UNIVERSITY OF 
 ILLINOIS LIBRARY , 

 
 I 
 
 THE 
 
 LATE PROSPERITY, 
 
 AND THE PRESEN'^' 
 
 ADVERSITY OF THE COUNTRY, 
 
 EXPLAINED; 
 
 THE PROPER REMEDIES CONSIDERED, 
 
 And the comparative Merits of the 
 
 DISCUSSED, 
 
 IX A CORRESPONDENCE BETWEEN 
 
 SIR JOHN SINCLAIR AND MR. THOMAS ATTWOOD. 
 
 LONDON 
 
 PUBLISHED BY J. RTDGEWAY, PICCADILLY; AND 
 J. HATCHARD AND SON, 187, PICCADILLY. 
 
 MUCCCXXVI.
 
 BIRMINGHAM; 
 
 Printed by R. Wriglitson.
 
 
 *' It is then written above, that we shall now commit nothing; but errors. ^ 
 
 Napoleon, on his retreat from Moscow, 
 
 CONTENTS. 
 
 Mr. Attwood's First Letter — On the Causes which had produced 
 the then existing Prosperity of the Nation. — February 23, 1825. 
 —Page 7 to 13. 
 
 Mr. Attwood's Second Letter — On the Cause of the late Panic, and 
 on its Character and Mode of Operation.— December 27, 1825. 
 —Page 14 to 20. 
 
 Mr. Attwood's Third Letter — On the future Operation of Ihe Me- 
 tallic Standard, and on the two Modes of carrying it into full 
 effect.— January 4, 1826.— Page 21 to 28. 
 
 Mr. Attwood's Fourth Letter — On the comparative eligibility of a 
 Reduction of the Metallic Standard or a Bank Restriction Act.— 
 January 11, 1826.— Page 29 to 45. 
 
 Sir John Sinclair's First and Second Letters, inclosing his Pa- 
 per — On the Means of Relieving the present Pecuniary Embar- 
 rassments of the Country, and prevenliug their recurrence.—- 
 December 30, 1825, and January 4, 1826.— Page 46 to 33. 
 
 Mr. Attwood's Fifth Letter — On the Establishment of Joint Stock 
 Banks in England. — January 9, 1826. — Page 54 to 59. 
 
 Sir John Sinclair's Third Letter — On the comparative Merits of 
 the English and Scottish Systems of Banking. — January J, 
 18-26.- Page 60 to 66. 

 
 Mr. Attwood's Sixth Letter — On the comparative Merits of the 
 English and Scottish Systems of Banking ; and on the expedi- 
 ency of rene%ving the Bank Restriction Act. — January 28, 1826. 
 —Page 67 to 96. 
 
 Sir John Sinclair's Fourth Letter — On the comparative Merits of 
 the English and Scottish Systems of Banking. — February 21, 
 1826.— Page 97 to 107. 
 
 Mr. Attwood's Seventh Letter — On the Remedies for the present 
 Distress j on the various alledged Causes of Distress, and on 
 the proposed Means of relieving it. — March 3, 1826. — Page 
 108 to 134.
 
 INTRODUCTION. 
 
 O 
 
 'N the 12th December, 1824, Sir John Sinclair wrote to Mf. 
 Attwood, congratulating him on the prosperous state of the 
 country, and on Ihe disappointment of their mutual predictions, 
 that the ancient Metallic Standard could not be restored without 
 occasioning universal misery and distress. The ancient Standard 
 had been then in operation for near two years, viz : — from May 
 1823, at which period, every Debt, Tax, Rent, Contract, and Ob- 
 ligation, had become payable by law, in solid gold, at the rate of 
 jSS 17s. lOfd. of money, to the ounce weight of gold. The Na- 
 tional Debt had thus been made convertible by laic, into Eight 
 Thousand Tons of Solid Gold ; and the piivate debts, existin* 
 between man and man, had also been made convertible by law, 
 into at least Eight Thousand Tons more of Solid Gold I 
 Here was Sixteen Thousand Tons of Solid Gold, which the na- 
 tion had bound itself to produce and pay, although so much gold 
 did not exist in Nature, either above the Earth or under ihe Earth ! ! 
 The principal of the National Debt, it is true, was redeemable only 
 at the national convenience ; but the Interest was payable annually 
 at the same ratio ; and every private debt in the kingdom was pay- 
 able at once and in full, after the rate of one ounce of Gold to 
 every £3 lis. lO^d. of Debt ; and the same was the case with re- 
 ference to the prices of all property and of all labour. Against the 
 justice, the policy, the utility, and the possibility of this. Sir 
 John Sinclair and Mr. A, had repeatedly remonstrated, and it was 
 upon seeing these opinions apparently controverted by the then 
 prosperous state of the country, that the former had written to 
 the latter to congratulate him on the disappointment of their mu- 
 tual predictions.
 
 LETTER I. 
 
 rROM MR. ATTWOOD TO SIR JOHN SINCLAIR, ON THE CAUSES! 
 
 AVHICH HAD PRODUCED THE THEN EXISTING 
 
 PROSPERITY OF THE NATION. 
 
 Birmingham, February 23, 1825. 
 
 Dear Sir, 
 
 I have been so excessively occupied with public 
 and private business of many kinds, that I have never 
 until now been able to find a single hour to reply to 
 your esteemed letter of the 12th of December. I rely 
 upon your liberality to excuse me. I might have ac- 
 knowledged the receipt before now, but I was desir- 
 ous to reply fully to your observations, because they 
 are important. 
 
 With regard, then, to the present pi^osperiti/ of the 
 Country, I acknowledge it, and rejoice in it; and I 
 assure you, that I do not rejoice the less, because it 
 tends, in some degree, to overturn in the public mind 
 the theory which you and I have supported. It is 
 sufficient for a good man to know that his Country 
 prospers. — Whether it prospers by his own counsels, 
 or by those of others, is a mere trifle. It is a ques- 
 tion which can only be important to men, whose 
 vanity is stronger than their intellect, or whose self- 
 ish feelings out-WTigh their generous affections.
 
 t^or myself, therefore, content, to see things as tliey 
 ore, I have no desire to interfere with the prejudices 
 and opinions which have obtained in the public mind. 
 I have seen the ruin sweep by me year after year ; 
 I have seen thousands hurried to destruction, and 
 Inindreds to untimely graves. I now see as clear as 
 I see the pen in my hand, that nothing- but a change 
 in the Government measures, has saved the Govern- 
 ment from Anarchy and Revolution. But if national 
 policy forbids this great truth to be acknowledged, 
 (which I expect it does), I am content to let it sleep 
 for ever ; or to awake only when the national interest 
 requires, or when the public mind is ripe for its re- 
 ception. 
 
 When 1 say, — '* nothing but a change in the Govern- 
 ment measures," I ought to make one exception, and 
 to allow, that the fortuitous action of South American 
 aflfairs, has tended much to confirm and substantiate 
 the measures of the Government. Lord Castlereagh 
 found that he was wrong, and he died of a broken 
 heart. But it was not the prosperous external affairs 
 of his country which destroyed him. It was the 
 unmeasured and unmitigated ruin which he saw at 
 home. I know that he saw it ; and 1 may almost 
 say, 1 know that it killed him. 
 
 1 
 
 The real truth is, that for the last two or three years, 
 Government have been acting w\)qi\ jyrecisely opposite 
 principles to those which they had acted upon for se- 
 ven years l)eforc. 1 will name a few of their measures
 
 9 
 
 which have hitherto been seldom noticed, but which 
 have liad a prodig-ious effect in producing the present 
 stale of thinofs. 1 consider them all as the measures 
 of Government ;, because it is reasonable to believe 
 that the Bank of England, which has been the osten- 
 sible agent in most of them, would not have acted 
 in the way it has done, without the previous instiga- 
 tion and protection of the Government. 
 
 In the first place then, the Government has passed 
 an Act, leyalisincf the issue of £\ notes for eleven 
 years! ! 
 
 In the second place, they have passed an Act to 
 borrow two millions per annum, for about 20 years 
 to come, from the Bank of England, for the purpose 
 of paying the pensioners of the Army and Navy, and 
 this annual sum of two millions they have consented 
 to borrow from the Bank at 5 per cent, at the very 
 time when they could have borrowed from the public 
 at 3 J per cent ! ! 
 
 In the third place, they have induced the Bank of 
 England to lend four millions sterling upon mortgage 
 to the Landowners, at 4 per cent, interest. 
 
 In the fourth place, they have induced the Bank 
 of England to lend two millions to the East India 
 Company, at 2^ per cent. 
 
 c
 
 10 
 
 In the fifth place, they liave induced the Bank of 
 England to lend money to the Fund owners upon the 
 morlgage of Consols., at the rate of about £l6 sterling 
 to the £100 Consols ; and when last I had the oppor- 
 tunity of enquiring into the subject, I had reason to 
 think, that between two and three millions sterling 
 had been advanced by the Bank in this way. 
 
 Here are five gigantic measures, all calculated to 
 have an immense effect upon the Circulating System 
 of the country ; for although the Bank of England 
 notes are not now in reality legal tenders, yet 1 will 
 venture to say, that even among well-informed men, 
 not one in a hundred is yet informed of this great fact. 
 They have been bred up under the idea of the Bank 
 Notes being the same as the coin of the realm, and 
 nothing short of a miracle or a thunderbolt, can at 
 present erase this impression from their minds. 
 
 It is not necessary for me to recapitulate the various 
 minor measures, all tending to the same effect, viz — 
 to the increase of the Circulating Medium; I might 
 otherwise bring forwards the discount by the Bank 
 of three months' Bills ; the discount of irregular 
 Bills; and the discount at 4 per cent, instead of 5 
 per cent. These are mere matters of course, which 
 follow in the train of the gigantic measures which I 
 have alluded to above. 
 
 The evident effect of all these things, however.
 
 n 
 
 has been to force and increase the acting Circulating 
 Medium of the country. The Bank of England Pa- 
 per has been kept out nearly to the same extent as 
 during the War, and it has possessed nearly the same 
 power in the public mind. In addition to this, the 
 South American Bullion has been poured into the 
 country. Seven Millions Sterling per annum, which 
 for two hundred years had gone to Spain in payment 
 of tribute, for the last three years, has come to En(/' 
 land, in payment for British Manufactures!! The Pa- 
 per and the Bullion are thus increased together ^ and 
 the mutual depreciation of both, prevents that of 
 either from being visible to the public eye. 
 We are at this moment in the very same situa- 
 tion as we were in the ^^ear 1796. The discon- 
 tinuance of the use of a Coinage in France, had then 
 thrown upon England the very same increase of Me- 
 tallic Circulation, as has latterly been occasioned by 
 the emancipation of the South American States ; and 
 Mr. Pitt's measures in 1796 had, at that time, pro- 
 duced the very same effect in increasing the Paper 
 Circulation, which has latterly been produced by the 
 action of the Government upon the Bank of England. 
 
 Hence all t\\Q prosperitjf which we now see. The 
 measures of the Government combined with the 
 emancipation of the South American States, have fil- 
 led the Country with what is called Money ; and this 
 plenty of Bloney has necessarily produced a general 
 elevation of prices ; and this general elevation of pri-
 
 1-2 
 
 ces has necessarily produced a general increase of 
 profit in all occupations; and this g-eneral increase of 
 profits has, as a matter of course, given activity to 
 every trade in the kingdom ; and wiiilst the work- 
 men, in one branch of trade, are producing one set of 
 articles, they are inevitably constimini/ an equal 
 amount of all other articles. This is the prosperilif 
 of the Country, ^ndi there is no other prosperity which 
 ever has been enjoyed, or ever can be enjoyed. 
 
 The present prosperity of the Country, is indeed to 
 be attributed to one cause only, and that cause is the 
 general increase of the Circulating Medium. This 
 increase has been effected by the IStimulatinq System^ 
 upon which the Government has acted with the Bank 
 of England for the last three or four years; and by the 
 increased importations of Bullion from the South 
 American 8tates. Let the Government drop this 
 Stimulating System, or let the current of the Spanish 
 Minerals be turned into other directions ; in either 
 of these cases, universal depression would immediately 
 succeed to universal confidence, afiluence, and 
 prosperity. The Country would again be struck 
 with a sti'ixnge, j?aralysiSi like that of 1816 and of 
 1 H19. All manner of strange anomalies would again 
 present themselves ; and again the Radicals and 
 /i/rtw^t'/eer5 would shtike the foundations of the Go- 
 vernment.
 
 13 
 
 I consider notliiiig- upon earth more certain than 
 this. But I also take it for granted, that his Majes- 
 ty's Ministers understand this subject now ; and that 
 they are prepared to give us again " The Bank 
 Restriction Act^"" whenever the day of trial comes. 
 
 If they are not prepared for this — If they have 
 launched the Country into the ocean of Paper Credit 
 and high prices ^^'lihoxxi being prepared to sacrifice the 
 Metallic Standard altogether, if necessary ; then in 
 my judgment, they have committed the happiness 
 of the People, and the safety of the Crown, upon 
 principles as baseless as the winds. 
 
 I remain, with sincere esteem. 
 My dear Sir, 
 Your faithful humble Servant, 
 THOMAS ATTVVOOD. 
 
 To the Right Honourable Sir John Sinclair, Bart. ^c.
 
 LETTER II. 
 
 FROM MR. ATTVVOOD TO SIR JOHN SINCLAIR, ON THE. CAUSE OF 
 
 THE LATE PANIC, AND ON ITS CHARACTER AND 
 
 MODE OF OPERATION. 
 
 Birmingham, December 27, 1825. 
 
 Dear Sir, 
 
 In my letter of the 23d of February last, I endea- 
 voured to shew that the then existing" prosperity of 
 the country was entirely owing" to the increased cir- 
 culation of money which had been brought into action 
 by the operations of the Government upon the Bank 
 of England, and by the importations of Bullion from 
 South America. 1 also expressed a conviction that 
 the most disastrous consequences would ensue to the 
 country if Government should discontinue their ope- 
 rations upon the Bank; or if any circumstances should 
 ar^se to occasion an exportation of Bullion. These 
 disastrous consequences have since come upon us sud- 
 denly and secretly, and in a way calculated to appal 
 the stoutest minds among us. I think, therefore, 
 th-at it will not be lU-timed, if J now take the liberty 
 of explaining- more fully in what manner such dis- 
 astrous consequences have arisen, and what must be 
 their probable action in the end. Born and bred up 
 in tlin very midst of the Paper System, and having 
 the opportunity of watcliing closely its nature and
 
 lb 
 
 its operation, you will not, I am sure, accuse me of 
 vanity, when I assume, as it were, a personal acquain- 
 tance with subjects which statesmen may have omitted 
 to notice, through the mists and delusions with which 
 distance environs them. 
 
 There can be no doubt then that, in February last, 
 the country was i^rosperous. All agriculture, all 
 trade, and all manufactures, gave to the active classes 
 of the community a reasonable profit for their labour 
 and capital employed ; and whilst one set of men in 
 each occupation was producing one set of commodi- 
 ties, the same set of men were inevitably consuminif 
 nearly an equal amount of all other commodities. In 
 whatever degree their mutual productions exceeded 
 their mutual consumptions, such surplus diverged it- 
 self into expenditure in the shape of profits, taxes, or 
 investments, or remained in the shape of Stock to 
 auo'ment the national wealth. What was it that con- 
 stituted this happy state of things ? It was, that the 
 general mass of money in circulation had been so far 
 increased, as to cover, in its action, a range oi general 
 prices sufficiently high to give a general profit in the 
 production of all commodities. Until this increase 
 of money had been effected by the operations of the 
 Government above alluded to, the range of general 
 prices fell below the general range of the expenses 
 attending the production of commodities, and thus 
 all production wa^ stagnant ; or if active, it was 
 only made so, by the ruin of the producers. In
 
 IG 
 
 fact, tlie industry of the country was throttled. The 
 increase of prices consequent upon tlie increase of 
 money released the industry of the country from its 
 thraldom. Every thing presented a scene of profit- 
 able activity ; and Government had the satisfaction, 
 as Mr. Robinson expressed it, of " Dispensing- from 
 " the ancient portals of a constitutional monarchy, the 
 " blessing-s of plenty and contentment throughout the 
 "land." 
 
 Observe, now, how this happy state of things has 
 been changed. The whole of this melancholy change 
 will be found to originate in the attempt to enforce 
 the ancient standard of value ; or in other words, to 
 render every £3 I7 lO^d. of Debt, Tax\ Money, or 
 Obligation^ convertible by law into an ounce weight of 
 Gold!! 
 
