was utterly dependent on American ships for provisions.

Brougham’s motion was then voted and defeated 216 / 144.

Sat 15th Aug 1812

The maritime rights of neutrals were fixed in 1713 by the Treaty of Utrecht which was signed and ratified by England, France, Holland, Portugal, Prussia and Spain and formed the basis to international law on the subject.

The Treaty provides that:

  • The ship’s flag covers the cargo – enemy goods under a neutral flag are neutral goods; neutral goods under an enemy flag are enemy goods.
  • The protection of a neutral flag does not extend to contraband, arms & ammunition or military stores.
  • When a belligerent’s ship visits a neutral ship on the high seas it will stay out of cannon reach. The visit is made by a few men only.
  • Neutral ships may trade from an enemy port to an enemy port or from an enemy port to a neutral port.
  • The ports disallowed to a neutral are those under real blockade i.e. invested, besieged and likely to be taken, to which access is dangerous.

These terms have been incorporated in every subsequent treaty that involves maritime rights. The British assert this agreement was modified in the Seven Years War by the Rule of 1756 which disallowed a wartime trade to a neutral that had been unavailable to him in peacetime, e.g. trade with European colonies that was restricted to the mother country in peacetime, could not be engaged in by neutrals in war. The development of International Law is achieved by war, the victor getting his amendments incorporated. The Rule of 1756 was thus also adopted in international law after 1763 but is irrelevant to the instant matter.

The Order-in-Council of 16th May 1806 proscribed all neutral maritime trade. The Orders of 1807 permitted neutrals to again trade provided they came to Britain before continuing on to destination. This made London the commercial capital of the world (by becoming the entrepot for all colonial goods available to neutrals) and made international trade contribute to British costs of war. It was welcomed by British merchants and politicians as the route to global hegemony.

Napoleon’s Berlin Decree of Nov 1806 responded to the Order of May 1806 by blockading British trade to Europe; the Milan Decree of December 1807 responded to the Order of November 1807 by denationalising every neutral ship that visited England or paid British tax. Effectively France was conceding all trade to England but denying her a market in the territories she could influence – the Continental System. This caused great amounts of British capital, that had been invested in colonial goods and manufacturing, to become frozen in the warehouses of England and gave birth to the great smuggling trade and the Licensing system that have characterised recent years of the war. Smuggling caused the incorporation of the Netherlands in France and the occupation of the Hanseatic towns by French garrisons to close the popular smuggling routes of the English. This then gave birth to the Licensed trade which was an acknowledgement of the failure of the restrictive British policy.

The British ministry overlooks the Order of 1806 and categorises the Order of 1807 as retaliation for the Berlin Decree, and the consolidated Order of 1809 as retaliation for the Milan Decree, thereby affecting an apparently responsive national posture.

Sat 22nd Aug 1812

The merchants of Manchester and Salford wish to call a meeting to agree a wording for a Petition to the Regent. 154 merchants called the meeting at the Exchange Buildings. In the meantime the Petition of the Livery of London that could not be presented to the Regent is circulating in the country and the people of Manchester also decided to Petition – they have not done that before.

As a result the merchants’ of Manchester postponed their meeting. They first tried to find an alternative venue where they would not be disturbed by the common people but failed. A great mass of working men (who had learned of the intended meeting) assembled at the Exchange Buildings at the appointed time. They broke into the Buildings and trashed them. Many valuable items were broken. The army was called, the Riot Act read and the crowd was dispersed. A few arrests were made.

Sat 22nd Aug 1812

Under the Licensing system, French wine and brandy is brought to England. The wine is taxed at £5 per ton; brandy £10 per ton. After the duty is paid the goods are to be sealed in the ship until the commensurate quantity of sugar and coffee has been exported. Then the importer must export the wine but he may sell the brandy in England if he wishes (Editor – there is no substitute for French brandy).

Sat 22nd Aug 1812

13th April – Richard Spooner has led a delegation of Birmingham merchants to demand the repeal of the consolidated Order-in-Council of April 1809.

Perceval said it cannot be done.

Rose said France and England are like two men with their heads in a bucket of water – its just a matter of who can hold-out longest. That overlooks a material fact – the economy of France is far less dependent on trade than we are.

Sat 22nd Aug 1812

Stock prices today (early April) – 3% Consols 60, 3% reduced 59.

Sat 24th Oct 1812

Lloyds of London has posted a letter from New York in its coffee house indicating British trade to West Indies will be threatened by the proposed American Embargo Act. British consuls in America have been advised that they might have to leave soon.

Sat 5th Sept 1812

The Bank of England held a quarterly Court on 21st March 1812 and agreed to pay shareholders a nett £5 dividend after tax in respect of the first half year’s business. Shareholders asked about the parliamentary debate on making the Bank’s paper legal tender in Ireland. Chairman Hoare said the Bank knew nothing about it – it is a ministerial initiative. We will be told when the time is right, he told shareholders.

A shareholder asked if the Bank was in a race with the Board of Trade. He explained as follows: The Board is issuing Licences for trade with the enemy. France has agents in every European port (as do we) to manage this Licensed trade. The ships taking the cargo require British exporters to pay freight in gold or silver. The shipowners bank this specie with French banks in London. This transfer of specie is proceeding at a rate of about £10 millions a year. When the goods are delivered in the Baltic, the cargo owner exchanges the bullion proceeds from sale of his goods for Bills on London which are returned via Paris to these same French banks in London.

Every week the French banks ship off bullion, as can be seen from the Customs House entries, in settlement of the Bills. Thus the bullion we pay here for freight becomes the bullion that pays there for some part of our goods. The Licensing system is a means of transferring bullion from England to Europe. The less bullion in the Bank of England, the less value there is to underwrite its note issue.[112]

Sat 31st Oct 1812

Frankfurt Journal: The British House of Commons debated the budget on 18th June. The Chancellor of the Exchequer said taxation is a heavy burden on the people that cannot be relieved.

Last year we spent £19.7 millions on the navy; £14.6 millions on the army; £5.3 millions on ordnance; £2.3 millions on army extraordinaries.

Then there were subsidies – Sicily £100,000 and Portugal £2 millions; unforeseen costs £2.3 millions. England needed an extra £5 million and Ireland £2 million plus a loan £8 million making a total required revenue of £58 millions.

Add the interest on Exchequer Bills £1.7 million plus Exchequer Bills cancelled £2.4 millions, makes £62 millions.

The Chancellor said the country needed to borrow £23 millions to see its way through another year. He thought £6 millions might be available from ‘voluntary’ subscriptions but the rest would have to be borrowed from the capitalists who are less confident this year and likely to demand harsher terms.

Sat 7th Nov 1812

Frankfurt Journal – The British government enquiry into distress in the thirty principal manufacturing districts is receiving disturbing news. They have interviewed one hundred witnesses. Birmingham and its adjacent districts, formerly one great factory, is now in famine. Even the greatest manufacturers of Birmingham have discharged half their workforce. Warwickshire, Yorkshire, Sheffield and Rochdale are the same.

The ministry is in a desperate plight. Government debt paper keeps sinking in the market in spite of constant government buying through the Sinking Fund and Land Tax. The new loan for £22.5 millions for this year’s expenses has been contracted on onerous terms. Britain appears to have reached her credit limit.

Sat 7th Nov 1812

The channel of communication via Morlaix (the prisoner exchange) has been used to submit a humanitarian French proposal to London. Prussia has a good harvest of winter wheat and a surplus is available for export. Both France and England have hungry populaces. Napoleon has suggested to the British ministry that we jointly buy this supply for the relief of our people.

The initial response of our government was that our shortages in this country are not yet severe. Britain is not actually short of grain, its just that merchants in the manufacturing and export sectors have less business due to the Continental System and have laid-off staff. This has disabled the unemployed from paying for food.

We have said we are willing to consider an arrangement whereby, after the Prussian ships discharge the British half of each cargo, they load the empty space with British manufactures for sale in France. A French response is awaited.

Sat 14th Nov 1812

London, 30th April – Our Board of Trade applied to the Russian Company for a Licence to send a ship to Matwick and was refused. We hope this does not indicate our trade difficulties in the Baltic are increasing.

Sat 21st Nov 1812

The House of Commons debate on the Orders-in-Council continued on 4th May:

Jeremiah Ryder has been interviewed. He is a Birmingham trader with buyers in America. His capital of £50,000 is all held in stock which he cannot ship until the Orders are repealed. He does not care about the French Decrees or the Non-Importation and Embargo Acts.

Ryder is daily importuned by manufacturers offering their products at knock-down prices. He is irritated he cannot take advantage of their offers. If there is a war with America he thinks he will take his business to New York and exploit that market directly. He believes the Non-Importation Act has stimulated American domestic manufacture.

Joseph Webster makes wire in Birmingham. He has some valuable orders from America which he cannot ship until the Orders are repealed. The diminishment of his trade has caused him to lay-off workers. He usually employs 100 but has dismissed 25 whom he believes to be still unemployed.

Joseph Day is a locksmith from Walsall. He said much the same. The Poor Rates in Walsall have increased by £600 in the last few months. A high level of unemployment affected the town but no violence had yet occurred.

Sat 6th Feb 1813

London market – 3% consols 7th July are declining at 55½

Sat 24th April 1813

London – Canning has been able to assemble a ministry but a general election is called anyway.

Catholic emancipation is to be debated in the next parliament.

In the last parliament, the Chancellor of the Exchequer said “bank notes in the public estimation are equal in value to gold” and at the same time parliament passed a law making it criminal to exchange bank notes for less than their face value in gold. This was followed by a flight of gold out of the country to Hamburg and other cities where it is worth much more.

Sat 15th May 1813

Commons, 8th December – Manning, the Governor of the Bank of England, answered the supposed drain of gold and silver from domestic circulation with a report from his Bank indicating that over the last fifteen months it had issued £2.5 millions in silver coins (3/- and 1/6d coins) and withdrawn a similar amount of notes. The actual silver content of these coins is less than other British silver coins as they are made from recycled Spanish dollars. The present note circulation (Bank of England only) was now £22.5 million.

On 9th December, the Chancellor of the Exchequer asked for and was permitted to raise £10.5 millions in new Exchequer Bills.

Sat 29th May 1813

The London Prices Current for 22nd December reveals the sources and types of imports received at that city:

  • North America – cotton, rice, tar, beeswax.
  • West Indies – coffee, cotton, ginger, indigo.
  • From South America – coffee, cotton, hides and indigo.
  • From Africa – aloes (from the Cape) and ivory.
  • From the Baltic – flax, hemp, tar, iron.
  • East Indies – coffee, cotton, gums, indigo, spices, medicines, rice, sago, opium, saltpetre, silk, sugar and timber.

Sat 29th May 1813

London, trade report 22nd December – Large sales of coffee have depressed interest but owners are not cutting prices. Most of the last auction was bought-in. Speculation has evaporated and the Licensed trade has shrunk to so small a scale as to be insignificant. Prices will only recover when the Baltic trade is reopened. Russian military success suggests this may occur in the Spring.

Sugar is selling well.

Cotton from North America and West Indies is selling briskly. 14,000 packages were sold to the spinners of Manchester last week and our manufacturing classes are reviving.

Rice is unavailable.

Sat 19th June 1813

The Gold Coin Bill establishes the perfect equality of bank notes to specie.

Chancellor of the Exchequer Vansittart says the British people are confident about bank notes – they are convenient for carriage. The Bill is receiving its second reading.

Huskisson said that by linking paper to gold in value, the paper currency cannot be inflated.

Whitbread had learned that a shipment of £80,000 Bank of England notes had been sent to the Governor-General of Canada to pay for his troops and war supplies in the tussle with America. He asked how is the value of this paper money secured. Chancellor of the Exchequer said he had sent the notes to Canada and they were traded at a 30% discount which made them attractive and acceptable to the Canadians. He said they were expected to settle at the same value as our commercial Bills of Exchange which are also traded in Canada.

Chancellor of the Exchequer Vansittart said the ministry understands the risk of paper depreciating and was liaising with the Bank of England to restrict the issue of its notes appropriately but the use of credit for public exchange is one of the greatest discoveries of modern times. It has tripled or quadrupled the resources of this country. We cannot return to a currency based on value. We must make paper money work and an important part of that is to criminalise any exchange that devalues it.

This Bill is forced on the ministry by Lord King. His tenancy agreements require tenants pay him rent in gold.

The important thing is to entirely remove value from the circulating medium. All the gold and silver coins should be replaced by paper so there is nothing to remind the people of an alternative.

Whitbread believes millions of guineas (a gold coin worth 21/-) had been exported on the approach of this piece of legislation. The capitalists believe gold is valuable and paper is not. Some are melting gold coins to escape the risk of its detention as coin at the Bank (it is the export of gold coin that is illegal not the metal itself).

Chancellor of the Exchequer said we have been here before. Early in William III’s reign silver coins were debased and sold at varying prices and more recently in Ireland guineas were exchanged for whatever value the parties could agree upon. At present our situation is the same as Portugal. We lack a law to enforce equality of paper and gold. This is the problem that daily affects Wellington’s ability to pay his way in the Peninsula – none of the merchants are willing to take his paper except at a huge discount. He gets 14/- per paper Pound (70%) at best.[113]

Portuguese statesmen and our own Bullion Committee say the value of paper can be maintained by precisely regulating its amount. Unfortunately, before we discovered that principle, we had overly printed and issued bank notes. We now need to create the mechanisms that will ensure paper maintains value and the confidence of the Portuguese merchants can be slowly restored.

The Bullion Committee also commends that bank payments in gold should be resumed in two years but the ministry says this will create confusion in the country. Britain does not have that amount of gold and silver to circulate and there is no prospect of importing it because the value here is artificially low – the mint price offered for gold (in paper Pounds) is less than the market price. The notes cannot be replaced by coins – they have to be accepted. The only way England can restore the domestic value of specie is to maintain an immense balance of trade in our favour. That will oblige our trading partners to discharge the balance in specie which will then be imported to the Bank for domestic circulation.

The problem only became acute in 1808 with the Berlin Decree. Then France not only stopped our goods from being imported to Europe but she stopped the payments (for those goods that evaded her import controls) from being repatriated.[114] It was that later fact that caused gold to flow away from Britain. The rate had been about £24 millions annually since then (i.e. effectively the merchants are paying for their return cargoes in gold). Last year we also had to export £7 millions of gold for foreign grain purchases. It is these outflows of gold that have changed the exchange rate with our paper money and disturbed the merchants.

Protheroe said we intentionally removed value from the domestic economy and had a duty to protect people who were necessarily obliged to receive credit in lieu of value. He supported the Bill.

Whitbread said he had noted in Bath that potatoes sold by the sack for 3 guinea coins or £4. 7. 0d in paper money, a 40% devaluation of paper. Wheat and flour were the same and in fact few people were willing to tender gold coins as they expect the paper value to fall further. He knew of numerous instances of commercial contracts that had been unilaterally voided when payment was unavailable in gold.

Whitbread objected to the ministry blaming Lord King. He had always made his tenancy agreements with the express stipulation for payment in gold. Now his foresight is being rewarded, the ministry reproves him. It was not Lord King that created this different value – it was one of the ministry’s methods for increasing the country’s ability to raise loans that was the proximate cause.

The particular tenant who raised the ministerial ‘hue and cry’ against King was a Bank of England director who had made windfall profits from the excess issue of paper money whilst King and all other landowners had lost in the same proportion. This Banker was precisely the sort of person who should be required to pay rent in gold and it was from this man alone that King demanded such payment. In fact King generally waived his contractual right to gold and nearly all his tenants pay in paper. That banker has circulated allegations of King’s sedition and oppression but it is a nice question ‘who oppresses who?’

Whitbread knew that guineas were sometimes sold in Liverpool at 27/- or 28/- each, but the majority are being hoarded precisely because of this Bill. The most damning thing is the cost of the British army in the Peninsula – it is increased 30-40% by forcing paper money and Bills of Exchange onto the unwilling Portuguese merchants who supply it.[115]

W Smith said the same Liverpool prices that Whitbread mentioned were paid for guineas in Norwich. Poverty was forcing people to exchange gold to get the advantage over paper and then use the paper to settle taxes, etc. Whether the ministry acknowledged it or not, there were two prices in the country – one for gold and another for paper.

The third reading is set for tomorrow (a Saturday). Whitbread objected it was too fast – many MPs needed time to consider its effects. Chancellor of the Exchequer said it cannot be helped. Appeals to the Speaker failed to get a reconsideration.[116]

Sat 19th June 1813

House of Commons, 14th December – Parliament has voted £150,000 to people whom we have induced to leave their own countries to fight France with us. They are primarily French aristocrats, French clergy (many now in the Channel Islands) and Dutch merchants.

Palmerston at the same sitting obtained a vote of nearly £4 millions for a variety of unexpected military costs – support of foreign corps, the American loyalists and others (Now Britain is  warring with the United States she needs to ensure her friends in New England remain supportive).

Whitbread complained the Chancellor of the Exchequer knew he had a cash shortfall this year (one of the war taxes was repealed last session) and should not be so profligate.

The Chancellor of the Exchequer said he had been able to sell £6.5 millions of unfunded Exchequer Bills to the Bank of England to solve the cashflow problem.

Whitbread said it was the first he had heard of it but he had not been in the House last Saturday and supposed it was voted then.

The Chancellor said the sale was approved in the usual way.

Sat 3rd July 1813

The ministry is considering to regulate the new market in Licences that has sprung up in London. By making the new Licences assignable, they sell second-hand at ever increasing prices.

The ministry says the rationale to transferable Licences is to permit an increase in the types of British manufacture that France is now willing to import.

Sat 10th July 1813

L’Ambigu, Commercial Bulletin, 10th December – The withdrawal of the French from the north of Europe has given an impetus to commerce in London. The best sorts of roasted coffee are quoted at 95/- per 100 lbs and green coffee is 80/-. Jamaica sugar has risen to 86/-. Speculators have bought the entire supply of foreign sugar.

The effect of these rises on British paper has been astonishing.

Omnium on the last close was up 8 – 8½%. The Franc exchange rate to the Pound Sterling has risen to 27 Francs 60 Cents per Pound at Hamburg whilst Paris is still trying to hold the old level at 18 Francs 75 Cents. The potential for windfall profits has so stimulated the markets that all the commercial misery of the last two years has evaporated.

Sat 17th July 1813

Parry, a merchant of Devonshire Square, has been accused of forgery on a grand scale. The total value of his forged Bills is £100,000 of which $60,000 is on one London House alone.

The deceived merchants held a meeting with Parry last week at which they were sufficiently credulous to permit his departure on his agreement to return later.

He has not been seen since and enquiries at his Devonshire Place office and at his country estate were unavailing. He is rumoured to be in hiding in London awaiting the departure of a ship on which he has booked passage.

Sat 14th Aug 1813

House of Commons, 12th January – Receipts from war taxes for the year ended 16th October 1812 were £21,823,000, whereas the comparative figure for 1811 is £22,649,000. This reduction of revenue is not reflected in the receipts of the Consolidated Fund which were £40,455,000 in 1811 and £41,177,000 in 1812.

We have lost £800,000 revenue from war taxes but obtained an extra £700,000 in the Consolidated Fund from somewhere else. It’s a mystery.

Sat 21st Aug 1813

A meeting of the City merchants in the City of London Tavern has agreed to raise a subscription for Russia. The ministry has already obtained a parliamentary grant of £200,000 for the Tsar. All of Europe was closed to us by Napoleon until the Tsar broke the French grip on the continent.

Russian exports are almost entirely sent to England and paid for in English manufactures and colonial goods. Russian exports are essential to our maritime supremacy and her imports are a useful market for our trading and manufacturing classes. The salvation of Russia is also the salvation of England – we should be grateful.

The Tsar never asked for a subsidy but has achieved what all the subsidy-seeking powers could not achieve – he has a claim on us. Chairman Manning, the Governor of the Bank of England, then read a list of subscriptions that had been pledged. Most of the subscribers are MPs and some are merchants. By 25th February, they had collected £59,000. Another subscription at the Crown and Anchor Tavern has collected £29,000.

Sat 4th Sept 1813

The London subscription for Russia of 30th December 1812 is duplicated at Bombay. The officers and men of H M’s 65th Regiment have donated £150 and various merchants and Company officers have added over £1,000. Unusually for India, the new Bombay governor Evan Nepean, formerly of the Admiralty, is not on the list – normally the governor’s name is at the head of every subscription.

Sat 25th Sept 1813

The Bonne Citoyen (Green) has arrived Spithead from Buenos Aires with £1 million in silver. She was escorted as far as the Equator by HMS Montague. Lloyd’s had set the cargo premium, in event of a claim, at 60% and her safe arrival has reassured the City.

HMS Sir Francis Drake (Peachey) which is bringing $1 million in silver from Calcutta to London, has transferred half her cargo to HMS President (Warren) at St Helena for safety. HMS President has since arrived at Portsmouth.

Sat 9th Oct 1813

The reversal of France’s prospects in our ‘eternal war’ that has been caused by Napoleon’s retreat from Moscow has allowed the exchange rate for Sterling to recover. The appreciation of Sterling against the Franc in international markets since Moscow is 15% so far.

Castlereagh has told the Commons the appreciation of Sterling is due to the ministerial decision to end the Licensing System. He says the historical relationship between Sterling and gold is thereby restored. Actually, the value of Licences issued and not yet completed is so great they are expected to provide a further c. £8 millions in gold to France for her import duties.

Formerly the effect of the Licences was to devalue Sterling and revalue the Franc as the balance of our trade with Europe was against us. Now we no longer have to permit French imports on any terms and France has to allow our goods in without reciprocal provisions in the Licence. That means the balance of trade is now paid by France in shipments of specie to England. Castlereagh says that is the cause of Sterling revaluation.

It is just as well it happened now. The deficiency of British revenue this last year is about £2.4 millions. Fortunately, the moneymen now think we are a better bet that France.

Sat 16th Oct 1813

Until March 1812 rice was selling throughout England at 2½d a pound. It is now (March 1813) 10d to 1/- a pound.

Sat 16th Oct 1813

Vansittart is proposing to levy no new taxes in 1813 and make-up the shortfall in necessary revenue by borrowing from the Sinking Fund. Since 1786 this fund has been consistently applied by the Legislature to redeem the national debt. Vansittart’s proposal would be a departure from previous fixed practice.

Tierney and Huskisson in the Commons and Lords Lansdowne and Lauderdale in the Lords have united in reprobating the proposal. They say the Fund is ‘one of the fundamental institutions of the finance of the country, upon the efficacious operation of which depended the maintenance of public credit during the long and expensive wars in which we have been engaged.’

Sat 30th Oct 1813

A few months ago a creditor arrested the corpse of his debtor in London and kept it in his cellar, expecting the relatives to disgorge the amount of his debt in return for the body.

Contrarily, the relatives sued and the Sheriff, sitting with a Jury, gave them their verdict with damages of £200.

Sat 4th Dec 1813

John Senior has been executed at York for perjury. He obtained a declaration of bankruptcy by concealing some assets which were later found. Capital punishment in these circumstances is rare. The last case was John Perrot, a lace worker of Ludgate Hill, in 1761.

Senior was in the red to £13,513. He swore to the Commissioner that he had spent £5,500 on a woman friend but the Commissioner disbelieved him and so did the Judge.

Sat 11th Dec 1813

The British are becoming familiar with the effects of a paper currency. The cost of living in that country (in terms of paper Pounds) has continued to increase faster than the increase in wages and the majority of the population are suffering.

An English couple who used to live in Bombay have written of their experiences since returning to live in London two years ago. They live in a large house in a fashionable part of town (York Place on the north bank of the Thames in Westminster) with an establishment of servants commensurate to their need. They keep an open house for one or two friends every weekday at dinner time and they entertain 12-14 people on Saturday evening. The following costs are the average annual costs after two year’s expenses:

  • Their house cost £5,500 and the furniture cost £2,550. Interest on the house price at 5% and the furniture at 10% = £530 per annum.
  • The ground rent, rates, income tax (on the rentable value of the house), window tax, water = $132 per annum.
  • They have ten servants costing £232 a year (a maid is £10 up to a butler at £45).
  • Four liveries (one on each door of two carriages) taxed at £120; fresh foods £1,040; groceries £90; heating coal £105; lighting candles £60; stationery £30 and wine £300, totally £1,745.
  • Jobbing two carriage horses £126, carriage maintenance £50, maintaining two riding horses £70 = £246.
  • Men’s clothes £150, woman’s clothes £200 = £350.
  • Entertainment subscriptions £80. Pubs, clubs, charities £100. Rent etc., of summer holiday house $200 = £380.
  • Average annual medical expenses £60
  • Other miscellaneous expenses £93.
  • Total = £3,847 per annum.

They exclude interest on their jewellery, silver plate, carriages, etc., (which cost over £3,000) although the government taxes income at 10% of the value of everything you own. Effectively this couple needed £4,500 a year in 1811 / 1812 to maintain themselves in the style they were accustomed to in British India.

Sat 11th Dec 1813

John Cole is a real estate agent in London. He received a commission from the landlord of a small unit wherein the tenant, one Ann Arthur, had not paid her rent. Arthur has an unemployed husband and four children. She has been earning for the family but not enough to cover the costs. When the rent fell into arrears, the landlord employed Cole to protect the contents of the apartment pending for a distress sale.

Whilst sitting in the living room performing his duty, he saw Arthur take a box of dominoes, which had been given to one of her children since deceased, and give it to another of her children. Cole protested and endeavoured to take the asset from the child forcibly. Arthur intervened and Cole struck her causing an unexpected spinal injury and paraplegia.

He says he was put in possession by the landlord and had a duty to protect the property. He has been bound-over to appear at the next Sessions and justify his act.

Sat 11th Dec 1813

Morning Chronicle, May 1813 – A broker at Lloyd’s of London is selling policies on Napoleon’s death. A premium of 4 guineas will earn a 100 guinea pay-out if he be dead or imprisoned before 19th June 1812.

We tried so often to assassinate him without success – perhaps the gambling fraternity will fare better. The availability of this new investment has been also published on the Exchange at Amsterdam.

Sat 18th Dec 1813

Every British capitalist will buy gold for paper money, despite the ministry’s recent enactment of punishments. This has given rise to a delightful new scam.

A very rich man resides at Goodman’s Fields (in Aldgate). A gentleman called on him, using the name of a mutual friend, and offered guineas for sale. The rich man bought the entire lot and paid with paper.

Moments later, the gentleman returned, the apparent prisoner of a policeman, who adverted to the earlier transaction and entered the house to search. The rich man is naturally expert at hiding things and the policeman failed to find any gold after a most diligent and lengthy search. He nevertheless arrested the rich chap and took his ‘two prisoners’ off to Union Hall in Whitechapel for enquiries.

On the way he offered to release the men for a reward but the rich man did not respond. Ultimately the ‘policeman’ simply walked away and the rich man went home where he discovered two banknotes for £800 were missing from his desk although all the hidden gold had been preserved.

He returned to Union Hall and complained. The banknotes had by then been exchanged for smaller ones and the police are now trying to locate the thieves.

Sat 15th Jan 1814

The House of Commons Select Committee enquiring into the grain trade has reported that Britain and Ireland have sufficient arable land to produce grain for all the population and entirely preclude the need for imports. During the last 5 years the declared value of imported grain was £18,934.359 of which over one third came from Ireland.