 The general range of prices which had been raised 
 as above described, to about the Vi^ar leveh being all 
 measured in Ounces of Gold, at £3 17 lOkl. of 
 price to one ounce of Gold, the consequence was, 
 that Foreign Nations began to purchase less of our 
 manufactures and commodities, and thus our exports 
 began to fall off comparatively ; but at the same 
 time, being tempted by the high real prices which 
 their commodities sold for in England, they began 
 to sell us a greater comparative (\w^wi\iy of such com- 
 modities, and thus our Imports were increased. In 
 the last year we imported four millions sterling
 
 17 
 
 «iOre CoUon than usual. The Balance of Trade 
 as it is called, was thus thrown against us, and 
 instead of having many millions per annum of 
 Bullion to receive, we have latterly had many 
 millions of Bullion to pay. This drain of Bul- 
 lion from England has now been going on for about 
 two years, and although counteracted for a moment, 
 by the shock in the Money Markets, it must naturally 
 go on until our general range of prices falls again to 
 the level of 1816 and 1819. It was known to exist 
 for some time, and indeed might have been assumed 
 as a matter of course, but L believe it was not pub- 
 licly exhibited until June last., when a return was 
 made to Parliament from the Custom House, shew- 
 ing an exportation of eight millions sterling of Gold, 
 and of four millions sterling of silver, in the preceding 
 eighteen months f Nothing was said of the immense 
 sums which were exported without entry at the 
 Custom House, nor of the quantity of Sovereigns melt- 
 ed by the Refiners^ some of whom I have known in 
 Birmingham to melt 1000 or 1500 per week more 
 or less, for years ! The terrible truth of such a rapid 
 diminution of the only legal tenders in existence, 
 seems to have slumbered without notice for a few 
 months, and it was not until September last that the 
 Bank Directors found it necessary to diminish their 
 Bank Note Circulation correspondently . How this 
 reduction of the Bank Note Circulation was effected, 
 I cannot say, but it is certain that it rvas effected, 
 and that it instantly produced that scarcity of money
 
 18 
 
 and that g-cneral want of confidence, which have late- 
 ly produced such dreadful consequences to the coun- 
 try. When the Bullion Money left the country, the 
 Bank Note 31oney oug"ht to have been increased to 
 supply its place, and then we should have found no 
 diminution of the national prosperity ; but the un- 
 happy character of our present position is such, that 
 whenever the Bullion Money leaves us, the Bank 
 Note Money is sure to leave us correspondently at the 
 same time. And can we wonder at the disastrous 
 consequences we have seen ? When a main artery 
 is opened in the rigid arm, and the vital current is 
 streaming" from the unhappy patient, we open ano- 
 ther main artery in the left arm ! ! And can w^e be 
 surprised that instant paralysis or death ensues ? Is 
 it not certain that the tremendous consequences which 
 we have witnessed in the last three weeks, must be 
 the inevitable result of the double ruin which has 
 thus been set in rapid and simultaneous action ? Sup- 
 pose a Thousand Millions sterling- of Debts and Obli- 
 gations to exist in the Nation between Man and 
 Man, and that a certain g-iven proportion of such 
 Debts is required to be discharged daily. Sup- 
 pose the nation to possess twenty millions of Gold 
 Coins as legal tenderSy and twenty millions more of 
 Bank of England Notes, which in the public estima- 
 tion have the moral force of legal tenders. Suppose, 
 then, ten millions of the Gold Coins to be exported, 
 leaving only thirty million of Gold Coins and Bank 
 Notes in circulation. Is it not evident that one fourth
 
 19 
 
 of the usual proportion of Debts required daily to be 
 paid, must go unpaid ? And if at this critical period, 
 the Bank of England should also reduce its circula- 
 tion of Bank iNotes, is it not equally evident that a 
 general crash and ruin must instantly take place 
 among- all Debtors, and that a general terror and 
 alarm must instantly take effect among all Credilois'^ 
 Panic is said to have been the cause of the terrible con- 
 vulsions, which yet agitate the whole mass of monied 
 obligations. Is there not ground for panic when the 
 money of the country becomes unequal to the duties 
 which it has to discharge, and Z5 wo longer able to meet 
 the mass of monied obligations pressing upon the money 
 for payment P A fact of this kind once found out 
 in the practice of men creates immediately a general 
 scramble for money , throughout all classes of the com- 
 munity. All rush upon their Debtors, some animated 
 by fear, and others urged by their own necessities, 
 and in their blind eagerness to escape general calam- 
 ity, all precipitate the general ruin. 
 
 This is the state of things which the country has 
 exhibited during the last few weeks; and still con- 
 tinues to exhibit, although in a mitigated degree. 
 The evil is stayed for a moment, or rather it is shifted, 
 in some degree, from off the backs of the monied classes 
 upon the country it large ; but it still remains in ex- 
 istence, and still threatens the most tremendous conse- 
 quences to the Nation. I will take the liberty of
 
 20 
 
 troubling" you with one othei* letter, in which I wil! 
 endeavour to point out the character and yrohahle 
 operation of those consequences, 
 
 I remain, with sincere respect, 
 Dear Sir, 
 Your obedient humble Servant, 
 
 THOMAS ATTWOOD, 
 
 To the Right Honorable Sir John Sinclair, Bart. Sfc.
 
 LETTER III. 
 
 FROM MR. ATTWOOD TO SIR JOHN SINCLAIR, ON THE FUTURE 
 
 OPERATION OF THE METALLIC STANDARD, AND ON THE TWO 
 
 MODES OF CARRYING IT INTO FULL EFFECT. 
 
 Birmingham, January 4, 1826. 
 
 Dear Sir, 
 
 The principal object of my last letter, was to ex- 
 plain the cause of the late panic, and of the present 
 alarm and want of confidence, which so generally 
 prevail. Some people assume that the panic was it- 
 self a cause, and not an effect produced by any other 
 cause. They represent it as resembling- what the 
 French call " terreur panique" which sometimes takes 
 effect in Armies, when the bravest troops are dismayed 
 without any ostensible cause, and rush upon their 
 ruin, in their blind eagerness to avoid imaginary 
 danger. Never was assumption more false than this. 
 Never was there more real cause for panic than that 
 which existed in England a fortnight ago. If an 
 earthquake had opened its gaping jaws in a thousand 
 directions, and had literally swallowed up every 
 tenth man's house throughout the country, no more 
 real cause of terror could have existed than that 
 which was occasioned by the late exportations of Bul- 
 lion Money ^ being suddenly followed up by a corres- 
 pondent reduction in the Paper Monet/. The found-
 
 22 
 
 aiioiis of every man's house did, in fact, tremble un- 
 der bis feet. Every Debtor in the kingdom was en- 
 dangered by the impossibility of suddenly discharg- 
 ing his Debts; and every Creditor was endangered 
 by tlie threatened Bankruptcy of his Debtors. No 
 capital, no wealth, was a protection to either party. 
 Nothing but the literal possession of Sovereigns could 
 guarantee either Creditors or Debtors from the most 
 frightful losses and injuries* How then could we 
 wonder to see every man anxious to obtain them ? 
 A reduction of one half had taken place in the num- 
 l)er of Sovereigns existing' in the comitry. A corres- 
 pondent reduction had commenced in the Bank Notes. 
 A vast mass of monied obligations was thus left iin" 
 protected ; for the remaining Sovereigns in existence, 
 could not possibly discharge daily the same quan- 
 tity of Debts which the former quantity of Sover- 
 eigns daily discharged. Here then was ample 
 cause of alarm. The unprotected masses oi obligations 
 beofan to crumble over our heads. The American 
 Merchants first gave way in London, Liverpool, and 
 other largfe towns. Then the Devonshire Bankers fol- 
 lowed, and soon after some eminent London Bankers 
 Avere obliged to suspend their payments"; and through 
 their connexions, the alarm was rapidly propagated 
 through the Country Bankers generally. A geneial 
 'scramble for Sovereigns and Bank Notes ensued. 
 The safety of a man was not to be measured by his 
 wealth or capital, but by the prudence and fore- 
 si'>lit which he had exhibited in scrambling for 
 Bank JS'oles in time f No doubt this general rush
 
 23 
 
 or run for money, which was set in action, aggrava* 
 ted the evil which it was meant to cure. If the pub- 
 lic had been contented to sit down quietly, and to be 
 destroyed in detail, one after another, it is probable 
 that the destruction would not have been so o-eneral 
 as the late panic threatened to make it ; but still it 
 would have been frightful and enormous. Panic was 
 therefore^ its inevitable result, and ihut panic neces- 
 sarily continued to increase, until the canse which 
 gave rise to it was removed by the increased issues of 
 money. These increased issues of money were cer- 
 tainly driven off to the very last hour at which they 
 could possibly be effectual. In all human probability 
 if they had been deferred for another week, no human 
 power could have prevented a general explosion of all 
 the monetary obligations of the country. 
 
 At this critical period, however, the evil Jias been 
 stayed. But the cause which produced it has not 
 been removed. That cause still remains in operation, 
 and still threatens the most tremendous consequences 
 to the country. It is right, therefore, to enquire what 
 these consequences will be, and how they will exhibit 
 themselves. If the Government should indeed think 
 proper to abolish the Metallic Standard altogether, 
 or to reduce it greatly by alloy , or diminution of its 
 weight, or elevation of its price ; then, intleed, it is 
 certain that this country can have nothing to fear. 
 But assuming that we are still to attempt to perse- 
 vere in the present Metallic Standard, I apprehend, 
 in that case, a long train of calamities, beginning in
 
 24 
 
 poverty, bankruptcy, and misery, and ending in the 
 most frightful anarchy and revolution. 
 
 Assuming, then, that the present Metallic Standard 
 is to be still persevered in, there are, in this case, 
 two modes of proceeding- for the Government to adopt. 
 In the first place, they may proceed firmly in the 
 course which they have pointed out, leaving the 
 Bank of England to protect itself, and compelling 
 that Estahlislmient and all individuals to pay their 
 debts rigidly in Gold Coins; or in the second place, 
 they may adopt a middle, or temporizing policy, and 
 endeavour to bolster and prop up the Metallic Stand- 
 ard, by the assistance of palliative and artificial mea- 
 sures. 
 
 In the former case, it is probable, that we shall 
 very quickly return to the state from which we have 
 so lately escaped. The Bank is said now to have 
 about twenty-eight millions of notes in circulation. 
 From ten to fifteen millions of these notes must be in- 
 stantly withdrawn, in order to render the Bank Notes 
 as scarce as the Coins in which they are payable, and 
 in order to prevent the renewed exportation of those 
 Coins, by again beating down the prices of property 
 and labour. 
 
 This reduction of the Bank Notes will instantly 
 bring back the late convulsions in the Money Mar- 
 kets. Again we shall seethe failure of Banks and
 
 25 
 
 other Establishments, the most affluent and eminent 
 in the country. One calamity will follow another in 
 sudden and rapid progression, and after a little while, 
 when crash upon crash shall have prepared men's 
 minds for a tremendous catastrophe, that catastrophe 
 will inevitably come. The money of the country will 
 not be equal to discharge one hundredth part of 
 the demands upon it ; and if men live at all, they 
 will only do so by having recourse to universal plun- 
 der. The Bank of England will be compelled to 
 stop payment; but the probability is, that it will 
 not do so, until the g-eneral distress and terror have 
 become so great, as to render a Bank Restriction 
 Act, at such a period, perfectly unequal to the 
 mighty task of propping or re-constructing the falling 
 fabrick of society . 
 
 If the Government should adopt the middle or tem- 
 porizing policy; if they should act upon a system of 
 palliatives, and should induce the Bank of England 
 to call in its issues gradually and slowly, and in the 
 meanwhile to throw in assistance from time to time, 
 into such quarters, and under such parts, of our Mo- 
 netary obligations, as are in the act of giving way, 
 yet still the same fate will await us in the end. We 
 shall goto the same ruin, but we shall go more slowly 
 and more painfully. The cause also of our ruin will 
 be more deeply seated, and less visible to the public 
 eye. Instead of dying by a cannon hall, we shall 
 die hi/ inches. We shall run the race of 1816 and of 
 
 £
 
 26 
 
 1819, instead of meeting- tli€ sudden and swift de- 
 struction of 1825. But still our end will be the same. 
 If we persevere in compelling- every £.3 I7s. lOid. 
 of Debt, Tax, Settlement, and Obligation, to be 
 convertible hy Imv into an ounce weight of Gold, the 
 consequence must inevitably be a total breaking up 
 of all monied obligations, and of the whole fabrick of 
 Society, which they hold together. 
 
 If we look back to 1816 and 1810, we shall see,a.« 
 in a glass, the dangers and the horrors which we 
 have to meet. That is to say, we shall see them in 
 their commencement, but not in their career. In 
 1816 they were arrested by the Bank of England is- 
 suing Six Millions sterling of more Notes, by a loan 
 to Government under the liestriction Act. In IS 19, 
 
 1820, and 1821, they proceeded slowly and surely un- 
 til the whole mass of society became contaminated 
 with revolutionary views. In 1822, they were again 
 arrested by the £l note Act, and by abundant 
 issues of money. At that time, I proved in 
 many letters, printed in the Farmer's Journal, 
 that it was certain that a third catastrophe would 
 ensue. That third catastrophe is now come, and if 
 Government neglect to apply an early and permanent 
 remedy, all the dangers and all the horrors that we 
 saw in I8l6 and 1819, will very shortly be deemed 
 but trifles, when compared with those which we have 
 yet to see.
 
 27 
 
 Suppose then the Government to act upon the tem- 
 porizing policy as above described. Is it not certain, 
 that in this case, the prices of property and labour 
 generally in England must fall to nearly the Conti- 
 nental level ? The Bank of England must reduce its 
 issues generally^ however much it may increase them 
 locally. No other way will remain to stop the export, 
 and force the import of gold, but so tobeat'down Eng- 
 lish prices, (whilst Gold remains the satn&J that at 
 last. Gold Jjecomes the least beneficial article that 
 men can find to export, and the most beneficial article 
 that they can find to import. This is the way in 
 which the process of bringing back Gold to England 
 at the ancient price must work. It must force back 
 all other commodities to their ancient prices also. 
 Here begins the ruin of the system. The debts and 
 obligations cannot be forced back to their ancient lev- 
 el. Thus every farmer becomes bankrupt to his land- 
 lord, and every landlord becomes bankrupt to his 
 creditor, in one shape or other. Every merchant 
 becomes insolvent to his creditors; or at least he finds 
 the losses of his trade are gTeater than its profits. 
 Every manufacturer finds the prices of his goods fall 
 so low, as to give him a loss instead of a profit ; and 
 therefore lie contracts his establishments and dis- 
 charges his workmen, the only possible process through 
 which he can compel them to reduce their wages. 
 The unhappy workmen are thus u\^(\e non-producers 
 on one hand ; but they are also made non-consumers 
 on the other, A mighty evil is thus set in motion,
 
 28 
 
 wliich acts and re-acts upon its own elements, until 
 the distress terminates in some g-reat convulsion, or in 
 the increase of the circulating money, occasioned 
 either by the renewed importations of Gold, or by the 
 interference of Government. 
 
 The temporizing policy, therefore, gives us no hope 
 of escape from the fate which awaits us. It only pro- 
 crastinates our misery, without the possibility of re- 
 lieving it. Every year that it lasts, it brings thou- 
 sands of heart-broken wretches to the grave. What 
 reparation can we make to these unhappy men ? 
 What to the hundreds of thousands of others, who 
 must toil early and late^ and reap ruin as the reward 
 of their labour ? In my judgment it is much better 
 to adopt the decisive policy at once ; and at once to 
 compel all debts and obligations to be paid in heavy 
 Gold. Much better would it have been to have acted 
 in this way in 1816 or 1819. The injustice and the 
 impossibility of this would then have been evident 
 to all eyes ; and the country would necessarily have 
 been placed under the protection of a reduced stand- 
 ard, or of a Restriction Act. Respecting the com- 
 parative eligibility of these two modes of relief, I pur- 
 pose to trouble you with one other letter. 
 
 I remain, with sincere esteem. 
 My dear Sir, 
 Your obedient humble Servant, 
 
 THOMAS ATTVVOOD. 
 
 To the Rizhi Honourable Sir John Sinclair, Bart. Sfc.
 
 LETTER IV. 
 
 FROM I\IR. ATTWOOD TO SIR JOHN SINCLAIR, ON THE COMPA- 
 RATIVE ELIGIBILITY OF A REDUCTION OF THE METALLIC 
 STANDARD, OR A BANK RESTRICTION ACT. 
 
 Birmingham, Januartj 11, 1826. 
 
 Dear Sir, 
 
 With regard, then, to the comparative eligibility of 
 the two only modes of relief which remain to the 
 country, I am of opinion that a renewal of the Bank 
 Restriction Act is better than a reduction of the Me- 
 tallic Standard of Value, for the following reasons. — 
 
 A Metallic Standard has no power of accommodat- 
 ing itself to the wants and purposes of society. It 
 has no power of expanding or contracting the nume- 
 rical quantity of legal tenders in existence, accord- 
 ing as the necessities of the community may require. 
 It remains fixed and immovable when it ought to 
 expand. It expands when it ought to contract ; it 
 contracts when it ought to expand. In short, it dis- 
 appoints in every way, in a highly artificial state of 
 society, all the ends and objects to which it is well-fit- 
 ted in a more barbarous age. Suppose, for instance, 
 the Metallic Standard to be reduced one-half as in 
 strict justice it ought to be, so as to give about 10s. 
 to the bushel of wheat, and 16s. to the weekly wa- 
 ges of Agricultural Labour. This large reduction of 
 the Standard, and consequent elevation of prices to
 
 30 
 
 the War level, or to about the level which has exist- 
 ed for the last three years, would certainly place the 
 prosperity of the country upon a secure fooling-, as 
 far as a Metallic Standard can possibly produce such 
 effect. Suppose, then, in our highly artificial state of 
 Society, where such an extreme division of labour 
 prevails, and such an immense mass of monied obliga- 
 tions, of a hundred kinds, must necessarily exist, and 
 where the bulk of such monied obligations must still 
 be founded upon paper, and he discliaryed with pa- 
 per ^ or not discharged at all: Suppose, in such a 
 state of things, any slight action upon the Exchanges, 
 or upon the balance of Foreign Remittances, should 
 occur, so as to occasion a temporary exportation of 
 Bullion money, how, in this case, is the Paper Money 
 to be encreased so as to supply the place of the Bul- 
 lion Money ? How, indeed, is the Paper Money to 
 be prevented from contracting and diminishing its 
 quantity correspondently with the contraction of the 
 Bullion Money ? The Paper Money, when most 
 wanted, must necessarily disappear as a matter of 
 course. A slight action upon the Exchanges be- 
 comes, thiiSj a mighty evil, producing a general de- 
 pression of prices, and a general depression of Agri- 
 culture, Manufactures, and Commerce. 
 
 Take the cowirer^e of the above proposition. Sup- 
 pose a slight action upon the Exchanges, or upon the 
 balance of Foreign Trade, to occasion an extra 2/h- 
 poriation o^ B\\\\\o\\ Money, At such a period, the
 
 31 
 
 Paper Money ought to disappear, so as to make 
 room for the Bullion Money, and prevent the tempo- 
 rary elevation of prices, which must otherwise be 
 occasioned. But instead of this, the Paper Money 
 instantly expands, and increases itself with the in- 
 crease of its means of payment, which the new Bul- 
 lion Money presents. A sudden and g-reat elevation 
 of prices is thus occasioned, which lasts just long 
 enough to deceive the public mind, and to induce 
 people to contract eng-ag-ements on the strength of it. 
 It then disappears from under their feet, and such 
 engagements eventuate in their ruin. 
 
 What can be more injurious to society than such 
 elevations and depressions of prices, and such changes 
 in the relative plenty or scarcity of money ? Do they 
 not scatter throughout the country, with a prodigal 
 hand, unmerited prosperity to-day ^ and unmerited 
 ruin to-morrorv? Do they not tend to make all busi- 
 ness a mere matter of gambling speculation, instead 
 of the regular and sober pursuit of reasonable and 
 moderate gains ? And yet these fluctuations are inse- 
 parable from a Metallic Standard, in a state of society 
 like ours. We cannot do without Paper Circulation. 
 If we were to attempt this, the consequence would 
 be absolute and universal bankruptcy. If we could 
 indeed shake off the existing engagements of society, 
 and begin again £?e novo^ then indeed it is certain that 
 we could do without Paper Circulation. But as 
 things are, it is impossible. We have therefore to
 
 32 
 
 consider, whether it is best to preserve it, jointly 
 with a Metallic Standard ; or to shake off the Metal- 
 lic Standard altogether. If we preserve the Paper 
 Circidation jointly with a Metallic Standard, then 
 we must at all times expect considerable changes 
 and fluctuations in the value of money, and in the con- 
 sequent prices of property and labour generally. 
 The Paper Money, like a false friend, will cling 
 around us when we want it not ; but in the hour of 
 our adversity it will disappear. 
 
 If at any time a foreign invasion of this country 
 should take place, the danger of an immense Paper 
 Currency all convertible into Gold, would then sud- 
 denly assume a terrific magnitude. But if we were 
 in possession of a non-convertible and independent 
 circulation of our own, a foreign invasion would have 
 no effect upon our monetary System. Instead of 
 every man being engaged in the process of crushing 
 his debtors, in order to convert his debts and money 
 into Gold, every man's interest would be bound up 
 in that of his country, and his hand would be engaged 
 in crushing her invaders. The danger of the Paper 
 Currency consists solely in its convertibility into Gold. 
 
 What would have been the situation of the country 
 three weeks ago, if the Bank Restriction Act had 
 not still existed in the 2mblic mind notwithstanding 
 its repeal in law. Instead of increasing the circula- 
 tion of Bank Notes from eighteen to twenty-eight
 
 5^ 
 
 millions, the Bank must in this case, have been com- 
 pelled to reduce it suddenly from eighteen millions 
 down to ten millions or under. The evil in operation 
 would thus have been acrgravated a hundred fold. 
 Ruin would have been accumulated upon ruin. In 
 all human probability, the whole mass of circulating- 
 paper, of many kinds, would instantly have dis- 
 appeared from circulation, leaving" nothing but a few 
 millions of hoarded sovereigns, to discharg-e the du- 
 ties which a hundred millions of Circulating Sove- 
 reigns would not have been equal to discharge. No 
 possible means of paying the weekly wages of labour, 
 or of purchasing the common necessaries of life, 
 would have remained in existence. Universal plun- 
 der, anarchy, and murder, must have ensued; for by 
 no other means could human life have been supported 
 and defended. From this frightful fate we were sav- 
 ed by the timely issues of Bank Notes. Fortunately 
 for us, the power of the Bank Note, as a legal tender ^ 
 still existed in the public mind. The laws had in- 
 deed repealed the Bank Restriction Act, but some 
 terrible convulsion must ensue, or the present genera- 
 tion must pass away, before it can possibly be repeal- 
 ed in the habits and modes of thinking of Society. In 
 fact, a new race of men must grow up under the new 
 impressions, before the old race of men will cease to 
 act upon the old impressions. We were thus enabled , 
 to issue the Bank Notes plentifully, and thereby to 
 arrest the mighty ruin which threatened us. In the 
 hour of our danger, we were obliged to fly to the ca- 
 
 F
 
 34 
 
 lumniated Paper for refuge, and there we found it. 
 If we had relied upon the Gold, our destruction 
 would have been ascertain as day and nig-ht. 
 
 Contrast all the dangers, the changes, the fluctua- 
 tions, the unjust ruin, the unjust aggrandizement, 
 attendant upon a Metallic Standard, with the secu- 
 rity, the certainty, the equality of pricesand of values; 
 the exemption from unjust losses, and from unjust 
 gains ; and the general stability of all profits and of 
 all prosperity, which a non-convejtible Paper Cur- 
 rency presents. — Self-existent, self-dependent, liable 
 to no foreign actions, entirely under our own con- 
 troul; contracting, expanding, or remaining fixed, 
 according as the wants and exigencies of the commu- 
 nity may require, a non-convertible Paper Currency 
 presents every element of national security and hap- 
 piness, without the possibility of injuring any one 
 class of the community. In case of any sudden pa- 
 nic occurring, so as to occasion an unusual demand 
 for money, for the discharge of Debts and the support 
 of public credit, the non-convcrtihle Paper m^tc\nt\y 
 expands itself to meet the demand, and the demand 
 is satisfied and the mischief stayed. When public 
 confidence runs high, and the instruments of credit 
 have a tendency to expand themselves into excess ^ the 
 slightest foMcA upon the non-convertible basis o^ the. 
 Circulation, instantly reduces the whole, and binds 
 down the Circulating System upon the ancient level. 
 Upon this level we may stand for a thousand years.
 
 35 
 
 We may for ever ensure a whole<Jome range of prices, 
 neither too high or too low, but securing at all times 
 the clue reward of industry to the productive classes, 
 and the due distribution of mutual rights and inte- 
 rests among all other classes of the community. 
 
 It is true, that we ought to have some superintend- 
 ing power to regulate and conduct a mighty system 
 of this kind, and not to leave the whole under the 
 non-responsible management of the Bank of England. 
 This superintending power we may readily obtain by 
 the establishment of a Board of Controul, or Parlia- 
 mentary Commission, responsible to Parliament for 
 its conduct, and compelled to act upon certain known 
 and established principles. Under the guidance of 
 such a power as this, the Bank of England vi'ould 
 become a mighty agent of national power, security, 
 and happiness, without the possibility of its ever is- 
 suing its notes in excess, or of unduly contracting 
 them to the national injury. AVe should never again 
 know what it is to have expansions to day and con- 
 tractions to-morrow ; to have prosperity in the be- 
 ginning of the year, and ruin in the end ; or to have 
 any of those fatal fluctuations which have distracted 
 society for the last ten years. 
 
 If, however, the establishment of a permanent 
 Bank Restriction Act should be thought too great an 
 innovation in the habits and modes of thinking in so- 
 ciety, yet still a temporary Buik Restriction Act 
 would be necessary for the purpose of giving us time
 
 36 
 
 to decide upon a practicable MeiaWic Standard, and to 
 introduce it generally and securely into public use. 
 A sudden change in the present Coins might, perhaps, 
 produce too great a shock upon the Monetary System, 
 and upon men's habits and prejudices. It would in 
 reality injure no one, hut the few individuals who have 
 occasion to move their capital abroad, and to invest it, 
 or expend it there. But it might be obnoxious to 
 public prejudice if adopted at once. It might be 
 thought to injure all, although in reality it would in- 
 jure none, unless carried to such a degree as to elevate 
 the prices of property and labour above the level 
 which has existed for the last three years ; which a 
 reduction of 60 per cent, in the Standard _ would not 
 do. 
 
 Be these things as they will, however, one of the 
 two rye must do, or we are lost. Our situation is a 
 choice of difficulties, but no human power can avoid 
 them. We may, perhaps, toil and struggle on for a 
 little longer, amidst all manner of dangers, and all 
 manner of sufferings and privations ; but the end of 
 oar career is Death. Not Death to the people, but 
 to the political system under which we live. I have 
 reflected upon the subject for twenty 5 ears ; I have 
 ccntiimally turned it in my mind, in a thousand shapes 
 and ways, and I am still most firmly of opinion, that 
 if we persevere in the attempt to force all the prices, 
 <)bli""ations, and contracts of societv into conformity 
 with the ancient Standard of value, we shall not sue-
 
 ceed ill that object ; but we shall pull down the whole 
 fabrick of society upon our heads. 
 
 One important fact I ought to mention, in proof 
 or confirmation of this opinion. I have never met 
 one single individual, who has had leisure and disposi- 
 tion to turn his thoughts to the subject, who has not 
 fully adopted the same opinion in the end. 
 
 One other fact is important. If these arguments 
 are wrong, is it not strange that no one has ever been 
 found to point out their error, or even to attempt it ? 
 All ttie experience that we have had confirms their 
 truth. Every shock that our Circulating System has 
 sustained, from the year 1791 to this day, can be di- 
 rectly traced to the pressure of the Metallic Standard. 
 In 1816 and 1819 the very foundations of society 
 were giving way. In 1825 the whole Circulating 
 System was suddenly falling upon our heads. In 
 every instance the Paper saved us; and nothing but 
 the Paper. It remains now to be seen, whether we 
 shall abandon this mighty engine of national security 
 or not. Short and awful is the crisis in which we 
 are placed. If we determine wrong, God help this 
 Nation through the mortal trial that awaits her. 
 
 We must not reason from precedent. If we do, we 
 reason wrong. No precedent exists in history like 
 England at this period. Every thing is new and gi- 
 gantic about us. Grown up into a giant's strength,
 
 38 
 
 ill all the mighty parts and proportions of society, we 
 cannot again be forced back into the habits and modes 
 of thinking of a semi -barbarous age. In a semi-bar- 
 barous age, Money is but of little consequence. Every 
 village produces nearly the whole of its wants within 
 itself; and but little difficulty occurs in the mutual 
 exchange of commodities and services among- the 
 rude inhabitants. Debts and Taxes may be said not 
 to exist ; or if they do exist, they are chiefly payable in 
 hind. But in a highly artificial state of society like 
 ours, Money is literally vital. Here the division of 
 labour has become extreme. Society is divided, not 
 into villages, producing the whole of their moderate 
 wants within themselves ; but into trades, classes, 
 and occupations, each producing their masses of 
 separate commodities, and of parts of commodities, 
 which are only made available for the public use, 
 through the medium of money. Every thing is done, 
 also, through the intervention of debts, or of monied 
 contracts or obligations of some kind, 31oney 
 becomes thus the very life blood of the political Sys- 
 tem ; and its ample and healthy supply is just as 
 necessary to our political body, as blood itself is to 
 animal life. 
 
 Whether this ample and healthy supply of money 
 is obtained by a reduction of the Standard, or by a 
 Bank Restriction Act, is however of little compara- 
 tive importance, ])rovided it is obtained, and secured. 
 The Debtor interest of the Country is, at present,
 
 39 
 
 strangled by tlie Creditor interest* Upon what is 
 this latter to be supported when its victim dies ? 
 When the Drones of society have destroyed tlie ^ees^ 
 liow are the Drones themselves to live ? Is it not cer- 
 tain, that they also must die in the end ? And after 
 all, is not every Creditor on the right hand, a Debtor 
 himself on the left hand ? Let the Creditor then re- 
 lax his grasp upon the Debtor's throat. Let him 
 be content to receive his Debts, Rents, and Taxes in 
 a money, as cheap and abundant as that, in reference 
 to which, his Debts, Rents, and Taxes were contract- 
 ed ; and then there will be no misery, no discord in 
 society. Or if it is thought that the Public Creditor 
 has a just claim upon the country for payment in un- 
 depreciated Coins, let the Public Creditor receive 
 iiis payment accordingly : but let not the innumerable 
 private Creditors throughout the country receive also 
 a benefit which no individual among them will dare 
 to contend is Jiis right. Let not the very elements 
 of society be armed against each other j and each be 
 compelled to destroy to-daj^ and to be destroyed itself 
 to-morrow. The doubling of the real weiglit and 
 real value of the National Debt, will be heavy 
 enough upon the Nation, but it will not be more 
 heavy than the Nation can bear. The National 
 Debt presses generally, equally, and universally, upon 
 all parts and elements of Society, and like the 
 weight of the Atmosphere, its burthen is in reality 
 but little felt. But the private debts and obligations 
 existing between man and man, press locally and
 
 40 
 
 partially ; crushing to tlie very earth one class of men 
 to-day, and another class of men to-morrow, and in 
 the end destroying all. Why then should we volun- 
 teer an universal ruin of this kind ? Can no means 
 be devised whereby the Public Creditor may receive 
 his dividends in heavy Gold, without g^iving- also the 
 same heavy Gold to every Creditor of a thousand 
 kinds throughout the country ? Could not the Pub- 
 lic Creditor he guaranteed his dividends in heavy 
 Gold for some limited period, and would not this give 
 him the opportunity of selling out, and of withdraw- 
 ing his property from the funds, if at the end of 
 such period, he should not ihink proper to receive 
 such money as the national convenience may require ? 
 It appears tome, that the Bank Restriction Act might 
 be renewed for three years, during which the above 
 privilege might last, without raising the price of 
 Gold in the markets, beyond the level it has reached 
 during the last three years ; or if the price of Gold 
 shoidd rise 10 or 20 per cent above that level, the ex- 
 pence of the guarantee would be a mere trifle. 
 
 We might in this way render ample justice to the 
 Public Creditor, without crushing into the earth every 
 Private Debtor in the kingdom. And if the weight 
 of Gold, contained in the instruments of money, is 
 made so great an object, it becomes another reason 
 why a renewal of the Bank Restriction Act is a better 
 mode of present relief, than a direct reduction of the 
 Metallic Standard. The former would throw Gold 
 out of use, and out of demand^ and keep down its
 
 41 
 
 price antl its exchang'eable value, so as to gite a 
 much greater quantity of Gold to the Pound Sterling-, 
 by way of purchase in the rtiarkel. It would, in fact, 
 depreciate Gold itself for years, and render it compa- 
 ratively a mere drug in the country ; whereas a re- 
 duction of the Standard would instantly call Gold 
 into general use and general demand ; and whilst it 
 really raised the exchangeable value of Gold itself, it 
 would be a literal reduction of the quantity of Gold 
 wbich the Pound Sterling- would contain or would 
 purchase. 
 
 But in truth, a reduction of the Standard to the 
 extent of one-half^ would injure no individuals in the 
 community, excepting only those who invest or expend 
 their Capitals abroad. It would not raise the gene- 
 ral prices of commodities and labour beyond the level 
 which has existed for the last three years, It would 
 only preserve those prices under which all classes have 
 flourished, and without which no class can flourish 
 permanently . For the last three years we have flou- 
 rished under the range of the high war level of prices. 
 This high war level of general prices has been ob- 
 tained by abundant issues of Paper, and by ajorced 
 depreciation oj heavy Gold. What diflerence can it 
 make to the Public, whether this high War level of 
 general prices is preserved by a reduction of the 
 Standard, or by a forced depreciation of the exchange- 
 able value oj heavy Gold? Certainly it can make 
 none. It can only make a diflerence to persons going 
 
 G
 
 42 
 
 abroad, to expend or invest their capitals, and these 
 persons ought to be deprived of the enormous pre- 
 mium with which we now brihe them to leave the 
 land of their fathers, and to expend their capitals 
 abroad. 
 
 The result of all the above is, that whether we re- 
 dnce the Standard or not^ it is advisable, in the first 
 instance, to restore the Bank Restriction Act. Un- 
 der this mighty monument of the wisdom of Mr. 
 Pitt we may yet take refuge ; and there we shall be 
 safe. No shadow of danger can reach us. There is 
 no difficulty in paying paper debts with paper money. 
 There is no difficulty in employing and maintaining 
 labourers, so long as the prices of the products of la- 
 bour are kept above the range of the fixed charges 
 and monied expences, which must otherwise suffocate 
 the industry of the country. But if the paper mo- 
 ney is withdrawn, the paper debts must fall ; and if 
 the prices of commodities are suffered to fall to the 
 level of the ancient Standard, they fall within the 
 level of the fixed charges and expences, and the in- 
 dustry of the country dies. If then, we survive the 
 shock of the Monetary System, we have still to con- 
 tend with poverty, misery, and anarchy, in their 
 wildest and most appalling forms. If we escape from 
 1825, we rush upon 1816 and IS19 ! ! And if we 
 subdue the cries of hunger, and the clamours of des- 
 pair and madness in the population, we have yet to 
 meet the ruin of the Landlords, which threatened
 
 43 
 
 such terrible consequences in IS2I and 1822 ! ! In 
 short, turn which way we will, we meet ruin, and 
 nothing- but ruin ! ! We have no safety for the Crown, 
 or for the People, but in the Bank Restriction Act. 
 
 I remain. Dear Sir, 
 Yours, with sincere respect, 
 
 THOMAS ATTWOOD. 
 
 To the Right Honourable Sir John Sinclair, Bart. 
 
 POSTSCRIPT. 
 
 There can be no doubt that a reduction of the 
 Metallic Standard to about one half is competent to 
 secure the country. An elevation of the price of Gold 
 to the extent of cent, per cent., which is its necessary 
 effect, is the only possible means, through which we 
 can bring down English prices <jenerallyj to a level 
 with Continental prices. It efiects this object at 
 once, without injury to any 6ne. It makes ten shil- 
 lings of English money equal to only five shillings of 
 Continental money, and thus it equalizes English and 
 Continental prices at once. It gives a premium of 
 50 per cent, upon the exporlalion of British Commo- 
 dities. It imposes a duty of 50 per cent, upon the 
 importation of all Foreign Commodities. It super- 
 sedes all Corn Laws. It preserves the iVages of la- 
 bour^ and the Remits of Land at the high war level.
 
 44 
 
 It places a rock of security under the laboui'er's feet. 
 It makes labour a property worth havintj^ instead of 
 being totally useless to both its Seller and its Buyer. 
 It makes the Master seek the Labourer, instead of 
 bandying the labourer from door to door. The labour- 
 er can never prosper unless his employers prosper. 
 His employers can never prosper, if the prices of pro- 
 perty are to fall within the grasp of the vested inter- 
 ests. The only property of the labourer is his labour. 
 Without an ample and abundant demand for his la- 
 bour^ he can possess no security and no liberty. 
 All the liberty that he can have, in such a state, 
 is a choice betwen the Workhouse and the Grave, 
 No demand can exist for his labour, if the employ- 
 ment of labour is to be a warrant of ruin to the Em- 
 ployer ; and this it must certainly be, if the present 
 Standard is persisted in. The reduction of the Stand- 
 ard will secure all interests ; but not equally so with 
 a Bank Restriction Act, under the superintendence of 
 a Board of Controul . 
 
 It has been said, that the Bank of England is a pri- 
 vate body, and ought not be interfered with. The 
 fact is not so. The Bank of England is still a public 
 Ixody, possessing the most important public powers, 
 and bound by the most yjowerful public duties. The 
 Sultan of Turkey does not possess such an extensive 
 and arbitrary power to save and to destroy, as the 
 Bank of England possesses at this moment, The 
 mere repeal of the Bank Restriction Act, iji the letter 
 of ike law, is nothing ; until it is equally repealed in
 
 45 
 
 men's habits and opinions, and in its general influence 
 over the public mind. It is through legislative Acts, 
 that the Bank has been suffered to acquire this gigan- 
 tic power in the country ; and therefore the legisla- 
 ture is still bound to take care that it is exercised for 
 the public welfare. The Bank of England is still a 
 public body to all intents and purposes. It still exer- 
 cises great public powers, and is still bound by great 
 public duties. It is in fact the Mint of England 
 at this hour. Where the King*s Coins effect one trans- 
 action, the Bank Notes effect one hundred ; and where 
 the King's Coins discharge one hundred pounds of 
 Debt, the Bank Notes discharge One Million.
 