Sat 5th Feb 1814

The Naval Chronicle, the newspaper of the Royal Navy, has commented on the use of oak for ship-building:

145,504 acres of the Royal forests are closed off to the public and used to grow oak for the navy. In 1788, the time they were last reported upon, the forests had produced during the prior 57 years an average of 1,356 loads of oak timber annually – sufficient to build one ship of 642 tons a year in the national dockyards.

At this rate of production, given the average rent that the land would attract if put on the market, this works out at £68 per load, excluding transportation whereas the supply of private oak timber to the dockyards is bought-in at £4. 5. 0d per load.

In 1802, when the country wished to build many new frigates, the Surveyor General of Forests told the Navy Board that the quantity of timber suitable for felling was too small to maintain the then rate of production.

In 1783 a survey of four Royal forests revealed the quantity of fallen and decayed timber exceeded the quantity of growing trees. In that survey six forests covering 83,738 acres were estimated to contain 50,456 loads.

In 1788 the tonnage of the Royal Navy was 413,067 tons; in 1810 it was nearly 800,000 tons and consumption was calculated at 100,000 loads a year. By 1812 the quantity of hull timber we used was 110,000 loads without considering masts or cannon-carriages.

Private suppliers harvest 50 loads of oak timber per acre. At their efficient rate, we would still need 220,000 acres of forest to meet our needs.

The article concludes with a recommendation that the Navy explore the use of Asian teak for its ships.

Sat 5th Feb 1814

British grain imports recorded at the Customs Houses for 1812 totalled £2,855,000, of which £1,641,000 came from Ireland.

Sat 12th Feb 1814

The improvement of British fortunes in Europe is reflected in bullion prices in London. By late April 1813 fine gold and fine silver were trading at £5. 8.0d and 7/6d per ounce respectively.

Bank of England shares are at £220 and pay 10½% annual dividend plus occasional bonuses.

Sat 19th Feb 1814

HMS Bucephalus has arrived Portsmouth 10th Aug 1813 with $1 million in silver from India and China. She has convoyed the Indiamen on their homeward voyage.

Sat 12th March 1814

The London Times of 16th July has a report on the national finances for the year ending 5th January 1813. Revenue including the loan was £95.7 million and expenditure was £104.4 million.

Servicing the public debt cost £36.6 million of which £13.5 million (£1.35 million?) was passed to the Commissioners for Reduction of the Public Debt (they supervise the Sinking Fund and buy government stock)

Imports for the three years 1811 – 1813 were £36.4, £24.5 and 23.0 millions. These figures exclude imports from India which were £4.1 million in 1811.

Exports for the three years were officially £34.9, £34.1 and £31.2 millions but the Customs says the real value in 1813 was £43.7 million if one includes re-exports. Foreign goods re-exported were £10.9, £8.3 and 12.0 million respectively.[117]

Sat 26th March 1814

Lord Liverpool and Vansittart held a meeting at Downing Street with the bankers M/s Robarts, Curtis & Co in respect of a new loan. The expenses of the ministry in procuring the unexpected revival of allied fortunes have been considerable.

40% of the old loan remained to be repaid and any new loan would be expensive. For this reason Liverpool offered the new loan to the subscribers of the old one. If their proposals are unworkable, it would be offered generally. This loan is intended to last until Spring 1814.

HMS Voluntaire left Portsmouth on 25th October with £150,000 in specie as wages to the British forces in Spain.

Sat 2nd April 1814

The India Company’s Directors have been discussing the salary increase that the shareholders have approved (the deal is the Company pays Income Tax on the dividend; the shareholders approve the salary increase).

One said the pay-rise should be dated from 1st April (laughter). Another said people complain about patronage but the Directors have to give the jobs to someone and that is always likely to be their friends whom they know and can vouch for – its not really corruption. Look at the China factory – the names of the writers and officers at Macau are the same as many of the Directors.[118] Increasing the Directors’ pay is ‘small beer’ compared with their incomes through family members.

When Fox tried to seize the patronage of the Directors for the ministry, it was valued in total at £350,000 a year. Writerships now cost up to £3,000 but taking a modest valuation of $2,000 each and assuming a low value for a cadetship at the price of an army commission (although they are often £500), the 770 writerships and 4,423 cadetships awarded during the validity of the last Charter (20 years) produced an immense value.

The Board of Control received patronage equivalent to 2 Directors; the Chairman and deputy Chairman each had a double patronage; all other Directors had a single patronage. That totals 28 shares between the Board and the 24 Directors amongst whom the patronage was distributed – its nearly £5,000 a year for each share.

Another source of patronage is the selection of ships for charter. Ship owners generally reckon a Company charter, if it can be bought, is worth £500 per ship.

Then there is the appointment of barristers and solicitors to India.

The Directors also appoint the staff of India House, the Company’s warehouses, the two colleges (Haileybury and Addington), etc.

Formerly the Directors received a commission from British manufacturers whose goods were selected for sale in Asia but they professedly abandoned that a few years ago.

The political administrators of this country are paid less than the Directors although their duties are often more onerous and time-consuming.

He thought wealthy men would be better rewarded with honours rather than more money.

Lushington said £300 a year (the Directors salary at present) is not worth as much today as a few years ago (due to inflation of the paper money supply). The Company’s business had grown immensely in turnover and complexity in recent years.

The comparison of Directors’ and ministers’ incomes was flawed as it excluded the patronage of the latter. Melville in the last two months of his service as First Lord of the Admiralty appointed Captains to naval service in which they each made £10,000 – £20,000 (freighting bullion and share of prize money). On that basis should Melville receive no salary? The Auditor of the Exchequer also has the disposal of many profitable jobs.

Shareholder Lowndes said he had spent decades trying to penetrate the mystical workings of the Company but his questions were always laughed-at. If the Directors’ salaries are increased, it will start a new round of corruption and he intended to sell his shares (laughter). He knew that people were queuing-up to become Directors and the salary was clearly more than ample. The matter of patronage had made the Company odious to the people – jobs in India should be distributed fairly.

Grant said Directors who had sons found the patronage advantageous but not all Directors had sons. Of 30 Directors he had known, only 18 had relatives serving in the East.

The meeting finally approved the appointment of a committee of fifteen (quorum of five) to look into the patronage of the Directors.

Sat 2nd July 1814

House of Commons, 17th December 1813 – A Committee on Foreign Treaties has provided an interesting report to parliament. It says the world is indebted to England for freeing it from vassalage to France. The services we have provided to various states are almost endless:

The direct aid in money and stores to Spain was £2 millions; the subsidy to Portugal was £2 millions; to Sicily £400,000; to Sweden £5.4 million.

Finance to Sweden enabled that country to field an army of 50,000 men. This, together with the genius of Bernadotte and assistance of Moreau, enabled Sweden to beat the French.

We granted £2.5 million in subsidies to Russia and Prussia with which they were enabled to make their splendid contribution to the war effort. We rewarded Austria with £1 million and 100,000 muskets for her last Declaration of War against France. We have also guaranteed a further £2.5 millions to the European states generally for future war costs.

George III was, through his ownership of Hanover and control of trade into central Europe, Arch-Treasurer to the Holy Roman Empire. During this war he became Arch-Treasurer to all of Europe.

We have resuscitated Spain and re-created Portugal. Our efforts have resulted in Holland and the German states recovering their independence. This is all due to our efforts and example. We are the deliverers of Europe and we may expect the applause of the world.

Sat 2nd July 1814

House of Commons, 7th December – The Insolvent Debtors Bill is being debated in the House of Commons. It is generally supposed to be a Bill to ameliorate the conditions of debtors but has a clause providing for capital punishment in cases of bankrupts concealing assets in excess of £120.

Serjeant Best (a barrister)[119] proposed two amendments – that a debtor who makes an honest disclosure of his assets, surrenders them to his creditor and makes reasonable proposals for repayment of the balance should not be imprisoned. On the other hand those debtors who institute vexatious legal proceedings intending to delay payment to creditors should be imprisoned for 12 months certain. Both proposals were withdrawn after discussion.

The state of Newgate Prison was considered. Grand Juries are supposed to visit the prisons they send convicts to and the Grand Jury of London visited Newgate last week. Its report is embarrassing. The women’s section has facilities for 60 inmates but a population of 120. The space of 3’ 6” allowed to each woman has been halved. They live exposed to the weather and few have bedding.

Sir James Shaw defended the Corporation of London. Overcrowding the prisons of England with debtors has occurred suddenly. Its an aspect of the parlous state of the economy. There are over 300 debtors in Newgate plus 200 real convicts awaiting transportation.[120]

Tues 5th July 1814 Extraordinary

London, 12th February – the 3% consols were 66¼ on 9th February and 71¾ today.

Sat 16th July 1814

Dutch merchants are again permitted to trade with Dutch colonies. We require them to get Licences from the British minister at the Hague or the British consuls at either Amsterdam or Rotterdam. They may only visit ex-Dutch colonies and no other places.

To ensure the Dutch are not enabled to compete unfairly with us, they are required to pay the same duties that British merchants pay at their ex-colonies.

Sat 27th Aug 1814

Lord Huntingfield (Joshua Vanneck) has for years been the Agent for those Dutch colonies that submitted to British occupation (those that complied with the letter we squeezed out of the Stadtholder requiring them to hand-over administration to British officers). He has accumulated an immense amount of money on behalf of the Dutch. During the war, the Court of Chancery permitted him to make no payments but he will now settle all debts.

Sat 3rd Sept 1814

The market price for gold in London has fallen substantially. Since January there was a continuous influx of bullion from Europe which lasted for three months. More shipments are expected in coming weeks. Our army in Spain (now in France) has been paid in gold since the beginning of this year.

Sat 3rd Sept 1814

A fraud at the Stock Exchange has been detected and several important people are being prosecuted on indictment for conspiracy. It relates to Napoleon’s defeat and supposed abdication which the conspirators announced before the fact.

They include Andrew Cochrane Johnstone, Sir Thomas (Lord) Cochrane, Charles Random Berringer, Richard Gathorne Butt, Ralph Sandom, Alexander McCrae, John Peter Holloway and Henry Lyte.

There are forty prosecution witnesses including Admiral Foley, the talkative investor whom the conspirators first approached.

Sat 26th Nov 1814

Lord Cochrane, who embarrassed the ministry with exposés of corruption in the Admiralty, has been indicted and convicted of conspiracy to commit fraud. He is one of six conspirators who are said to have started a false rumour about Napoleon that influenced share prices. All six are sentenced to be pilloried outside the Stock Exchange and then imprisoned for 12 months. There was an immense crowd outside the court which was exclusively sympathetic to the Admiral. He was visibly shocked at the judicial award.

The conviction should act to prevent Cochrane returning to the House of Commons and that’s the main thing. In fact both Cochrane and his relative Cochrane Johnstone were expelled from the Commons by a vote 140 / 44. The Prince Regent has erased his name from the Admiralty List and is expected to withdraw his KCB. It is not easy to criticise the British government and impossible to do so in Cochrane’s way.

The pillorying was later remitted by the Regent as an act of clemency.[121]

Sat 10th Sept 1814

A meeting of holders of French pre-war debt paper has been held in the City of London. The Estate of Sir Elijah Impey, former Chief Justice of Bengal, is the largest holder. The amount it alone claims is just under £2 millions. The meeting appointed an Agent in Paris who is to receive 1% of any sums recovered up to a maximum £10,000. It was agreed to petition Louis XVIII comparing the injustice of Napoleon with his own pristine honour.

Sat 5th Nov 1814

Editorial – In most of the world one becomes enslaved as a result of superior force but in England slavery follows imprisonment for debt. Any creditor may imprison his debtor on his own allegation of non-payment. The House of Lords is discussing the state of these paupers in the prisons. Many of them dispute all or part of their alleged debts. They can spend up to a year in prison before the matters are cleared-up.

The creditor pays 6d a day for debtor’s own-maintenance provided the debtor makes Oath that he has no other assets. Making that Oath, knowing it to be untrue, is a capital offence, but they are mostly men of straw with no foreseeable possibility of paying-off their creditors. 6d a day is not quite enough to sustain existence – the inflationary effects of the paper money have devalued the currency for the past several years. As a result the debtors are reliant on friends and relatives for their food and continued existence.

There is improper treatment of these alleged debtors – some are charged large fees for care received in prison, some are not allowed to make Oath for weeks after requesting to do so, others wait weeks after making Oath before assistance is provided and any debtor who seeks for the protection of the Insolvents Act has his payments stopped from that instant until his release.

Stanhope said imprisonment by creditors is wrong. They ally with petty-fogging lawyers to abuse the protection of law and imprison their enemies for all sorts of non-debt reasons. He had just made a survey of the last 520 completed cases and found, in 468 of them, that the creditor(s) recovered neither the alleged debt nor the maintenance costs. This system does not work.

Sat 12th Nov 1814

King’s Bench, 10th March – Frederick Cavendish sued the Globe Insurance Office and its Directors Isaac Lewis Goldsmid, John Neave and Sir T Theophilus Metcalfe for non-payment of a fire claim.

The insurers deposed that Cavendish was involved in setting the fire. Judgment for the Defendants.

Sat 19th Nov 1814

The country is in uproar over a ministerial attempt to increase the price of bread. A revision to the Corn Laws has been moved in the Commons whereby a swingeing duty would be placed on imported grain, sufficient to amount to a prohibition.

The proposal is that when domestic grain costs 63/- per quarter (28 lbs), the tax on imported grain is 24/- per quarter. The tax decreases as local prices increase until it is totally absorbed at 87/- per quarter. The intention is to artificially support the value of agricultural land, maintain the rents and revalue the land-owners who have not had a good war.

Landowners have been comparatively disadvantaged by the malt tax and the tax on agricultural horses. Their land holdings are public knowledge and cannot be concealed like merchant profits and they have consequently been contributing full rate to the income and property taxes. Formerly people mostly brewed their own beer but the malt tax closed that loophole and moonshining and smuggling had consequently increased which is no good to the landowners – indeed it only benefits the hoi polloi.

On the other hand, limiting grain supply to domestic production inevitably means dearer bread. The ministry wants to give the landowners a hand and is probably very sorry about the price of bread.

George Rose has been leading opposition in the House of Commons and he has become a national hero. The ministry took fright at the number of Petitions coming in and sought for delay. It moved a committee be formed to report after six months.

Sat 10th Dec 1814

Hector Campbell has published a table of comparative prices of bread over the last 125 years which well illustrates the collapsing value of the British paper Pound recently. It appears in an (unidentified) English paper:


Price of a loaf

Loaves per £

Farm hand’s wkly wage

Wage in loaves

Poor Rate (£ mlns)

Nos of Paupers (000’s)





























Year 1803 1804 1805
Price of a loaf 10d 12d 20d
Loaves per £ 24 20 12
Farm hands’s wkly wage 10/- 12/- 15/-
Weekly wage in loaves 12 12 9
Poor rate (£ millions) 4.113 5.922 10.452
Number of paupers (000’s) 1,040 1,247 2,071

In the last 20 years bread has tripled in price whilst wages have increased by two thirds. In the same period, the cost of the Poor Rate has quadrupled whilst the numbers of paupers receiving it have doubled (20% of the population). It has been a hard time for the majority of English people.

The great increase in commercial crime and the astonishing numbers of people in the smuggling trade are the evidence of hardship – there is no alternative.

Sat 4th March 1815

The French legislature is upset with the Bourbons. The change of government was an opportunity to repudiate the national debt but the Bourbons have committed themselves to the allies to meet all the debts of Napoleon’s government.

They are selling part of the national forests to make the payments. Strangely, ‘the eternal enemy’ (England) is the largest national creditor.

Sat 4th March 1815

The Hon Francis Cavendish has been acquitted in Dublin. He was on trial for his life for forging a Power of Attorney that caused the Bank of Ireland to pay out £1,250.

Sat 11th March 1815

R Ladbroke has died leaving an Estate of £400,000 (unconnected with the gambling business of today – the family wealth was derived from banking and land). His stud has just been sold at auction for £3,000+

Sat 11th March 1815

Canning has made an uncannily perceptive speech in the House of Commons which received much applause. It was in the debate on the peace treaty.

He said the extraordinary thing about the war was that a small country like England had been able to exert itself sufficiently to successfully contend with the ‘delusive and enthusiastic spirit of liberty’ in a bigger country like France. All Europe is examining our recipe for strength and we have become the model for future government.

We are entering a new age. We will not have to force our system on Europe, the Kings recognise its superiority. Nurturing commerce creates national wealth – the country with the deepest pockets wins the war.[122]

Sat 18th March 1815

There is something wrong with the distribution of foods in London. The military garrison in Middlesex has contracted for supply of best beef at 6d a pound. In other home counties it is 4d – 5d a pound.

A pound of beef in London cannot be had for under 10d. It seems that beef is yet another necessary to have been monopolised by a cartel.

Sat 18th March 1815

A man from Harwich calling himself Thomas Mountain arrived in Hamburg in mid-September and passed a number of counterfeit British bank notes. He has a Jewish appearance. The cash shortage here has made the merchants of Hamburg an easy prey to this sort of activity and the spurious notes have been widely circulated. Once they became suspect, Mountain disappeared.

Sat 18th March 1815

One of the lucrative scams tolerated by the ministry was the construction of barracks for regional militia in the expectation of invasion by France. The forts are now being dismantled and sold. Chelmsford Barracks is being taken down for sale but nothing is said of the notorious Lines nearby which cost £33,000 to construct on the Estate of Sir H Mildmay (plus £600 a year rent). This enormous cost was never publicly explained. We sincerely hope the sale price now will be equally enormous.

Sat 18th March 1815

The absentee Dutch landlords of Surinam farms have been represented during our occupation of their country by a Commission of the British government superintended by our Robert Bent, former MP for Aylesbury.

His administration of their property has been cautious and expensive and no income remains to the landowners. Bent’s commission has now been revoked.

Sat 18th March 1815

Vansittart has told the Governor of the Bank of England that the ministry does not expect to require either a new loan or an issue of Exchequer Bills this year. Concurrently with the publication of this news the 3% consols rose to 67 on the Exchange.

Sat 18th March 1815

Aggravated robberies have become a daily occurrence in England since our military forces were demobilised.

  • H Schroeder was travelling to Whitfield in Kent when three ruffians set upon him, stabbed him and robbed him. They then dragged him off the road into an adjacent copse supposing him to be dead. He was discovered still alive the following day and taken to Whitfield for treatment.
  • Sir Charles Flower was riding his horse when a single armed robber sprang from the roadside and accosted him – ‘your money or your life.’ Flower thought he could escape from one man and spurred his horse forward. A few yards further on a couple more robbers stepped out and shot at him, injuring his horse which stopped. Flower jumped off. He was struck on the head with the butt of a pistol and rendered unconsciousness. When he awoke all his money and valuables were gone. He thought the robbers had the bearing of soldiers.

Sat 1st April 1815

Thomas Draper has been charged at Somerset County Sessions with being a rogue and a vagabond. He has imposed himself on the citizens of Bath and Bristol by purporting to cure disease by touch. When questioned about his expertise in medicine, he said he had a diploma from God.

Many thousands of people have sought his help and the daily crowds are immense. He has been making a fortune whilst qualified doctors have insufficient business. They have now persuaded the magistrate to arrest him.

Sat 22nd April 1815

The Commissioners for the Reduction of the National Debt are now investing £75,000 every Transfer Day to support government paper in the market.

Sat 22nd April 1815

Talleyrand has introduced the French national budget. He notes the population of France in the last census was 28 millions and the previous year’s revenue from personal taxes was 600 million Francs producing an average payment per head of 22 Francs a year.

In America 7 million people paid $16 million in Federal tax during the years before the present war with England – the equivalent of 12 Francs each. Adding the State Taxes of an average of 11 Francs each totals 23 Francs per American. He concludes that French and American taxes are comparable.

He also examined British taxes but found them anomalous. Excluding Ireland, the product last year was £60 millions from a maximum of 12 million inhabitants i.e. £5 per head, equivalent to 120 Francs.

Talleyrand attributed the ability of the British ministry to maintain its great income to the Sinking Fund whereby part of the revenue was used to buy government loan stocks and maintain their price. This reassured the capitalists to subscribe to new loans at low rates of interest.

As the British have been manipulating their stock market for decades, they should raise no complaint if France emulates them which is Talleyrand’s main proposal for financial recovery in France.[123]

Mon 1st May 1815 Extraordinary

Vansittart has agreed to reduce British Income Tax to 5% but says he will have to continue it for another ten years.

Mon 1st May 1815 Extraordinary

The Prince Regent re-opened parliament on 8th November. He told the legislators that arrears of government payments and the costs of the American War necessitated a continuation of the war taxes.

Sat 6th May 1815

Two London merchant banks have failed. They are Mainwaring Son Chatteris & Co and Whitehead Howard & Hoddock.

Mainwarings was in the tannery business and is small beer. The payments due are £50,000 and available assets are £30,000.

Whiteheads were agents for several provincial banks and held their balances. Old Whitehouse retired a few years ago and the bank has been under his son’s management. Whitehead’s money for the last few years has been in Spanish wool and the difficulty we have with the new Spanish government in settling terms of trade has contributed to the poor performance of those speculations.

The failure of Whitehead was precipitated by the Bath bankers Hobhouse & Co who withdrew their funds. Whitehead’s son is reported to have speculated in Omnium which has performed poorly of late – he has fled to France. His father has offered £50,000 to refinance the business. Poor Howard, the junior partner, bought into the firm with £80,000 not long ago.

Another unfortunate victim is the Yeovil bank of Daniel & Co. They were customers of Boldero’s bank which failed last year. They transferred their remaining capital to Whitehead’s bank and have now probably lost that as well.

Sat 27th May 1815

The Leipzig Fair was well attended by British manufacturers this year (there are a reported three fairs a year, early January, Easter and Michaelmas (end September), and this article likely refers to the last-named in 1814) and British hardware and saddlery were in demand. Cottons and printed piecegoods were selling at low prices as the fair was greatly over-supplied. All the shipments normally destined for America have come here instead this year. There has also been a huge re-export through Holland and Belgium to Leipzig. The Swiss and Saxon cloth was very competitive – it looked newer than the English and the patterns were more modern.

English buyers took almost all the Georgia cotton on offer.

The most noticeable thing was the favourable balance of trade that England now enjoys with all Europe. Each day produced a progressively higher rate of exchange that Europe pays to London. This movement of value to England explains the better prices that colonial goods are now attracting.

Sat 27th May 1815

On 13th December the Lord Mayor, Aldermen and Livery of London proclaimed their demand for an end to the Income Tax:

Successive ministers have all said the Property and other taxes are war taxes and will be repealed on the peace. We have peace but the taxes continue. Worse, Liverpool’s colleagues have said they will tax our incomes for several more years. We have been deceived.

Its not just the loss of income that irritates us, we have to deal with swarms of surveyors, assessors and inspectors and submit to the arbitrary, inquisitorial and unconstitutional powers of the Revenue Commissioners. After the regular payment comes a series of unpredictable surcharges against which we have to reveal all that we know of our affairs and even then the Commissioner is quite likely to deem his own figures correct. We make our statements on Oath whilst his assessments are ‘plucked from the air’. Not only that, but there is no appeal in law or equity. Persons who have traded close to or over their limit of their capital, have to settle the Commissioners’ demands or expose themselves to bankruptcy proceedings.

We are not talking of occasional oppression, as occurs when the government is hard-up, but of systematic injustice throughout the country. The Tax Commissioners are a Capitalist Inquisition. We have unanimously agreed to petition the Regent for protection and redress.[124]

A second resolution of the Londoners on 23rd February was against the prohibition on imported grain:

This Act is to maintain the high price of bread and thus rents for agricultural land in order to appease the landowners who are well represented in parliament. For 20 years the people have been called upon to surrender part of their property in order to preserve the rest. Manufacturers and Merchants were disproportionately taxed whilst most of their channels for sales abroad were closed. Trade has stagnated, their buildings and machinery have been devalued and all the necessaries of life have become expensive. The Gazettes are filled with lists of bankrupts, the prisons are filled with debtors and the poor houses filled with paupers.

On the other hand, during this nationwide commercial distress, the price of land and the produce from it has doubled. Landowners have been exempted from the sacrifices of the rest of the community. Their secure rental income is taxed at the same rate as uncertain business profits. The increased income of the landowners is greater than the taxes they pay. Those taxes were supposedly for the preservation of property. Now with peace, the natural reversion of land values to their peacetime level has been prevented by this Act. This is mistaken policy. With peace, England will have to compete with the neighbours for the trade of the world. If our cost-base is high, our products will be too expensive.

The problem is the abusive nature of political power. All those placemen, pensioners and appointees must be evicted and a rigorous economy substituted for our former profligacy. Both Houses have been repeatedly petitioned to reject increased grain prices. We now add our petition to those many others.

Sat 10th June 1815

The country bank Marsh Deane Westbrooke & Co of Reading failed on 5th January. This is likely a knock-on effect from the other recent failures in London. It was a complete surprise to the customers.

Sat 29th July 1815

The government has introduced its Corn Bill amending the Corn Laws to prevent any imports of grain unless the domestic price reaches 80/- a bushel.

There is a cartel operating in London that substantially increases grain prices. A quartern loaf in Exeter retails for 9¾d but the same loaf in London (which gets its grain from the west country) is 11¾d. The 20% surcharge greatly exceeds the cost of transporting wheat from Exeter to London.

Sat 12th Aug 1815

The British ministry really needs money. The Treasury has issued £18 million in unfunded Exchequer Bills and asked the Bank of England to sell them. For every £100 received they offer £117 in Navy 5% Bills. The cost of money has become a clear indication of the state of the economy.

Thurs 21st Sept 1815 Extraordinary

The minister has got a new loan from the City for £42 million. He has got as much as he can in one huge bite because he is not sure they will contribute again. It is said to be all that will be required to conclude matters with France. The terms are naturally harsher than hitherto.

The deal was done with two tenderers – M/s Steeres & Ricardo of the stockbroking cartel and M/s Barings representing the merchant bankers (NB – stock-brokers and bankers run the British economy. They are now being joined by insurers).

The precise loan requested was £27 million for England, £9 million for Ireland and a credit of £6 million.

For every £100 cash received the Chancellor of the Exchequer will pay £130 of 3% consols plus £40 of 4%s plus a discount of 4% for prompt payment. The subscribers get their first dividends free of Income Tax.

Vansittart indicated he might need more money and he declined to undertake not to issue Exchequer Bills. The size and terms of the loan have shocked investors. 3% consols fell from 57 to 55 in the course of the day.

Sat 30th Sept 1815

Ship-building business in London has reduced and the builders are increasing their prices to compensate. We used to build seven ships a year on the Thames, now it is only two. One of the industry’s problems has been the India Company taking a position in the market. They have procured an Act of Parliament permitting India-built ships to trade to London and be sold here. It is one of Dundas’ initiatives. They are teak ships and stronger than our domestic oak builds. Two years ago an Indian ship could be bought for £20 a ton, now it is £31. It seems to be profiteering. What will become of our shipwrights and artisans if India is allowed to compete with our domestic industry?

The House of Commons is debating the East India Shipping Bill. In previous wars we have converted Indiamen to warships to increase our naval force. If Indiamen are built in India we will not have the docks here to continue that procedure.