 LETTER I. 
 
 FROIM SIR JOHN SINCLAIR TO MR. ATTWOOD, INCLOSING THE 
 
 PLAN OF THE FORMER FOR RELIEVING THE PECUNIARY 
 
 EMBARRASSMENTS OF THE COUNTRY. 
 
 My dear Sir, 
 
 1 hope that you received my two packets. I now 
 send you my Remedy, and will trouble you to return 
 me your remarks upon it^ as soon as possible, under 
 Lord Glasgow's cover. 
 
 In haste, 
 
 Faithfully yours, 
 
 JOHN SINCLAIR. 
 
 133, George Street, Edinburgh,'} 
 December 30, 1825. T
 
 LETTER TI. 
 
 FROM SIR JOHN SINCLAIR TO JWR. ATnVOOD, RESPECTING THE 
 EFFECT UPON FOREIGN TRADE, OF GOLD REMAINING AT THE 
 
 old price, vvhiuyr all other prices rise cent. per cent. 
 
 Dear Sir, 
 
 I herewith return your letter of the 27th ultimo, 
 after having" taken a copy of it. There is a great deal 
 of excellent matter in it. T shall be very glad next 
 to receive the other letter with which you proposed 
 to favour me. The only thing which requires explan- 
 ation, is, why Foreign Nations (see p. 16. ) began to 
 purchase less goods, when the general range of prices 
 rose to the war level, and the price of Gold continued 
 at £3 lis. lO^dP Higher prices would certainly di- 
 minish demand, — but what is the direct effect of Gold 
 being at the mint price ? What, if it had increased 
 to £6 per ounce ? 
 
 I am very anxious to receive your remarks on my 
 plan for remedying the Banking System of England, 
 
 I remain, in great haste. 
 
 Faithfully yours, 
 JOHN SINCLAIR. 
 
 133, George Street, Edinburgh,') 
 January 4, 1826. C
 
 ON THE MEANS 
 
 OF RELIEVING THE PRESENT PECUNIARY EMBARRASSjW'ENT» 
 
 OF THE COUNTRY, AND PREVENTING THEIR RECURRENCE; 
 
 TOGETHER WITH THE PLAN OF A CHARTERED COMPANY FOR 
 
 PROMOTING THE SECURITY OF THE COUNTRY BANKS. 
 
 BY THE RIGHT HON. SIR JOHN SINCLAIR, BART. 
 
 It is quite practicable, by placing* the circulation 
 of the country on a proper footingf, to prevent the re- 
 currence of those melancholy scenes of distress, which 
 are so frequently experienced in England. In Scot- 
 land, where a judicious system of banking is estab- 
 lished, and where any number of persons can associ- 
 ate for banking" purposes, they are scarcely known ; 
 and it is principally by transferring to England the 
 same system, which the experience of above half a 
 century has sanctioned in Scotland, that the great 
 object in view, an advantageous system of paper cir- 
 culation f may be attained. 
 
 In Scotland, during a period oi above Jifty years ^ 
 only six banks have suspended payment, — only in 
 two instances were there any deficiencies, — and these,
 
 49 
 
 in all, did not amount to £30,000* ; v.'hereas in 
 England, 71 banks stopped payment in one year f 
 and great losses were sustained. Hecent events have 
 fully proved the superior excellence of the Scotch 
 system. In England, in the short period of three 
 weeks, sixty-one banking' establishments in the*coun- 
 try, and six in London, suspended their payments. 
 These failures vt^ere attended with the most disastrous 
 consequences, for they not only occasioned much in- 
 dividual misery, produced g-reat depreciation of pro- 
 perty, and brought sudden ruin on numbers of indus- 
 trious persons, but materially injured public, as well 
 as private credit^ and essentially affected the reve- 
 nue. 
 
 During this frightful convulsion in England, in 
 Scotland * not one' banking- house has stopped. In 
 various parts of England also, the same fortunate cir- 
 cumstance has taken place, but at the expense of im- 
 mense sacrifices on the part of the bankers, or by 
 means of the support they received from the great 
 landholders, and most respectable mercantile interests 
 in their immediate neighbourhood. The necessity, 
 however, of applying- to a number of individuals for 
 
 * See Hints on Circulation by the Right Hon. Sir John Sinclair, Bai't. published 
 in 1822, where the Scotch system is described in the Appendix, No 3. An account 
 is there g-iven of the six banks which had suspendeti their pajiuents in Scotland, 
 during the last 50 yeai's. 
 
 + See Chalmers's Estimate, p. 297, edit. 1804. 
 
 G
 
 50 
 
 such aid, placed tliose banking establishments, in a 
 most painful predicament. 
 
 It would take a lengthened discussion to explain, 
 in detail, the plan I now beg to ofter, as an effectual 
 preventive of such mischiefs. Some general outline 
 of it, therefore, is alone given, which may be ex- 
 tended if necessary. 
 
 1. The establishment of respectable hanks hy public 
 licence, in every county of England where required, 
 is the basis of the whole system. The advantages of 
 such establishments, when properly regulated, can- 
 not be questioned, (see Appendix) ; and to place 
 them on a footing of security, I am persuaded that 
 the Bank of England would forego its exclusive pri- 
 vilege of banking with more than six partners, in so 
 far as regards country districts ; as the Directors of 
 the Bank must he awarcy that the mischiefs which 
 have lately been experienced, originated in a great 
 measure from the existence of that monopoly. 
 
 In order, however, to induce the Bank to make 
 that sacrifice rvillinglyy the public should guarantee 
 the existing dividend, during the continuance of the 
 present charter, and should agree to give one year 
 additional of charter, for one year relinquishment of 
 claims the monopoly, however, to be continued to 
 the Bank, in so far as regards London and its imme- 
 diate neighbourhood.
 
 51 
 
 2. That a board of seven Commissioners, not Mem- 
 bers of either House of Parliament, shall be appoint- 
 ed for licensing* country bankers, without authority 
 from whom, no eng'raved or printed notes payable to 
 bearer on demand, shall be circulated, nor even then 
 beyond the sums for which landed, funded, or perso- 
 nal security, has been given to the Commissioners. 
 It is quite an anomaly, that we should hang one in- 
 dividual for coining a shilling, and suffer another to 
 pass with impunity, who has circulated thousands of 
 promissory n(^es, payable on demand, without the 
 means of retirins: them. 
 
 '& 
 
 3. That a great Corporation shall be erected in 
 London, to be called, " The London Bank,^' to act 
 as a correspondent to such of the provincial banks as 
 choose to employ it. This is a most important part 
 of the plan. No private banker in London can stand 
 his ground, when there is a great run on a number 
 of his country correspondents. (A plan for erecting 
 a great corporation, as the centre of country circula- 
 tion, was drawn up by me some years ago ; but un- 
 fortunately the public were not then ripe for its adop- 
 tion. An abstract of it is annexed.) Such a corpo- 
 ration might likewise have the liberty of circulating- 
 notes in the country ^ leaving the circulation of Lon- 
 don and its neighbourhood exclusively to the Bank of 
 England ; as that Bank, I trust, v/ill always be 
 found entitled to the coniidencj and favour of the 
 public.
 
 52 
 
 In times of distress in country districts, how much 
 easier could a supply be conveyed, and a panic dis- 
 pelled, could the alarm be met by the notes of such 
 a corporation, issued under the sanction of public 
 Commissioners, than by imperfect supplies of gold 
 or silver ? 
 
 4. That, subject to the above regulations, the pri- 
 vileges of the Bank of England shall be continued ; 
 for it is a corporation, which, on many trying occa- 
 sions, has been eminently useful, and is conducted 
 with much ability ; — that its notes shall be legal ten- 
 ders in all public and private payments ; — and conver- 
 tible into gold, at its average price for the preceding 
 quarter, to be periodically inserted in the London 
 Gazette.* Gold and silver, like other commodities, 
 must vary in price ; and if those who require them, 
 can get them at the market price, it is all they are 
 entitl.ed to expect. 
 
 * With great deference to the opinion of others, I would prefer silver for the fol- 
 lowing reasons : Silver is indispensable for the smaller, and consequently the more 
 numerous payments -. — it is harder, and less liable to wear than gold : — it cannot 
 be so easily, or profitably melted down : — it cannot be exportal, but at a greater 
 risk and heavier chai'ges : — all our accounts are kept in pounds and shillings, or la 
 reference to silver : — it is the least subject to variation : — and it is the general legal 
 tender in Europe and Amei'ica. Indeed, silver ever has held, and probably ever 
 will hold the prerogative, of being the general standard in commercial countries : 
 gold being always valued by silver, but not silver by gold. 
 
 Tlicrc arc some excellent observations on the subject of silver as a standard, in 
 Mr. Baring's speech, printed in Hansard's Pailianientary Debates for April, 1821. 
 
 Had silver been llie standard, it would nol have been so eai^y to have drawn fro!|H 
 the banks theii' nietalli<; eunency, during the laic alarm.
 
 53 
 
 After having thought on the subject for a number 
 of years, I am convinced, that a plan founded on the 
 principles of this brief outline, vi^ould place the circu- 
 lation of England, (on which the prosperity of Scot- 
 land and Ireland so greatly depends,) on a secure foot- 
 ing,- — advance the national prosperity, and prevent 
 those sudden reverses, to which, under the present sys- 
 tem, we are constantly exposed. But to attain these 
 great objects, prejudices must be got rid of and sacii' 
 Jices made. That such a plan may be improved upon, 
 is readily admitted ; but if the principles are in gene- 
 ral recog'nised, and acted on, any defects, which ex- 
 perience may point out, would easily be remedied. 
 
 The great object is, to secure a circulation distin- 
 guished by two great advantages; 1. Safety ; and. 2. 
 Abundance. When that great blessing is attained, 
 all the industrious classes of the community are em- 
 ployed, the revenue flourishes, and the nation pros- 
 pers. Whereas, when circulation is diminished, con- 
 fidence is destroyed, and the whole nation, with the 
 exception of a few opulent classes, must experience 
 great distress, 
 
 JOHN SINCLAIR. 
 
 133, George-Street, Edinburgh,'^ 
 \st January, 1826, C
 
 LETTER V. 
 
 FROM MR, ATTWOOD TO SIR JOHN SINCLAIR, ON THE ESTABLISH- 
 MENT OF JOINT STOCK BANKS IN ENGLAND. 
 
 Birmingham, January 9, 182G. 
 
 DiEAR Sir, 
 
 I have received the favour of your letter of the 4th 
 instant. In the last three or four years, when the 
 prices of Commodities generally rose to tlie War level, 
 or about cent, per cent, above the Peace level. Gold 
 itself did not rise at all, but continued at the ancient 
 price of £3 lis iO^d per ounce. Thus the doubling 
 of our prices was literally demanding" from foreigners 
 two ounces of Gold instead of one, in exchange for the 
 very same amount of British Commodities ! ! — Now 
 if Gold had been raised in price correspondently with 
 the rise of other prices, then no exportation of Bullion 
 vrould have ensued. Gold would not then have been 
 the cheapest Article for export which merchants could 
 find, and consequently it would not have been export- 
 ed, but on the contrary, would have continued to be 
 imported as long as it could possibly be wanted. 
 
 T am sorry 1 have delayed so long to reply to your 
 favour of the 30th of December. The plan which it 
 suggests is good, if taken ivithout reference to existing
 
 55 
 
 circumstances; that js to say, it would have been good 
 originally. But in my opinion, considerable ol^stacles 
 exist now to the general and sudden introductioyi of 
 the Joint Stock Banking' St/stem into England. Ob- 
 serve the real facts in England. Of all the Banks 
 which have failed, or stopped payment since the war, 
 not one in ten has done so from any real insolvency/ in 
 its affairs. The whole, or nearly the whole of the ruin, 
 has been occasioned by the secret and unseen opera- 
 tions upon the Currency, which have literally swindled 
 the Bankers out of their property, and have then made 
 them insolvent to their Creditors, by first making 
 their Debtors insolvent to them. The unhappy wretches 
 have been first robbed of their own property, they have 
 then been robbed of their creditors' property, and 
 they have then been robbod of the last comfort of the 
 wretched — their Character, Now it is not right to 
 charge upon these unhappy men the ruin and the 
 misery of which they are themselves the victims, and 
 not the cause. It is right to lay upon the Govern- 
 ment, and upon the Government alone, as a venerable 
 friend of mine remarked to me a few days ago, all 
 the Bankruptcies, and all the miseries of which 
 their injudicious attempts to restore an unjust and im- 
 practicable standard have been the cause. 
 
 But independent of this unjust charge, upon which 
 the expediency of Joint Stock Banks would be found- 
 ed in England, it is with me a very serious question* 
 whether they would have it in their power to manage
 
 56 
 
 their affairs so well as individuals manage them ; or 
 at any rate, whether they would be able, upon a more 
 rigid system of management, to distribute the usual 
 proportions of Banking Accommodation to which the 
 English public have been accustomed, and without 
 which, it is probable, that the English public could 
 not flourish. 
 
 Another grand fact also remains, which is calcula- 
 ted to alarm the warmest friend to the estal)lis!iment 
 of Joint Stock Banks in England. It is i\\\^--His!:ht 
 hundred English Banks yet exist. They have all had 
 considerable demands upon them, without exception. 
 They all stand now in injured, not to Jsay in doubtful, 
 credit. They have all vast masses of money lodged in 
 their hands by their customers, the whole of which 
 is payable on demand, or upon very short notice, upon 
 pain of ruin. They have also all of them vast masses 
 of money lent out to the Public, in a thousand shapes 
 and directions ; nearly the whole of which is literally 
 locked up, and cannot be obtained suddenly by any 
 human exertions, however safe it may ultimately be. 
 
 Now, if Joint Stock Banks should be forcibly esta- 
 blished throughout England, the probable conse- 
 quence would be, that the superior credit and influ- 
 ence of such large and influential bodies of proprietors, 
 would draw out of the present Bankers' hands, a 
 great part of their present balances and deposits of 
 money. But the Joint Stock Companies would not
 
 67 
 
 take any of the locked up debts, and otlier entangle- 
 ments of the present Bankers. These would remain 
 a^ a le()acy of ruin to the unhappy owners. The Bank- 
 ers would be deprived of the funds and resources up- 
 on the credit of which they have lent out and locked 
 up money ; but not one of their bad.) or doubtful, or 
 locked up debts would be removed from their shoul- 
 ders ! ! The consequence would Le, in my humble 
 judgment, such a mass of private and public ruin as 
 has perhaps never before been witnessed. 
 
 I beg you will excuse the freedom of my commu- 
 nications. The subject is important. The whole 
 mass of monetary obligations^ public and private, is 
 already shaken to its centre. Every thing should be 
 done to support public credit, as it is. When once 
 the present fabrick is firmly supported and fixed, we 
 may proceed to make improvements. But if we touch 
 the mighty structure now with a rash hand, we may 
 bring down the whole social system upon our heads. 
 
 When habits have long been formed in a commu- 
 nity, they become necessary to the public welfare, 
 and cannot be removed without injuiy. Now, the 
 Scotch system of Banking does not give one-half so 
 much accommodation to the Public as the English 
 System gives. How then could English Society bear 
 the contraction of such a change ? The English Sys- 
 tem, with its £l notes, nourishes and calls into in- 
 
 H
 
 58 
 
 dependence tliousands of workmen every year. It 
 encourages the Little Capitalists ^ and discourages 
 the growth of enormous fortunes. The Scotch Sys- 
 tem, on tlie contrary, depresses and keeps down the 
 Little Men, but with regard to overgrown traders, 
 it gives " its sum of more to w?iat already has too 
 *'much.'* No enormous fortunes have been made in 
 Warwickshire and Staffordshire since the Paper Sys- 
 tem was established ; but hundreds and thousands of 
 small fortunes have been made by its assistance. In 
 Scotland, I apprehend, the case is different, and so it 
 is in Lancashire, where the overgrown traders mono- 
 polize the country, and keep down those innume- 
 rable traders, who would rise up to moderate affluence, 
 if the £{ notes were generally issued in that county. 
 It is universally known, that the working mechanics 
 of Warwickshire and Staffordshire, are better off' 
 than those of Lancashire. To what is this owing, but 
 to the encouragement which tlie Banking System 
 and the £l notes give to the little capitalists ? who 
 are thus enabled to bid freely in the market of labour 
 for the labour of the mechanics. Is this the case in 
 Scotland ? Are not the mechanics kept down from 
 rising by the system of Banking established there? 
 1 think they are. 1 think the English System of 
 Banking is excellent in all points, excepting only in 
 this. It is not so capable as the Scotch System of re- 
 sisting, jwro tempore, the ruinous and unjust attempts
 
 59 
 
 of the Government io force iijDon the country an undue 
 and impracticable Metallic Standard. 
 
 I remain. Dear Sir, 
 Yours, with sincere esteem, 
 
 THOMAS ATTWOOD. 
 
 To the Right Honourable Sir John Sinclair, Bart.
 
 LETTER Til. 
 
 from sir john sinclair to mr. attvvood, un the compara- 
 tive merits of the english and scottish systems 
 of banking. 
 
 Dear Sir, 
 
 I had the pleasure of receiving' your letter of the 
 7th current, which is written with your usual fund of 
 information^ and extent of ability. 
 
 1 have no doubt, that different systems are applic- 
 able to different countries, forms of governments, 
 and stages of society -, and, as you well observe, '■' Ihat 
 when habits have been long Jormed in a community , 
 they cannot be suddenly changed without injury.'* 
 But there is no habit or system that may not be gra- 
 dually altered and improved upon^ and that seems to 
 be peculiarly the case in regard to the English mode 
 of Banking. 
 
 There is, certainly, nothing more desirable than to 
 place the Banking Establishments of a country on a 
 proper footing. When that is accomplished^ a nation 
 is su])plied with a medium of circulation without ex-
 
 61 
 
 pense, instead of being" obliged to purchase g^old for 
 that purpose, which must in general be procured in 
 exchange Jor commodities, sold at a low price. 
 
 Indeed such are the advantages of a Paper Circula- 
 tion, that the establishment of Banks cannot be too 
 much encouraged, provided the payment of the notes 
 they put in circulation is secured. 
 
 You seem to attribute, not only the late embarrass- 
 ments, but alsjo our former pecuniary distresses, al- 
 most exclusively to the change of our currency ; and 
 the injudicious attempts to restore an unjust and im- 
 practicable standard. That the measures founded on 
 the report of the Bullion Committee, have had most 
 pernicious effects on the national prosperity, no man 
 has more firmly maintained than myself. But our 
 apprehensions on that head ought to be kept within 
 due bounds, for the g-reatest evils have, in themselves, 
 some means of of alleviation, and the seeds of repair. 
 