Wallace said this is a restraining Bill. It prevents India-built ships from being used anywhere except on voyages between London and Asia. Shipyard owners should remember that when America was a colony, her ships were permitted British registry, and no complaint was then made. He said the principal cause of reduced British ship-building was the end of the war not the quality of Indian shipbuilding.

He noted that there are 4,000 shipwrights petitioning and 80% of their work related to repairs rather than new builds. They are not faced with ruin but a reduction of market. The Company operates 30 ships which are now ageing and will require replacement. The shipwrights will compete for that business.

Indian ship-building is actually good for England. One third of the construction materials are sent out from England – Indian iron is unsuitably mild, India has no copper and canvas must be English. India was valuable only for the hulls and the skilled carpentry. In any event owners of British forests have quadrupled the price of oak over the last 20 years and it was no longer economical. Approved 51 / 22.

Sat 28th Oct 1815

The Treasury has published its account of all the subsidies paid by Britain to continental powers between 1793 and 1814. Its tiny – about £50 millions.

The principal beneficiaries were:

Portugal £9,433,355
German Imperial Loans £8,636,666
Prussia £8,375,633
Russia £5,275,158
Spain £5,200,477
Sweden £3,878,411
Sicily £2,616,666
Austria £2,414,881
Hanover £2,290,107
Hesse Cassel £1,271,107

The beneficiaries of less than £1 million are Sardinia, the House of Orange, Bavaria, Brunswick, France, Denmark, Baden and Morocco.



1816 – Whole year missing in BL copy

1817 – Whole year missing in BL copy



Sat 24th Jan 1818

Stockbrokers are saying they have never before witnessed such a strong and sustained rally of stock prices in London and it seems that all the merchants are involved and attending to little else in the way of business.

In early July, Bank shares were 291, 3% consols 82, 3% reduced consols 89.

The Danish and French loans are doing well – the French loan pays 7½% and is particularly attractive. Next settlement day is Friday and the daily increases provide great advantage before it is necessary to pay.

Sat 14th Feb 1818

House of Commons, 11th July – Grenfell MP asked the Chancellor of the Exchequer whether the twenty years of paper currency had produced more good or evil to the people (NB – Nicholas Vansittart was Chanceller from 1812 – 1823).

He recognised that the convenience of paper money had been important in its widespread acceptance but wondered, now the war was over, if the ministry had any plans to permit the people to share in the benefits of real value which is currently reserved to the Bank of England and cabinet members.

The Chancellor of the Exchequer left his place and no response was obtained.

Sat 14th Feb 1818

This year’s British revenue has a surplus in the stamp duty and Customs but a deficit in the Excise due to the great expansion of private home brewing and distilling. Overall the government has a little more money than anticipated and the 3% consols have rallied at 80¼ / 80½. The premium on India bonds is £123 and they are expected to go higher.

Sat 14th Feb 1818

British Midlands, 29th September – six months ago unemployed workers were starving in the streets and all the industrial furnaces were cold – now the factories are working all hours and are still unable to cope with their orders.

In Staffordshire, the iron industry is centred on Wednesbury, Tipton, Bilston and Braley and full employment reigns. New furnaces are being built to increase the supply of refined ore to the factories. United with commercial prosperity is the excellent harvest our farmers had this year. Everyone is hopeful again.

Sat 14th Feb 1818

The Goldsmiths Hall Company has reported a great increase in duty paid on finished silver and gold work from its workshops. In 2nd quarter 1817 the amount rose by £5,000 over the 1st quarter which approximates with a one third increase in sales.

Sat 14th Feb 1818

Robinson, the Minister for the Board of Trade, told the House of Commons on 11th July 1817 that he knows how to grow the British economy but as soon as he moves in that direction, in comes one or other of the shipping, commerce or manufacturing interests with vociferous complaints and accusations and all improvement is prevented.

Merchants in iron and wool trades, in mining and manufacturing and shipping all had differing wants and the only thing they agreed upon was the maintenance of restrictive laws that protected their investments and sale prices. He could make no progress with the national economy unless this was first addressed.

He knew it was absurd – even the transit duty on foreign linen (a tax on re-export) could not be removed as our friends in Northern Ireland (big linen producers) instantly objected. He wants the House of Commons to take a lead. We are in the third year of peace and this House has not yet thought it fit to debate national economic policy.

As regards financial policy, the Chancellor of the Exchequer maintained that the onerous Customs duties that make smuggling so profitable must remain because he would not jeopardise his revenue to the speculative free-trade idea of growth. A government should preserve what it has got, he thought. The poverty of Europe has continued and our exports have not fully recovered their former extent. On the contrary, European countries were commencing their own manufacturing industries and would soon become our competitors. Cotton mills had been established at Vienna and Mulhausen which made cotton ‘twist’ of high quality.

British industrialists wish to prohibit the export of ‘twist’ and gain the added value of processing it into piece-goods themselves. A Petition had been received by the Regent to this effect.

Our relations with the Spanish colonies of South America was another point – we have commercial agents in some countries but not in others. We have a Consul in one Spanish colony who received his commission from King Ferdinand VII but dared not produce it as the place was verging on, and has since declared, independence.

In Trinidad our colonial government supports the Spanish and opposes the mainland residents. It provides services to Spain of inspecting letters to the mainland, preventing selected people from travelling to the mainland, charging others up to $200 fare for carriage to the mainland. As a result its trade with the mainland has collapsed, food prices have risen fifteen-fold and mules for carriage cost $40 each.

The King of Sardinia is one of the Kings for whom we fought to establish the present order. He was granted part of Liguria as an indemnity for something. On his island he was restricted to a small income and army. Now we have given him Genoa and its hinterland he is more powerful. The Vienna Congress declared Genoa would be a free port but the King first demanded a loan from the Genoa Chamber of Commerce to build himself a frigate. The Chamber passed on the costs to its members who form two groups – British on the one side and French and Piedmontese on the other. The continental merchants declined to complain because they want the British out and they support anything we dislike. Our chaps appealed to the British Consul at Turin but his help was ineffectual. They remonstrated with the Chamber with the result that a soldier was placed outside the house of every British merchant until they started paying the impost at the rate of 3 Francs a day. They complained again to the Consul but were rebuffed. Eventually someone got to Castlereagh who wrote to the Sardinian Court and was told they had done nothing illegal. The MP said he was ashamed when he learned of this ‘degradation of the British character.’

English merchants abroad must be able to rely on the Foreign Office to get them the conditions they need. We are the foremost naval power but we submit to Sardinia whose King is our creature!

Once the King had got his impost accepted, he introduced a tax on cloth that disadvantaged our merchants more than the French. If these insulting little Kings can do this, what will happen to our trade with big Kings like Russia and Austria?

Castlereagh talks of a balance of power but all the European countries are maintaining armies; the Holy Alliance looks more political than religious;[125] the dispute between Portugal and Spain continues to grow. Where is the security and tranquillity that Castlereagh expects from his treaties?

Castlereagh replied that the funds are up, the factories have full orders, people have jobs – “what more do you want from me?”

Sat 28th Feb 1818

On 8th October in London 3% consols were 82½

Sat 28th Feb 1818

London 27th September – Now the war is over and Napoleon has been incarcerated, the British government is minting a new coinage of gold sovereigns and silver half-crowns, shillings and sixpences. They propose a further issue of gold half-sovereigns and silver crowns when more bullion becomes available. The silver crown will approximate the Spanish dollar, both in size and value. It is not intended to withdraw bank paper entirely – it is well-tolerated and is considered convenient.

Sat 13th June 1818

Bell’s Weekly Messenger, 4th January – the British government will mint 500,000 Crowns (5/- coins). The King’s head will be on one side and St George and the dragon on the other. They are expected to be received by the Bank of England in about a month.

Sat 4th July 1818

London, 9th April – the Chancellor of the Exchequer has ordered private bankers in the City to issue no more banknotes of less than £5 w.e.f. 5th July. It is supposed that the Bank of England may resume cash payments at about that time.

If private bankers wish to continue issuing small notes after 5th July, they will have to deposit security by way of bullion, specie or government paper.

The objectionable features to the merchants are twofold:

  • firstly, the security required is as extensive as the note issue and the country banks can get no gearing advantage from it;
  • secondly, on depositing his valuable security in the Bank of England, the private banker gets Bank of England notes in return. He will no longer be allowed to print his own notes. This extinguishes the fundamental attraction of paper-currency to note-issuing country banks.

Sat 11th July 1818

London, 13th February – the gold and silver coins put into circulation by the ministry last year (1817) total in Pounds Sterling:

Sovereigns 3,224,025
Half-sovereigns 1,037,295
Half crowns 1,125,630
Shillings 2,458,566
Sixpences 657,162

Sat 11th July 1818

Sir James Mackintosh has moved an enquiry into the increased frequency of executions for forgery. He thinks the House of Commons should focus on diminishing crime rather than the punishment of it.

Between 1783 – 1797 there were 4 cases of forging Bills of Exchange. Between 1797 – 1811 there were 448 cases mostly for bank-notes. Tabled.[126]

Sat 18th July 1818

The growth of poverty in Britain is revealed in Poor Law statistics. Before 1750 the assessments and expenditure were each under a million Pounds. Before 1800 they were under £2 millions. In 1803 there was £5.3 millions assessed and £4.3 millions disbursed. The average of 1813 – 1815 (3 years) was £8.2 millions and £6.1 millions. During those three years the number of people on poor relief was just under a million of whom 560,000 were receiving dole continuously and 490,000 occasionally. No children are counted but they are also enrolled in the work-houses. The population of England and Wales in 1811 was 10,150,615.[127]

In the same three years the enrolment in Friendly Societies was over 800,000.[128]

Sat 1st Aug 1818

Bank Restriction commenced in 1797. Sir James Mackintosh says it is the cause of the great increase in forgery cases. He says the numbers of prosecutions and executions for forgery is a hundred times greater than when bullion was freely available. In the 14 years before 1797 there were 4 cases; in the 14 years after 1797 there were 448 cases.

He thought this indicated a disadvantage in the paper currency system compared with the gold / silver system. The preponderance of prosecutions involved £1, £2 and £5 notes – the currency of the people and the market towns. Larger notes (the currency of trade) were seldom forged.

Lockhart MP thought the Bank might help itself by using paper and inks that were uncommon. He said the simplicity of existing notes was an allurement to poor people to commit crime.

Sat 5th Sept 1818

Stock prices in London, 19th April:

3% consols 80; 3% reduced 79½; 4% consols 98; 5% Navy Annuities 107.

Thurs 10th Sept 1818 Extraordinary

A rare application for a rule of Mandamus was made in the Court of King’s Bench in May 1818.

It requests the Court to order the Governor and Directors of the Bank of England to distribute their profits. The Bank’s Charter does not permit the Directors to accumulate capital and one of the shareholders has averred that the Directors are in breach of this requirement. He is not named in the proceedings but Brougham is representing him.

Thurs 10th Sept 1818 Extraordinary

May 1818 – Gold is selling in London at £4. 2. 6d per ounce; silver dollars are 5/6d each.

Sat 12th Sept 1818

London, 21st May – The Commissioners for Reduction of the National Debt report they are daily buying £16,000 of the new 3½% stock. Its trading today at 89. The 3% consols are 78 and the 4%s 98. India stock is 233.

Sat 19th Sept 1818

The British Exchequer has published a statement of the Consolidated Account for 1815 – 1818 in Pounds Sterling:

Year Ending Income Charge
5th Apr 1815 45,097,526 41,450,489
5th Apr 1816 46,143.798 43,895,686
5th Apr 1817 42,213.418 44,763,389
5th Apr 1818 51,380,297 54,061,975

Sat 19th Sept 1818

A representative of the Bank of England Directors has told the Commons they think the counterfeiting of their bank notes is a matter for their own concern and does not involve parliament. The House of Commons disagrees – telling a politician there are things beyond his purview is intolerable. The MPs are wondering just how much money has actually been printed and issued.

Sir James Mackintosh says in the 12 years before suspension of payments there was one prosecution for forgery; in the last 7 years there had been a torrent of them (and 101 convicts were hanged for it last year). The incidence of prosecutions is increasing. He thinks there is a connection between circulating printed Bills for credit and forgery. Executions for forgery are now more numerous that for murder, burglary or robbery. The costs of prosecuting these forgeries had risen to £30,000 last year (its higher than other offences because of the large rewards to informers) – might we better spend this money improving the quality of the notes to make counterfeiting more difficult, he asked?

The Lord Chief Baron said at the end of the last Assizes that hanging was not deterring offenders. Some Liverpudlians had petitioned the House alleging the Bank is not doing enough to protect its shareholders. The cotton merchants of Lancashire now prefer to trade in country bank notes in spite of the failures of 1793 – they think country bank-notes are more dependable.

Capital awards are now handed down in one out of every eight cases of forgery tried. Between 1805 – 1811 the rate was 390 executions a year; from 1812 – 1818 it has averaged 580 executions a year (6,790 for the period).

Sir James Graham believes half the Bank of England notes circulating in northern England are counterfeit and the greatest sufferers are the shopkeepers and tradesmen. A cute young girl named Emma Connor went around some shops proffering forged Bills for goods and no-one suspected her. It costs more to bring on a prosecution than is entailed in the original crime.

We should copy American bankers and print more ingenious notes. They spend a bit more on printing but they have few prosecutions for forgery.

The Chancellor of the Exchequer Vansittart responded that Mackintosh is alarmist. There have always been forgeries; they are not a recent phenomena. Not only that but the Chancellor’s statistics suggest the incidence of forgery is diminishing and hanging works.

If there is a problem, it is in counterfeit coins and he redirected debate to that subject. Between 1811 and 1813 there were 392 convictions for coining; In 1815 to 1817 there were 924.[129] Obviously people were forging valuable things for profit and it did not matter how fancy the security precautions were – they would still do it.

S Thornton (one of the Bank of England’s MPs) said we always investigate these offences thoroughly and are lenient whenever possible.

The proposal to investigate into the causes of forgery was then voted down.

Sat 20th March 1819

We learned about national debt from William III but we did not really involve ourselves in it until the Seven Years War which cost £141 millions we did not have – that opened our eyes. We added £268 millions for the American War of Independence and that was where we were in 1793 when the Revolutionary War commenced. That struggle with democracy added £259 millions.

Then we had to suppress democratic France, with its brief aftermath, which cost £1,288 millions. Our actual outstanding debt to the national creditors is now (1818) about £1,100 millions and debt servicing costs £45 millions a year in interest. We could never have sustained the cost of the French wars if it had not been for William Pitt’s magnificent Sinking Fund (comprised of 1% of all the loans) that maintained the market price of our debt paper.

Hail William Pitt. No wonder we have a paper currency – there is not enough gold and silver on the planet.

Sat 20th March 1819

‘A Paisley manufacturer’ has written to the Journal of Trade to explain how British capitalism works in practice, 3rd June 1818:

1 lb of cotton is shipped from Calcutta to London. It is sent by road to Lancashire to be spun into yarn and transferred to Paisley to be woven. It is then sent to Ayrshire to be tamboured and returned to Paisley for veining. Then it goes to Dumbarton for hand-sewing and back to Paisley for checking from whence it is forwarded to Renfrew for bleaching. On return to Paisley it is sent to Glasgow for finishing and on-carried by coach to London.

The time to bring this pound of cotton to market is about 3 years. It travelled 5,000 miles by sea and nearly 1,000 miles by land. 150 people were involved in its carriage and processing and its value increased twenty times en route.[130]

Sat 13th March 1819

The reparations agreement with France is concluded. Lafitte is out and Baring is in. He will be the Agent for the new French national loan. Payments will be made in 4 tranches of 25% each, starting 26th December 1818 and two-monthly thereafter. Baring gets a huge discount – he is paying 2 Francs for every 3 Francs loaned. The principal is 265 million Francs. In fact the deal is so advantageous Baring has been obliged, for propriety, to cut his rate on the last slice to 74% from 67%. For that part he will only get 4 Francs back for every 3 Francs loaned

The biggest recipients are England and Russia who get 48 millions Francs each; Austria and Prussia get 40 millions each; Netherlands 22 millions; Bavaria 10 millions. There are many smaller shares for the German and Italian states. The allied armies will withdraw from France at end October.

French stocks were barely effected by the news.

Sat 3rd April 1819

London, 18th October – There is too much money in the stock market and its driving up prices. It is expected that the ministry will sell-off the Omnium to create extra stock for the market.

It is the inflow of silver from South America and the expectation of it by way of reparations from France that is mainly responsible.

Another part of the problem is the Commissioners for the Sinking Fund. They are legislatively obliged to buy £120,000 of 3%s and £11,000 of 3½%s four times a week. In the quarter ended 5th Jan 1818 they bought nearly £6 millions. 3% Consols are trading at 76. Omnium is at 2½ discount.

Sat 10th April 1819

The free trade is overstocking British importers. The addition of Indian cotton to the American supply has allowed cotton manufacturers to buy small amounts almost weekly to take full advantage of the steadily decreasing price.

Some lots of Indian are being withheld from the Company’s auctions in the absence of buyers. Cheap cotton is 8d per lb; good qualities are 10d a pound while best qualities are 11+d.

Sat 22nd May 1819

London, 10th December – The Bank of England is expected to call-in its £1 and £2 notes, of which it has £5 millions in circulation, and replace them with silver coins. It has already minted £3 millions of silver coins and the remainder should be completed soon.

Sat 22nd May 1819

London stocks 10th December – 3% consols 79; 3% reduced 78; Bank stock 270.

Sat 5th June 1819

In response to the Regent’s Address to parliament, Lansdowne said in the House of Lords that the revenue of UK was $54 millions last year whilst expenditure was £68 millions and we were at peace in Europe and America for the entire year (but paying, in the first instance, for our army of occupation in France).

The deficiency for that one year (£14 millions) was equal to the entire sum in the Sinking Fund. He despaired of ever resuming cash payments at the Bank until expenditure is aligned with revenue.

In the House of Commons there was a complaint that the Regent’s Address did not contain a hint of any tax reductions. MPs also deplored the failure of the Congress at Aix-la-Chapelle to agree on the slave trade. We tried to get agreement for our maritime ‘stop & search’ of suspect neutral ships but the other powers were opposed.

Catholic emancipation was likewise overlooked in the Regent’s Address.

Sat 5th June 1819

House of Commons, 11th February – Castlereagh says commerce has never been so good but we keep having these contradictory business failures. Yesterday, two corn factors and a sugar importer failed to make payments on time.

The uncertainty is driving the stock market down and every speculator was concerned to discover that the big sellers of shares were all people close to the ministry. What do they know?[131] Is the Sinking Fund to be applied to ordinary expenditure instead of propping-up government paper?

Today’s prices – 3% consols 76; 3% reduced 77.

Sat 5th June 1819

The rumours about the end of Bank Restriction are destabilising stock prices. They have been the subject of a meeting between Castlereagh and the Bank Directors. The ministry now intends a Commons debate on the subject before further extending the restriction.

Tierney suspected the ministry was trifling with the House. Speculators are profiting from ministerial leaks. National policy is dictated by capitalists, he said.

Sat 5th June 1819

M/s Campbell Bowden & Co has cashflow difficulties. They have issued an account of their commercial affairs to five of the major trading houses in the City. It was sufficiently well received for the Bank of England to advance a £150,000 loan enabling the company to resume payments.

Sat 5th June 1819

Stocks 21st January – 3% consols 79; 3% reduced 79

Sat 19th June 1819

London, 25th January – Ministers tonight were shocked to discover that the House of Commons is no longer under their control. Chancellor of the Exchequer Vansittart told Tierney a couple of days ago that no debate on the Bank’s paper money would be permitted. Then today he discovered Tierney has adequate support for his enquiry. The ministry has lost its majority and can no longer dump every inconvenient motion into a Secret Committee.

Sir James Mackintosh likewise was sufficiently supported to get his amendment of the criminal law in respect of punishments – a Commission of Public Abuses appears likely to be formed.

The evidence of ministerial disarray is in the clever new faces (Peel et al) appearing on the government benches – the old hands do not know what to do but they are hoping these bright young lads can save them.

The country should be congratulated in returning government from cabinet cabals to the House of Commons.[132]

Sat 26th June 1819

Morning Chronicle, 30th January:

The Bank of England’s Pound-note has for several years been the official currency of Britain. When the value of gold increases relative to the Pound, we holders of Pounds are devalued. It indicates an over-issue of the Pound-note beyond the size of the national economy to justify.

Fortunately we Britons have another measure of value – the Guinea. It is always worth 129.42 Grains of gold and is stated to equate with 21/-. If the weight of the Guinea drops below 128 Grains it is no longer legal currency. From this benchmark, the Pound at 20/- is accordingly worth 123.27 Grains of gold and should never be less than c. 122 Grains of gold.

Before Britain became insolvent (the Bank Restriction Act), the Bank of England was obliged to pay £3.17.10½d for every Pound-note. This was the immutable value of a quarter of an ounce of gold which the Pound-note was supposed to represent (480 Grains avdp = 1 Troy Ounce). That was why it was called the Pound Sterling.

There have been occasions in recent memory when the Bank’s Pound-note has exchanged as low as 87 Grains (equivalent to £2.11.11d per quarter ounce of gold). Its fluctuating value reflects the caprice of the ministry and the Bank Directors whom they control. It is not representative of the Pound Sterling and can only be valued by daily calculating the cost of gold in bank-notes. So long as gold costs nearly £4 per quarter ounce, the Pound-note is worth what the ministry says its worth.

Effectively what the ministers and Bank Directors do when they cause the value of gold to increase relative to the Pound-note, is to clip off a bit of gold. Its the old currency fraud of ‘clipping’ with which everyone is familiar but is obscured by the paper Pound continuing to appear unchanged. This uncertainty in the value of money underlies much of our crime and misery. People in the towns and villages assume a Pound-note is a Pound and do not know that its value has been incrementally decreased by over-supply.

We now have a Secret Committee (appointed by ministers) enquiring into the conduct of the Bank’s officers. Tierney has moved in the House of Commons that the committee members be capable and impartial men with full powers to investigate the money supply. They are supposed to devise a system that will restore the value of the Pound-note to a predictable level.

Editor – We should all have an opinion on this.

Sat 26th June 1819

House of Commons, 29th January 1819 – Grenfell MP said the price of silver had risen this week in paper money to 5/7½d an ounce while the price paid by the mint was fixed at 5/6d per ounce. He had visited the City and confirmed that ‘standard silver’ (not silver dollars) was then trading at 5/7d per ounce. He said this results from the continuance of the Bank’s suspension of cash payments.

Canning says exporting or melting coins of the realm is illegal so there is nothing to worry about.

Grenfell thinks contrarily that if silver is more valuable overseas it will inevitably be exported (privately melted down to evade the legislative proscription on the export of coins). It appeared that the silver coin of the realm would follow our gold coins to other countries.

Wellesley Pole said that, when the ministry obtained House of Commons agreement to mint new gold and silver coins in the last parliament, it had been understood that only the gold coin would have a fixed value and the silver coins were merely tokens for domestic exchange. This was to allow the Mint to charge its 6% ad valorem seignorage for both types of coin entirely on the silver issue.[133] A majority of MPs had agreed. It was too late to change our minds now. Was Grenfell asking for more seignorage?

Pole recalled the House had agreed to make silver coins legal tender for up to only 40/- and we agreed to control the import of silver bullion if it became cheap. It was enough, but if MPs think it is inadequate, the correct response is a revision of the law and not an intervention in the supply of bullion.

As regards the resumption of cash payments by the Bank, Pole was receiving conflicting advice from the Bank and the City and hence it had become a matter for the diligent study of the Secret Committee.

Tierney said the point to bear in mind was that all gold is exported whenever it appears in Britain and silver has now started to go the same way. The only chap who seems to understand what is going on is a fellow at the University of Oxford who has written a persuasive note to Peel on the subject. We should form a competent committee and try to get on top of this.

House of Commons, 2nd February 1819 – Tierney continued to debate the effects of Bank Restriction on cash payments. He requested a committee be formed to ascertain the effect on the domestic value of gold and silver of our exchange of those metals with foreign countries.

Restriction has continued for 21 years. During the war we knew little of its effects overseas; now in the peace we suspect something nasty. According to the last annual extension of the Restriction, it is said that ‘unpredictable circumstances’ made a restoration of cash payments inadvisable. He thought the question was ‘whether the circulation will ever return to exchange of real value’ and ‘whether it was fair to the people to keep the paper currency system’

He said it has become apparent over the years that paper does not retain its value like gold. This was not simply a matter of the ministry keeping the nation’s bullion supply for its own use. The ministry has forced a paper substitute on the people which is now seen to incrementally lose value relative to bullion.

The paper currency is only supported by those gamblers who use it to buy stocks and land (the two great speculative investments that create new wealth by driving-up prices) with the sole object of maintaining and increasing the circulation of paper to ensure its value. Should the velocity of this inflated circulation slow, the value of paper will fall and all their speculations will lose value. The speculators use unreal security, secured on other unreal securities (usually government bonds), that increase in apparent value in relation to the speed of circulation.

Britain is now in the anomalous position of having merchants petitioning for the continuation of paper currency and against a return to the true values of exchange used in other countries. The merchants have been protected in this uniquely lucrative scam for two decades of war by punitive counterfeiting laws under which thousands of Englishmen have been executed. They want it to go on for ever.

The Chancellor of the Exchequer is either the puppet of these speculators or has been cowed into submission to them.[134] His entire monetary system is built on paper. During the war we were told our fluctuating fortunes in battle prevented a return to value. Since the peace he says the Sinking Fund is preventing our debt increasing and offsets the Exchequer Bills he issues for payments, maintaining a sort of balance.

He raises new revenue not by new taxation or improved collection but by printing more Pound-notes. This became apparent in early 1817 when the quantity of paper in circulation seemed to decrease. In June 1817 the Chancellor of the Exchequer Vansittart came to this House and triumphantly proclaimed the problem was solved, revenue was increasing, government debt paper had gone up in price on the stock exchange, and he expected to soon pay-off the 5% and 4% loans. At the time none of us understood but a few months later the accounts of the Bank were submitted and we discovered there had been a new issue of paper currency. This is the basis to our national prosperity.

To be Chancellor of the Exchequer of Britain is simple. You issue Exchequer Bills (at interest) for your operating costs and send them over to the Bank of England which issues the corresponding amount in Pound-notes. The public has been told a Pound is a Pound and feels no immediate effect. We are now in the fifth year of peace, trade has burgeoned but the people get no benefit from it. Indeed they have got poorer. If we have to fight another war we should use a paper army and save the costs of the real one we cannot afford.

This system is the cause of the endless fluctuations in stock prices and that is what a substantial body of capitalist speculators demand. If you are amongst that small coterie of insiders who are privy to the data and know which way the stocks must move, you make profits day after day, year after year, without the inconvenience of work. In early 1817 the 3% consols were trading at 63 / 64. The Bank’s issue of paper that Spring provided the liquidity to raise 3%s to 84. To be fair, increased trade contributed too but the major factor was the availability of Pound-notes which first went into the stock market before travelling around the country. The purpose of forcing-up stock prices can be established by its effect – it reduces the value of interest payable to holders. It looks like fraud.

I should say the Chancellor of the Exchequer was determined at that time to pay-off the 5% loan which he had been unable to do any other way – perhaps that is adequate justification. People who bought 5%s expected to be paid-off first on the return to peace. They had the Bank Restriction Act before them indicating cash payments would resume six months after peace was declared. How could they have known that Restriction was to continue and that the note issue was to increase (reducing the real value of interest payable whilst concurrently making the purchase of necessaries more expensive). We were then told that inflation in the economy was an inevitable result of the return to prosperity.

It is time to bring an end to temporary expedients and maturely consider some definite measures. We have accommodated speculators for too long. Those people who petition for continuance of Bank Restriction are not the people we should be helping. We want our property valued the same way it is done in every other country. We want to know what ‘unpredictable circumstances’ are preventing a return to cash payments. The gentlemen at Leeds who petitioned for continued Restriction say a resumption of cash payments is dangerous – why? It is rumoured they are concerned at the extent of our foreign loans, said (by Castlereagh) to be £12 millions payable in 27 months. We need details not rumours.

A group of insiders have been dealing secretly with the ministry. They knew last summer that the Chancellor of the Exchequer and Lord Liverpool were intent on returning to convertibility. The Bank’s Directors necessarily agreed with the ministry. The Chancellor of the Exchequer offered the Bank some Exchequer Bills to facilitate the resumption of payments. The Bank accordingly commenced to withdraw its notes from circulation. The 3%s sank to 74 and the City of London immediately sent in a delegation to say they were starving. They continued to lobby ministers right up to the opening of this parliament.

Do you see how it works? Artful scheming men cause the fluctuations of stock values based on inside information. They do not risk real capital but paper capital – that is why the Bank does not want to resume payments – it would have to pay value and (initially) receive credit. The ministry and the speculators are mutually dependent – in return for subscribing to the ministerial game, the capitalists require a reward. Everyone jeopardising his capital in this country’s money markets is taxed by them or joins the predatory game. Its useless to rely on the public professions of ministers – caveat emptor is the rule.

We need an expert Committee of Inquiry. As it will be stuffed with speculators if it is a Secret Committee (selected by ballot), it should be a Select Committee.

Canning replied for the ministry. He was sorry Tierney had adopted a vulgar partisan attitude. Tierney’s application for an inquiry was too vague to be intelligible. The financial system of Britain is stable and judicious. This ministry has done more for the people than was ever done after any previous war. We have repealed the Property Tax and foregone an immense source of revenue. At the same time the national debt had been reduced by $25 millions. This speedy recovery is unique in British history. If the House insists on an Inquiry he hoped the members would be unbiased.

The decline in the rate of exchange for Sterling on the European exchanges was entirely due to the French loan, he said. The resources of France had been over-estimated and we had necessarily exported a huge amount of bullion to facilitate French payments of the indemnities. The markets had devalued Sterling in response to our export of bullion. That is why we must continue the suspension of cash payments. We also have loans out to Russia, Prussia, Austria and the Netherlands. The safety of British share-holdings in the Second Bank of the United States is another cause for concern. It would be unwise to resume cash payments now. We planned to resume payments in March 1820 but at commencement of this parliament the Bank of England said it did not want resumption unless there was an Inquiry and resumption legislatively ordered. We agreed to an Inquiry to avoid any improvident decision. This Inquiry must be secret because it will naturally inquire into the bank’s reserves and the adequacy of bullion holdings to underwrite full convertibility.

T F Lewis MP said when Pitt instituted the suspension in 1797 he said it was required on public grounds. The Bank had informed the then ministry that it could not pay its way. Within a year of Pitt obtaining the restriction, the Bank advanced the ministry £10 millions. He asked ‘Is it the case that the ministry still requires advances and that is the reason that the suspension must continue?’

Lewis was also perplexed by Canning’s assertion that £25 million of debt had been paid-off since the war. According to the published accounts none had been paid-off and the only source for its repayment was the £3 millions of the last loan from the City capitalists that had not yet been expended.

Castlereagh said it is a complex subject but the Chancellor of the Exchequer has a lucid understanding of it and his propositions should be adopted. He would vote for a secret committee and hopefully the Bank will resume payments next March. This House should never hazard the commerce and industry of this country, he concluded.

Sat 3rd July 1819

London, 27th February – 3% consols are 74, 3% reduced are 73. Exchequer Bills are at 15/- discount.

The funds are depressed and brokers say its due to a pending government loan. French funds are in free-fall.

Eleven Manchester manufacturers failed and news of an American tobacco exporter in similar difficulties were all reported on 23rd February.

Sat 7th Aug 1819

Coventry Herald – The Tamworth Old Bank has failed. It was operated by M/s Harding, Oats & Wellington.

Worcester Journal, 18th March – The Bank of Sir Paul Baghott & Sons at Cheltenham has failed.

Sat 28th Aug 1819

The only Bank in Sheerness has failed and the local people are inconvenienced.

Sat 28th Aug 1819

The Secret Committee investigating the resumption of cash payments by the Bank has called the stockbroker Ricardo to assist. He seems to know something of macro-economics.

He says the Bank should mint quarter-ounce gold coins and offer them in exchange for paper Pounds at £4.1.0d each. After a couple of years of this, the price should have incrementally reduced to standard i.e. £3.17.10½d.

This will allow the removal of the Bank’s notes from circulation and lock the value of gold to the international standard but silver carries the mint seignorage for both metals (totally 8% ad valorem) and is thus worth less in London than Paris. The ministry will solve the problem of international value by limiting the use of silver to domestic transactions of less than 40/-. This permits us to use a gold standard, free of seignorage, for value.

Sat 18th Sept 1819

London, 29th May – Grenville was right about the suspension of bank payments. Although the paper currency gave ministers greater facilities in the war with France, the advantage was counter-balanced by the derangement of our monetary system and the misery it inflicted on the people.

The most recent examples of misery have been the activities of the speculators in fear of a return to value, but in spite of their sales, the 3% consols actually rose 2½% yesterday. With prudence the ministry should be able to balance the books without resurrecting the hated Property Tax.

The resumption of payments is expected to occur in 1820 and gold and silver are already declining in the market. Gold is down to £4 and silver to 5/2d an ounce. On 1st June the 3% consols were 66.

Sat 18th Sept 1819

Tierney is concerned at the state of Britain. He has spoken in the House of Commons:

Europe is now directed by five powers. It had been four but we were so impressed with Richelieu we invited France to join us. Having done so the Bourbon government dismissed Richelieu and we don’t know who we are dealing with now. This is a measure of the uncertainty of the settlement of Europe – anything can go wrong.

In America Jackson has executed two Britons when our countries are at peace. In former times it would have caused a war. America has bought Florida from impoverished Spain. She now has control of the entire east coast and threatens the sea route to West Indies.

The two rocks on which British policy must be founded are our accumulation of wealth and our navy. With flourishing finances we can defy the world. We have made a series of treaties with foreign powers since ending the war but not one of them has been a commercial treaty. I except the American Treaty but note in passing that it has disappointed our Newfoundland fishing people.

There was a great commercial prospect in South America until the ministry identified an obscure duty to the King of Spain and gave the development of South American markets to the merchants of New England.

The three years since Jan 1816 are a case study:

At the beginning of the period our national debt was £860 millions. The ministry said it would deal with the debt by continuing the Property Tax. Then the Property Tax was thrown-out by the representatives. The ministry did not resign. Instead it threw out the Malt Tax as well but took no remedial action on the debt. That year they borrowed £9 millions from the Bank and failed to repay £3 millions they had previously promised. To protect themselves, ministers enacted a continuation of Bank Restriction for two years.

In 1817 they spoke endlessly about prosperity – the stocks are at par, the 5%s will be paid-off or reduced – and only borrowed £12.5 millions by issues of Exchequer Bills.

Thus in 1818 they could still say the country is flourishing, stocks rising, etc. They then introduced £27 millions of 3½% paper, not, Heaven forbid, as a new loan but as an eventual receptacle for the 5%s that were to be reduced into 3½%s, so they said. Apart from the appearance of fraud on the 5% holders they did nothing else. The debt to the Bank was continued and, necessarily, suspension of payments was continued because of ‘unforeseen circumstances connected with foreign loans’ as Castlereagh put it.

It has since transpired that the Bank Directors categorically told ministers in 1817 that they could not resume payments.

In January 1819 the national debt (funded and unfunded) stood at £845 millions. In three years of peace we appear to have paid-off £14 millions but that is only the appearance. Actually, by June 1816 arrears of Property Tax of £8.5 millions was collected so the actual debt reduction has been £5 millions.

It has just become known that the ministry intends to borrow £22 millions this year, interest payments on which must presumably be funded by new taxation. It is beginning to appear that the ministry has neither the will nor the intention to reduce the national debt.

Tierney requested MPs to approve no new tax until the ministry put the national finances on a firm foundation.

The 3% funds are permitted to fluctuate between 61 and 83 and every boom and bust creates mayhem for the people.[135] Some make fortunes, others become bankrupt. Everyone’s property is subject to fluctuation and we have become a nation of gamblers which the ministry alone has made possible.

Castlereagh for the ministry categorised his parliamentary assailants as Marathas (see the Asia chapters for these competitors for the opium market) and said he would do something to dazzle them soon but it was too early to talk about it.

Sat 25th Sept 1819

The British government owes the Bank of England £10 millions in respect of Exchequer Bills it has issued and sent across for payment. This has to be repaid before the suspension on payments can be lifted.

Once that is done, Ricardo’s plan will be adopted. The steps he commends are:

  • When we start withdrawing the notes on 1st February 1820, we pay £4.1.0d for a quarter-ounce of gold and accept exchanges of not less than 60 ounces (£972). The premium price will attract foreign holdings of gold to our market which we need to increase our stock in prospect of resumed cash payments.
  • On 1st October 1820 anyone with the equivalent of 60 ounces of gold in paper may demand exchange from the Bank at £3.19.6d per quarter-ounce.
  • On 1st May 1821 the Bank will pay the mint price (£3.17.10½d) per quarter-ounce but still for minimum quantities of 60 ounce equivalent in notes.
  • From 1st May 1823 the Bank will resume cash payments and the laws prohibiting the melting and export of gold and silver coins will be repealed.

Lauderdale says in 1816 and the first months of 1817 the exchange rates at Hamburg, etc., were such that importing gold and silver to England was a profitable business.

In March 1819 a silver coinage of several million Pounds was released onto the country whereupon gold imports ceased and an export flow commenced but silver imports continued to be profitable and flowed into Britain from every part of the world. There was a concurrent minting of gold coins with the silver coins but the residue of these were very soon recalled when they were seen to flow away overseas.

Lauderdale thinks the Mint Regulations must be changed to allow it to buy and sell gold & silver at the standard rate. He thinks we only issued notes to get the country over a crisis which we could fund in no other way. Pitt’s acts in 1797 were a temporary departure from prudence. The temporary nature was apparent from the many Suspension Acts passed, all for relatively short durations and their preambles which generally specifically mentioned it was temporary.

The main thing is whether Britain needs a fixed value for its currency. Many experts thought the absence of a fixed standard was very useful. No country has ever divorced its currency from value before. There was a history in England and most other European countries of debasing the gold and silver currency to stretch it further but there was still some value exchanged. Our Bank-notes are worth nothing at all and we rely on the Directors of the Bank of England to act honestly and not make money on their own behalf.

Suppose the Bank issues £20 millions of notes based on the Bank’s holding of £20 millions of government debt paper. £1 million is payable to the Bank in annual interest on the Bonds (5% interest suggests the holdings in this example are Exchequer Bills). Issuing bank notes is clearly a nice little earner. If government issued its own notes, it would save the £1 million in annual interest. England is the most commercially developed and wealthy country in the world. What we do is likely to be emulated by other countries. We permit a body of merchants to regulate our currency and increase its quantity according to their own notions of what is appropriate. There is a principle for the House to address here – who should regulate the value and quantity of the currency?

Good faith and honesty requires we restore value to the circulation. On the other hand merchants have made engagements on paper notes and say they will have hardship if they receive paper and pay gold, but this has always been the case.

In 1811 there was a great depreciation in the value of the paper Pound. It was generally attributed to the costs of war in the Peninsula and of subsidies to our allies. The price of gold in London rose to £5. 4.0d an ounce and continued at about that level for three years. This revealed a depreciation of paper in the order of 25%. In 1814 peace was achieved and the cost of gold in London began to fall. There was an interruption during Napoleon’s return but by mid 1816 the value of our paper was again aligned to gold. Actually gold was selling at £3.15.0d in paper Pounds but the Bank paid excessively in order to ensure it obtained all available supply. It therefore seems that we have already successfully weathered a devaluation of our money without ill effects. Later on gold rose to a maximum of 6½% over the paper Pound but that is hardly significant. During the recent discussions about ending the suspension etc., the price of gold has remained at about £4.0.6d, a 3% premium to paper.

Changing back to exchange based on value is planned to start in February. It will be done gradually as only people with spare capital of £1,000 (equivalent to 60 ounces gold) will qualify and they are all our friends. Payments in gold and paper withdrawals will continue to be made for 18 months whereupon the whole of the Bank’s paper will be withdrawn and the gold / silver paid out. Everyone agrees that reducing the amount of paper will lower the value of gold but the speculators foresee inconvenience from what they call ‘a forced reduction’.

There is a question over the note issues of the country banks. If the price of gold increases or decreases, the paper Pound will increase / decrease along with it provided we have a goodly part of the circulation in gold. For example the Bank reduced its issue to £3 millions last year but there was no concurrent increase in the country bank issue and accordingly the total currency circulating in the country was overall reduced. The speculators say the exchange rates changed as the value of gold increased. This might have been due to increased commercial business in Europe which we learned in the war could effect our exchange rate. The Bank, in resuming convertibility, is thus assuming another risk apart from the domestic one – if the exchange rate is unfavourable, capitalists might prefer gold to paper and our stock of precious metals will flow overseas.

The Bullion Committee’s report says there is a way to prevent this but does not reveal it. The Bank Directors say they will definitely need a payment of about £10 millions from government to make the plan work (leaving a balance due to the Bank of £9 millions). This is what the City does not like. Any competition for the government’s available funds increases the risk of government defaulting on interest payments on its loans. The mercantile speculators also like paper and want it to continue.

Sir Alexander Baring has given evidence of the attractions of paper (his final advice to the ministry is below in 8th September 1821 edition). He nevertheless recognised a need to have it firmly linked to gold to ensure the amount of money in circulation was not overly increased or decreased. Whilst paper was divorced from gold it was common for the Bank to accommodate the merchants which it could not have done if the accommodations were linked to value.

Liverpool thought it one of the attractions of paper that the circulation could be increased or decreased to reduce public distress or embarrassment but the speculators had a difficulty in treating paper as valuable and it tended to increase their appetite for gambling. The arguments in favour of gold are stability of values (land & buildings, rents, salaries) and avoidance of panic.

The circulation of paper money before 1792 was very limited – just a few merchants used paper for their largest engagements. Our economy has completely changed since then. At that time government revenue was £20 millions a year, commerce and industry was half of today’s and agricultural production was smaller. The bank notes and coin circulating then was the same amount as the notes of the Bank and the country banks are now.

Before the American war (the War of Independence) there were few country banks and their business was restricted. People kept money at home to deal with expected demands. We dealt with this by the agency system whereby each country bank runs an account with its London bank and only receives or remits the outstanding balance from time to time. The Bullion Committee has an example of this in its report – daily transactions between London and country banks is about £4.7 millions but the actual sum exchanged daily averages only £220,000 (4.7%).

The £1 and £2 notes circulate at a rate of £7 millions a year (there are £20 million issued) but transact $240 millions of business.

  • £1 notes average 147 days in circulation before returning to the Bank;
  • £5 notes take 70 days;
  • £1,000 notes take 13 days.

In 1792 the £1,000 note returned in 22 days and the £10 note in 136 days. The velocity of paper has greatly increased.

Today we have a circulation of about £50 millions – that’s £25 millions of Bank of England notes, £4 millions of silver and £21 millions of country bank notes – but it exchanges double the value of property that was exchanged in 1792. It appears that paper circulates property faster than gold by about four times.

Mr Lloyd, the Lancashire miller, told the Bullion Committee that the circulating medium amongst the businessmen in Lancashire is neither bank notes nor gold but Bills of Exchange.[136]

Grenville adduced the statistical record of bankruptcies and note issues to assert a connection between them. Every time the Bank inflated the currency there was an increase in commercial and private bankruptcies. The situation had become out of control in 1816. The Bank had lent money with one hand in 1815 whilst destroying confidence in existing contracts with the other. The effect had become apparent in 1816 from the frequent bankruptcies. Everyone suffered – landowners reliant on rents, farmers selling produce, manufacturers and traders – all had contracts to perform in depreciating currency.

We should link our currency to something of agreed global value. Historically the Pound under the Saxon Kings was a pound of silver; the French Livre under Charlemagne was a pound of silver, but there had followed a series of reductions in value usually associated with the cost of war and invariably representing a fraud on the people. When Edward VI sought to reduce the Pound to 4 ounces of silver he risked a national insurrection.

The question is whether parliament will legislate the value of money or by failing to do so leave it to the whims of the market. The speculators are opposed to fixed value because it denies them the booms and busts on which they rely for their profits.

The late Mr Horner of the Bullion Committee revealed how, when gold coins were added to the circulation without a reduction of the note issue, the price of gold increased in terms of notes. This implies that a certain amount of money in circulation will achieve a value for gold that is recognised globally and the value we wish to set is £3.17.10½d per ounce.

Sat 23rd Oct 1819

The latest British Government loan of £12 millions has been taken up entirely by Rothschild, the Bank of England having declined to participate. It is predicated on the price of Omnium. The balance of the shortfall in revenue will come from utilising part of the Sinking Fund and the product of some new taxes on wines and tobacco. There is also a new duty on wool that should raise £500,000. Altogether the government will raise £15.5 millions

The first instalment of loan is £1.2 millions and has been paid. It is expected that Omnium will recover its price soon although those bankers who were cut-out of the government loan by Rothschild depressed the price of Omnium as a warning to Chancellor Vansittart. They resent the low rate Rothschild accepted to break-in to the business which might act as a precedent for future borrowings and make government loans business less profitable.

Their tactic is to sell Omnium, which secures the loan and induce fear amongst other Omnium holders by its declining price to get them to sell as well (they got it down to a discount of nearly 2). If enough people sell, the price will fall sufficiently for the bankers to buy back in and secure a share of the loan profits by this means.

Sat 30th Oct 1819

The great sell-off of British stocks is being attributed to Jewish financiers according to London newspapers of early June. They are said to have caused the recent drop by selling £20 millions of stock although they actually owned only £1 million.

It is a mystery – they can apparently sell stock before they buy it. They seem to expect to buy-back soon at lower prices.[137]

Sat 6th Nov 1819

Le Pilote, Paris 15th June – extracted data considering the Spanish institution of prohibitive tariffs to protect domestic production, from a report on the sale of Spanish possessions in America (original in the South America Chapter):

“….. the British minister has notified the Spanish government that he expects repayment of the costs Wellington incurred in removing the French.

“He values British military services in Spain from 1808 to 1814 at £265 millions. That demand, coming from the hegemon of the high seas, should loosen Ferdinand’s grasp on his American possessions.”

Sat 13th Nov 1819

London stocks 6th July – 3% consols 68, 4% consols 85, Bank stock 217,

Sat 4th Dec 1819

Asiatic Mirror of 10th November recites a London report of 28th June:

The Chancellor of the Exchequer has issued £16 millions of Exchequer Bills and £2½ millions of Irish Treasury Bills for conversion to bank-notes by the Bank of England. This issue of unsecured paper to obtain bank-notes is to roll-over the unfunded debt of both countries.

Sat 4th Dec 1819

London Courier, 7th July – the revenue for the quarter ending June 1819 is £2 millions more than for the corresponding quarter of 1818. The 3% consols however are now at 67 whereas they were 85 this time last year.

The Editor is perplexed – how can the funds representing the national debt lose a third of their value in such favourable circumstances, he wonders.

Sat 1st Jan 1820

Economic comparisons during Bank Restriction:


Circulating gold coin

Bank of England bank-notes

Outstanding Exchequer Bills

Credits due to Bank of England



Nett revenue

Debt Interest

Jan 1797


£ 8,640,000







Jan 1819









Sun 6th Feb 1820 Extraordinary

Some fears for the stability of the British financial system have surfaced on the continent and orders for the sale of over £1 million of government debt paper have been received in the last few days.

Dutch brokers are selling all the Omnium they hold.

On the other hand, French 5% stock is in demand and is increasing in price notwithstanding it is ex-dividend.

Sun 6th Feb 1820 Extraordinary

London stocks, 11th September – Bank stock, the 3% reduced and 4% consols and the long annuities were all withdrawn from the market today. The 3% consols had previously closed at 70.

There is some Portuguese gold in the market at the standard price (£3.17.10½d) and some new doubloons at £2.14. 6d, but no other foreign gold is available. New Spanish dollars are 5/-.

Sat 19th Feb 1820

The Committee of Thirty Two, which operates the London Stock Exchange, has been presented with a case.

Many of the stock jobbers, generally teenagers, who do the legwork for the brokers, have been making time bargains in their own names and for their own profit. At the last settlement day they jointly owned £90,000 stocks.

Fourteen lads have since been dismissed.

Sat 4th March 1820

London stocks, 6th November – 3% consols 67; 3% reduced 66; 4% 84; India stock 207;

Sat 22nd April 1820

There has been a withdrawal of funds from the Royal Exchange (the stock exchange) and government buying is inadequate to nullify its effect. 3% consols have been withdrawn from sale and bets are exchanging that when they reopen they will be at about 60. There is a great scarcity of money in circulation – silver holders require 10% interest on their metal.

Sat 6th May 1820

The Bank of England seems to be solvent again. Gold and silver are selling at the mint price and a large offering of bullion to the Bank was recently declined. The exchange rate for the Pound on foreign exchanges is stable.

The test will be the dividends payable on government paper in January. They far exceed the amount of dividends payable in April and October. The revenue for the last quarter has declined and the shortfall has been exacerbated by the Commissioners for Customs & Excise. They have paid their collected duties in highly discounted Exchequer Bills instead of bank-notes.

Cash payments have been made possible by our foremost capitalist (a reference to N M Rothschild since he disciplined the City bankers in Summer 1819) guaranteeing to redeem all the Exchequer Bills thus issued. It is hoped this will facilitate the dividend payments but the likelihood of government having to pay higher interest on its Exchequer Bills has increased. The City expects the new rate of interest to be 3d per pound per day (4½%) if government wishes to avoid the discount. 3% consols ended the week at 67.

Sat 27th May 1820

American re-exports of China tea smuggled to Liverpool and thereabouts are said to approximate 1½ million pounds a year.

In a debate on the state of the country in House of Lords 30th November, Lansdowne suggested the tea duty be reduced on the lower qualities in order to deter smuggling and recover a revenue from the many tea-drinkers of Yorkshire, Lancashire, Cheshire and the Midlands.

He also suggested the duties on all articles of common consumption be reduced to alleviate hardship.

Sat 3rd June 1820

London stocks 29th January – 3% consols 67; 3% reduced 68; 4%s 87.

Sat 3rd June 1820

Imports of American cotton have resumed at Liverpool and the factories are beginning to commence production. It appears that an end to the widespread distress is in sight.

Sat 15th July 1820

Lord Yarmouth (an adviser to George IV) was congratulated in the City in early March. As a result of a recent speculation he has netted £280,000.

Sat 12th Aug 1820

London stocks, 22nd April – 3% consols and 3% reduced both 69; 4% consols 87; Bank of England 222.

Sat 23rd Sept 1820

Exchequer Bills, which are normally renewed annually, now have some 20 months of interest owing on them.

Sat 30th Sept 1820

The funding of Exchequer Bills exceeded £30 millions by early May. The number of contractors is large but the main ones are Cohen & Co (acting for Rothschild) and Barnes & Co who each have £1½ million; Wooley & Co and Easthope each have £1 million; Hoare & Co and Aubert each have £½ million and the rest of the subscribers are led by Bailey & Co, Cooper & Co and Wyatt & Co.

Sat 7th Oct 1820

London Times, 1st June – Late on 30th May the Treasury announced it would sell 5% stock to fund its Exchequer Bills. The stock is currently trading above par and the government is believed to be offering £7 millions or thereabouts.

On 31st May a crowd of prospective investors commenced to assemble in front of the Bank of England at 2 am, waiting for admission to the Chief Cashier’s Office to make their purchases. By the time the Bank opened for business this crowd had assumed the proportions of a democracy rally.

The Bank normally deals with popular issues by issuing numbered tickets to interested parties, the number indicating the holder’s position in the queue. The entire £7 million issue of 5%s was subscribed by the holders of the first ten numbers who acted for themselves and 50-odd new friends.

In the course of the scramble, the stout doors of the Chief Cashier’s Office were broken from their hinges.

As soon as the sale was complete, Exchequer Bills, which had been trading at 11/- premium, fell to 2/- premium. The new 5% scrip closed yesterday at a premium of 1¼. Exchequer Bills remained at 2/- premium.

Sat 7th Oct 1820

House of Lords, 26th May – Lansdowne has been speaking on the State of the Nation. He thinks an important element in ministerial attempts to restore national wealth should be the stimulation of trade.

He says the London shipping interest developed Canada as a source of timber for English ship-building and procured a prohibitive tax on timber from the Baltic to protect their investment and profits. The ministry co-operated because they needed more revenue but, to ameliorate the complaints of the Baltic traders, the tax was presented as a temporary measure. The shipping interest want this tax applied permanently but it is detrimental to Britain’s overall interest as the Canadian firs lack the qualities of Baltic masts. Lansdowne thinks the ministry should attend to the national interest before it attends to its friends.

If our commercial policy is to be shaped by the momentary interests of those people profiting from it and not based on the sound principles of free trade, it jeopardises the country’s wealth. Profit precedes quality, a higher rate of replacement adds to the cost of operating British ships comparative to other more prudent nations, and our control of the seas, for which we have just won international recognition, is threatened. Formerly the trade with Russia and Prussia in Baltic timber was done in British ships and was paid for in British manufactures.

We still get the sale of our manufactures. At the Leipzig Fair each year it is the Russians, Prussians and Poles who buy our manufactures but our timber trade has moved to distant Canada where we spend £500,000 a year more on procurement than we formerly spent in the Baltic timber trade.

We tax French wines at £143 the tun and the less-popular Iberian wines at £95 the tun. As a result the formal trade in French wines reduced by £200,000 last year. We should be trying to make our trade reciprocal. We can reasonably expect France to receive British manufactures in return for our purchases of wine and brandy. The prohibitive duty on superior French silks might be reduced if we concurrently made some one-off grant to the silk weavers of Spitalfields.

There was also a general handicap to British trade contained in those Statutes that predicate a particular minimum tonnage of ship for a particular trade. That meant many ports are hardly accessible to us (because our ships are too big) and a coasting trade upon foreign shores is impossible.