 In Scotland, which is subjected to the same laws 
 in regard to currency, as the rest of the kingdom, 
 there has not been, during- the late convulsion in 
 England, the slightest pecuniary embarrassment. 
 That is entirely to be ascribed to our superior system, 
 of Banking; and it may be confidently asserted, that 
 had the Paper Circulation of Eng-land been equally 
 well secured, the mischiefs which have lately been ex- 
 perienced there, would never have arisen to the height
 
 62 
 
 they did. Gold would not have been so eagerly de- 
 manded, had the solidity of the Paper in circulation 
 been placed beyond doubt. 
 
 You contend that Joint Stock Companies will ne- 
 ver manage their affairs so well as private individuals. 
 I cannot concur in that opinion, — Private individuals 
 are too apt to engage in hazardous speculations, 
 which the directors of a Public Bank cannot, with 
 any propriety, attempt, and would not be prevailed 
 upon to sanction. 
 
 A Public Bank can only be a dealer in money. 
 A Private Banker may not only act in that capacity, 
 but may secretly become a manufacturer, a miner, or 
 a merchant. — There is a publicity, also, in conducting 
 the affairs of a great Company, from the number of 
 clerks and other officers employed by it, which ope- 
 rates as a salutary check on either speculation or mis- 
 management. 
 
 You question much, whether Joint Stock Compa- 
 nies could, under a more rigid system of management, 
 be able to distribute the small proportions of banking 
 accommodation, to which the English public have 
 been accustomed ; and you contend, that the Scotch 
 does not a'ive one -half so much accommodation to the 
 public, as the English system of Banking. But this 
 is quite a mistake. In proportion to its population 
 and wealth, no country is so well supplied M'ith Bunks
 
 63 
 
 as Scotland. — There are, in all, including- branches, 
 not less than 225 Banking establishments in it. — The 
 greatness of the number is of the utmost service to the 
 public ; for by their rivalship, the Circulation is al- 
 ways kept full, and their weekly exchanges, in a 
 narrow country j prevent the Circulation from beings 
 redundant. — In an extensive country, however, like 
 England, limitation, effected hy exchanges merely, 
 would not, probably, be sufficiently g-uarded ag-ainst 
 abuse, and limitation oj quantity may likewise he ne- 
 cessary. 
 
 In reg-ard to accommodation, the system of g-rant- 
 ing- " Cash Accounts,'' as they are called, is an in- 
 valuable part of the Scotch System. It is the safest 
 and best mode of accommodation that has ever hi- 
 therto been invented ; and it is sing-ularly useful to 
 small Capitalists^ who may either pay into, or take 
 out from, their cash accounts, the smallest sums, as 
 suits their convenience. 
 
 On the whole, I am convinced that Banking- is, 
 in practice, better understood in Scotland than in any 
 other country ; and hence, with a barren soil and a 
 wretched climate^ it is, at the present moment, the 
 most prosperous country in Europe; while its prospe- 
 rity is entirely founded on a Paper Currency ; for 
 there is not a single sovereign or guinea to be found 
 in its common circulation.
 
 64 
 
 You have very properly deprecated any sudden 
 chang-e in the English system, and you remark, '*that 
 though my plan of requiring security from the Bankers 
 mig-ht have been orig-inally good, yet that in England 
 it is not at all calculated for existing; circumstances.^' 
 It cannot be questioned, that i\\e interests of Eig-ht 
 hundred Country Bankers, who have stood the 
 test of this dreadful convulsion, are well entitled to 
 protection. If the Bank monopoly, however, were 
 extinguished, it is probable that a considerable pro- 
 portion of Country Bankers, would take advantag-e of 
 such a circumstance, to add to the number of their 
 Partners, by which their capital would be increased, 
 and their credit augmented ; and thus the new sys- 
 tem might be gradually introduced, without injury 
 to the old establishments. Besides, though there are 
 three chartered Banks, and two large Joint Stock 
 Companies in Edinburgh,there are not less than eight 
 private Banking Associations iri that town, so that 
 private Banking and large public Establishments, are 
 not inconsistent. 
 
 It would in a great measure recompense the calam- 
 ities attending the late convulsion, if the extinction 
 of the mischievous monopoly of the Bank of England 
 resulted from it. All monopolies are declared l)y the 
 Law of England, illegal and void; but the power pos- 
 sessed by the Directors of the Bank of England over 
 the circulation, and, through that main spring of in- 
 fluence, over the commerce — agriculture-^iudustry
 
 66 
 
 and property of the Counh-y, is the most exorbitant 
 ever heard of. By the will of twenty -four Directors, 
 the prices of all articles may be either raised or low- 
 ered ; public credit, and the price of public securities, 
 may be either improved or diminished ; and indivi- 
 duals may be enriched, oppressed, or undone, as suits 
 their pleasure. During- the late Bank Restriction 
 also, most enormous sums were divided among the 
 proprietors. But though the Directors, on the whole, 
 conducted themselves well, in very trying circum- 
 stances, yet their powers are much beyond what any 
 set of men ought to possess. The only remedy is, the 
 extinction of so odious a monopoly, and the estab- 
 lishment of another Bank, by whose rivalship, such 
 enormous powers may be kept within due bounds. 
 
 ^I am very much gratified with the free and man- 
 ly nidnner in which you have stated your sentiments 
 on this most important subject. It has thence been 
 more thoroughly discussed between us, than other- 
 wise it would have been ; and perhaps it might be of 
 use were we to print the substance of our correspon- 
 dence in a corrected form, for circulation amongst 
 our friends. The Ministers also, would thus be en- 
 bled to understand the question better than it is pos- 
 
 Notp, n. 4.) I See an Account of them in Smith's Wealth of Nations. Book 2. 
 Chapter 2.
 
 06 
 
 sible for them to do without that information with 
 which our correspondence would furnish them. 
 
 How fortunate wouhl be the result, if it led them 
 to act on that improved system of politics, by which 
 Great Britain would be rendered what Scotland now 
 is, — ^^Independent of Foreign Nations for Circula- 
 tion and Food.'* 
 
 I remain, with much esteem. 
 Dear Sir, 
 Your faithful and obedient Servant, 
 
 JOHN SINCLAIR. 
 
 133, George-Street, Edinburgh'^ 
 1st January, 1826. L 
 
 N. B. I should be very glad to receive any re- 
 marks on this letter that may occur on its perusal, as 
 soon as you can find leisure to send them.
 
 LETTER VI. 
 
 FROM MR. ATHVOOD TO SIR JOHN SINCLAIR, ON THECOMPARA- 
 
 TIVE MERITS OF THE ENGLISH AND SCOTTISH SYSTEMS OF 
 
 BANKING, AND ON THE EXPEDIENCY OF RENEWING 
 
 THE BANK RESTRICTION ACT. 
 
 Birmingham, 2^th of January, 1826. 
 
 Dear Sir, 
 
 My letter of the 9th inst. had refenence " to the 
 general and sudden introduction oj the Joint Stock 
 Banking System into England j' by some peculiar en- 
 coiirag'ement and excitement of the Government, and 
 my arguments will not apply very strongly to the 
 mere repeal of the ancient law which prohibits it. 
 A mere permission for bodies of persons to open 
 Banks, would, I think, be of little importance in the 
 present state of the money markets. It would pro- 
 bably not lead to the present establishment of one 
 single Joint Stock Bank ; because the necessary Ca- 
 pital could not be raised without the shares falling to 
 a very large discount, almost as soon as they were 
 subscribed for. The Irish Provincial Bank, for in- 
 stance, was established under far more favourable 
 circumstances with regard to the raising of capital,, 
 and to the places of operation ; and yet the shares in
 
 68 
 
 that concern bear a discount of 40 per cent, upon the 
 capital advanced, the shares selling- for only £6 each 
 in the markets, although £10 each of capital has been 
 paid upon them. And this heavy loss of 40 per cent, 
 upon their capital has been already incurred, throug-h 
 the mere contraction of the money markets, in the 
 i^ice of the known and acknowledged fact, that the 
 Irish Provincial Bank is in itself highly fiourishing 
 and prosperous ! ! 
 
 Now if such an enormous loss as this has been in- 
 curred by the Shareholders of the Irish Provincial 
 Bank, which was established rvhen money was plenti- 
 ful, and which has to operate in an intirely unoccu- 
 pied Country, what must be the necessary loss upon 
 the shares of any English Joint Stock Banks, which 
 would have to raise their capitals in the very same 
 money markets, Tvhen money is scarce, and which 
 would hardlv be able to find a sino-le town in their 
 district, where the ground is not previously occupied 
 by long" established and formidable rivals ? In my 
 opinion, it would not be possible in the present state of 
 the money markets, to raise the necessary capital in 
 any town in England, without an immediate loss cf 
 50 per cent, falling upon the Shareholders ! ! Unless 
 the ancient Metallic Standard was first removed, from 
 the Circulating System, the Joint Stock Banks in 
 England, would be more complete ^*Subbles'' than any 
 that we have witnessed in the last two years -, and in-
 
 GO 
 
 stead of relieving", in any way, the general distress, 
 they would aggravate the general mischief. Tbey 
 would cause injury to themselves, and to the existing 
 Bankers, and be of no possible use to the public. In 
 whatever degree, they might be supposed to afford to 
 the public a more secure species of circulating Medi- 
 um, in the very same degree they would render tlie 
 existing circulating Medium more insecure than it 
 now is; and the injury which they would cause to 
 the public in this way, would far more than coun- 
 terbalance any possible benefit which they could pro- 
 duce in all other ways. 
 
 But my principal objection to the establishment of 
 Joint Stock Banks, at the present period, in England 
 is, that thty would he founded in error. As a prin- 
 ciple of Free Trade, gfiving to every man the power 
 of employing his capital in any way that he pleases, 
 I can have no objection to them, provided they are 
 not unduly encouraged by the Government. But 
 they would now be founded upon the erroneous opi- 
 nions that something is wrong in the English system 
 of Banking, which hcis greatly contributed to the 
 late and present distresses ; and that the Scottish sys- 
 tem of Banking would tend to relieve those distresses, 
 and prevent them in future. Both these opinions are 
 entirely unfounded. There is nothing wrong in the 
 English system of Banking. There is nothing in the 
 Scottish system which could relieve the present dis-
 
 70 
 
 tresses or prevent the future. The only charge 
 ag"ainst the English Bankers is, that they haxe given 
 way under the unmeasured plunder that has been 
 practised upon them. The Scottish Banks, on the 
 contrary, have^Aoa^ the ruin around them , and have 
 thus saved themselves at the expence of the public. 
 They have not given -way like the English and Irish 
 Banks, because the great influence they combine has 
 enabled them, in some degree, to set at defiance <Ae 
 law of the land, and to do with the public just as 
 they please. If I am rightly informed, there is not 
 a lawyer in Scotland, who will dare to put the law in 
 force against any of the Scottish Banks, and compel 
 them to pay in Gold. 
 
 If this law were now to be put in force, every 
 Bank in Scotland \\ould probably be compelled to stop 
 payment in a week ! for there is not one sovereign in 
 that country to every ten notes. If, therefore, the 
 Scottish Banks hold up longer than the English, it is 
 because they exercise a greater power over the pub- 
 lic, and when they do yield, the minis comparative- 
 ly so much the greater. 
 
 In England, the Banks easily give rvay^ in the 
 event of any defect occurring in the management of 
 the Currency. In the hands of a wise Government 
 this defect ought to be productive of advantage, by 
 enabling the Government instantly to ascertain tho
 
 71 
 
 evil, and to remedy it. Under the Scottish system, 
 it might, perhaps, be concealed until the remedy was 
 too late. 
 
 If, indeed, it could be shewn that the failures 
 among the English Bankers, or even any considerable 
 proportion of them, could be justly attributable to any 
 want of property in those Bankers, or to any specu- 
 lations in business which they have carried on, then, 
 indeed, we might reasonably find fault with the sys- 
 tem under which they act, and endeavour to amend 
 it. But this is altogether an error. It can be prov- 
 ed beyond a doubt, that nine-teuths of those failures 
 have been occasioned entirely by actions on the Cur- 
 rency, which by causing the public to contract debts 
 in a cheap and abundant Currency, and then to re- 
 pay such debts in a dear and scarce Currency, have 
 first rendered the public insolvent to the Bankers, 
 and have then, as a matter of course, rendered the 
 Bankers insolvent to the public in return. It is the 
 business of Bankers to stand, as it were, between the 
 Creditor Interest Sind the Debtor Interest of the coun- 
 try, giving their security to the former for the sur- 
 plus capital which, from time to time, they may have 
 at disposal, and then undertaking the duty of lending 
 it out to the latter, upon such temporary securities as 
 they may approve. These securities are generally 
 ^oodf as long as the money continues of the same va*
 
 72 
 
 lite; but if the money becomes siuldeiily more valua- 
 ble and more scarce, then the securities become bad^ 
 and unless the banker in some degree foresees the 
 change, and provides against it, he cannot fail to 
 be injured. If he does foresee it and guard against 
 it, he calls in his securities in time ; he shakes the 
 ruin from off his own property and his creditors* pro- 
 perty, and throws it upon the Ci editors of his Debt- 
 ors. 
 
 But it is not to be expecte<l that Bankers can 
 generally be political economists ; and still less is it 
 to be expected that they should have the power of 
 anticipating the decisions of Government from time 
 to time, when those decisions have been generally 
 founded upon one secret, silent, and persevering de- 
 termination, to restore the ancient Standard of value, 
 through any consequences to which it may lead. Ac- 
 cordingly the Bankers have generally been taken by 
 surprise. Their property has been twisted out of their 
 hands in an unseen way. The property of their Cre- 
 ditors has then been twisted out in a similar way . 
 and these latter, astonished at their losses, and equally 
 ignorant as the Bankers themselves upon the subject, 
 have been induced to attribute them to poverty or cri' 
 rninalily on the part of the Bankers; and in fact to 
 every cause but the right. 
 
 1 remember in the year 1822, when the Banks in
 
 73 
 
 the South of Ireland all, or almost all, stopped pay- 
 ment, ]Mr. Frankland Lewis was reported in the 
 public papers, to have asked JNlr. Vansittart in Parlia- 
 ment, " whether Ministers had devised any plan of 
 bringing to justice, the fraudulent Bankers in Ireland, 
 who had lately swindled the Irish Public in such a 
 cruel way ?" Mr. Vansittart was reported to have 
 answered, "that Government had not yet succeeded 
 in devising any positive plan, but the subject still oc- 
 cupied their serious attention ! !" 
 
 I was indignant to see these swindled and murdered 
 men treated in this '•'- cruel way ^'^ and I wrote to a 
 friend in Ireland to get me the history, the " birth, 
 parentage, and education," the life, property and 
 character of them all. My friend took a good deal 
 of pains to satisfy me ; and to the best of my recollec- 
 tion, out of the whole fourteen banks that had failed, 
 there was not one, which had not possessed consider- 
 able property during the war. But by the secret 
 and unknown change of the Currency, Irish Wheat 
 had fallen to four sliillings per bushel, and Irish 
 Land, provisions and other property had fallen iti a 
 similar degree. But the debts and obligations con- 
 tracted im the same cheap money^ which had made 
 the former high prices, and which had existed for 
 twenty years had not fallen at all ! ! Universal in- 
 solvency was thus scattered throughout Ireland, of 
 which the unhappy Bankers were the victims and 
 not the cause, 
 
 K
 
 The story of two brothers wa>{ ratluer a striking" 
 example. Thry said to their creditors, ** We began 
 businei)S, as Bankers, thirty years ago, with £-2o,000 
 capital between us. By industry and economy we 
 increased our capital to £90,000. But we have lat-» 
 terly met with great losses nnd misfortunes. We have 
 nriiten off upon our books £:200,000, of had debts, 
 and we have still £70,000, of doubtful debts remain- 
 inor," " What speculation — what imprudence must 
 have been here !" said the creditors. *^ No," said the 
 bankers, " we must defend ourselves from that 
 pharge. AVe have carried on the business for thirty 
 years upon theveri/ same principles, and under the very 
 same conduct. For the first twenty-four years, up to 
 1815, our bad debts never averaged more than £500 
 q yeaX' But for the last sir years, it seems to us that 
 every debt that we have made has been bad!!'' 
 
 I mention this, in order to guard against the fatal 
 error, that the bankers have caused the mischief. It 
 is the ruin among the public, that has first ruined the 
 hankers, before the rnin of these latter, could react, 
 upon the public in return. 
 
 No mischief has, therefore, arisen from any thing 
 wrong or defective in the Banking System in Eng- 
 land. The whole has arisen from the impolitic and 
 unjust operations upon tl\e Currency.
 
 io 
 
 If the above arguments are correct, it follows that 
 the Scottish System of Banking is not wanted in 
 England. It could, probabl}, do no harm, in the 
 present state of the money markets. But if Goveri^i- 
 ment should bring it foi'vvalrds a^ an influential and 
 important measure, calculated to assist in supporting 
 the present JMetallic Standard, and should; therefore, 
 assist and eilcourage ,j(s being carried into general 
 operation ; it would, in this way, be found powerful 
 to all manner of evil, without the possibility of doing- 
 any kind of good. It would turn aside the public 
 attention yrom the only cause of all their sufferings 
 and of all their dangers. It would injure and endan- 
 ger the present bankers, upon whose solvency and 
 credit the very existence of the Government depends. 
 It would endanger one Circulating Medium, without 
 the possibility of supplying another. And after all, 
 when carried into effect, the Metallic Standard would 
 crush it to atoms ! ! 
 
 Supposing the Metallic Standard to be properly 
 adjusted to the existing depreciation of the Currency, 
 or supposing the Bank Restriction Act to be renewed,, 
 I am still of opinion, that the English System of 
 Banking is the best. It presents every where smaU 
 bodies of respectable and wealthy meit, who are not 
 so powerful as to set the law at defiance, nor so inde- 
 pendent as not to have a strong interest in obtaining 
 the confidence and good-will of the public. Their 
 g^eilerai issue of Cash Notes, also, gives them induce-
 
 76 
 
 ment to lift tip the neak into a wholesome rivalship 
 with the strong. It is their interest to gather around 
 them, all industrious, prudent^ and frugal men ; and 
 to nourish find encourage them into independence and 
 affluence. Every person of this description flies to 
 the banker ; and there he finds a friend. While 
 struggling with the difficulties, which always attend 
 the breaking out from poverty into independence, 
 the banker takes him by the hand, and clears the way 
 before him. He supplies him with a little assistance, 
 from time to time, in all the accidents to which he 
 is exposed ; and after a little while, he raises his head 
 above his difficulties, and becomes enabled to remu- 
 nerate the banker in various ways. 
 
 It is thus, that in England, thousands of wor/i 7we?t 
 and others, who have first saved a little monev of 
 their own, are annually nourished and brought for- 
 wards into a state of independence. It is thus, that 
 they are made Buyers of Labour, instead of Sellers 
 of Labour', and that the demand for labour being thus 
 relatively increased, the situation of the labourer is 
 relatively improved. This is the reason why the me- 
 chanics of Warwickshire and Stafibrdshire are better 
 /7^ than those of Lancashire. And the same reason 
 will tend also to explain, why innumerable small for- 
 tunes, and very few large ones, exist in the former 
 counties, whilst the contrary is the case in the latter 
 county. The merchants and manufacturers of Man- 
 chester are sensible of this effect of the issues of Cash
 
 Notes, among- the English Bankers, and they have 
 therefore always opposed the issuing' of Cash Notes 
 by the Manchester Banks, There can be no doubt, 
 that in England generally, the issue of Cash Notes by 
 the Bankers, upon their present System, has a strong 
 tendency to improve the relative wages of labour and 
 the situation of the lahoureis on the one hand, whilst 
 on the other, it has nearly an equal tendency to di- 
 minish the profits of Capital, and to prevent the ac- 
 cumulation of enormous fortunes. No one, I thinkj 
 who takes a Statesman's view of the subject, or who, 
 in fact, does not take the narrow and interested view 
 of a mere Tradesman, will deem these effects of the 
 English system of Banking evils. In my opinion, 
 they are effects of the very highest importance to the 
 strength, the security, and the happiness of the na- 
 tion. 
 
 Nothing of this kind, however, is found in Scot- 
 land. There the Joint Stock Banks are generally 
 conducted by Agents, who have little or no interest 
 in the issue of the Notes ; or in lifting up the tveak 
 into a wholesome competition with the strong. On 
 the contrary, they are generally made responsible for 
 any Bad Debts which they may make ; and thus 
 they bear themselves all the risk of giving encourage- 
 ment to humble merit, while the Shareholders them- 
 selves have all the gain ! ! The consequence of this 
 is, that the public accommodation in Scotland is 
 carried to a very limited extent, in comparison with
 
 78 
 
 what the English Public have been accustomed to ; 
 and what accommodation there is, is generally confin- 
 ed to the greater Capitalists, who have influence in 
 the Banks, and who give security jor each other. 
 The Banks may, in fact, be said to be combinations 
 of CapifalistSy who usurp great powers into their 
 hands, and use them more for their own individual 
 aggrandizement, than for any general accommoda- 
 tion of the Public. 
 
 It is upon this general ilFiberality of the Scottish 
 Banks, that Mr, Maberley has been induced to found 
 many private Banking Establishments in that coun- 
 try, within the last few years ; and from what I have 
 been able to learn, those Establishments have ren- 
 dered essential services to the country, by compel- 
 ling the Joint Stock Banks to expand and liberalize 
 their system of operations. 
 
 There does seem, therefore, strong reason to think 
 that the Scottish system is no better than the Eng- 
 lish system ; and in whatever degree it may be sup- 
 posed to excel the English in point of security, there 
 is ample reason to- believe that it falls short in point 
 of public utility. 
 
 But, in truth, the failures among the English 
 Banks have been much exaggerated. It is not cor- 
 rect, that 200 of the English Banks /hiVerf in 1815 
 and 1816. More than iOO, out of the 200 alluded to,
 
 79 
 
 merely retired Jrom business, on aocouiU of the storms 
 that surrounded them; and of the remaining 100, I 
 believe that not more than 70 ever wound up their 
 affairs under an insolvency. Of these 70, there 
 might perhaps be ten or twelve who were never per- 
 sons of property, and who had, in fact, usurped a 
 station which they were not entitled to. But I 
 would imdertake to prove^ that at least 5-6ths of those 
 who failed, were fully competent to pay 20s. in the 
 pound, if justice had been done to them ; that is to 
 say, if they had been allowed to pay their debts in 
 the same cheap and abundant money ^ in tvhich their 
 debts were contracted. 
 
 The public mind ought to be disabused with res- 
 pect to these unfortunate men, and to the hosts of 
 others, who have been ruined in a similar way, du- 
 ring the last eleven years. The secret operations of 
 the Government upon the Currency have directly 
 caused 9-lOths of all the ruin that we have seen. 
 In 1816, in 1819 and 1820, and in 1825, these 
 have been the three great periods in which these ^e- 
 cre/ operations have been going on. In the two for- 
 mer periods, the ruin was rather slower in its pro- 
 gress than in the latter ; but in each period it was ex- 
 actly the same. It was the pressure of the ancient 
 Metallic Standard, which, in every instance compel- 
 led the Government to call in the Paper Money ^ 
 which the pressure of the public necessities had in each 
 instance previously compelled them to issue^ If the
 
 m 
 
 Government had proceeded at once to restore tlie ]Vfe- 
 tallic Standard in 1816, when the Bank Restriction 
 Act was intended to expire, no Government eould 
 have existed in a Month ! ! Tlie secret operation 
 was therefore suspended for awhile, and the Bank 
 issues were increased. In IS 19 and 1820 the Go- 
 vernment proceeded a second time to the same object, 
 but they proceeded more slowly and cautiously , 
 through plots, and conspiracies, and horrors. In 1822, 
 they were again compelled to relax their grasp upon 
 the Nation's throat. In 1 S25, the ruin has been at- 
 tempted a third time, but it has again been found ne- 
 cessary to stay it, by renewing the issues of Bank 
 Notes. The Country has thus, " resembled a Victim 
 in the jaws of a Tyger, escaping at one moment ^ in 
 order to he again seized the next^^* as 1 foretold 
 would be its fate, in my printed letter to Lord Liver- 
 pool, published in May 1819. 
 
 And can we wonder that men should have failed 
 under such tremendous operations as these ? Three 
 times they have been tempted out in the sunshine^ and 
 three times the storm has been sent to burst over their 
 heads ! ! Three times they have been tempted forth 
 to move^ to walk, to contract debts and ol)ligations, 
 and to work the great machinery upon which the 
 existence of men depends ; and three tijnes the solid 
 earth has been taken from under their feet, by the secret 
 and arbitrary power of the legislature ! ! This is the 
 way in which the public have become insolvent to
 
 81 
 
 the Bankers, and have thereby made the Bankers, in 
 many instances, insolvent to the public in return ! 
 
 I will mention one or two local instances out of a 
 thousand which have come within my own knowledge, 
 I knew a family who laid out £60,000, in a manu- 
 facturing establishment, which, in 1816, they were 
 compelled io sell for less than £5000 ; and yet the 
 purchaser gained £20,000 a year, hy the very same 
 works, during the next two years, 1S17 and 1818! ! 
 At one period, the action of the Currency had given. 
 a positive loss, instead of a profit, to the works in 
 question. At the other period, the renewed issues of 
 Bank Notes iiad given an expansive action to the. 
 Currency, which occasioned an enormous profit. I 
 knew an individual who, in 1815, had paid £14,000 
 in cash, for a mineral property of great value, upon 
 which he had £6000 more to pay, by instalments of 
 £ 1000 a year. When this property was advertized for 
 sale in 1816, the whole of the £14,000 was gone ; and 
 no one could be found who would take the property 
 for nothing, subject to the £6000 ! ! And yet, this 
 property, in a short time afterwards, sold for near 
 £40,000 ! ! Could it be wondered that these men 
 should become insolvent to their Bankers ; and could 
 the Bankers be blamed for not foreseeing unheard-of 
 operations of this kind ? In these instances, the va- 
 lue of money was strung up many hundreds per cent., 
 instead of 4 per cent, ; and again it was de|)reciated 
 in nearly a similar degree ! It is thus that the Legis-
 
 S2 
 
 lattire, under the pretence of giving- ns a " healthy 
 Currency^''^ and a fixed state of things, have, in 
 reality, given nothing but instability and uncertainty 
 to every operation on which tlie existence of man- 
 kind depends. Under the pretence of doing aivay 
 with speculation, they have compelled nothing but 
 the wildest speculation to exist. The very cidtivation 
 of the earth has become now a speculation so exceed- 
 ingly wild and precarious, that it may be deemed a 
 matter of absolute certainty, that every Farmer who 
 sows the earth this Spring, will reap poverty instead 
 of riches in the Autumn ! ! 
 
 I allow the wisdom of your remarks in your excel- 
 lent letter of the l6tli instant. It is true, " the 
 greatest evils have sometimes in themselves the seeds 
 of repair',^* and it is wonderful to what an extent 
 this principle has exhibited itself in England, during 
 the last ten years. If men, generally, could have 
 understood the operation that has been going on, the 
 cultivation of the earth could not have taken place ! ! 
 But the elastic energy and the ignorance of the pub- 
 lic mind have counteracted, in a great degree, the 
 errors of the Government. 
 
 I think you must have been misinformed in saying, 
 that " there is not the slightest pecuniary embarrass- 
 ment in Scotland." I apprehend, that the distress 
 there is quite equal to what it is in England, although 
 it has not exhibited itself in the failure of Banks.
 
 83 
 
 The Joint Stock Banks, however, are not invalnera- 
 ble. Five, or six of them have lately Hopped pay- 
 ment in the United Slates ; and there cannot be the 
 shadow of a doubt, that ever}' Bank in Scotland 
 would have stopped payment before now, if the Bank 
 of England had not encreased its issues five weeks, 
 ago. There is, then, some good in the very weak- 
 ness of the English Banks, which gave early notice 
 of the approaching ruin, and thereby gave the Go- 
 vernment time to guard against it. If all the Eng- 
 lish Banks had been upon the Scottish system, it is 
 not improbable that the danger would not have been 
 understood or believed until it was too late to remedy 
 
 I allow that private Bankers do sometimes " en- 
 gage in hazardous specidations.^* But this is not a 
 frequent occurrence. The certain discredit that at- 
 tends any conduct of this kind, is such a certain cor^ 
 rectivCy that, generally speaking, Bankers are the very 
 last men who are given to speculate. They see so 
 much also of the ruin of speculation, that they gene- 
 rally entertain a perfect horror of it. The only rock 
 which Bankers generally split upon, is the unwil- 
 lingness to sit down contented under any ^ivere awd 
 moderate loss, which they may now and then be lia- 
 ble to among their debtors. When they have made 
 a bad or doubtful debt, to a reasonable amount, they 
 sometimes are induced to increase it, with the view 
 of recovering it, or " working it round,' ^ as it is
 
 84 
 
 called. In other words, they shoot golden arrows af' 
 ter the wooden one, and both are lost ! ! 
 
 There does not appear to nie to be any impro- 
 priety in a Banker becoming- '* a Manufacturer, a 
 Miner, or a 31erchant** It is never his interest to 
 interfere extensively in a rivalship with others ; if he 
 does, his interest and his character will soon convince 
 !»im of his error. But in a moderate and prudent 
 way, it cannot be otherwise than beneficial, that a 
 banker should be permitted to increase his capital by 
 every means in his power, and to extend and improve 
 his knowledg-e of men and thing's, by coming" now 
 and then into more immediate contact with the trades 
 and interests which surround him. 
 
 I hardly understand what you mean by '•'■Cash Ac^ 
 counts'^ kept with the Scottish Banks. In England 
 that term means, an account current having cash in 
 the Banker s hands, belonging- to a customer, and of 
 course at liberty to be drawn out as it may be wanted. 
 In Scotland, I apprehend it means the banker having 
 previously discounted some bills for the customer, and 
 placing the cash thus produced to his credit. In this 
 case, the customer probably sends in his bills to the 
 bank the day before, and humbly waits for his answer 
 whether they will be discounted or not. In England, 
 the thing is deemed a matter of course, that the 
 banker should discount all the good bills which the 
 customer may have received in th« course of his busi-
 
 85 
 
 ness ; and if the banker becomes discontented with 
 the quality or magnitude of such bills, he refuses 
 them, or remonstrates upon the subject, and the ac- 
 count is altered or closed. But, generally speaking, 
 it is assumed as ^a matter of course, that if ever a 
 respectable tradesman wants discount, he is entitled 
 to calculate upon it, and even to take it without ask- 
 ing for it. And so with respect to any moderate and 
 uncovered advances of cash or bills, a respectable 
 tradesman, who has been accustomed to keep large 
 balances in his banker's hands, thinks himself entitl- 
 ed to orert^raw his banker's account for short periods, 
 whenever his occasions may require. The banks are 
 thus made to act as great regulators in the monetary 
 machinery, keeping the balances of one man to-day, 
 and of another to-morrow, who have no immediate oc- 
 ccasions for their use ; and giving back the use of 
 such balances to the same parties, or to others, accord- 
 ing as their occasions may arise. 
 
 You seem to deprecate the gigantic power of the 
 Bank of England^ (although that power has but late- 
 ly been used to the salvation of the Government ;) and 
 yet you seem to acknowledge that the power of the 
 Joint Stock Banks in Scotland is, in some degree, an- 
 alagous thereto ; for you expressly state, that they 
 preserve their bank notes in circulation, although 
 " there is not a single Sovereign'' to be found in cir- 
 culation wherewith to pay them. Our English 
 Banks have prepared themselves better, to submit to
 
 86 
 
 the Iron Law which compels them to pay the wlwle 
 of their debts in Sovereigns, although they have never 
 received Sovereigns for a hundredth part of such 
 Debts a I will venture to assert, that the Scottish 
 Banks must be prepared also ; or we shall very short- 
 ly witness among those Banks far greater ruin and 
 confusion than we have ever yet seen in England. 
 The house in which I am concerned, gave up the issue 
 of small notes five years ago, in express anticipation 
 of the late storm, and your Scottish Banks must do 
 the same; or their Joint Stock Capital will never 
 protect them, under the storms that are approaiphing. 
 
 With regard to the Banks giving security Jor their 
 Circulation of Notes, I think it is a vain and futile 
 measure. The Banks will not submit to it. They 
 will rather discontinue the circulation of notes at 
 once ; unless, indeed, Government, in taking the se- 
 curity out of the Bankers^ hands, will take also the 
 burden off' his back ; and in this case, the notes of 
 the country Bankers v/ill become Assiynats or Go-^ 
 vernment Notes, to all intents and purposes. To 
 suppose that the country Banker will first put the 
 means of paying his notes into the hands of Govern- 
 ment, and will then continue to issue them for the 
 mere honour of being compelled to pay them again him- 
 self, is quite incredible. The best security that we can. 
 get from the country Banker, is to act justly and ho-^ 
 nestly by him, and not to compel him to pay his 
 notes iu a kind of money which is of full double the
 
 87 
 
 value of that which he has received for his notes. 
 Let us act justly by the country Banker, and make 
 his notes payable in a just and equitable money, and 
 you may be assured that we shall have no occasion for 
 any further security. All his debtors will be solvent 
 to him, and he will be solvent to his creditors. But 
 if we are to persevere in our present Metallic Stan- 
 dard, all that the country Banker can do with pru- 
 dence is, not to lock up his securities in the hands of 
 the Government; but to call in his notes from tha 
 hands of the Public ^ and generally to get in his debts 
 and effects with all possible expedition. In this way, 
 he will shake the ruin from off his own shoulders. 
 But if he attempts to give security y he is lost, 
 
 I think I must have sufficiently proved, that it is 
 no defect in the present Banking- System which has 
 caused the present distress ; and that no alterations of 
 that system will relieve it, I have discussed the sub- 
 ject thus at length, because I am anxious that the 
 public mind should be disabused, and that the pub- 
 lic attention should not be continually drawn away 
 from the real and only cause of all the public suffer- 
 ings and dangers. It is surprising to reflect how 
 grossly and continually the public mind has been de- 
 luded. I cannot think that tlie delusion has been in- 
 tentional ', but really, when we have heard cries for 
 ten years together, of " the wolf /tere," and " the 
 wolf thercy^ and " the wolf every where,'''' but in the 
 right place, it requires no small stock of incredulity
 
 88 
 
 not to suspect that some secret conspiracy has been at 
 work, of which both Government and people have 
 been made the victims. In counteracting these delu- 
 sions, you have done your duty, and I have done 
 mine. About a dozen other individuals have labour- 
 ed in the same cause. We have all laboured in vain. 
 We may novt' sit down in peace, and watch, with 
 a quiet conscience, the sure approaches of that mighty 
 ruin which threatens the Government and the 
 country. 
 
 I cannot but express my regret that you, who have 
 always understood this subject so perfectly, should at 
 this momentous crisis, have lent your powerful assis- 
 tance in confirmation of the general error, that some- 
 thing wrong in our Banking System has caused our 
 late and present distresses. It is calculated to do 
 much mischief. It is altogether incorrect. The mis- 
 chief began with the Merchants, and not with the 
 JSanhers. Five or six eminent mercantile Houses 
 had stopped at Liverpool, as many had stopped at 
 Manchester, and Mr. Samuel Williams and others had 
 stopped in London, before a single Bank was affected. 
 Upon the occurrence of these failures, I wrote, at that 
 time, a paper calculated to prove that the whole of 
 the Country Bank Paper was about to get into great 
 discredit, and that a total explosion was about to take 
 place among the Country £1 notes, unless the Bank 
 of England was prepared previously with £l notes, 
 with which the Country £V notes might be either
 
 89 
 
 J>aid, or supported in circulation. I sent this paper 
 to a quarter, where I thought it might be useful ; 
 and in a fortnight afterwards, the Devonshire Bankers 
 began to give rvayy and to confirm all my anticipa- 
 tions. How then, can the Bankers be called the 
 cause of the ruin, when the ruin among the Mer- 
 chants took place before the Bankers were affected ? 
 The truth is, that it is the pressure of the Metallic 
 Standard, which is the only cause of the national mis- 
 chief; and, therefore, that mischief will never be re- 
 dressed until the pressure of the Standard is relieved. 
 