In Asia we have excluded all British mercantile activity from the tea trade. Even the India Company should give way to the national interest, he thought. As the law presently stood Asian trade can only be legally done in ships of 400+ tons. The Company employs 20,000 tons using 2,500 seamen whereas the new free trade in Asia already employs 60,000 tons and 4,000 sailors. Our merchants are excluded from tea trade while Americans monopolise supply to France, Holland and Germany.[138]

If a British ship goes to South America for silver it must return here before going to India whereas the Americans often circumnavigate the globe in their voyages. Moreover their smaller ships give them access to all the little ports and rivers of Asia and South America whilst ours have to anchor miles offshore and lighter their cargoes in and out. The newly independent countries of South America are keen to trade and they pay in silver.

Lansdowne said trade can be developed by thoughtful regulation. It may take time to experience the benefits but that is no reason to neglect it. He proposes a committee be formed to enquire into British foreign trade. It was agreed.

Sat 7th Oct 1820

Dover, 26th May – The excise cutter Lively captured a smuggling boat containing 11 Folkestone men, 200 gallons of brandy and 37 chests of tea. The smugglers were committed to Dover Gaol where 10 of them were found suitable for service in the Royal Navy and were accordingly marked for transfer to one of the navy’s receiving ships.

Overnight a number of rough-looking fellows converged on Dover and, by the time the ten men were brought out for the transfer, several hundreds had collected outside the gaol. The Mayor of Dover and another magistrate were in attendance with a troop of seamen and soldiers. When the smugglers were brought out, a widespread cry of ‘liberty for ever’ was heard and stones were thrown at the authorities. The smugglers were taken back inside the prison until the mob could be dispersed and, to facilitate dispersal, the Riot Act was read from an upper window.

The crowd did not disperse. It commenced an attack on the prison with crow-bars, pick axes, hammers and saws and very soon had unroofed part of the structure and thrown down an outer wall. The 11 smugglers were allowed to walk out and several other inmates took the opportunity for a stroll as well.

The authorities were however able to arrest one rioter and he was put into a coach with two constables for carriage to Canterbury Gaol. Unfortunately, the coach encountered another mob at the outskirts of town. They stopped the coach, dragged out the three occupants, severed the handcuff linking the suspect to the constable with a cold chisel and escaped with him. Thus the government has no-one on whom to base its usual interrogative form of investigation.

Sat 21st Oct 1820

Vansittart has written to the Bank of England on 5th June 1820 asking the Chairman to inform the Stock Exchange that the ministry wishes to borrow £5 millions. He permits conditional bids from the capitalists. The ministry proposes to offer Reduced Annuities for the money.

This request had been leaked earlier and had no effect on the funds – 3% consols remained firm at 70. There has been some selling by political insiders, motivated by the arrival of Queen Caroline (see the chapter named for her), but it was insufficient to start a run.

Sat 4th Nov 1820

More bankers turned up at the Treasury to bid for the new loan than had ever done so previously. The loan is for £5 millions; 5% interest is offered; 3% discount is given on the Principal; bidding is in the 3% consols; 10% of the loan is required on 16th June and the balance in tranches of 10% monthly until 16th March 1821.

The Governor of the Bank of England was present and some bidders asked him if the repayments would be in Omnium (it pays 5%). He did not promise but he did not say it was impossible. Formerly all loans were repaid in Omnium but the last one was not.

The Chancellor of the Exchequer is reserving to himself the ability to take up to £12 millions from the Sinking Fund which, if fully taken, would leave £5 millions in that Fund of which £4.4 millions is for England and £600,000 for Ireland.[139]

Sat 4th Nov 1820

All the big financial houses of the City have petitioned the Gresham Committee to close the Stock Exchange at 4.30 pm. They include Baring, Rothschild, Mellish, Goldsmid, Sir John Lubbock, etc., and they are such a powerful lot that there can be no doubt they will get full political co-operation.

The time for holding change presently extends from 3 pm to 5.30 pm daily but the bankers say all business can be easily completed in 90 minutes.

Sat 18th Nov 1820

The Bank of England is printing new bank-notes. At long last they will contain security features to deter forgery. They will be circulated in September.

Sat 10th Feb 1821

The global market for cotton seems to be in disarray. There were 187,071 bales in London at December 1819 and large but indeterminate quantities in Liverpool and other northern ports.

The Indian export in 1820 was small. Bombay, Surat and Mauritian figures are unavailable but Bengal was only 6,786 bales.

Notwithstanding this, the stock figure in London had not decreased materially at the stock-taking in August 1820. The China market appears equally unlikely to improve. This indicates a risk in cotton speculations this year and cultivators will have to limit their expectations to only moderate prices.[140]

Sat 21st April 1821

London Stock Exchange, 28th October – 3% consols 67; 3% reduced 67; 4% consols 85½; Bank shares 215.

Sat 26th May 1821

The domestic difficulties of the British ministry are focusing. The Counties of Durham and Stafford contain many liberally-minded men of property who are calling for the protection of the Constitution in a politically correct sort of way, i.e. both against sedition and ministerial abuse.[141] The financial distress of the country has not alone been sufficient to really threaten the ministry’s power. They can always call out the army and people are inured to their doing so.

The real cause of the threat to the ministry has been Queen Caroline. It is a simple homely issue that everyone can comprehend and identify with. The Queen has had the support of the female half of the population all along. Now a sufficient number of the male half has taken her side as well. Everyone knows the duties of a husband.

The Press – Times, Traveller, Star, Globe, True Briton and Observer – have greatly increased their circulation and have consistently taken a pro-Queen line which has deepened the chasm between the King and his minister on the one hand and the rest of the country on the other. More than one million 6d and 1/- pamphlets containing all the distressing details about the investigation and prosecution of the Queen have been sold in the last three months. Her distress has become Press profit. This has made the country members of the Commons uncomfortable and has brought ministerial control of their representation into question.

All this has built upon nationwide financial distress and genuine hardship due to falling sales of manufactures and agricultural produce with the resultant unemployment in the fields and factories. Those falling sales are in turn due to the resumption of farming and manufacturing in war-ravaged Europe providing more competition to us and to some trade-protectionist policies intended by each country to get a bigger share of our profits from global trade.

British bankers have less interest in financing manufacturing now the market is unfavourable and repayment of advances both less certain and less profitable. They have changed their focus to trade finance, South American and Asian silver and gold and speculative forays on the Exchange.

The bankers are particularly motivated to support the underlying source of their wealth – the paper currency. In war, the British economy was somewhat isolated from activities in Europe and everyone supported our measures to prevent Napoleon influencing the value of the paper Pound. In peace, our paper becomes subject to exchange rate fluctuations and needs some real measure of wealth to support it. That means a fixed parity with gold.

The Bank of England gets a huge gearing on its paper as only a small amount of it turns up daily for negotiation but even that advantage has been completely expended on servicing our national loans. Now the tax revenue is shrinking with the shrinking of commerce, the means of paying interest on the loans is threatened and the Sinking Fund may not be adequate to support our credit.[142]

Sat 2nd June 1821

One of those people with a statistical bent has reported that, during the 694 years of 31 reigns up to George III’s accession, Britain spent £795 millions administering itself. During the 59 years of George III’s reign, the country spent £2,327 millions. It equates with approximately three times the value of the kingdom. We also borrowed nearly £1,000 million in George’s reign as well.

If every acre of the country was sold at 25 years rental income (current valuation of agricultural land) it would still be less than the present national debt.

Sat 2nd June 1821

London, 17th January 1821 – The difficulties of the ministry have translated into a large amount of British debt being offered to the united stockbrokers for sale. Purchasers were unavailable at an eighth below the quoted rates. It is feared it will be difficult to control the decline. If this continues, the City will also be converted to the popular wish for a change of ministry.

Sun 10th June 1821 Extraordinary

London, mid-March – Against a background of reduced commerce and industry, government debt paper has appreciated in value and government revenue is also said to be improved.

On 9th March 3% consols were 72. In November last they had dropped to 67 and stayed low until now.

Sat 23rd June 1821

The depression of commercial activity in England inevitably involves the shipping interest as well. During the war the India Company willingly paid £40 per ton for chartered tonnage. Last year they negotiated rates of £10-12 and this year its £7-8. They were offered 36,000 tons but have taken-up only 3,000 tons so far. It seems they believe the bottom has not yet been reached.

Sat 30th June 1821

London, 17th February – The House of Commons has received an account of bank-notes and bank post-bills in weekly circulation between 18th July 1820 – 6th February 1821.

At the beginning of the period it was just over £26.4 millions; at the end it was just under £23.6 million, a diminution of nearly $2.9 million or well over 10% of the circulation. It will reduce prices.

Sat 18th Aug 1821

London, 10th April – the ministry has laid a heavy tax on East India sugar that amounts to a prohibition. It has been a losing trade for three years. The East India merchants in London obtained an interview with the Minister and Chancellor of the Exchequer and got it reduced from 5/- to 2/6d per cwt but its still 12/6d more per cwt than West Indian supply.

The difficulty is the West Indian farms are funded by London capital whereas our Indian sugar is funded by the Indian Agency houses and of little significance to London bankers. This will diminish the Company’s sugar purchases. Given the poor state of cotton and indigo sales in India, this will cause further damage to the Indian economy.[143]

The tax is said to protect the West Indian farmers from competition with North and South American slave-produced sugar. This regulation will make our East Indian product too expensive for re-export to Europe and secures that market to the West Indian farmers at the expense of the British consumer.

It is true that the West Indian farmer makes little profit. Most have large loans from the banks and can afford only to pay the interest. The costs of shipping and insurance to get their product to market are high because the monopoly granted by the Navigation Laws. The predominant part of the West Indian farmer’s profit goes to the London Agents who buy cheap and sell the sugar at auction. This West Indian integration into the London commercial system is the main reason for the high tax on East Indian sugar. Ricardo opposed the tax on the grounds that one colony should not be commercially preferred to another, but he was not heard.

Sat 8th Sept 1821

House of Commons, 9th April:

Baring referred to the nationally deleterious effects on commerce of Peel’s Bill (authorising the reduction of the bank-note supply since 1819 preparatory to resumption of cash payments). Before debating committal of this Cash Payments Bill, Baring wished to make a statement on the matter. He would then put a proposition to the House:

After 7 years of peace the country remains in abject poverty. The land owners are the most vociferous for a high price of grain which, if granted, would keep everyone else down.

The efficient cause of distress now is the attempt to make the currency convertible. The Chancellor of the Exchequer says that the reduction in notes issued is 5-6% whereas Baring himself thought it was more like 25 – 33%.

Some years ago this House declared that there was no description of the bank-note. From this had flowed the ruin of many farmers who invested their bank-notes in farm lands. Those were depreciated value bank-notes and the land was correspondingly highly priced. The present reduction of the note issue had made those land acquisitions too expensive. All my bank’s existing debtors have been affected equally. All the mortgages on land that we City bankers accepted have left us also exposed to bankruptcy. The cash deposits paid by farmers to obtain mortgages have been completely exhausted by the appreciation of the paper pound on its way to convertibility. Today’s valuation of land is always less than the outstanding amount on the mortgages we provided. Our security has become inadequate.

You need look no further than the apparent reduction in the price of precious metals, although all commodities are similarly affected. Most are a quarter cheaper, some a third or a half.

When the price of grain fell the farmers protested but grain retained it value comparative to other commodities. A bushel of grain today is worth the same amount of wool, cotton or hardware as it was at the height of its price. The only change that has really occurred is in the standard of value. The Pound was depreciated by over-printing and all production and contracts were stated at that depreciated value.

Our present standard of value is even higher than 1797. Before that year gold was worth £3.17.10½d and silver 5/2d an ounce. During subsequent years silver reduced to 4/10d an ounce and that was the only standard of value we used. The problem was slightly exacerbated by difficulty obtaining silver – at that time it was scarcer than gold. Looking at the record of the exchange value of the Pound it is clear it is now worth much more than formerly. The price of goods should fall with the reduced supply of Pounds but merchants have tried to maintain those prices they obtained at the height and therein lies the distress. That is why consumption has fallen so much.

Consider say, a stone-mason. He can earn all along about 30-40/- a week. Today his wages must decrease or he is unemployable. Discontent. On the other hand, the price of goods has continued high as merchants hold out for the former price level and the stone-mason’s standard of living necessarily declines.

The people are strident for parliamentary reform when what they really detest is the decreased availability of the pound and the consequent reduced purchasing power of their wages. Parliament can avert the political revolution that threatens the power-centres merely by addressing this.

The wealth of Britain is also flowing to those people who hold annuities and fixed-income jobs – they are receiving interest in higher value Pounds. These annuitants are idle consumers. The more we have of them, the greater the difficulties of industrious people.

We adjusted the standard of value in 1815 and 1816 by returning £10 millions of money to the Bank that had previously been withdrawn from circulation. We need to do the same again now. This might be thought a fraud on the fund-holder and annuitant whose investment values are protected by the Act of 1797 but nothing can justify the continuance of that Act. It is unnecessary to return to a gold & silver currency such as we had until 1797. That will simply over-state the enormous debts we have contracted since.[144]

Vansittart, Chancellor of the Exchequer, spoke for the ministry. He said the price of bullion had fluctuated endlessly since the peace of Amiens, sometimes daily. What was the value that the House wished to put on gold. Everyone hitherto agreed that we should return to cash payments. The paper pound depreciated after the repeal of the Property Tax. If we take the value at that time (1818) at £4. 2. 0d per ounce of gold it is 6% less than the 1797 value. Will that provide sufficient relief to make the breach of our undertaking not to devalue (in the Act of 1819) an acceptable cost?

The country has now recovered the pound’s value in 1797. Its an achievement. We have already pledged our faith in the Act of 1819. We have worked for two years towards this result. Its too late to resile. Baring himself recommended the 1819 Act.

Vansittart denied there was a connection between Peel’s Act of 1819 and the present distress in the country. The distress is Europe-wide. All prices are depreciated. The depreciation in America is even greater. The real cause has been the cessation of immense government expenditure in fighting the war, he thought. It was exacerbated by the good harvests everywhere which had produced a surplus of produce. These were the real causes of the lower prices.

There has been no reduction in the national revenue. Consumption of almost all Excisable goods had increased. What Baring is asking for is a return to fluctuating currency values.

J B Monck, MP for Reading, said comparing the paper pound to the gold value is misleading. One might conclude that at worst there was only a 4-6 percentage point difference in it. In 1819 that was said to be the difference but if one compared the pound with the 1819 cost of necessaries, the difference was 25-30%. The explanation is that every time there is a large issue of paper, it displaces gold from circulation. Liverpool estimated the value of currency circulating in Britain before the Bank Restriction Act at £25 millions. After restriction we issued lots of paper which displaced the gold which went overseas where it was more valuable.

France has a bi-metallic currency worth about £90 millions. If they indulged their merchants with a compulsory issue of paper of that extent, the inevitable result would be that the £90 millions of bullion would flow away to other countries and the domestic prices of necessaries would rise by perhaps 30+% before there was any effect on the bullion price. Domestically, paper and gold would fall in value together, until the discrepancy with overseas values became noticed on the return of foreign-trade Bills for discounting.

Monck evidenced his opinion by a comparison of the grain and gold prices in Britain. For the 4 years before 1797 grain was 62/- per quarter and gold was at its fixed price; in 1800 grain was 71/- and gold remained at the mint price; in 1804 grain was 75/- and gold still remained at the mint price; In 1808 grain was 79/- and gold moved to £4 an ounce; in 1812 (the highest price) grain was 105/- and gold was £5.5.6d. This suggests the gold price does not move in tandem with other commodities but is subject to a delayed response. Vansittart is wrong.

Another thing that must be considered is the note issue of the country banks. The volume can be obtained from the stamp duty paid. In 1818, before the ministry first started to withdraw paper from circulation, the stamp duty paid by country banks was £165,000. In 1819 it fell to £64,000 and in 1820 to £54,000. The country banks have reduced their paper issue in tandem with the Bank of England.

The thing to bear in mind, said Monck, is that there is a lag before there is any change in the price of gold against other commodities. Now we are reversing that process there will be some pain initially but we should endure it because it is temporary.

There are crucial differences between the state of the country in 1797 and now – principally these are the national debt, interest payable on that debt, and increased wages to both the military and the civil service.

In 1797 we could get along with a circulation of £25 millions; today we would need £40 millions to achieve the same standard. The Bank of England has issued £25 million in paper; the country banks £15 millions and the Scottish and Irish banks £6 millions each. The Bank of England might manage to make its issue convertible but what of the others? The country banks have no specie. If they are required to make their issues convertible they will sell their Exchequer Bills, stocks and convertible securities and they must get gold in payment. Selling all this paper will collapse stock values and the whole country will be available on the cheap to foreigners. At the same time our commodities would become cheap and our people the most lightly taxed in Europe which may sound fine but do not forget the interest payments on the national debt.

We have more capitalists in England than at any former time. In these new circumstances, they would find no trade so advantageous as possession of money. The ordinary people would show their disenchantment with paper by preferring gold. We have recently seen published proposals and actual attempts by the reformers to attack our financial system. We are at war with our people. Why should they fight against our soldiers when they can attack the Exchequer with impunity? It is foreseeable that the demand for gold would be enormous and probably much greater than appears likely from the balances at the banks.

E Ellice noted that in 1817 the issue of Bank of England notes was raised to £30 millions and the country banks permitted a pro-rata increase (to £18 million). The committee in 1819 had accordingly misled the House that the depreciation in currency was only the difference between £3.17.10½ and the then gold price of £4. 2. 0. The overall effect of the Suspension had been to increase the influence of the monied class in the country at the expense of the others.

In 1815 (the last year of the Property Tax), prices were nearly as high as they ever got and the landed income was assessed for £37 millions, the income from funds and annuities was assessed very much lower than their present value. Under the new ‘fixed value’ system, the landed income will reduce spectacularly while the funded income and annuities would commensurately increase. There has been a silent revaluation of the country’s monied classes with the holders of funds and fixed annuities winning hands down.

Sat 22nd Sept 1821

London, 8th May – the Bank of England commenced offering to exchange sovereigns for large denomination bank-notes today in pursuit of Ricardo’s plan for convertibility. Only a few applications were made.

Sat 27th Oct 1821

House of Commons, 1st June – Ricardo MP complained of the management of the Sinking Fund. It is supposed to reduce the national debt. The proposal originated with Sir Robert Walpole and was resurrected by Pitt who, to keep the Fund from ministers, put its management in the hands of the Bank of England. Pitt’s proposal had been for £1 million of revenue a year to be accumulated in the Fund and set aside for purchase of government stock.

Pitt kept his hands off it and Sidmouth as Chancellor of the Exchequer was equally abstemious but now Vansittart has proposed to appropriate large sums in his budget. He first took £7.3 million ‘for the relief of stock-holders’ as he said, and this year there is another large deduction.

Ricardo thought it would be better to return this fund to the taxpayers and revive it only if the country should again go to war.

Sat 16th March 1822

The Duke of Northumberland has reduced the rents payable on his Estates by 20%. Several months ago, when agricultural produce was at its most expensive, he reduced the rents 25%. This additional 20% is a further abatement to restore rents to the affordable level that existed prior to the expansion of the money supply.[145]

James, MP for Carlyle, has lowered his rents 25-30% and the Governors of Christ’s Hospital have cut 20% off rents on all their farms.

Sat 20th April 1822

Statistical report from London:

A new census is being taken in Britain. The last one in 1811 revealed a population of 11.8 million exclusive of 500,000 then in the armed forces. Early returns from the new census suggest the increase in population over the last ten years has been 15% bringing the British total today to about 14 millions. Ireland has a population of 6.5 millions.

The population of Canada is 1.5 millions; Our West Indian colonies contain 90,000 Britons; in Africa there are another 130,000; around the Mediterranean are 150,000; our colonies and dependencies in Asia and Australia contain 2,040,000. In India there are 70 million British citizens under the government of the Company.

Shipping tonnage on the British registry is 2.64 millions employing 174,000 seamen. Our exports are worth £51 million (including £11 million re-exports of foreign and colonial produce); of those exports cotton manufactures account for £20 millions. Our imports are £86 millions. Government annual revenue is about £57 millions.

Pitt calculated the value of landed property in Great Britain in 1797 at £1.6 billion.

Sat 20th April 1822

British currency – William the Conqueror introduced the Pound in 1073. It was a silver coin. Edward III introduced the gold Florin in 1345 which was worth 2/3rds of a Pound. In 1395 the gold Noble was coined. It had half the value of Edward’s Florin or a third of William’s Pound. In 1423 gold Reals were coined, each worth half a Pound. In 1510 a gold Sovereign was introduced worth 22/- which in 1550 was reminted at an exchange value of 20/-. In 1553 this coin was legislatively deemed to be worth 30/-.

In 1682 the guinea was introduced, valued at 26/- and in 1717, when Sir Isaac Newton was in charge of the Mint, this guinea was revalued at 21/-. It was milled to deter clipping. In 1773 all gold coins were called-in, valued at £15,563,393 and re-minted at a cost of £700,000 (4½% seignorage). At that time the Bank of England’s note issue, in Bills of Exchange (almost exclusively for foreign trade), totalled £10.5 million, giving value and credit in circulation of £26 million.

On 2nd Dec 1797 a new gold coin worth 7/- was minted and a silver token was issued in Jan 1798.

Today the sovereigns lately issued by the Bank of England total about £8 millions whilst the note issue has been reduced to £22 millions. The circulation today is only £4 millions more than in 1773 but trade (exports and imports) has tripled whilst government revenue has quadrupled. Proportionately, we have about half the currency we had in 1778.

The difference during the war was attributable mainly to the issue of bank-notes by the country banks which was large for several years but has since declined. The practice today amongst country banks is to maintain balances with their London correspondent and settle accounts by cheque periodically. It has permitted them to earmark their available capital at the expected amount of daily turnover and has reduced the need for large cash reserves in the provinces.

Sat 8th June 1822

The landowners of Norfolk held a meeting in early January to discuss the state of agriculture. The Earl of Albemarle, Lord Suffield, Coke and Wodehouse (the county’s MPs), several retired army officers and other landowners attended.

The meeting regretted that, after 4 years of supposed economy and retrenchment, the expenses of government continued high. At the end of the war the King’s Address to parliament commended the ministry to reduce expenses to the ‘lowest standard compatible with national safety’. This had not been done. The ministry merely counter-complained that it was the landowners rents and the church’s tithes that kept prices high.

The landowners say the fact is that costs have increased. A labourer in 1792 could live on 10/- a week but today could not. The difference is no longer in the costs of necessaries but the burden of taxation.

In the 1821 session of parliament a Report of the Agricultural Committee was presented. This suggested that British grain should approximate continental grain in price. The British people pay far more tax than the Europeans. If we allow the price of British grain to fall to continental levels, wages to farm labourers will fall, agricultural rents will fall and the whole landed interest of Britain will be devalued.

The meeting agreed that one way of resolving the hardship was to restore bank-notes to the value they had prior to Peel’s Bill (the 1819 Act to reduce the volume of bank-notes). Prior to the Bill, grain had cost 20/-, now it was 30/-. The economic argument that there was too much grain or not enough people (due to emigration) was considered and dismissed – there had been no importation of grain for the prior 3 years. Nearly all existing contracts were made to the standard of value before Peel’s Bill. This legislative fiat that ‘a Pound is no longer a Pound’ will diminish landowners.

The responsible act required of the ministry is not to restore the currency but to reduce taxation.

Unfortunately, the City banks will not permit a reduction in taxes as they secure the repayment of government loans. A majority of the 600+ MPs are returned by about 8,000 electors whose interests differ from the rest of society. Reforming the ministry will require a prior reform of the representation. It was then agreed to petition both the House of Lords and House of Commons.

It was noted in the discussions that several individual landowners have unilaterally reduced rents by 20 – 40%.

Sat 15th June 1822

London Courier – Liverpool and Vansittart as respectively Prime Minister and Chancellor of the Exchequer, have interviewed the major holders of government 5% paper at the Treasury.[146] They propose to pay-off the 5% investments, which would likely cause their transfer to the 4%s. It would be a saving of over £1 million in interest payments that conceivably might permit some tax reductions and should lessen dissent in the House of Commons and elsewhere in the country.

Liverpool opened the meeting by telling the investors ‘I am not here to discuss the proposal with you but to reveal the terms’ – that set the tone. A new 4% loan is open to 1829. Holders of 5%s may transfer into the new 4%s at an exchange of £105 new loan for every £100 of old loan. Dividends commence January 1822 and every 6 months thereafter. A register will be opened at the Bank of England for 3 weeks in March for dissenting investors. Those not dissenting will have their investments automatically transferred. Dissenters will be paid-off in numerical order commencing July 1822 when the last payment of dividend on the 5% loans is due.[147]

An added advantage in the demise of 5% loans is the likelihood that the Bank, which charges 5% on loans and discounts, will be induced to reduce its charge to 4%. This should spread throughout the banking and broking industry.

An attempt was made by 2,600 holders of the 5%s to defeat the measure through their representative in the House of Lords by threatening to transfer their investments to France but on examination the dissenters were found to be holders of £2.6 millions out of a total issue of 5%s of £150 million (1½%). They also said they feared the 4%s would be ended in 7 years and only 3%s left.

Sat 22nd June 1822

In the year ended 5th January 1821 British government revenue was £54.5 million and expenditure £53.1 million. In the current year it was £56.0 and £53.3. Next year it is estimated to be £55.2 and £50.0.

The Bank of England note issue in mid February was:

Bank Notes of £5+

Bank Notes under £5

Bank Post Bills[148]

£15.8 millions

£ 1.5 millions

£ 1.7 millions

Liverpool and Vansittart propose to apply the excess in the Sinking Fund over £5 million (about £1.5 million) to the relief of taxes paid by farmers; they propose to redeem the 5% stock thus saving £1.5 millions a year in dividends. They will apply this £3 millions to parishes by an issue of Exchequer Bills (which the Bank will discount at 3%) secured on the Rates.

Sat 7th Dec 1822

The Board of Control has commended the India Company to permit the use of private ships of less than 350 tons in the trade between Asia and Britain. The Board believes the requirement for only larger ships has prevented private merchants from developing the free trade of Asia appropriately. The Company’s concern is that smaller ships will be capable of accessing the myriad small ports of Asia and competing in the coasting trade.

The Directors say they already have the agreement of the ministry to a minimum of 350 tons and do not expect it to resile. If it is obliged to forego this, it will require some reciprocal advantage – either in acceptance of India-built ships on the British registry or equalisation of the duties on East Indian sugar.

Government is willing to yield on the shipping but says it needs a year to gauge the effect of the present sugar duties before amending them. The West Indian planters are in difficulty due to the legislative requirement they abjure slave labour. This has closed all European markets to British West Indian sugar on price grounds. Until the ministry can obtain the agreement of the European competitors to cease using slaves for colonial production, the problem will continue and the temporary solution is to guarantee our West Indian planters a market for their entire harvest in Britain.

Sat 6th July 1822

One of the attractions of shipping goods to London is its legislative exemption from Customs duty on short-delivered goods. In London the consignee only pays duty on the goods he actually receives, not the invoice amount.

This valuable concession has just been extended by the Treasury to Liverpool, Bristol, Plymouth, Falmouth and Hull. This is another benefit to the outports in their competition for trade.

Sat 13th July 1822

Chitty is ‘the contract king’ of the London barristers. He turns out for one party or the other in most contractual disputes at King’s Bench. He has just suffered a rare defeat in an interesting case on 29th January in Cox v Troy.

Troy is the surviving partner of Robarts, the former Director of the India Company and great London ship-owner. He continues to operate Robarts & Co, the bankers. He received a 60-day Bill of Exchange from Roche & Co, the Cork bankers, endorsed to the Plaintiff Cox. He wrote his acceptance on it, then had second thoughts, and erased the acceptance and returned the Bill to Cox. The reason for his change of mind was not adduced in evidence.

Chitty argued for the Plaintiff that once a Bill is accepted there has to be some evidence of a mistake for it to be declined. The Judge disagreed and referred to a French decision that held that a contract is made only when the decision of the acceptor is known to the applicant.

(This is the factual background to the new law reported in the next article.)

Sat 1st Sept 1821

House of Commons, 19th April – the ministry has enacted that no inland or foreign Bill of Exchange is legally accepted until the acceptor adds his written endorsement of acceptance on it. The legislation follows a commercial dispute in the London courts.

Sat 20th Oct 1821

London stocks 5th June – 3% consols 76; 3% reduced 75; 4% consols 94;

Sat 2nd Feb 1822

Bell’s Weekly Messenger, 5th August – the state of British markets, both for commodities and money, is anomalous. Prices for grain and meat continue to fall and the landed and agricultural interests are alarmed. In the seaports, prices of houses are also falling and rents along with them, due to the reduction of the Royal Navy and its decreased activity. Even coal is down to 32/- per chaldron (36 bushels).[149] The same diminishing prices are however evident throughout the country. There is a surplus of everything, except bank-notes.

It may relate to the decline in population due to the many British people who, finding no employment here, have emigrated to America, Canada and Australia,[150] or are fighting in South America (see the chapter of that name) or who have gone to seek their fortunes in India under the new free trade.

Sat 9th March 1822

London stocks – prices have been slowly rising throughout 1821 and by 8th October the 3% consols were 77 and the 5% stock was at 110.

Sat 13th April 1822

London stocks, 7th November – Bank of England 240; East India stock 242; 3% Consols 78; 4% consols 96; 5% consols 111.

Sat 4th May 1822

Alexander Baring, son of Sir Francis, has bought the Estate of Mr Petre in Norfolk for £300,000.

Sat 15th June 1822

Preston Chronicle, mid-February – The Lancaster Bank has ceased payment. It was supported by the farmers, manufacturers and merchants of Preston as well as many other locals who are now all financially diminished.

The timing is awful – many people had deposited funds in order to pay for land which was to be made available for purchase at Candlemas.[151] Speculators are offering 4/6d to 5/- a pound (25%) to those willing to sell their claims on the bank.

Sat 15th June 1822

The proprietor of Coutts Bank has died and left his entire Estate of £900,000 to his wife. He is buried in the family vault at Royton Abbey, Oxford. He had three daughters – the Countess of Guildford, the Marchioness of Bute and Lady Burdett, wife of Sir Francis. Each of the ladies have already received £100,000 on their marriages.

Mrs Coutts now becomes the majority shareholder of Coutts Bank. The Duke of York has privately expressed an interest in marrying her.

Sat 29th June 1822

The British economy is finally improving. Employment is up, Poor Rate payments are down and revenue has increased, due entirely to increased trade as reflected in greater Customs receipts.

Government re-organisation of its revenue will largely involve the reduction or elimination of the malt tax (on beer) which will be widely popular.

Lord Cochrane, now the Admiral of Independent Chile, has written many letters to the merchants of England and many ships have taken cargoes to the newly independent states of South America. The effect of those new markets on our national prosperity remains unknown.

The new Russian tariff is biased against this country and annoyingly offers advantages to America. Cotton consumption in the factories to the north is now 50+% more than the low 315,000 bales a year reached in 1815 / 16.

Sat 6th July 1822

Bell’s Weekly Messenger, 20th January 1822 – George Poole is a watch-gilder. He was accused of stealing two chickens by a poulterer of Little Bell Alley. The theft was done openly and a nearby Constable instantly arrested Poole.

Poole said his wife and three children lived nearby and were hungry so he took the chickens. He had no money and no job but received 4/- a week from the Poor Rate of the parish of St Luke’s and this paid the rent on the family room.

The Constable visited the room on the upper floor of 1 New Row, Memel Street and interviewed the wife. She and the three children were scarcely clothed. They were clearly cold and hungry. The only furniture was a chair on which reposed the body of a fourth child which had died a few days earlier and awaited a coffin for burial. A few rags in a corner suggested that was the bed of the family.

The Judge (it was in the City and the case was heard by the Lord Mayor) discharged the prisoner and commended him to approach St Luke’s for better assistance.

(the publication of this article in Bell’s caused a subscription to be raised and £60 was donated to Poole)

Sat 13th July 1822

Lord Grosvenor has just bought the celebrated picture of Napoleon by Robert Lefevre for 310 Guineas.

Sat 20th July 1822

The Report of the Police Committee of London has mentioned the existence of flash-houses in London. They board and lodge children for prostitution. These children, being predated upon by adults, in turn learn to predate on younger children and the whole thing gets perpetuated.

The operators have occasionally made themselves useful to Police by providing information on crimes against property but this is insufficient justification for their continued toleration.

A recent survey suggests there are 8,000 children working in flash-houses in the Cities of London and Westminster and the Borough of Southwark.

Sat 27th July 1822

A Lloyd’s underwriter is offering £100 for a 40 Guinea premium if the 3% consols reach 85 before 31st Dec 1822.

Sat 17th Aug 1822

The unsettled state of almost every European country ex Scandinavia is causing our funds to rise and rise. 3% consols in London were 81½ on 29th March. The 4%s have been trading between 95 – 98.

Foreign stock is also advancing and, astonishingly, there has been a run on Spanish government paper, which last year was unsellable at any price. The brokers attribute it to the ministry’s public, if cautious, welcome of parliamentary reform.

Sat 7th Sept 1822

Bell’s Weekly Messenger, mid-April – At a shareholders’ meeting, the Directors of the Bank of England wished to contradict the current popular belief that their removal of bank-notes from circulation has contributed to the economic troubles of the country.

The shareholders were told that the issue of gold and paper in the year ending March 1822 was £4 millions more than the previous year. The issue of gold and paper in the prior year (ending March 1821) was £3.5 million more than the year before that.

There is a popular belief that the Bank’s reclamation of its £10 million debt from the government had reduced the circulating medium by that amount. The Governor denied it.

He noted that since the recent issues of specie, the number of prosecutions for forgery had fallen considerably. He declined to comment on what effect the reduction of government debt interest to 4% would have on the Bank’s discount rate.

He announced a 5% dividend for the half-year.

Sat 7th Sept 1822

The West Indian farmers have petitioned the House of Commons to protest a breach of agreement.

They say the deal they made with a previous ministry was for them to have a monopoly of the British sugar market and Britain to have a monopoly of their market for manufactures. They themselves have enforced the monopoly and permitted access to only British ships and British goods but the ministry has reneged on its commitment. Many thousands of British sailors are employed in the carriage of goods to and fro. British buyers of West Indian sugar pay £3.5 millions into the Exchequer in Customs duty.

They say the export of East Indian sugar from India is a matter of trivial importance to the India Company and should be ended. Their own survival imperatively demands it (NB – East Indian sugar has been subject to extra duty since 1813 in an attempt to support West Indian farmers whose lobbyists are London banks)

Secondly, they protest that slave-grown sugar undercuts their own price and they pray for government to undertake vigorous measures to suppress the slave traffic.

Their third complaint concerns West Indian / United States trade. The British regulations are supposed to ensure that all trade between West Indies and America is in British ships. Contrarily, the Americans offload and reload British manufactures in their own ports (or simply switch documents) thus giving the goods the superficial appearance of American exports and circumventing the legislative restriction. This gives employment to American ships and sailors at British expense.

A separate complaint against the Americans arises from their recent occupation of the Floridas. This gives them several safe ports close to the trade route between West Indies and Europe and threatens West Indian trade should we again quarrel with USA.

Sat 21st Sept 1822

The ministry introduced a plan to the Commons in early May for government to contract with private companies for the payment of the military annuities, pensions and half-pay. The plan was approved on a vote 135 / 56.

The Pensions List costs about £5 millions a year. The idea is to pay £2.8 millions to a private contractor annually for 45 years.[152] He will pay-off the pensions year by year, initially incurring a loss, but reaping a fine profit in later years.

The £2+ millions ‘saved’ will enable government to remit some tax. It is said the salt tax is likely to be abandoned first.

On 7th May a meeting was held at Treasury Chambers at which all the main City merchants were represented. The ministry’s Schedule of Payments that are estimated to be required by the plan starts at £4.9 millions in the first year and decreases year by year to £300,000 in 45th year. A management fee of £300 per million is allowed the successful contractor. He must provide £5 millions in security which may be in holdings of government paper.

Sat 21st Sept 1822

The period for country banks to issue small bank-notes is extended to 1833. Those that are 65+ miles from London may form joint-stock companies like the Scottish banks.

In return for its agreement to this measure, the Bank of England has won another ten years beyond 1833 on its Charter.

Sat 21st Sept 1822

London, 20th May – The South Sea Company, which deals in whale products, seeks funding for pensions. The shareholders and those members of the public who were invited to subscribe, only invested £1.5 millions whilst the Company requires over £5 millions.

The government is discussing the matter with the Bank of England. Perhaps the Bank will provide a loan to the South Sea Company. This has been a contributing factor in the strong increase in the price of government debt paper.

When the South Sea Company EGM ended on Monday, and the decision to ask for a loan was known, its 3½% stock advanced from 91 to 94 on a single enormous transaction in the expectation that the South Sea loan would instantly trade at a premium.

Stock market speculators calculate that all the funds will be 2-3% higher within a couple of months.

Sat 28th Sept 1822

The Stamp Duty on newspapers sold in England allows government to know how many are sold. In 1821, 16,254,531 newspapers were sold in London and 8,525,252 sold in the provinces. That is a 50% increase on sales in 1801 when totally 16,084,905 newspapers were sold throughout the country.

Sat 5th Oct 1822

The House of Commons has published a return of British trade in £ millions:


























The re-exports are colonial produce imported and taxed to comply with the Navigation Act, then exported mainly to Europe. The considerable inflow of silver and gold into Britain, and the ability to resume gold payments, appears based on the huge balance of trade in Britain’s favour. This explains the ministry’s willingness to amend fundamental terms of the Navigation Act. Britain is edging towards the American position on free trade.

Sat 5th Oct 1822

The Russian government has just concluded the terms for a £3½ million loan in London paying 5% interest. A sinking fund of 1% of the loan will eventually redeem it at some distant date. The stock was offered at 77 yesterday but today was trading at 85.

The requirement for this loan is thought to confirm that the Tsar will make war on the Ottomans. Russia wants the Turkish provinces of Moldavia and Wallachia.

The Turks are agreeable to a cession once Russian fomentation of insurrection in Greece ends however the Russians contrarily claim the Turks are treaty bound to instantly surrender the two provinces.

Britain appears to be supporting the Ottomans – we have supplied their navy with Congreve rockets and some skilful seamen who know how to operate them.

Sat 30th Nov 1822

The Bank of England has responded to the retirement of the three types of 5% government stock. It will discount all Bills of Exchange and approved drafts at 4% commencing 21st June 1822.

This announcement caused government paper to rise. The 3% consols closed at 81.

Sat 30th Nov 1822

The favourable balance of trade has caused the price of gold in London to fall to £3.17.6d per Pound. This is the first time the Pound has traded above its mint value since 1797 and a rare occurrence since record-keeping commenced.

Sat 30th Nov 1822

House of Lords, 17th June – the Lords are debating trade. The Navigation Laws are intended to make England the entrepôt of the world. We will not achieve this aim if we overly tax the produce of other countries.

It has been our experience that the more foreign countries increase their wealth, the more our trade benefits from it. The recent distress of our manufacturers was due to our inability to find return cargoes, it was said. The more import duties that we cancel, the more trade we will do.

The West Indian and American Trade Bill opens direct trade between those two areas with only a protective tariff on goods not imported in British ships.

The Colonial Trade Bill authorises free trade with all foreign colonies, whether independent or not (i.e. South America is included).

Sat 14th Dec 1822

Bankers in the City suspect the ministry might be tempted by the easy success they had in transferring the 5% investors into 4%s, to do it again with the 4%s into 3%s.

The bankers are talking about ‘an attack on the 4%s’.

Sat 14th Dec 1822

London, late June – The stock exchange is depressed due to extensive selling by Jewish investors. They have been selling ‘in dribs and drabs’ daily for a fortnight.

The news of yet another insurrection in Spain helped keep prices down too. Spanish bonds fell 1% to 62. Monday is settlement day for Spanish bonds and they are expected to be marked down further.

Other bonds were also down – Chile 69; Russia 82.

Sat 14th Dec 1822

The parliamentary return on insolvent people reveals 6,090 petitioning and discharged debtors have debts of £5.5 million and assets of £1,499. Declaring bankruptcy is a last-ditch measure in Britain.

Sat 18th Jan 1823

British commerce is settling into a peacetime style. During the war we held international trade exclusively in our own hands and were able to charge what we liked, even for commodities. The resultant wealth that flooded the country made commercial endeavours appear ‘easy money’.

With the peace, our neighbours have resumed competition with us and profits of trade have been greatly reduced. Our advantages are our lead in industrial technology, our native ingenuity and our unrivalled knowledge of the ways of global trade that derived from our occupation of all our neighbours’ colonies. These advantages and our superiority in available capital and insurance services are the tools to maintain our comparative advantage.

This change to peace has reduced our unit profits but our overall markets have grown immensely and a smaller slice of a larger cake is still highly profitable. The opportunities now being presented by South America are of great national importance. In that market we presently compete only with USA but the North Americans cannot supply manufactured goods nor would the South Americans choose to buy agricultural products. They have to buy the former from us which gives us an easy profit; and they have to sell the latter to Europe which allows us to compete with European national production.

Sat 8th Feb 1823

London, 24th August – The interest shown in the new science of political economy is having its effect on commercial decisions. We have learned that increasing the availability of capital equates with decreasing the interest rate – they are different manifestations of the same thing.

Paper money is the same as any other commodity – the more you have, the less its worth.

The India Company has resolved to reduce the interest payable on its London bonds from 4% to 3½% effective 28th February 1823. It has advertised its intention in the newspapers with the confident phrase – ‘those people wishing to sell-out may do so at any time.’

Sat 8th Feb 1823

London, 1st September – British funds continue to increase. The 3% consols are at 81 – 82. The cause is being attributed to the intention of the Directors of Bank of England to change the basis to their dividend. Formerly they have routinely paid 10+% annual interest to shareholders plus occasional cash bonuses.

It is now proposed to reduce the percentage of interest on the dividend and substitute a cash payment to equate with the reduction.

Bank stock has a face value of £15 millions (the present share price is about £250) and the proposed cash payment is rumoured to be as much as 20-25% of issued capital a year.

This innovation would potentially throw £3+ millions of dividends into circulation annually which would almost certainly feed directly into other securities and provided even more support to our stock market. This is contributing to the speculative flows into the consols.[153]

Sat 15th March 1823

The Directors of the Bank of England have abandoned their plan to pay a cash bonus to shareholders in lieu of a percentage dividend. The share price has since risen to 251. It is the effect on the share value that dissuaded them – they would need a very large bonus to make the reduction in Bank share prices, and consequently government paper, workable. However the Directors have taken an Oath of Secrecy amongst themselves and we are unlikely to know what is afoot until it occurs.

It is well known that the Bank has a large amount of unused capital at its disposal and this will increase with the government repayments that are due for retirement of Exchequer Bills now the government is well-funded again.

The Directors are rumoured to intend a proposal to the Chancellor to purchase the army and navy pensions that were recently agreed to be privatised in the House of Commons – that scheme requires an investment up-front with the profits flowing-in later and fits nicely with the Bank’s cashflow position. The South Sea Company sought to win that contract but its capital was inadequate. The Bank and Stock Exchange were closed Sat 21st September but considerable private share dealing was done by insiders.

British loans to other governments are performing satisfactorily. The latest quotations are:

Prussia 1818 loan 5%

Prussia 1822 loan 5%

Danish loan 5%

Russian loan 5%

Neapolitan loan 5%

Spanish 1820 loan 5%

Spanish 1821 loan 5%

Chilean loan 6%

Columbian loan 6%










Sat 29th March 1823

The amendment of the British Navigation Laws has induced the Tsar to amend his own trading regulations. He has permitted all British ships into Russian ports, and to trade on the coasts of Russia, at the same level of duty that his own ship-owners pay.

The opening of British West Indian ports has permitted the U S administration to reciprocate with the opening of mainland American ports to our ships.

Sat 5th April 1823

The Bank of England has agreed to fund the settlement of the dissenting holders of Navy 5% Bills on behalf of government. It will cost about £2.7 millions. The Bank also agreed only 3% interest on the loan until liquidated. In return the government will refund the money by quarterly payments of £300,000 each.

These payments are drawn from the Sinking Fund and will reduce government ability to buy its own securities. Recently the government has bought £15,000 daily. The present buoyant state of the financial market, underwritten by regular receipt of trading surpluses, has persuaded government that securities should maintain their price without support.

Sat 5th April 1823

Many Kentish farmers take chalk from under the coastal cliffs to reduce the acidity of their farming land. Recently, the authorities noticed that traffic on the beaches had increased. On investigation, it transpired that Kentish smugglers had evolved a new way of talking delivery of goods.

The French boats land their barrels of brandy totally encased in plaster of Paris. Some even have bits of seaweed attached for greater realism. They somewhat resemble the blocks of chalk that fall from the cliffs.

Sat 26th April 1823

London 5th November – 2nd November was settlement day at the Exchange. A famous loan contractor took £2 millions of stock to take advantage of a depression in the price due to widespread sales for cash by the public at large. These sales are in response to the plans of the ‘Unholy Alliance’, as it is called by the Press, for Iberia and the frightful 3% drop in French funds. The Alliance has published its belief it has a right to intervene in Spanish internal affairs.[154]

Another famous banker lent £1 million at 4½% for speculation in the funds. The Commissioners for the Sinking Fund have continued their operations. It has been solely due to the acts of Rothschild and this handful of great Jewish capitalists, acting both in London and Paris concertedly, that losses have not been very substantial.

These attempts to consolidate the market were not confined to London stock alone – purchases of French and other European loans were also made. As a result there were few large defaulters on 3rd November (settlement day).

There has been a move amongst British capitalists in the last year from traditional commercial pursuits to stock speculations due to the greater profit potential of the market and the ease of trading. This in turn has drawn-in all sorts of more or less impecunious people who are willing to chance everything on a gamble. The Exchange has clipped their wings by proscribing time bargains temporarily. The legality of time bargains on foreign stock remains obscure and no doubt the litigation at King’s Bench that will predictably arise from the numerous failures in the current débâcle will clarify the situation.

The new South American stock was initially unsupported. The Columbian loan opened yesterday at 77 and closed at 70. This morning it fell to 68 before the major holders staged a recovery which permitted it to close at 74.

Sat 17th May 1823

Vienna, early December – Several large capitalists have caused a run on Austrian Imperial funds here which fell 3% in one day. It appears they expect Austria, which is one of the two major forces in the Holy Alliance, to support war between France and Russia on the one side against Spain and Portugal on the other.[155] The capitalists disapprove.

This loss of national wealth may be enough to dissuade the Hapsburgs. Autocratic Kings are only slowly becoming familiar with the ways capitalists can influence monarchical policies now that paper money has been adopted and the Kings are all in debt in an overt and undeniable way.

Meanwhile King Ferdinand of Spain and his sons Carlos and Francisco are all required to stay in their apartments in Madrid. The French Bourbon army that has been on the border for months is said to be moving into Spain.

Sat 14th June 1823

House of Lords, 4th February – Brougham spoke on the subject of paper money. Lord Stanhope’s Act of 1811 had ranked paper pari passu with gold and required all creditors to receive it at that value.

A careful analysis of available statistics reveal that over-printing had caused the Pound to be worth 14/9d in gold value at the time that Act of Parliament was approved.

Sat 21st June 1823

Joseph Hume has objected in the Commons to the ‘farce’ of making the Sinking Fund up to £15 millions each year, then borrowing from it for other purposes.

The Lord Mayor of London has said that the Sinking Fund is absolutely fundamental to the commercial well-being of England. Since Pitt introduced it, it has been copied in France, Russia and Prussia. Lushington said it was intended to simplify the accounting of the Sinking Fund very soon.

Baring said the continuance of the Sinking Fund was imperative (he is a big holder of government paper); Ricardo said it was useless (he is a free trader).

Sat 21st June 1823

House of Lords, 17th February – Lansdowne asked why the Austrian war loans had not been paid-off. The war ended long ago. Liverpool said a basis to Austrian repayment had been agreed and he hoped to have some good news soon.

Sat 21st June 1823

The House of Commons has debated on the Bank of England. The amount of public money held by the Bank in 1815 was about £11 – £12 millions. That had progressively been reduced to £4 millions now. Grenfell asked why this capital was left unproductive in the Bank. The country pays the Bank £270,000 a year for management of transfers and payment of dividends on loan stock. All the merchant banks would be happy to take the job at £70,000 a year.

The Chancellor of the Exchequer (now Robinson) said he was new to the job and would have to check.

Baring told the Chancellor of the Exchequer that the balance with the Bank could not be reduced because government had agreed as a term of the Charter that it would always keep £4-5 millions in its account. Manning (a Bank Director) said the Bank of England provided great services for the £270,000.

Joseph Hume said the government could make an instant profit of £1.5 millions by acting as its own banker. On a revenue of about £60 millions and debt servicing of £20-30 millions a year, government would certainly manage its own funds far more cheaply, he thought.

Sat 28th June 1823

The people of Surrey have petitioned for relief. During the war they were encouraged by Pitt’s ministry and its successors to invest in government stock as a means of mitigating their liability for the Land Tax. It was held-out that the tax was perpetual and they would materially benefit from doing so. For many years they did.

Long after the end of the war the government acted to resume cash payments by removing a large part of the paper currency from circulation thus increasing the international value of the remainder until it reached a parity with its former gold value (the gold value before payments ceased).

The effect of this contraction of domestic money supply was to make everything in England less expensive. By 1819, the price of land and hence rents had dropped an estimated 30-40% due to the operation. This devalued those land-owners who were subject to the Land Tax and they wanted compensation.

The petition was read and tabled.

Sat 12th July 1823

An agreement between the ministry and the Bank of England for the latter to pay the army pensions and half-pay for 5 years in return for annuities for 45 years has been concluded and the Chancellor of the Exchequer was given leave in late March to bring in an enabling Bill.

Sat 19th July 1823

House of Lords, 21st March – Liverpool moved the committal of the National Debt Reduction Act and said this required the Sinking Fund to have £5 millions.

King and Ellenborough took the same line as Tierney in the Commons and said the real value of the Sinking Fund would be £3 millions. The army pensions / annuity scheme whereby the other £2 millions was raised was simply a borrowing from future generations – it is directly opposed to the great principle of the Sinking Fund.

Parnell had suggested earlier that the National Debt might be paid-off by converting the loan stock to 45-year annuities paying 1% more. This would add £8 millions to our annual interest payments but would replace the Sinking Fund entirely. Ricardo was strongly in support.

Bennett said the only function of the Sinking Fund that ministers wished to preserve was its employment to maintain the price of loan stock – that benefits the tax-eaters at the cost of the tax-payers, he thought.[156]

Hume worked an example to show the Sinking Fund was a cost on the people and had not reduced the debt. In the 6 years 1816 – 1821 the excess revenue over expenditure was £9.6 millions. If this had been used to pay-off debt, the annual interest payments now would be £500,000 less. Instead we opted for complexity by raising loans, issuing Exchequer Bills, transferring capital back and forth between Treasury and Bank of England (about £120 millions), and, although there had been a diminution of annual charge over the period (of £230,000 by expiry of annuities and £941,500 by reduction of interest rate payable on Exchequer Bills), the charge on the debt at 1821, both funded and unfunded, greatly exceeded all the preceding years.

This Sinking Fund ‘hocus-pocus’ costs us an extra £100,000 a year payable to the tax-eaters, Hume said. He recalled that Pitt introduced the Sinking Fund to pay-off our debts as we incurred them thus relieving posterity of the burden. This had since been reversed by successive ministries and we now relieved ourselves of debt by transfer to our children.

Ricardo asked the ministry to try the experiment with £50 millions of debt paper (perpetual annuities) converted into long annuities (i.e. Parnell’s suggestion).

The ministry was able to garner the necessary support amongst the country members to defeat all the suggested amendments.[157]

Sat 16th August 1823

Just over 50% of British revenue in 1822 and 1823 came from Excise Duty (i.e. the domestic economy). Customs produced 20% and stamp duty over 10%. Taxes were 15% and the rest was from postage stamps and miscellaneous income.

Sat 13th Sept 1823

Letter to the Editor, 12th September:

The exchange rate between Britain and India fluctuates in accordance with the balance of trade. For some years the Company and the Agencies have been exporters of bullion to Britain. It gives a better return than Indian produce. This has masked a large reduction in the value of Indian commodity trade.

The intrinsic silver value of the Bombay Rupee is now 1/11d. Until recently it was exchanging at 2/6d. That better rate for Indian exporters of capital was due to four factors:

  • a relative shortage of silver in India before 1806.

(refuted by a commentator Amicus – the shortages were occasional and infrequent and merely evidenced a natural demand for capital, he said),

  • to the high interest rate on the Company’s loan paper.

(which interest was remittable to London at ±2/6d to the Rupee. Amicus says this was an effect of the high rate not a cause)

  • and to the Indian trade being a monopoly trade.

(also discountenanced by Amicus – the Company is a commercial organisation; it will not forego the profit on silver trade merely to maintain an unrealistic price in India, he says)

  • Subsequent to 1806 the rate was exacerbated by the depreciation of Sterling due to printing – that made an exchange of 2/6d about right.

(Amicus approves this as the prime, perhaps only, cause. He notes the balance of trade is always in favour of Britain and against India)

The British government repealed the suspension of cash payments when the Pound Sterling had appreciated by 25%, sufficient to return to its pre-war gold value. Once that occurred the possibility of a Rupee exchange at 2/6d ended.

Only if the Bank of England again depreciates the British currency or if the free trade is ended and monopoly restored, will the exchange rate again fall towards 2/6d.

These observations suggest that India has sustained a great apparent loss through no fault of her own. The Company charges a high price for its remittance service – we should seek for Company understanding of our diminished ability to remit to England for our pensions. The value of the remittance service is predicated on the alternative cost of sending silver instead – that is the freight cost to the frigate, minting and packaging. If the Company’s rate becomes unattractive commercially, people will send their own silver back. Sgd Verax

Sat 20th Sept 1823

The British loans to Austria that commenced with Pitt and continued through subsequent administrations have still not been repaid. The present difficulty is said to derive from the appreciation of Sterling after the note–issue was reduced.[158] All the European state debtors complain that the cost of repayment, should they attempt it, has increased. The Austrian and British ministries have agreed to be consensual and relaxed in their discussions.

Sat 27th Sept 1823

The Bombay Courier correspondent Verax has returned to the subject of the loans. He says between 1800 – 1810 very few of the Company’s loans were closed and they offered advantageous terms to investors. They followed each other in quick succession which explains why they had no premium.