 It is instructive to recapitulate the various and con- 
 flicting causes, which, for ten years together, have 
 been adduced as occasioning the national distress. 
 In 1816^ we were told that it was "Me change from 
 War to Peacey' which made the mischief. I public- 
 ly proved that it was nothing- but the contractive ac- 
 tion upon the Currency which caused it, and that were 
 it not for such contractive actiorit a great increase 
 o^ prosperity would have been our lot, instead of a 
 strange and unheard of adversity, on the return of 
 peace. When the Staffordshire colliers were drag- 
 ging waggon loads of coal to London, and the Man- 
 chester Blanketeers were threatening the Govern- 
 ment, the Bank Notes were again reissued in abun- 
 dance, and the ruin was relieved until the Autumn 
 of 1818. At this period the contractive action upon 
 the Currency was commenced again, in order to pre- 
 pare for Mr. PeeVs Bill, which was passed in the 
 
 M
 
 90 
 
 followhig' Spring ; and when, in the Summer of 
 1819, and the Spring of 1820, the Manchester lla- 
 dicalsj and the Cato-sireet conspirators, were again 
 threatening the Government, we were at this time 
 told that the distress originated in " over 'trading,'^ 
 and " speculalion,'' and *' over 'population,*' and 
 " over-production y I proved that the charge of 
 '^speculation' was nonsense, that *' over- trading'* 
 was impossible, that "over-population" was impos- 
 sible, and that " over-production" was impossible. 
 I moreover shewed that all these impossibilities con- 
 tradicted each other. I shewed that Trade was the 
 supplying of human wants, that human wants were 
 insatiable, and that therefore, " ower-trading-," as a 
 general principle, was impossible. I shewed, that 
 every man who brought a mouth into the world, 
 brought two hands to ^Qed. it ; and that every pair of 
 hands in the kingdom was capable of producing 
 food and shelter sufficient to maintain four fami- 
 lies of labourers ; and, therefore, that " over-popula- 
 tion' was impossible. I also shewed that "/^roc^MC- 
 iion.s'^ were merely stocks oi national riches, that 
 neither nations or individuals could be too rich, that 
 the very paupers were ready to spend the fortunes of 
 the Duke of Wellington, if permitted to do so ; that 
 if "productions" glutted the markets, it was not 
 because we had too many " productions,'" but be- 
 cause we had too little money, the organ whereby 
 the masses of separate " productions" are broken up, 
 and distributed into the mouths and on to the hacks
 
 91 
 
 of the population, in exchange for their labour ; and 
 that, therefore, *' over-production ' was impossible. 
 
 Upon many occasions I proved that all the.'^e reasons 
 or causes of distress were anomalous and contwdic- 
 tory, and that it was not possible that too many 
 mouths and too many loaves could exist in the nation 
 at the same time. In April 1821, 1 pj-ovedheiove 
 the Agricultural Committee, that the pressure of the 
 Metallic Standard had contracted the Currency, and 
 that the contraction of the Currency was the sole 
 cause of the distress of Ag-riculture, and of all other 
 distress. When a list was produced, of about twenty 
 different articles which had fallen in price, and about 
 nineteen different reasons were assigned for such fall 
 of price, 1 insisted that the fall of price was generaU 
 and that, therefore, it must have a general cause, and 
 that such^e?zer«/ cause was the contraction of the ge- 
 neral medium y which measures all prices and all va- 
 lues. 1 might as well have reasoned with the winds 
 of Heaven. Nevertheless, in 18-22, when nine-tenths 
 of the Landowners became insolvent, it was found 
 necessary again to encrease this (jenercd medium which 
 mesisures all pi'ices, and again the rmn was stayed.. 
 The nation awoke, as it were, from a second fright- 
 Jul dream, and during the years 1823 and 1824, it 
 may be said that all classes of the people were prospe- 
 rous. AV hen all the causes of distress assigned in 
 1816, and in 1819, and 1821, have been thus a second 
 time blown to the winds, it might have been hoped
 
 that something" like truth would have been revealed 
 to the people, when, in 1825, a third note of ruin 
 has resounded throug-hout the land. But the age of 
 delusions is not yet gone. We get a little nearer the 
 truth. We begin " to burn," as the children say, 
 in the game of *' blindmans huff;'' and we conclude 
 that the evil consists in oveTbankin(/, or in some 
 weakness or wickedness of the Bankers, which 
 ought to be remedied. 
 
 This is certainly something to discover. If we had 
 got thus far in J 816, we should have come to truth 
 by this time. But I well remember, at that period, 
 that you and 1, and a very few others, were thought 
 quite out of all reason, for contendingthatit was possi- 
 ble that the plenty or scarcity of money could have any 
 thing to do with national prosperity or adversity. 
 Every man could see that money was a good thing 
 in his orvn pocket ; and yet no one could see that it 
 was equally good in his neighbour s pocket ! ! Now 
 every one acknowledges, that the scarcity of money 
 has produced the present distresses ; although they 
 still attribute that scarcity to some defects in our 
 Banking System, and not to the pressure of the Me- 
 tallic Standard. Ten years of sufferings and dangers; 
 have given us a glimpse of the truth at last. 
 
 But 1 must conclude now, or I shall exhaust your 
 patience. To conclude then, and that really. All 
 palliatives are wrong. The direct policy is better 
 than the temporizing policy. We had better meet
 
 »3 
 
 the ruin at once, whilst yet men's minds are toler- 
 ably well affected towards each other ; and not wait 
 until years of jDOverty and privation, of crimination 
 and recrimination have exasperated every element of 
 society against the others. If then the paper is wrong-, 
 let us restore the Gold at once. But let us not pro- 
 ceed by slow and cruel precautions, to bring men's 
 minds into such a state of phrenzy and exasperation, 
 that i\e\i\\eY paper nor gold can be of any avail. In all 
 our dangers the paper has hitherto saved us. In'every 
 instance, it has been the Gold that has brought us into 
 danger,and i\\e paper that has relieved us. In 1 793 and 
 in 1797 before the paper syslem was fully established, 
 we found the character and magnitude of our operations 
 were such, that the Gold was not to be found when the 
 public wants demanded it, and the law required it. 
 If we had not found relief in the paper ^ we must have 
 been compelled to make a dishonourable peace. 
 Again in 1S16, when the foundations of society were 
 giving way, it was the gold which forced the paper 
 to contract, so as to render the payment of debts diffi- 
 cult, and the beneficial employment of labour absolute- 
 ly impossible. In 1819 and 1820, it was the gold 
 again which threw half the labourers in the kingdom 
 out of employment^ and filled the whole country with 
 conspiracies and dangers of many kinds. In 1822, it 
 was still the gold which reduced the monied prices 
 of property within the grasp of the monied charges 
 upon property, and rendered every Farmer and every 
 JLjaudowner in the country insolvent. In 1825, it was
 
 94 
 
 the gold alone which threatened to pull down the 
 whole circulating system upon our heads ! It is true, 
 the^iro^f/ could not have produced these tremendous evils 
 by destroying the paper, if the paper had not pre- 
 viously been suffered to exist ; and some people may 
 doubt the propriety of our ever having suffered the 
 paper to exist. Of this number I am not one ; be- 
 cause I know that the paper system is capable of giv- 
 ing greater certainty and security to the operations of 
 men, than either the Metallic System, or any mixed 
 system of paper and gold ; and because I know that 
 the Paper System might have been abandoned with 
 safety, if we had been content to adopt a just and 
 practicable Metallic Standard in its stead. 
 
 But it is too late to reason upon any original de- 
 fects in the Paper System, or of any mixed system in 
 Avhich gold and paper may act together, as they did 
 in 1793 and 1797, and as they have latterly done in 
 1823, and 1824, and 1825. These enquiries are too 
 late. The paper does exist = The paper has acted up- 
 on every monied obligation existing in the kingdom. 
 The paper still acts upon all ohli(jationSj upon all 
 prices, upon all debits and credits in existence. There- 
 fore the paper cannot be destroyed, without carrying 
 with it the whole frame and fabrick of society. To 
 sum up all in a few words. All the changes and 
 fluctuations, all the bankruptcies and the miseries, all 
 the dangers and the horrors which we have experienc- 
 ed, for the last ten years, are solely to be ascribed to
 
 96 
 
 the pressure of the ancient Metallic Standard of 
 Value, upon the new habits and associations^ the new 
 monies, the new prices, the new wages, and the 
 new contracts, debts, taxes, and oblig-ations of a hun- 
 dred kinds, which the new circumstances of the Na_ 
 tion have called into existence. In every instance 
 the gold has threatened us ! ! In every instance the 
 paper has saved us ! ! Under what fascination do we 
 then labour, that we should rush from our own safety 
 to our own perdition ? Where shall we seek for safety, 
 when the paper system is destroyed ? Can Govern- 
 ment recreate the mighty fabrick, when once it has 
 been shivered to atoms ? Can Government supj)ly 
 any other fabrick in its place ? Perhaps they will 
 give us " equitable adjustment.^* The very attempt 
 will blow the Government to the winds. A hundred 
 Courts of Justice sitting for a hundred years, could 
 not adjust a hundredth part of the contracts that 
 will be violated by the destruction of the Paper, 
 The only ^' equitable adjustment'^ that is possible^ is 
 the '^adjustment'' of the Standard by which the 
 values of society are measured. Let Government 
 give us a just and honest Metallic Standard, and 
 there is no difficulty in restoring cash payments, and 
 none in preserving abundance of metallic money in the 
 country; but if they persist in forcing upon the nation 
 an antiquated and unjust Standard, which in its ulti- 
 mate eifect must literally double the real burthen, and 
 the real value of every tax, debt, and monied obliga- 
 tion existing in the kingdom, then we may be quite
 
 96 
 
 sure that they will not succeed in their object, but 
 they will succeed in producing that revolution against 
 which 1 have warned them for ten years. 
 
 They may take then their choice. They may adjust 
 the Standard ; or they may restore the non-convertible 
 paper. There is no safety but in one of these. In 
 either, safety may be found. I prefer the non-coiwer- 
 tihle paper. 
 
 I remain, with sincere esteem. 
 Dear Sir, 
 
 Your faithful humble Servant, 
 THOMAS ATTWOOD. 
 
 To Hie Rigid Honourable Sir John Sinclair, Barl. Sfc.
 
 LETTER IV. 
 
 FROM SIR JOHN SINCLAIR TO MR. ATTVVOOD, ON THE COMPARA- 
 TIVE MERITS OF THE SCOTTISH AND ENGLISH SYSTEMS OF 
 BANKING. 
 
 Dear Sir, 
 
 You would have heard from me sooner, in answer 
 to your comparison on the Scotch and English Sys- 
 tems of Banking-, had I not been under the necessity 
 of dedicating several days exclusively to some busi- 
 ness of considerable personal importance, and to the 
 carrying on of a work, (The Analysis of the Statis- 
 tical Account of Scotland), which must be completed 
 before the meeting of the general assembly of our 
 National Church, in May next. I should not, how- 
 ever, have allowed even these matters, though highly 
 important, to have interfered with the carrying" on 
 of our discussion, were it possible to hope that our 
 correspondence could have been of any real public 
 usility, in the existing most eventful crisis. But the 
 die is cast, and all our efforts for the present will be 
 in vain. Indeed, until the nation has suffered some 
 severe additional calamities ; until the mischief has 
 spread its baneful influence over the whole country; 
 and above all, until the Revenue becomes seriously 
 
 N
 
 98 
 
 deficient, no alteration in the ruinous measures, now 
 carrying- on, can be looked for. But as your letter 
 touches upon some points in which we essentially differ, 
 and contains some ideas on the Scottish System of 
 Banking", which appear to me erroneous, I think it 
 right to trouble you with a reply. 
 
 1. The first point in which we differ regards Joint 
 Stock Banking Companies. If we were to have a 
 paper circulntion independent of a Metallic Standard, 
 and on a great scale, 1 do not see how that system 
 could be adopted with safely, without some great 
 Banking Corporations, to be established, at least in 
 all the more populous districts. That they have 
 failed in America, is no solid objection; because 
 that country is deficient in capital, and is likewise 
 suffering from its attempts to restore a Metallic Stand- 
 ard. — But they have succeeded in Scotland, and by 
 your own admission, are now succeeding in Ireland. 
 The Provincial Bank there being in a state hiijhly 
 flourishing and prosperous. When they are established 
 in England^ there cannot be a doubt that they will 
 prove eqnally flourishing and prosperous, if conducted 
 with prudence and economy, and founded on judicious 
 principles, 
 
 2. You next object to private bankers giving secu- 
 rity for the payment even of their small notes, a point 
 which seems to me in the highest degree essential.
 
 99 
 
 Notes of the larg-er descriptions, may be considered 
 like Bills of Exchange, which people will not take 
 without a conviction of the solidity of those who issue 
 them. But the case is quite different as to small 
 notes, whicli pass from hand to hand as coin^ and where 
 the public are entitled to claim the protection of 
 Government, to prevent their being- imposed on. 
 Perhaps, there is no duty more incumbent upon 
 any Government, than to provide a safe currency 
 for carrying on the common transactions between 
 man and man. For that purpose, when coins are in 
 circulation, they are kept up at their full weig'ht on 
 the same principle, when paper becomes the currency, 
 its value ought to be placed beyond the possibility of 
 a doubt. I see no just grounds, therefore, why pri- 
 vate bankers should not give security. Surely they 
 would find it more to their advantaofe to oive secu- 
 rity for their small notes, than not to issue them at 
 all ; and if their notes were so secured, they might 
 be made by law, receivahle in payment for taxes, 
 which would always keep up their credit. Besides, 
 in that case, bankers would not be under the neces- 
 sity of keeping any quantity either of coin, or of the 
 Bank of England NoteSj, as a security against a run, 
 which would be a saving of great importance. But 
 it would be a still greater advantage, if they were 
 not under the necessity of raising money, by selling 
 at low terms, those public securities in whicli their 
 property was invested. I am fully convinced, that if
 
 100 
 
 those bankers who have failed were to compare, on the 
 one hand, the losses they have sustained by keeping 
 a dead stock in Bank of England Notes, and in coin, 
 joined to the injury sustained from compulsive sales 
 of their property, and on the other, the expence they 
 would incur, by giving- security, they would find the 
 latter plan more eligible, even with a view to profit, 
 and, I am sure, greatly to be preferred for their own 
 personal comfort. It would not, perhaps, be necessary 
 to give security for the £5 notes or upwards, for, in 
 times of alarm, a banker's friends might be prevailed 
 upon to endorse them to a certain amount each, without 
 coming under any indefinite engagement ; and thus 
 the credit of the banker might be preserved, without 
 resorting to London for a supply of Bank of England 
 Notes or specie. 
 
 8. It is quite a mistake to suppose that the Scotch 
 Banks have such a commanding influence over the 
 public mind, that they can set the law at defiance, 
 or that no lawyer in Scotland will venture to make 
 them pay in gold. The law is not defied, but it 
 is nullified in regard to them, because, from the confi- 
 dence which the public have in their solidity, the 
 option which the holders of their notes have of com- 
 pelling them to pay in gold, is not enforced. Give 
 the English the same confidence in the security of 
 their banks, and there never would be a run upon 
 them more than there is now on the Banks in Scot- 
 land.
 
 l^X 
 
 4. I am very glad to find that you explain so clear- 
 ly, the mischievous consequences resulting- from the 
 want of small notes in Lancashire, and the great ad- 
 vantage that has been derived from their circulation 
 in Staffordshire and Warwickshire. What can be 
 more advantageous than a system which, you ob- 
 serve, annually nourishes and brings forward into a 
 state of independence, great numbers of industrious 
 men, and the result of which is; that the mechanics 
 of Warwickshire and Staffordshire are in a much 
 better state than those of Lancashire ? This, you 
 maintain, solely arises from the issue of small notes, 
 and that abundance of circulation thence arising, by 
 which general prosperity is insured. It is not, there- 
 fore, to be wondered at, that in the former districts, 
 innumerable small fortunes should exist, and very 
 few large ones ; while in the latter county the con- 
 trary is the case. This should be more generally 
 known and explained to the public ; for the circum- 
 stance of Lancashire having no small banker's notes, 
 is dwelt upon as a strong argument in favour of their 
 extinction. But you are much mistaken in suppo- 
 sing, that the same system of accommodation to the 
 middle ranks of society, the effects of which you ad- 
 mire so much in Warwickshire and Staffordshire, 
 does not extend to Scotland ; for it not only exists, 
 but exists to a much greater extent than even with 
 you, owing to the Cash Accounts granted by our 
 banks, the nature of which I have explained in a
 
 102 
 
 publication ; (Hints on Circulation, printed in 
 1822,) a copy of which I propose to send to you.* 
 These Cash Accounts seem to me the happiest 
 measure that has ever hitherto been devised, 
 and they justify the assertion, " That the true 
 
 *It woultl be of ^eat public importance, if the Bank of England adopted the 
 plan that has been found so useful in Scotland, that of granting " Cash AccountSy^ 
 thenatureof which is this. A bond, say for one thousand pouiuls, is subscribed, 
 by one responsible pereon, and two or more sureties. To the extent of that sum, 
 the principal in the bond, is entitled to draw as he may find it necessary, and he 
 pays in, from time to tune, such sums as he receives from his debtors. The ap- 
 count is settled yearly or half yeaily ; and the interest, at the rate of b per cent, 
 for the sum drawn out, beyond what is periodically paid in, is chaiged to his debit 
 in the new account. 
 
 In a recent publication (Muir's Review of the Banking System of Great Britain,) 
 the nature of these credits is more minutely explained. Such credits, we are in- 
 formed, merely give the option to the principal in the bond, of drawing out upon 
 interest, the notes of the bank ; and a very great proportion of these credits, is 
 frequently unused, from the inability of the parties to employ the money profitably. 
 The bankers exercise due deliberation, before a credit is of the kind granted; and as it 
 is generally found to exist for a considerable number of yeais, it is only given upon 
 such security, as is likely to continue permanently good for the amount. — The 
 Bank account of the principal, is always open to the inspection of the smeties, 
 who may withdraw their guarantee, if the principal is mismanaging, or imprudent. 
 The sureties are also liable for bill transactions with the Bank, to the amount of 
 the whole sum subscribed, but not faither. Among the numerous advantages at- 
 tending credit accounts, they enable many to enter upon useful undertakings, re- 
 quiring outlay of capital for a considerable period, who might otherwise have 
 been unable, or afraid to do so. If a young man gets his sureties to sign a bill, at 
 three or four months' date, instead of signing a bond for a credit account, he mu»t 
 be dependent upon the caprice or conveniont>e of the Bank for its renewal, for such 
 periods as might be desirable, in any protracted operations he may have embarked, 
 in, upon the faith of this credit by bills ; whereas, in the case of bonds, the Banks 
 almost never call them up, so long as the principal continues to keep an operative 
 account, or the sureties and hunself remain good for the amount. At all events, it 
 is provided for, in, the bond, that such waraiiig shall be given, before it is put iu
 
 103 
 
 principles of banking are no where so successfully 
 carried into practice, as in Scotland.'* — Such are the 
 effects of these Cash Accounts, and of the rivalship 
 of our numerous Banks and their branches, that it is 
 in the power of every individual who deserves credit 
 to procure accommodation ; and hence it is that Scot- 
 land, with its miserable soil and climate, and with 
 the burden of remitting a tribute of four millions per 
 annum, to the Exchequer of England, was, six 
 months ago, the most prosperous country in Europe. 
 How long that prosperity will be permitted to con- 
 tinue, remains to be seen. 
 