He believes it was the high profits of the Company’s exclusive monopoly trade that ensured capital was attracted to and retained in India. This is why there was a high rate of interest and exchange.[159]

Sat 11th Oct 1823

Letter to the Editor from Mercury (one of the leading Bombay merchants):

The gold Mohurs which are one of the gold coins of India are disappearing – it is because they afford the best remittance to London at present.

South American silver dollars, since the wars of independence commenced in 1810, have occasionally been impossible to bring to town for minting. At those times, capitalists have bought bar silver at 1-2% discount. To address this leakage of value, the Mexican government extended minting to several towns. This has both been expensive and unpredictable. The silver content of some provincially minted coins is less than advertised.[160]

British gold and silver coin is prohibited to export in order to satisfy parliamentary fears that its export might raise the money price of bullion.

The Spanish government has complex regulations for transfer of gold and silver that involve heavy deterrent duties. This gave rise to the extensive smuggling that has characterised South American trade. Smuggling fees have varied from 1 – 8% ad valorem. Recently at Vera Cruz, British government Bills could be negotiated at 4/2d per dollar whereas the formal rate at Jamaica was 4/8d.

An interesting aspect of economics is that the removal of restrictions has the same effect as their creation. This removal / creation may not occur in the place it is originated. So, for example, British Corn Laws and the new free trade with India have both had severe effects on the commerce of USA and their exchange rate with England.

Government loans are the usual concomitant of war. This extra demand for capital to meet war expenses tends to increase interest rates. The increased interest attracts more capital. The relative security (Sinking Fund, sequestration of gold and silver by government) of British war loans in the recent struggle with France, attracted many million Pounds of foreign capital to London. Today we see that every government that is intent on borrowing comes to London for its financial needs.

The Company’s loans in India are almost totally subscribed by residents which has the effect of stopping any inflow of capital here. The savings of the army and navy officers and the profits of the Agencies are invested in the Company’s loans and very little British capital from London could access this market. That was the cause of the demand for remittable interest which was probably doubled for European surplus income.

In 1813 the Company sent back as much silver as it could to London, not simply to help the country face its apparent defeat at that time but because the price of bullion in depreciated Sterling appeared advantageous.

From 1813 – 1819 the Company issued a series of loans that absorbed all the surplus capital of its employees and the Agency Houses – they allowed an exchange rate of 2/6d on the interest which was remitted to London. Ultimately, the Company had to remit bullion to settle these London expenses.

Throughout this period we had the beginning of free trade. It was characterised by an enormous increase in Indian cotton farming for shipment to England. These cotton speculators supported the exchange rate until the latter part of the period when it declined to the rate of bullion remittance. By 1820 cotton trade to Europe was impossible. Bullion had flowed into India in 1819 from Europe and America in a huge amount and the purchases of British manufactures locally were trebled. The Company necessarily changed its system. Instead of loans with remittable interest, it issued loans with interest payable here.

This caused a search for other means of remitting capital surpluses to London. Indigo reached its lowest price in Britain. Silk, sugar, spices, medicines – all were tried – but produced less than shipments of bullion. Once the exchange rate lost its artificial support, it fell rapidly to the same rate as a specie remittance, which is where it is at now. The time when we received 8% interest on our savings and 2/6d per Rupee on our remittances has passed.[161]

Vol 1 No 35 – Sat 20th September 1828

Gold and silver production in Guatemala:

1796 – 1810 283 ozs gold + 253,560 ozs silver = $2,193,832

1811 – 1825 1,524 ozs gold + 423,881 ozs silver = $3,810,382

It is said not 20% of this remains in Guatemala. The rest is exported as ore via Honduras despite severe punishments for smuggling.

Vol 7 No 4 – Tues 28th January 1834

The official figures for British foreign trade are available.

In 1831 imports were £49,727,108 and exports £71,431,491.

For 1832 they were £44,586,241 imports and £76,071,572 exports. These surpluses reveal a net inflow of funds to England.

What happens to the surpluses of this and previous years?

Our greatest trading partner is USA to whom we export £12,596,173 and import £8,970,342. Our next is Germany then India, West Indies and China.

Vol 7 No 4 – Tues 28th January 1834

An account has been published in London in July 1833 showing the effects of our fiscal changes since the French war (1815). The gross annual value of taxes repealed since the war is £42,345,529. The product of the replacement taxes is £5,836,110.

This huge reduction is comprised of £9 millions in Customs duty, £14 millions in Excise and £18.5 millions in property and other assessed taxes. Nevertheless, last year the revenue increased by £½ million due to the increased product of the new taxes. Government expenditure has reduced quicker than the fall in revenue. The Chancellor’s promise to remit the worst of the remaining taxes appears capable of fulfilment.

Vol 7 No 10 – Tues 11th March 1834

In praise of debt (from Tait’s Magazine):

Society is made of two classes, creditors and debtors. Creditors are thought to be enviable. This is wrong. The debtor has the sympathy of mankind. He is always the ‘poor’ or ‘unfortunate’ debtor. Whoever heard of a ‘poor’ or ‘unfortunate’ creditor? They are the harsh and hard-hearted. A creditor cannot be pitied unless he recants and becomes a debtor.

A debtor is interesting. Many people watch him and check his movements. He cannot disappear. His name is on many tongues and in many books. People think continuously about him. His door is constantly thronged. Judges know him as well as they know the Duke of Devonshire. His meals, his clothes, his furniture are well known and listed in all sorts of formal documents.

The man who pays his way is unknown. The milkman, the baker and the butcher have no record of him. Even his house is unknown. He pays his way to obscurity. When a carriage stops at his door no-one cares if he is about to leave town. When packages are removed from his house no-one follows to see if they are going to the pawnbroker.

Vol 8 No 23 – Tues 9th June 1835

A dispute between the American Federal Government and Barings has led to the dismissal of the British merchant bank and its replacement by N M Rothschild & Co as the financial agent of the Department of State from 1st January 1836.

Vol 10 No 37 – 12th September 1837

Various London papers:

  • America is in financial crisis. The merchant bankers Hicks Lawrence & Co and S & M Allen have failed in New York. Exchange is at a 10½ – 12% premium but even then few houses could sell Bills on London. The Second Bank of the United States has sold bonds on two thirds credit at 7% premium and they have been resold at par which has fixed the interest rate at 4% per month.
  • U S shares quoted in London have dropped about 20% in the last few months. Cotton continues to decline and twenty firms have failed in New Orleans. Two British firms in American trade (Thomas Wilson & Co and Timothy Wiggins & Co) have been assisted by the Bank of England which has increased the money in circulation. George Wilde & Co has been allowed to fail.
  • This increase in circulation has forced money into the funds. Stock and Exchequer Bills have since appreciated. The Bank of England’s circulation has now reached £19 millions, 5% up on the last quarter. This will soon have to be reduced.

Vol 10 No 42 – 17th October 1837

Observer, 21st May 1837:

The U S Ambassador to St James has recommended his government to send no silver to London to relieve the financial embarrassment of England.

He says the political disturbances in England are prompted by her financial difficulties:

If the power of the capitalists is crippled, it will raise the democratic forces of the country and Ireland will be freed. If America sends specie now it will enable the Tories to overawe and dominate the people.

It is regrettable that the minister of a friendly power should have thought it appropriate to promote a financial and political convulsion in England. The promotion of reform in England must follow a considered course. Even the Whigs cannot support Ambassador Andrew Stevenson’s ideas.

Vol 10 No 47 – 21st November 1837

Penny Magazine on Bank Runs, May 1837:

The first run occurred in 1667, twenty-seven years before the formation of the Bank of England, when Admiral de Ruyter with a Dutch naval force took Sheerness and entered the Thames. The government responded with confusion and the citizens rushed to the goldsmiths and private bankers to withdraw their money.

The second run was in 1745 when the Pretender’s army was marching on London (there was no run when William of Orange invaded in 1688 – that was at the invitation of the nobles and merchants). At a public meeting, a thousand merchants patriotically agreed to accept bank promissory notes in lieu of specie. The Bank nevertheless had to issue all its gold and at one stage was settling cash demands in silver.

A more remarkable run occurred in 1797 when a French invasion was anticipated, confidence was low and the Bank had only £1,270,000 in bullion and coin (25th February 1797). The people queuing outside for their funds in gold were fobbed off with a government order to the bank to settle demands in notes rather than specie. Notes for as little as £1 were then issued and the restriction on bullion payments continued through the war.

During 1817 – 1819 an attempt was made to return to convertibility but it was not until 1821 that payments in specie could be fully resumed. Since then, except for a short period in 1825, banknotes of less than £5 were withdrawn and are now prohibited.

Many readers will remember the Panic of 1825 when the run on the Bank was as great as the run in 1797. In Spring 1825 the Bank had £10 millions in bullion. By November it had £1.3 millions. The positive balances of British trade globally were being brought in from abroad as gold, sent to the mint for coining and the coins rushed to the bank for paying-out. The mint worked double shifts to meet the demand. Gold was handed out in £25 bags on demand. On the most active day the Bank discounted 4,200 Bills. On 8th December the discounts totalled £7.5 millions, on 15th they were £11.5 millions, on 22nd £14.5 millions and 29th £15 millions.

The annual average values of Bills discounted by the Bank was



1805 – 1816

1817 – 1826



between £11 – £20 millions annually and

between £2 – £6 millions annually.

By 1830 it was down to £900,000 and in 1831 £1.5 millions.[162]

Vol 11 No 31 – 31st July 1838

The International Copyright Law has sunk in the American Congress. It was supported by all British poets and novelists but U S publishers are opposed and the Representatives support them. A similar Bill is soon to be introduced in England where it will easily pass. The problem is in America and Western Europe. For each foreign book reprinted in England there are at least a hundred reprinted in France, Belgium and Germany.

Vol 11 No 31 – 31st July 1838

Tea, coffee and tobacco have made the world smaller:

  • We would know nothing of China if there was no tea.
  • Tobacco was the sole trading link between Europe and England for 300 years.
  • Arabia is connected to us solely by coffee which was only discovered by chance towards the end of the 13th century. Sheikh Omar was persecuted and fled with his followers to the mountains of Yemen where they found the coffee bean growing wild. It was too hard to chew so they boiled it and found the liquor invigorating. Its use took 3 centuries to spread to other Arab states. The Egyptian priests popularised it. They spent their nights in meditation and their days in scourging. Coffee revived them. From Egypt it spread to Turkey…….

Vol 11 No 38 – 18th September 1838

Blackwood’s Magazine, April 1838 – Commerce spreads luxuries:

  • Twenty years ago a sailor could expect nothing but salt meat and biscuit after the first two weeks of a voyage. Then a French chemist ascertained that, by parboiling meats and vegetables and excluding air, he could maintain their freshness for years in champagne bottles. This was emulated in London using cans instead of bottles – tinned food facilitated circumnavigations of the globe.
  • Ten years ago an American thought to carry ice to India. He loaded his cargo in the American winter and arrived at Calcutta with one third melted but carried the remainder up the Ganges where it is now a regular annual import and enjoyment. Lord William Bentinck gave him a gold medal. Ice is now exported to the Brazils.
  • A few years ago turtle was unavailable in London for half the year. Now turtle soup is made in Jamaica, sealed in cans and shipped to London where it can be had every day of the year at 5/- a pint.
  • A company has been formed to send oysters to South Africa. Once a colony of oysters has been formed there, it can be extended to Ceylon and Bengal and perhaps China. The India Company expects the delights of the oyster to open new markets and facilitate trade treaties.

Vol 11 No 52 – 25th December 1838

Petition of the Glasgow Chamber to the Queen, June 1838:

There is a progressive diminution in our foreign trade concurrent with a depression in our domestic market that is causing a decline in national revenue. We are now excluded for several markets in which we used to trade. Foreign states are breaking their treaties with us, insulting our traders and restricting our trade. The loss of international respect for our commerce is due to the peculiar system of diplomacy we have followed in the last few years (an inference against Palmerston).

That policy has compromised Turkey as an independent country and nullified its use as a buffer protecting eastern Europe. We have abandoned Circassia (the north-east Black Sea coast) and exposed our Indian empire to Russian conquest. We have allowed Persia to be reduced to a Russian dependency. British merchants are now excluded from the lucrative Black Sea trade. We permit the Dutch to evade the terms of our 1824 treaty with them and impose illegal duties on our exports to Java. We have tolerated the creation of a French colony in Africa, contrary to treaty. We have allowed European countries to exclude our manufactures by high duties in breach of our commercial treaties. Our fishing fleet in Newfoundland and around our own coast must compete with foreign fishermen. We have permitted the destruction of ancient Poland. Our claims on Greece have been compromised. We also have difficulties with Spain, Portugal, America, Brazil and Mexico.

Please use your influence to recover the respect we are due and protect your merchants and shipowners. The world acts as though our power had diminished. This is due to the supine nature of our foreign policy. We implore you to obtain redress and maintain our rights by a display of national vigour against any country that seeks to infringe on them.

Editor – this is one of the most important documents of our time. 459 Glaswegian firms and individuals – Tories, Whigs and Radicals – signed this Petition. They recognise the importance of the facts and have abandoned partisan beliefs for the national benefit. This is a remarkable development in our commerce. The cause of the decline in the British economy has been the indifference of the political leadership and the failure of London merchants to unite and lobby for our interests. There is as yet no Chamber of Commerce in London but one is in prospect. The political executive is worthless and must be advised by commercial associations. It’s a shame the Glasgow merchants did not mention China – the ‘fan kwai’ must also be protected.

Vol 12 No 12 – 19th March 1839

British revenue in 1837 was £42,887,638. In 1838 it was £43,628,683. The chief increases are in Customs, Excise and Stamp Duty. There is a new head of income in 1838 being rents from Crown Lands.

Vol 13 No 4 – 28th January 1840

Spectator, 14th September 1839, recited in Bengal Hurkaru, 20th November 1839 – Taxes make cheap things dear. They tempt the multitudes to fraud and perjury. Recently an unbribed exciseman found nearly 100 illicit distilleries within a ½ mile of St Paul’s Cathedral. These private distillers reap fortunes while their more scrupulous neighbours appear in the bankruptcy courts. Occasionally a fraudulent distiller is caught and fined. Does he care?

When Lord Ripon (F J Robinson) was Chancellor of the Exchequer he was visited by a tobacco manufacturer who said he bought his snuff for less than the duty on it by first always getting a permit. The duty was then about 1,200% and the temptation at the Excise Office and Customs House to issue spurious permits was irresistible.

America taxes British manufactures heavily but dealers in Massachusetts sell them at a loss and grow fat. A huge smuggling operation was detected. Bales of broadcloth worth 20/- per yard are wrapped in flannel worth 2/- per yard and the like. The involved parties are all Yorkshiremen.

This is not a matter of honour, integrity, principle or national character – its simply an example of great risks winning great profits. Heavy taxes are a permanent temptation to defraud the revenue. Fraud is commonplace and more or less considered fair. Men who might pause before robbing an individual of a penny will not hesitate to rob the country of millions. Governments are supposed to minimise allurements to crime. Judges while trying thieves, repeatedly scold shopkeepers for alluring thieves with displays of valuable goods. Why cannot governments foresee the effects of high taxation?

Vol 14 No 30 – 27th July 1841

The British budget for 1841 / 42 is £51 millions (of which 59% or c. £30 millions will pay interest on the bonds representing the outstanding national debt). Revenue is expected to be £22 millions from Customs, £14 millions from Excise, £7 millions from postage stamps and, with bits and bobs, should reach £48 millions.

The Chancellor of the Exchequer hopes the shortfall will be met by increased consumption and a few duty increases. If Lord John Russell’s Corn Law is not adopted, he will increase direct taxation.

The funded public debt of Britain is £733 millions and of Ireland £34 millions. Annual interest runs at £29 millions, exclusive of everything. Exchequer Bills outstanding total about £21 millions.

Friend of China, 1st April 1842 edition:

The 1839 English revenue from spirits was £8 million. Excluding moonshine that’s a gallon for every man, woman and child and costs each at least 15/- per year.

At about the same date, the revenue of Russia was 600 million Roubles of which a quarter came from duties on wines and spirits.

Friend of China, 21st April 1842:

The US Government is bankrupt. Her capitalists declined to subscribe to a Federal government loan. The civil service and armed forces are not being paid. The deficiency is about $14 millions.

In South America every government is in debt and the total is estimated at $100 millions.

In Europe the value of government debt is believed to exceed $3,000 million. The only government in the world with fiscal prudence nowadays is China.[163]

Friend of China, 21st April 1842:

A group of Peers implicated in the forging of exchequer bills have surrendered a man named Smith who has claimed responsibility for everything, been charged, pleaded guilty and sentenced to transportation for life.

The London papers say E. Beaumont Smith confirmed that politicians had instigated the theft and he had fronted it, but declined to name names.

Viscount Strangford has answered the imputations thrown upon him but another peer of eminent rank, attainments and influence has yet to do so and his colleague, an eminent Marquis, also remains silent and suspect.

The Morning Chronicle rather identifies the anonymous peer by saying “he once before was compelled to do himself justice by commencing a prosecution against a journal which falsely charged him with corruption” – this is tantamount to giving his name.

Smith told the Court he was introduced to Rapallo, Solari and their associates in 1820 and soon became entangled in Accommodation Bills business.[164] He was tempted to ‘borrow’ an Exchequer Bill to meet his acceptances. Rapallo commenced a speculation to ramp part of the market and fund the shortfall but this failed and the fraud came to light. The Bills available to Smith were numerous and simply required a forged signature to make them valid.

Friend of China 21.4.42 edition

At the last Leipzig Fair some Dutch traders offered Java tea at high prices and the flavour and strength were comparable to the best China caravan tea.

The good flavour is attributed to the short period since harvest and the good packing.

Friend of China, 19th May 1842:

Lord Ashburton, Francis Baring and Humphrey Mildmay have been found guilty of bribing Mexican legislators to enact a law preventing foreigners owning land.

Their purpose was to deprive Thomas Kinder of the advantage that his Mexican landholdings gave him in a contract with the Defendants.

Vol 15 No 25 – 21st June 1842

Sir Robert Peel has addressed the Commons on the deplorable state of England’s national finances. The previous government estimated income for the year ending 5 April 1843 at £48,310,000 and expenditure was estimated at £50,731,000.

Customs receipts will be £22,500,000, excise £13,450,000, stamps £9,100,000, post office £500,000, crown lands £150,000, misc. receipts £250,000 producing a total of £48,350,000. The expected deficit is £2,569,000.

Peel says he cannot squeeze any more out of the ordinary people and a luxury tax would be resented. He accordingly proposes an income tax of 7d per pound (c. 3%) on all incomes over £150. The income will include landed as well as funded property and apply to foreigners as well as Britons. It will raise £1,600,000 from workers direct. Occupiers of land will pay a further £120,000. Investments in funds will be taxed on the dividends which totalled £29,400,000 in 1841. He plans to deduct £1,000,000 from this in respect of notional income from savings banks which will be exempt. On other banks and foreign stocks the renewed Income Tax produces £1,500,000 making a total of nearly £50 millions revenue for the year.

The product of the income tax on trades and professions is estimated at £1,250,000; from civil servants £155,000 and, from both landed and funded property, totally £3,771,000.

The assessable value of land is £39,400,000. The assessable value of tithes, mines and shares in railway property is £8,400,000 making a total of £72,800,000 including dividends.

The income tax may have to be continued for five years but a return to commercial prosperity might reduce that period and, in the first instance, the proposal is for three years. Ireland will also contribute but only in war time.

The duty on charter-parties and Bills of Lading will be reduced to encourage trade.

“I am also considering a tax on exported coal which goes to the benefit of our commercial rivals. It would produce an estimated £200,000 and advantage our home industry.

“The new measures produce a surplus which I propose to apply in further reduction of the commercial tariff. Taxes on about 750 commodities will be reduced whilst another 450 will be unchanged.

“The process of concluding bilateral commercial treaties with several states is continuing and the articles affected by those arrangements are not included here but the expected diminution in revenue will be about £270,000. Sugar duties cannot be reduced until Cuba and Brazil forego slavery in its production. To reduce only the duty on British sugar would give our colonial producers a competitive advantage tending to monopoly without a corresponding advantage to consumers, etc.”

London Press comment on the budget – many errors but the underlying principle is to foster colonial trade at the expense of other foreign trade. The duties on live animals and preserved meats is a quarter of the duty on foreign meat. This will encourage the import of colonial cattle for fattening here, giving the English cattle farmer an advantage. As a generalisation this is a consumers’ budget and we should be pleased. Peel estimates a surplus of £500,000 annually

Friend of China 30.6.42 edition

Commercial news from London:

  • London financial problems are continuing. Several respected firms have suspended payments in March. Imports are low and stocks have been run down. The bullion stock in London is immense. Money is cheap and easy to get. When confidence is restored there should be an immediate boom.
  • Letters from China sent in January have revealed the extent of tea shipments to be expected in London in May. They have depressed the market. Bohea (the cheapest of teas) is 1/6d per lb, Company’s congou 1/10d. All the others are one to three shillings except gunpowder of which the best qualities are 4/6d.
  • The silk market is a little lower but prices are expected to firm. Silk garments are better than raw silk as stocks are much reduced.

Canton Register Vol 15 No 28 – 5th July 1842

Amongst the mails recently received at Alexandria from the East were three large letter bags, totally half a cwt, addressed to the Duke of Northumberland and Lord Prudhoe.

Rats ate a hole in one bag and it turned out to contain coffee not letters. Now the captain of the Oriental, which carried the bags, claims freight on them, the Customs claims revenue and the post office claims postage.

The nobles have identified the most economical response – they have gifted the coffee in proportionate shares to the three claimants.

Friend of China 7.7.42 edition

Peel’s new low duties are being denounced by the farmers as revolutionary. The initial impulse for free trade was made by Manchester and particularly by the member for Stockport (Cobden).

Vol 15 No 28, 12th July 1842

6th report of the London East India and China Association, presented at their office at 2 Cowper’s Court, Cornhill. 3rd March 1842:

We congratulate the membership on the adoption by government of some few of the measures we have pressed upon it.

Lowering the import duty on sugar to 26/- for foreign and 24/- for colonial and East India Company sugar does not provide adequate differential to ensure a market for our members.

The committee received opinion from principal importers of colonial sugar and discussed it with government. The result in parliament (Peel’s budget) was unsatisfactory and we will try again with the Earl of Ripon, the President of the Board of Trade.

Friend of China, 14th July 1842:

The Editor’s solution to British financial booms and busts:

England should repeal all duties and imposts on trade and instead raise revenue from a ½ – 1% annual tax on all real property both in England and its colonies. This will finance the Empire and permit its occupants to eat, dress and buy luxuries all at market cost. We would become the cheapest country in the World; all our countrymen who have left because of the expense would return; a flood of wealth would flow through the Empire.[165]

Canton Register Vol 15, No 31 – 2nd August 1842

London news: Money is plentiful. Interest stands at 3%. The Company has notified a revised exchange rate of 2/- per Company Rupee.

Notwithstanding this reduction of value, £250,000 went to India by this mail and bullion shipments to that country are expected to be soon commenced by individuals and companies. The Bank of England has set the interest rate for Bills of Exchange and notes discounted by the Bank at 4% w.e.f. 7th April 1842. This will make money cheaper as discount brokers will lower their own rates in competition with the Bank for the best Bills.

Last August General Sir G Cockburn suggested a plan to Sir Robert Peel to improve the national finances. The Times has now published it. It requires the government to ban the issue of paper money by public and private banks and substitute its own issue of £30 – 50 millions in large notes (£5 – £3,000). This would place a like amount of revenue at the disposal of the government.

Friend of China 18.8.42 edition

Tax Return received at Shrewsbury in 1801

I John Smith do declare

I have but little money to spare.

1 little house, 1 little maid,

2 little boys, 2 little trade,

2 little land,

2 little money at command.

(By this you see I have children three.)

Canton Register Vol 15 No 34 – 23rdAugust 1842

London Globe – America is trying to woo back European capital. The London and Amsterdam financial houses (Palmer, Cryder, Rothschild, Hope, Willink, Dennistoun, etc.) lost £75 millions in the collapse of American State stocks.

Now the States are pressing the Federal Government to legislatively increase the value of their debt instruments in the expectation that foreign money will then again be advanced to them.

The State bonds all pay 5 – 6%. Illinois bonds are trading at 15% of face value, Indiana 20%, Maryland and Michigan 30-40%. Even Pennsylvania is only 50%. We should take care.

The individual States will have to evidence greater straightforwardness in their financial affairs. The Federal government is powerless against the combined effects of corruption and democracy. If the Union breaks down, there will only be the individual States to answer for their debts and they will not find it easy to pay their way.

Friend of China 15.9.42 edition

London news as at 4th April 42:

  • Peel’s new Customs tariff and the income tax have been approved by the Queen. Peel says he will reduce the tea duty if he can find other items to make up the revenue.
  • Money is very cheap due to lack of commercial confidence.
  • £1,942,000 has been collected in London for the sufferers of the disastrous fire at Hamburg.
  • Notwithstanding the foregoing, English commercial and manufacturing firms are in a desperate state and many have failed.

Friend of China 6.10.42 edition

The new British tariff has become law. The contempt with which government has treated the City for the last 50 years is at an end. Peel has promoted free trade principles to the point there can be no returning to the old ways.

The magnitude of the interests in grain, sugar and coffee did overly influence the government to protect them from free trade. Now it is proposed to permit foreign grain to be milled in bond, a proposal contemptuously rejected by the land-owners previously. Perhaps corn spirits will also be distilled in bond? The colonial trade must obtain advantage from any such measures.

For residents of England, the diminished costs of consumption will offset the new income tax while for foreign trade there will be real benefits.

The land-owners with parliamentary power are now so committed to free trade that they cannot resile when it comes to repealing the Corn Laws.

The China war has ended and, provided there is no drain in Afghanistan, the government should increasingly be in surplus. Part of this will defray the reduced duties on coffee and foreign and colonial sugar but we people in the China trade stand to get nothing. We have good grounds to appeal for justice and demand the tea duty be reduced. The duty must be below 1/- per lb to increase consumption

Friend of China , 13.10.42 edition

Peel has agreed not to allow a differential duty in favour of Assam tea. Well done!

We effectively pay our West Indies colonies £7,000,000 per annum (the value of the revenue lost if the import duty applied to coffee and sugar from other countries was applied to West Indies). In return we sell them an annual total of £3,500,000 of commodities which they could get nowhere else more cheaply.

Canadian timber is admitted to England at a preferential duty over Baltic, producing a notional annual loss in revenue of £1,500,000. We export goods to Canada to a gross value of £2,000,000.

The colonists say that Empires must operate a protective system. Economists have valued this protection to British colonies at between £31 – 36 millions per annum. Mr James Deacon Hume, a Customs official for 39 years and Secretary of the Board of Trade for 11 years, calculates the total cost to the British people of supporting colonial trade in this way at £50 millions per year. Perhaps this was in Peel’s mind when he repudiated the India Company’s request for preferential duty on Assam tea.[166]

Friend of China, 5.1.43 edition

Commercial report from London:

Cotton, woollen and silk mills were closed for a fortnight in August but there has been an abundant grain harvest this year and wheat is cheap at 15/- per quarter (28 lbs or 12.7 kgs).

A huge stock of bullion has been collected in the Bank of England producing a widespread feeling amongst the merchants that everything is good. All kinds of foreign produce are available.

(Editor – seems the recession is over. Peace in China will brighten everyone when the news arrives in London in November.)

23.3.43 edition

The Glasgow East India Association has memorialised the Treasury as follows:

British exports to China are £1.2 millions p a. Chinese exports to Britain are £4 millions p a. The balance is the Indian trade in opium £3 millions and cotton £1 million. This produces an adverse balance for the UK that we settle in bullion. Analysing this triangular trade:

  • Opium and cotton demand is fixed.
  • Chinese silk cannot compete with Italian.
  • All the miscellaneous items have fixed demand.
  • Tea imports are limited by high price and cannot increase.

We can’t sell any more to China because although it is a huge country with a huge population they don’t have the extra goods to barter for our products.

Tea duty is 200% of CIF cost. The duty falls disproportionately on the poor who are both the largest consumers and the buyers of the cheaper types (the duty is reduced for higher priced teas). This duty limits our tea imports and consequently our manufactured exports to China (i.e. now the Chinese have been forced to submit, the new concern is for them to sell more tea to fund the purchase of more UK goods). Now we have access to the port nearest the tea centre (Fuk Chow) we can expect the prices to decrease by reduced inland freight and avoidance of Canton squeezes. We should decrease the UK duty thus stimulating demand.

Friend of China, 23.3.43 edition

Bombay Times reports the production of American goods has accelerated so quickly that prices are dropping lower. Cotton is cheaper than it has been for many years. This will kill the owners of the Bombay crop. Hopefully America’s good fortune will enable them to put their banking affairs in order.

With US imports restricted by the high tariff and exports so vibrant, the amount of specie at New Orleans is accumulating rapidly.

Friend of China, 30.3.43 supplement

During 1841, 2,247,778 gallons of Scotch whisky was drunk in England. The sellers described it on their bottles as ‘pure malt whisky’ but in fact the entire quantity manufactured from malt that year was 520,942 gallons. The rest is a mixture of whisky made with malted and unmalted grain, and is no doubt considered adequate by the Scots for the English ‘loons’.

On the other hand in Scotland during the same year 5,989,965 gallons of whisky were consumed of which only 614,743 was made from partially unmalted grain.

Total consumption of spirits in 1841:


England and Wales







Consumption (gallons)




It has hitherto been popularly assumed that the Irish drink more than anyone but if that is true they must be making their own spirits. Another anomaly is that the Scots are the most virtuous people of the kingdom but they appear to consume more alcohol than others.

Friend of China, 6.4.43 edition

Journal of Commerce – England is dishonest about free trade. When the Americans, under their Compromise Act, offered to accept all English goods at 20% we refused a quid pro quo and finally the northern states became manufacturers in their own right.

We did the same in Europe. When the Prussian minister Baron Maltzahn offered Mr Canning a commercial treaty in 1826 allowing British imports to Prussia at a moderate duty provided we would take their timber and corn on equal terms, Canning refused.

It was England that promoted a suicidal protective tariff until other nations were obliged to emulate her. Only then did she turn over a new leaf.

Friend of China, 6.4.43 edition

Commentary on gold and silver:

There has been an absurd variety of values placed on the gold and silver extracted from America and circulated in Europe over the last few centuries. Now Humboldt has finally settled the matter as well as may be:

1500 – 1545

1545 – 1600

1600 – 1700

1700 – 1750

1750 – 1803

3 million marks

11 million marks

16 million marks

22.5 million marks

35.3 million marks

During the 311 years to 1803 the production came from

New Spain (Mexico)

Peru / Buenos Aires

New Grenada (Colombia)



2,928 million dollars

2,410 million dollars

275 million dollars

138 million dollars

835 million dollars

According to the Mining Journal of Lima, the following production was achieved in the years between 1790 – 1830, in Pounds Sterling:




Buenos Aires












The total value of this mineral wealth equates with £1,880 million. This South American production permitted a growth in the world economy over the last forty years of £47 millions per annum at average.

The ratio of gold to silver production globally is 1 : 55 however this is not reflected in the ratio of the metals’ values, which in Asia is 1 : 12.

Gold is sold in the Straits 7% cheaper than London. Dr Earle says gold dust imported to Singapore from the west coast of Borneo totals 3,800 ounces p a which he estimates at 10% of the Borneo production.

M. Chaptal says gold production in the Indian archipelago (Kolar Goldfields) is 36 tons per annum.

It is produced in China and Tibet and offered to the foreign Shroffs involved in the coast trade but they are reluctant to take it for fear it has been adulterated. (one lot of gold from China was shipped to Calcutta and assayed at the mint. It was valued at barely the price of silver).

In about 1810 the contest that caused the separation of Spain from her South American colonies commenced. Want of security arose and the old Spanish families, who principally owned the mines, withdrew. A few fled to Spain, more to Cuba, to Bordeaux and other parts of the south of France where the Spanish King was then residing. Several mines were abandoned and the supply diminished.

Mr Ward says coined metal in Mexico had risen to $26½ million silver dollars in 1810 but declined to an average $10 millions for the following 18 years due to the disruption caused by wars of independence and the withdrawal of the Spanish mine owners. From 1810 – 1830 the mines of Europe also declined in production but Russia increased. The overall effect, according to Humboldt, produced an annual deficit of $18 millions for each of the twenty years 1810 – 1830 compared to previous. The diminution of the gold supply was less than that of silver, as the decreased production in Chile, New Grenada and the Brazils was somewhat offset by new or increased production in Russia and the United States.

European population increased during the period from 190 millions in 1810 to 210 millions in 1830. Over that time the circulating medium also increased 10%. Storck says 1815 saw $1,320 millions circulating in Europe which by 1830 had increased to $1,600 millions mainly due to the governments of England, Russia, Austria, Norway, Sweden, Denmark and USA withdrawing paper money after the war and resuming cash payments. He notes the consumption of gold for jewellery and plate was augmented on resumption of peace in 1815.[167]

Friend of China, 8.6.43 edition

Recent London Times leader:

“We can make treaties at the cannon’s mouth but in truth we are no diplomatists. The present cabinet seems unable to escape from the labyrinth into which My Lord Palmerston had wandered …. Our trade is withering away and our revenue declines exactly in proportion as we look back for a lesser trade not in our power and overlook a greater trade within our grasp.

“All home interests are neglected, trades combine and memorialise in vain; after months of wasted labour they sink into apathy, and wonder at the infatuation of the minister who can dally endlessly with foreign powers, and pay no regard to the thousands at home kept for years in an agony of suspense as to what shape their business may be forced to assume.”

Friend of China, 24.8.43 edition

Comments on smuggling from ‘an established publication’:

The law loses its moral authority when tax is set so high it tempts to evasion and then punishes the offence. It is only necessary to examine the tariff of a country to know if smuggling is widespread in it or not.

Spain enacts a high import duty. British exports to Gibraltar exceed £1 millions. These exports are almost exclusively 7 million pounds of tobacco which is smuggled into Spain.

France permits its traders to bond goods intended for smuggling so no duty is paid on it en route. British duty evaded by French smugglers (mainly of brandy £500,000) in 1831 was estimated at £800,000 exclusive of tobacco. British duty on tobacco is 90% and ¾ of the duty payable on tobacco in Ireland is avoided by smuggling. The Board of Trade indicated in 1840 that at least 48% of French silks imported to England paid no duty.

On the other hand British goods to the value of about £2 millions are smuggled annually into France across the Belgian frontier and some through the channel ports. The Belgian intermediaries used dogs to effect their smuggling and in the decade 1820 / 30 a total of 40,278 smuggling dogs were caught by French Customs and destroyed.

In 1822 385 boats and 52 ships were seized by the British preventive service in the act of smuggling. In 1831 the preventive service cost £700,000 – 800,000; 116 smugglers were in British gaols and 64 more were pressed into serving in the Navy. The total cost of the Customs and Excise departments in 1840 was £2,309,611. In 1835 there were 11,600 Customs officers and 6,072 Excise officers.

Friend of China 31.8.43 edition

Summary of British news received by the June overland mail:

  • Goulburn has published the national account and we are £2 millions short. Peel over-estimated the Excise by £1.2 millions and the Customs by £0.75 millions. If you exclude the one-off receipts, like the Chinese ransom, its even worse.[168] But we believe the crisis has passed and with the Income Tax starting to arrive and the improved business climate, there should be a surplus soon.
  • Sir Richard Arkwright died in 1792 and left £½ million to his son. (He is the inventor of the water frame which uses the power of a passing river to operate looms making connot yarn.) The son, also Richard Arkwright, has now died and left £7½ millions to his five sons. He paid the highest estate duty of £15,000, applicable to estates in excess of £1 million.

Friend of China, 14.9.43 supplement

The best ways of increasing and cheapening the food supply is something that occupies the minds of statesmen. In 1838 wheat was 50/- a bushel and the British people paid £40 millions for food. When it then rose to 73/- a bushel they paid £60 millions and deprived other retailers of £20 millions of business. This price rise occurred because there was a duty on foreign grain that prevented it competing in our market.

In Britain today there are 17,000,000 people who eat wheat daily, 10,000,000 who eat potatoes and no wheat; and 4,000,000 who live principally on oatmeal. How can 10,000,000 people not exchange their work for wheat? What a shame when recently in New Orleans a plague commenced because of the surfeit of food which could not be consumed and had rotted on the wharves.

Friend of China, 12.10.43 edition

The New York Spectator has been considering great wealth:

Mr Arkwright was the richest man in Europe. He may have been ponderous but he was a leviathan capitalist. Only one man has half his wealth – Mr Solomon Heine of Hamburg – he has £4 millions approx. It should be recalled that Mr Arkwright’s estates included landed property to a value of £1 – £2 millions which was not included in the calculation of his estate duty.

While the Barings, the Rothschilds and the Hopes are immensely wealthy they cannot compare. Only by accumulating all the fortunes distributed in profits by the House of Baring and adding it to the firm’s capital might one approximate Arkwright’s total. All the capital of all the Rothschilds throughout Europe might reach half of Arkwright’s fortune (i.e. about £4 millions).

In America the only man to approach Arkwright is Mr Astor of New York whose vast holdings of real estate and in commerce are said to be worth $16-17 millions or about £4 millions.

Another rich American was Stephen Girard. He made his money in Santo Domingo but was driven out when the liberated slaves assumed the government of that island. He went on to become the great banker of Philadelphia. It was a matter of contention between New York and Philadelphia as to which city had the richer capitalist. Stephen Girard died a few years ago and his last testament revealed wealth of $11 – 12 millions. When Astor was told of this he appeared satisfied and said ‘that would not do’, meaning, we believe, that it did not exceed his own prodigious accumulation.

Friend of China, 6.1.44 edition

Complete recitation of a trade treaty dated January 1843 between United Kingdom and Russia in this edition.

Friend of China, 13.1.44 supplement

A commercial treaty has been concluded between Britain and Uruguay on 26th August 1842. It is reproduced in full. The British Government is settling bilateral trade treaties globally.

[[115]Wellington uses Portuguese intermediaries between his own army commissariat and his mostly American and occasional British suppliers. It will be recalled that his commissariat kept no accounts. In a turbid period of British history, this is an inscrutable arrangement. In Portuguese Brazil it is British importers who control the supply of goods.
Supplying gold to Wellington in Spain earned the Rothschild family the gratitude of the ministry and a fundamental role in British loan-based finances although Wellington himself complained he sometimes received $n but had to sign receipts for $2n. Elsewhere in this text the cost of British military assistance to Spain 1808 – 1814 is calculated at £265 million.[[115]]

Footnotes    (↵ returns to text)

  1. The arithmetic as printed in this article and a good many others is wrong but the overall implications are valid.
  2. This paragraph refers to the legislative initiative of Charles II in 1666, after the country was affected by plague and his capital city destroyed by fire, upon which initiative, in Del Mar’s estimation, the science of economics is founded – see Money and Civilisation.
  3. This is strangely contentious for the usual warm relationship between ministry and Bank but Huskisson, in his reported debates, seems to have been a bit like that.
  4. The Food Committee’s recommendation of this is in an article dated 18th April 1801 above.
  5. The Continental System is generally considered in English histories from the outsider’s position i.e. Britain’s. It induced the temporarily successful British responses of bribery and smuggling until it collapsed into the licensing of trade with the enemy. The alternative insider’s view reveals a scientific focus within Europe on invention to create alternatives for the unavailable colonial commodities – sugar, coffee, indigo, pepper, etc. Both effects need to be considered for a balanced assessment.
  6. This is argued in House of Commons in respect of the effect of devaluation on naval officers who get 25% less than face value for their salaries in the Mediterranean – that is the extent to which Navy Bills are being discounted. The ministry says the Navy is doing very well in prize money – swings and roundabouts.
  7. Lord King’s tenancy agreements are considered in numerous articles following but the details do not become clear until a long debate in the Sat 19th June 1813 edition.
  8. When the French legislature was issuing assignats to its people pre-Napoleon, they also enacted a parity law.
  9. There was one good result of this commercial catastrophe – Lloyd’s instituted a global system of Agents, nominated by the Committee, to report intelligence.
  10. Napoleon believes that ‘buying cheap here to sell dear there’ is anti-social.
  11. Jesuits’ bark was the best treatment for fever although continued dosing caused liver disfunction. It was the bark of the Peruvian cinchona tree, the effectiveness of which as an antipyretic was learned from the natives.
  12. Barings have immense landholdings and financial investments in America.
  13. Thus inflating both export and import statistics.
  14. This seems illogical. Freight is a percentage of the value of each shipment which the exporter pays in bullion. The figure of £10 million for freight suggests the value of goods must be many times that amount. It sounds incorrect even if including the French import duty. The Licensed trade should be equal in each direction. This would not have much effect on the bullion holdings of either France or England unless freight rates ex-British port are truly astronomical.
  15. The same as the ministry’s own valuation of paper sent to Canada to fight the Americans. It seems to indicate the approximate extent of devaluation. In respect of army and navy payments globally, this discount inflates the national debt.
  16. The Continental System is intended to reduce British trade. Mercantile profits will diminish. The income tax take will reduce along with Customs receipts. Security on loans to government will be threatened, interest on loan stock paid later and later, and the banks will require the ministry to make peace so war expenses may be diverted to them in settlement of their claims.
  17. Readers of the Europe chapter will recall that parliament sitting on a Saturday was thought inconsistent with the dignity of the House when the matter of restoring peace was before the Commons (see an article dated 27th August 1803) but this Parity Bill qualifies as an exception. On the other hand the next article seems to suggest there was more business being done in 1813 and Saturday sittings were not uncommon.
  18. There is corroboration of Customs House statistics from the Convoy Tax which has made trade statistics and accounting more reliable.
  19. It is noted in the China chapter that a writer’s job in Macau is the most lucrative in a Director’s gift.
  20. Serjeant (sometimes Sergeant)-at-law was a medieval name and the highest rank in the legal profession. Eminent barristers with 16 years experience might hope for this recognition. Appointments were made by the Lord Chancellor. Only Serjeants were eligible to become Judges. At this time the rank was already being eclipsed by the new designation of King’s Counsel.
  21. The India Company operates the business of transportation of convicts and charges a handsome fee for the service (£80 per head for the one-way ticket) but its shipping is temporarily engaged on other duties.
  22. See, particularly, the South America chapters for better details of Cochrane’s life.
  23. British debt-based financial policy, which strengthens the capitalist base, was incrementally adopted by all Europe using the easy availability of loans to seduce the Kings. The Kings became addicted to borrowing. Their national banks morphed into Central Banks, their shares were withdrawn from the stock exchange and a century later institutions were created (BIS, IMF, World Bank) to ensure the financial system continued unchanged.
  24. And so it has been since. All governments adopt the debt-based financial system (inevitably since demonetisation) and manipulate their bond values.
  25. The Income Tax of this period might easily be confused with the present tax of the same name. They are different. Pitt’s Income Tax was an Assets Tax in which a notional 10% income from every asset was included in the assessment. See the article of 11th December 1813 above.
  26. Aimed ultimately at the conquest of the Muslim states of the Porte in Europe. Muslims, being people of the Book, assert the same dominion over the World as Christians and Jews. Within Europe the Alliance is concerned to maintain monarchy and the Divine Right as created by Pope Leo III and Charlemagne, and to expunge democracy.
  27. Sir James decorated this period like Thomas Erskine. I fear we have underestimated the importance of lawyers in recalling the duties of a social species like ours to just government. He was Recorder in Bombay in 1804 – see the Asia chapter.
  28. It has been noted in the Political Management chapter in respect of the Helstone constituency, but is worth mentioning again, that the price of a parliamentary seat was often related to the amount of the poor rates for that borough. It may be said, at least in Helstone, that the MP (or his Lord or Election Committee) underwrote the Poor Law. This provided some support to the unemployed of represented constituencies.
    Recipients of poor relief were required to work as directed, often for the local landowner, and thus became a cheap source of labour. In industrial towns where employment came and went with boom and bust, the costs of poor rates tended to destroy production. In times of national economic downturn, in the absence of this slight refuge, industrial unemployment quickly became civil discontent.
  29. Friendly Societies were self-help institutions whereby citizens directly deposited surplus funds which were loaned out to the needy amongst them. The Friendly Society routinely provided a Doctor and an Undertaker to members.
  30. Pursuant on the ministry resuming minting of some gold and silver coins which had long been unavailable.
  31. The startling inefficiencies revealed in this article tend to mitigate the assertion that British hegemony was attributable solely to technological achievement (the industrial revolution).
    Equally important was a prohibitive tariff on more competitive goods – Chinese porcelain, sugar and nankeens, Belgian linen, Indian cotton, sugar and indigo, etc., together with attempts to completely exclude those products that British industry had not yet learned to make – Indian muslins, Chinese crêpe – until a level of efficiency had been achieved. It was only then that the government embraced free trade.
    A third spur to commercial supremacy was provided by the City capitalists as soon as debt-based financing of the government reached huge proportions during and after the Great War, and a fourth by concentrating goods and services on London to which the rest of the country assisted, thus providing a one-stop shop for customers.
  32. The ministerial intention is to reduce the money supply sufficiently to make restoration of gold value possible. Less circulation = lower prices hence the precautionary stock sales of ministerial insiders.
  33. Hardly. Tierney merely suspects national policy is dictated by capitalists. Robert Peel formally makes it so. Peel has enjoyed a splendid reputation in British histories and it is no doubt fully justified in the unique achievement of the 1819 Act. No politician before or since has grasped the nettle of monetary inflation as he did.
    On the other hand, Peel is a merchant statesman and is responsible for the adoption of free trade policies in Britain by transferring responsibility for payment of government revenue from the merchants in Customs and Excise to the workers in Income Tax. I give him half marks.
  34. The reason Britain adopted a gold standard rather than a bimetallic standard as was adopted in France. This arrangement preserved the intention underlying Charles II’s Act of 1666.
  35. The annual revenue is always partly raised from loans. Without loans the ministry cannot operate the government. Parliament has become dependent on the City bankers. It is assessed as better than becoming democratic.
  36. The lower price is reportedly guaranteed to national creditors.
  37. Commons debates mention a high incidence of bank-note forgery in the North of England which makes Bills more attractive.
  38. A market-distorting procedure now known as ‘short-selling.’ The speculator sells shares before he buys them. It requires an accommodating and trusting stockbroker and is accordingly only available to big capitalists with influence over the whole market. If other investors are induced to sell and their sales are sufficiently voluminous they will of themselves reduce the price of the target stock and achieve the speculative intent.
    This financial skullduggery in summer 1819 appears to be Rothschild’s response to the other City merchant bankers for depressing the price of Omnium, see above – you devalue my holdings, I’ll devalue yours – and is also a splendid demonstration of capitalist power to government. Rothschild will shortly use the same short-selling procedure to collapse the value of Bank of Vienna stock as a warning to the Holy Roman Emperor for his support of the Holy Alliance. It will be recalled that the Goldsmid Brothers faced bankruptcy while dabbling in Omnium and one killed himself in 1810 due to it but that has not deterred N M Rothschild on this occasion
  39. The cost of monopoly. The Government supports the India Company’s chartered rights mainly because the Company collects ±£4 millions tax on the tea supply.
  40. The bidding was won by M/s Reid Irving & Co. For every £100 paid they accepted £100 in the 3% reduced, interest w.e.f. 5th April 1820; £42 of the 4%s, interest starting July 1820 and the discount mentioned above. There was a fall in the market immediately after the announcement. Omnium and 3% consols both declined and had not fully recovered by the close but resumed their usual level within a few days.
  41. But can they do so? The Indian market is already capitalised by the big Agency Houses which receive funds from Company employees for investment in agriculture on guaranteed percentage returns. This news heralds the astonishing rise in Indian opium exports through the 1820s as the only investment available to the Indian Agencies and their clients.
  42. This initiative very soon extends to most of the counties except Shropshire where the Sheriff bravely ignores a forest of raised arms and declares the reformers to be in a minority.
  43. The country needs some new source of real wealth to ensure the paper system works – that means more silver and gold for their internationally-accepted values. Baring has done a good job with the King of Spain on the overt trade and Lord Cochrane and the West Indian merchants are returning a valuable flow from South America in covert business. The Company is siphoning-off its positive balance of trade in bullion from India and China. England needs to corner the largest share of gold on which she can assure herself of dominance in any market – that means reliable Bills of Exchange for foreign trade and paper-notes for the home population. Financial wealth at home underwrites British commerce everywhere and funds whatever military efforts may be needed to promote our views (recalling Nelson’s aphorism – there is no better ambassador than an Admiral). With large gold holdings, all British traders and bankers prosper and any ministry has the nexus of power to assure itself of longevity. Right now there is an excessive amount of British capital frozen in stocks of commodities at the ports. No-one likes to sell at a loss.
  44. In two brief sentences, the cause of the great increase in opium speculations to South East Asia and China in 1820s is confirmed. The India Company had no other staple to sell.
  45. Baring’s plea for a disconnection of value from credit was ultimately granted by President Richard Milhous Nixon of the United States of America in 1973 and eagerly endorsed by the US Federal Reserve Banks and the Central Banks of Britain and Japan. It was sold to the public on the tag “the US Dollar is as good as gold.”
  46. This suggests a 40% increase in the gold value of paper money in the course of the year. It is an approximation.
  47. The 5%s are in three flavours: The Navy 5% loan of £142 millions, made at the end of the American War; the Irish 5% loan to raise £1.4 million and the Loyalty 5% loan of 1797 which was supposed to have been paid-off in 1804 but a little of which remains.
  48. The previous time that a British ministry reduced its debt was in 1749 when a 4% loan was paid-off. This is a rare event in London although common in British India where debts are regularly rolled-over on new terms.
  49. Sight drafts intended for delivery by post, rather like Postal Orders. They were used as a form of money.
  50. These are measures of volume equating with c. 28 cwt (1,400 Kg).
  51. Banishees returning to England on completion of their sentences are booking passage straight back to Botany Bay. Their good reports have created an increased emigration to Australia which, by November 1821, had become the destination of choice for Britons, according to Bombay Courier 6th April 1822 edition. This article raises an interesting question and emigration does appear to have been part of the answer.
  52. At the end of Epiphany, usually early February.
  53. Average life expectancy in Britain at this time is under 40 in the towns and under 60 in the country.
  54. Resulting from this proposal, Bank stock fluctuated wildly in the market, dropping to 215 before recovering to 247. The rumour was scotched by the ministry indicating it would need substantial supplies from the Bank through the coming year – thus suggesting there would be little disposable surplus.
  55. See the Europe chapter for details of the Holy Alliance’s acts in Naples and intentions in Iberia. There are also some references in the chapter on Iberia.
  56. Russia is a prime mover in the Holy Alliance’s war on democracy. She fights for monarchy and the divine right of kings. Spain, on the other hand, has become a centre of democracy – see the Iberia chapter.
  57. This delightful distinction of tax-eaters and tax-payers has been constantly relevant in British economics since the Napoleonic War but has regrettably fallen out of conversational use today, perhaps because of the wider ownership of government debt.
  58. During a subsequent House of Commons debate in April, it was realised that contracting with the Bank of England to settle the army pensions necessarily inferred that the Bank would become a trader of government paper in the stock market.
    Act 6 of William & Mary in 1694 had established the principle that the Bank may never trade in government securities except Exchequer Bills because it has an immense capital (and can print more) and could readily influence stock prices should it wish to do so. This agreement negated that precaution and effectively made stock-jobbers of the Bank.
    On the final subject in this article, Parnell’s proposed method of paying-off the National Debt would be the appropriate procedure should the operation ever be attempted however it would bring an end to all those foreign adventures that ministers enjoy but which lack popular support.
  59. The preponderance of these loans were said to have been paid in gold and silver which value has not changed.
  60. The expatriate complaint is that the exchange rate in India is falling but the cost of stock in London has contrarily increased. The Indian investor in Britain is burned at both ends. Verax supposes this will tend to force their capital into other channels
  61. This uncertain silver value is behind the well-known preference of Chinese Hong merchants for ‘old head’ (King Carlos) Spanish dollars
  62. A pristine summation of the economic background to the astonishing increase in Indian opium shipments to China after 1820 – they sell for real gold and silver which is remitted by the country trade to India and Britain and by the India Company which buys it for tea with Bills on Calcutta and London.
  63. I have seen notes of widespread cash withdrawals during the Gordon Riots that are not mentioned in this article.
  64. These immense debts are a consequence of the triumph of British principles in 1815.
  65. Hitherto Bills were traded through the discount market on trust. It was assumed a genuine trade lay behind each Bill which would generate cash on performance. Accommodation Bills financed an endless variety of speculative ventures. Their value was virtually fictitious and only maintained by the identity of the actual issuer – comparable to junk bonds today – and attractive solely to ‘grow’ the economy and create a boom. Accommodation Bills on their face are indistinguishable from Real Bills (for goods) but provide no consideration, indeed, the acceptor, who may be a man of straw, stipulates elsewhere that he is not required to meet the Bill. Its a fraud on the discounting bank which pays on the worthless security. Accommodation Bills underwrite speculation and are a cause of 19th century economic booms and busts.
  66. To convert the basis of British revenue to a Land Tax would never be conceded voluntarily by the land-owners who are now being joined increasingly by City merchants. It cannot be done in the British commercial system. It is the introduction of democratic principles by the back door.
  67. It is my belief that this estimated cost of £50 millions per year on the British people was the proximate cause of the end of empire, not simply the cost of two World Wars. At the height of empire in 1870s the Treasury official Malet notified the British minister to China that, if an account of China trade was ever drawn-up, it was a nice question what colour the bottom line would be. For merchants China was el Dorado; for domestic taxpayers it was a hole in their pockets. As C J Fox said ‘they get some fine poetry and uplifting songs.’
  68. This article omits the great flow of gold and silver obtained by Portugal and the Netherlands in 16th century from Japan. Between 1545 – 1624 Portugal took from Japan about 250 tons of gold and 500 tons of silver. The authority for these figures is Del Mar ‘Money and Civilisation.’
  69. See the China chapter for details of the first Opium War.

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