 5. You next remark, that I must be mistaken in 
 the assertion, " That there is not the slightest pecu- 
 niary embarrassment in Scotland." By this I meant 
 that none of our Banking Establishments had given 
 way. It could not be expected that the circulation 
 of our banks could be carried on to the same extent 
 as before the late convulsion. The calamities 
 of England, in that respect, necessarily extended 
 themselves to Scotland, from the intimate connection 
 which subsists between the two countries. Had the 
 Scotch banks been as liberal as they had been previ- 
 
 force, as may enable the parties, to get a similar accommodation at some other 
 Bank, or to dispose of their property, without the disadvantages of sudden or pres- 
 sing demands for repayments. Since the act 33. Geo. III. c. 74. cash credits have 
 been frequently granted, on the security of lands, houses, &c. and this practice 
 might certainly be greatly extended with much public benefit.
 
 104 
 
 ous to the late convulsion, the tUsfressed merchants 
 and b{>nkers of England would have contrived to have 
 got hold of a large proportion of our circulating pro- 
 perty, and brought on similar distresses to yours. 
 It became necessary also, vrhen, after the alarm had 
 taken place, that accommodation vras given, to limit 
 the duration of the loan as well as its amount. Those 
 who had overtraded themselves, and carried on their 
 business by Bill accommodations, must, of course, 
 suffer from such restrictions. But all men of real 
 property, still find no difficulty in getting what mo- 
 ney they require, at the legal rate of interest. On 
 this subject I shall only add, that when the Bank of 
 England, with its immense resources, and with the 
 advantage of having the revenue of the country pas- 
 sing through its hands, is reproached for having ad- 
 vanced £1,200,000, on mortgage to the landed inte- 
 rest, and feels it necessary to curtail its accommoda- 
 tion to the mercantile and banking classes, it would 
 be rather too much to expect that the Scotch Banks 
 should continue their former scale of issues with their 
 inferior resources. 
 
 6. You mention, that having anticipated what 
 \iould happen, the House in which you are concern- 
 ed^ had given up the issue of small notes five years 
 ago. 1 should be glad to know what was the effect 
 of that resolution ? Perhaps other bankers in your 
 vicinity continued their circulation of small notes, 
 and filled up the vacuum, otherwise your neighbour-
 
 105 
 
 hood must have suffered greatly from your change of 
 system, more especially as it took place in Warwick- 
 shire. 
 
 7. In regard to Scotland, it would be infatuation 
 in the extreme, to attempt the extinction of its small 
 notes, which have now existed with infinite advan- 
 tage, and without any detriment whatever, for above 
 a century. 
 
 Experiments with circulation may be tried in a 
 rich country like England, but here, any alteration 
 in its Banking system would be most fatal. Let the 
 circulation of Scotch Bank Notes in England be pro- 
 hibited, but to compel us to supply ourselves with a 
 Currency in Gold, at a distance from the markets 
 whence it must be procured, would cut up by the 
 roots the sources of our prosperity. It would bring 
 us back to the state of depression and misery in which 
 we were a century ago, would annihilate the tribute 
 of four millions per annum, which we now pay to 
 England, and while that system contmued we should 
 become, like Ireland, a source of expense and not of 
 revenue, to the kingdom at large. 
 
 8. I perfectly concur in opinion with you, that a 
 Paper Circulation, properly regulated, is infinitely 
 preferable to a Currency in gold, which, from the 
 difficulty of procuring, and above all, of retaining it, 
 is the worst of all standards for a country to adopt, 
 
 o
 
 106 
 
 and even greatly inferior to silver. That point I have 
 strongly enforced and explained, at considerable 
 length, in my " Hints on Oirculalion,'* above-men- 
 tioned. Findings however, that all the leading po- 
 litical characters, in both Houses of Parliament, were 
 decidedly hostile to Paper, I thought it expedient ta 
 suggest, as palliatives to the Gold System, — Firet, 
 the adoption of a Joint Standard of Gold and Silver ; 
 and next, the introductiori of the Scotch mode of 
 Banking into England. But the calamities are now 
 increasing so rapidly, and are likely to be carried 
 to such an extent, that the Ministers will probably 
 in the end be reluctantly compelled to the re-estab- 
 lishment of a Paper Circulation. 
 
 It must ever be a great source of consolation to usy 
 that we have resisted those fatal measures which have 
 brought such ruin upon the country. Nor ought we 
 yet to despair of seeing a change of system, General 
 distress will in time prove to the public, how far its 
 Government is wandering from the right path, by en- 
 deavouring to establish what is called a wliolesomey 
 but which is in fact^ a ruinous and impoverishing^ 
 Currency r and it may yet be in our power to lend 
 efficient aid towards the establishment of a better sys- 
 tem. Our Government will soon find, that without 
 an abundant circulation, neither this nor any other 
 nation, can be prosperous at home or f)Owerful abroad » 
 And there are no means by which a circulation can 
 be rendered permanently abundant , unless it i& in Pa-
 
 107 
 
 per, or in otiier words, independent of foreign male' 
 rials. The Paper, however, ought to be limited in 
 its amount ; it oug-ht not to be issued by any but 
 t!iose whose solidity is unquestionable, and it might 
 safely be rendered convertible into the precious me- 
 tals, at the average price of Gold and Silver ; which, 
 for tliat purpose, ought to be quarterly ascertained. 
 
 If an improved system of Paper circulation, thus 
 united with a power of converting it into the preci- 
 ous metals, were adopted, it would make Great Bri- 
 tain the happiest and most powerful country that has 
 €ver hitherto existed. Its prosperity would not be 
 fluctuating, but permanent, and that favourite ob- 
 ject, for which I have invariably contended, might 
 then be realised — " That of rendering Great Britain 
 independent of other nations for Circulation and 
 Food/^ 
 
 • 
 
 With much regard and esteem, 
 believe me. 
 Your faithful Servant, 
 
 JOHN SINCLAIR. 
 
 133, George-Street, Edinburgh^ 
 ^Ut Eebruary, 1826, i 
 
 Thomas Attwood, Esq. Birmingham.
 
 LETTER Vir. 
 
 FROM MR. ATTWOOD TO SIR JOHN SINCLAIR, ON THE REMEDIES 
 FOR THE PRESENT DISTRESS. 
 
 Birmingham, 3rd of March, 1826. 
 
 Dear Sir, 
 
 Your letter of the 21st ultimo, has said all that can 
 
 be said in favour of Joint Stock Banks. 1 have no 
 
 objection to them. They may probably be suited to 
 
 the habits and character of the Scottish People, as 
 
 our Banks arc to those of the English People. But 
 
 when they are brought forwards as a, panacea for every 
 
 evil, as a mighty resource which may enable us to 
 
 resist the unmeasured plunder of which our unhappy 
 
 country is made the victim ; when the ministers of 
 
 tire kinor also have made use of them as vehicles of 
 
 calumny against the English bankers, and of delusion 
 
 amongst the English public, under these cirucmstan- 
 
 ces, I desire to record my humble opinion, that these 
 
 boasted establishments are not capable of rendering 
 
 us any assistance whatever. In England they can at 
 
 this time produce neither the capital, the credit, nor 
 
 the knowledge, which is necessary to give them a 
 
 chance of ultimate success.
 
 109 
 
 lu your last letter, and in your " Hints on Cir- 
 culation,"* you have suggested a middle way of 
 proceeding between a reduced Metallic Standard, 
 and a Bank Restriction Act, viz : — the Bank paying 
 in gold and silver at the market price, until gold rises 
 to perhaps £8 per ounce. There can be no possible 
 objection to this way of proceeding. It is, perhaps, 
 not necessary to go so high as £8 to the ounce of gold. 
 About six guineas to the ounce of gold, and eight 
 shillings to the ounce of silver, would give eight shil- 
 lings as the price of the bushel of wheat, which 1 ap- 
 prehend is sufficiently high to enable the farmers to 
 pay their present rents, wages, and expences. But 
 
 * The only questions, then, at issue between the bullionists and me are these: 
 1. Shall the conversion of paper into coin beat a fixed or at a variable rate ? 2. 
 Shall the subjects of this country be compelled to furnish gold at the same low and 
 antiquated price, at which it was fixed above a hundred* years ago, and shall the 
 value of all property, and the wealth of the nation, be reduced accordingly ? Or. 3. 
 Shall the price of gold and silver rise with the augmented value of all other commo- 
 dities ? 
 
 Is it possible that any reflecting mind would wish to subject this country to all 
 the hoiTors which we have felt, and do now experience, and the still greater calami- 
 ties which, unless timely prevented, aie in store for us, in order to prevent a fluc- 
 tuation in Gold, at from L. 4 to even L. 8 per ounce, instead of fixing it invariably 
 nt L.3: 17: IQi ? 
 
 There never was a country brought to such a state of misery, for an object so 
 unnecessary, and, (on the grounds above stated), so highly exceptionable. 
 
 I have thus explained the nature of a plan, the success of which seems to me un- 
 questionable ; and one, by which, not only those additional miseries which there 
 is so much reason to apprehend, but that convulsion, which must be the necessary 
 consequence of a perseverance in the present systeai, would be prevented.— -See 
 Hints on Circulatiov, publishad in 1822.
 
 no 
 
 it ought never to be forgotten, that in adopting a Me- 
 tallic Standard, or in imposing any limit upon the 
 nominal price of such Standard, the more we raise the 
 nominal price of the gold, the more we relieve the 
 country from the real weight of all its public and its 
 private burthens. We ought, therefore, to raise the 
 price of the Metallic Standard to the very utmost that 
 justice will allow. We ought on no account to give 
 to the taxes, debts, and monied obligations of the 
 nation, on the restoration of a Metallic Standard^ the 
 command over greater quantities of commodities and 
 labour, than the proprietors of such taxes, debts, and 
 obligations, really advanced, or really contracted to 
 receive during the suspension of such Standard. If 
 we are to preserve the ancient Metallic Standard, it 
 can be proved beyond the shadow of a doubt, in fact, 
 it is now very generally acknowleged, that the restora- 
 tion of such Standard, if practicable, which, in my 
 opinion, it is not, would give to the proprietors of all 
 taxes, debts, and obligations contracted during the 
 war, or founded since, upon the habits and associations 
 which had existed during the war, full double the real 
 value, which the proprietors of such taxes, debts, 
 and obligations'had ever advanced, or had ever con- 
 tracted or expected to receive. 
 
 In my letter of the 23rd of February, in the last 
 year, in enumerating the operations of the Govern- 
 ment upon the Bank of England, (see p. 9.) I omit- 
 ted to notice the advance of £3,400,000 to the
 
 Ill 
 
 Government, for the purpose of enabling" them to pay 
 off the holders of 5 per cents, who refused to have 
 them converted into 4 per cents. This was another 
 grand operation, which made a positive increase of 
 three millions sterling- to the Circulating Medium! 
 This operation and the others wiiich I have alluded to, 
 have since been acknowledged in Parliament. Sure- 
 ly when these things are considered, we can be at no 
 loss to account for the plenty of money, and the 
 prosperity of 1824. 
 
 It has latterly, also, been acknowledged in Parlia- 
 ment, that in the Spring of the last year, the Bank of 
 England, influenced by the state of the Exchanges, 
 or in other words, by the exportation of the Bullion 
 Money, began to reduce their circulation of Paper 
 3Ioney correspondently, in order to stop the exporta- 
 tation of the one by rendering the other equally scarce 
 and dear ! In August and September, it seems that 
 the Bank sold Exchequer Bills largely with this 
 view. Surely we can be at no lass to account for the 
 fall in the price of Cotton, and for the failures which 
 took place among the merchants in Liverpool and Lon- 
 don, in the Autumn of the last year! And surely 
 we have no occasion to be surprized at the convul- 
 sion of December, 1825, and at the general misery 
 and distress which have since been scattered through 
 the country.
 
 112 
 
 Among intellig'ent practical men, tins convulsiotl 
 was seen as clearly in August and September, as it 
 was in December, or is now. The absolute and par- 
 ticular time of such cotivulsion, was indeed not fore- 
 seen to a certainty, bec*use,^ in truth, it was preci- 
 pitated rather suddenly by a mfie accident in a 
 large London Bank. When the public mind 
 is alarmed by the ex^pectation of great events ; 
 ■when some secret and general ruin is at work, of 
 ■which all men have some vague and general notions ; 
 notions which are the more terrible from their very 
 vagueness and indistinctness : in such a state of 
 things as this, accidents have always a very great ef- 
 fect. In the present instance, the accident in the 
 Bank alluded to, literally shook the throne of the 
 King ! 
 
 The Country Bankers, however, had nothing to 
 do in any of these great operations between the Go- 
 vernment and the Bank, the action of which first 
 made the prosperity of 1824, and the discontinuance 
 of which produced the ad versity of 1 825. They mere- 
 ly followed at a humble distance in the train of the 
 Government operations ; which it was, indeed, im- 
 possible for them to precede. If any proof of this were 
 necessary, it will be found in the price of Wheat, 
 which is well known to be peculiarly exposed to be 
 affected by the country Bank Notes, and which, du- 
 ring the whole of the late prosperity, has never ex- 
 ceeded 8s. 6d. per bushel! Nor, indeed, were the
 
 lid 
 
 general prices of commodities throughout the country 
 raised at all higher than the habits of the popula- 
 tion, and the Debts, Taxes, and Engagements of 
 the country, rendered absolutely necessary to the 
 existence of national prosperity. The only article 
 which rose, indeed, a little above this level, was 
 the Lancashire Cotton, an article, which it is well 
 known, is only indirectly exposed to the action of 
 Country Bank Notes. 
 
 How unjust, then, and how cruel is the charge 
 against the Country Bankers, that they have in iiny way 
 produced, or even contributed to the present distres- 
 ses. If the House in which I am interested, thought 
 it necessary to give up the issue of small notes five 
 years ago, in direct anticipation, expressed to all its 
 connexionSf of the crisis which has now occurred, 
 how can the Country Bankers, generally, be blamed 
 for giving them up, when they are cried down by 
 the Government on the one hand, and by Mr. Cob- 
 bett on the other ? The Country Bankers are not to 
 be blamed for any part of the miseries which have 
 occurred, or which still threaten the country. The 
 awful responsibility rests entirely upon the Govern- 
 ment alone. Instead of being censured for their 
 weakness and reproached for their imprudence, they 
 are entitled to the warmest gratitude of the Govern- 
 ment, for the strength which they exhibited, and 
 for the firmness with which they resisted a stupendous 
 
 P
 
 114 
 
 convulsion, which would otherwise have shivered the 
 Government to atoms ! /* 
 
 It is much to be lamented that errors of this kind 
 should be so prevalent in Parliament. The noblemen 
 and gentlemen who sit there, however conversant 
 they may be with general politics, and with science 
 and literature, seem generally to be totally unac- 
 quainted with business, and with the ways and 
 means by which human life is supported. And the 
 few practical men who sit in the Lower House, seem 
 to be either too busy with their own affairs, or too tim- 
 id, and too few in number, to allow them to make the 
 
 * The distress in Lancashire and in Middlesex, has all along been greater than in 
 any other district, and those are the peculiar distiicts tliat have never possessed a 
 Circulation of small notes ! ! How then can the small notes have made the distress 
 in those districts ? They may indeed be in some degree acted upon by the distress 
 around them ; but the fact is, that the distress in the districts alluded to, not only 
 is now greater than that any where else, but it also jpreceded the distress of the other 
 districts of the country. When the American Legislature took measures to restore 
 the payment in specie a few years ago, in the United States, the state of Massa- 
 chusetts alone had never made use of a Paper Cun-ency, and it was thought that 
 that state would thereby escape the distress attendant upon its abandonment. It 
 was found, however, in the end, that the adoption of a Paper Currency in the sur- 
 rounding States, had previo usly forced a redundant Circulation of Bullion money 
 npon the state of Massachusetts, and the consequence of this redunduncy was, 
 that the Bullion money of Massachusetts, was nearly as much depreciated as the 
 Paper money of the suiTounding States. When therefore the suiTounding States 
 recovered the use of Bullion money, this measure created a great drain upon the 
 state of Massachusetts. The Bullion money was, in consequence, strung up in 
 value in that state, and the consequent distress of the operation, was about the 
 same thci'e as in the other States. The same process was clearly visible in France, 
 during the periods when the surrounding countries gave up at one time, and recov- 
 ered at another, the use of a Metallic CuiTcucy.
 
 115 
 
 necessary exposition of the truth in the face of tb.e 
 ^reat combined interests around them. Hence the 
 total inconsistency of the Parliamentary measures in 
 matters of business, which are, in fact, the most im- 
 portant subjects which can occupy Parliamentary at- 
 tention. Hence we are informed one day, that the 
 Country Bankers are so desirous of issuing their small 
 notes, that it is necessary to stop the Stamp Office, 
 in order to prevent a literal deluge of them ! ! And 
 the very next day we are informed, that the Coun- 
 try Bankers are so regardless of <his privilege, and 
 so ignorant of their own interest, that from a mere 
 childish displeasure at the measures of Government, 
 they have determined not to issue their small notes at 
 all ! ! And, therefore, that it is necessary to get the 
 Bank of England to fill up the vacuum ! Arvarhoop 
 is raised against the Country Bankers ; they are de- 
 nounced as men unworthy of public confidence. 
 They are pointed out as objects of the popular ven- 
 geance and suspicion, and when they are thus pro- 
 scribed and hunted down by the Government in the 
 van and the Radicals in the rear, with the landed 
 interest cheering them on : when the issue of their 
 notes is thus made almost a warrant of ruin against 
 them, they are coolly reproached for not issuing their 
 notes as freely as before! If a fair proportion 
 ofpractjcal men had sat in Parliament, and if the 
 commercial and manufacturing interests had been as 
 fully and fairly represented as the Landed Interest,,
 
 116 
 
 how is it possible that delusions so gross as these 
 could ever have prevailed ? 
 
 First the destress is attributed to *' Bubbles'' and 
 Joint Stock Companies, and then other *^ Bubbles'* 
 and other Joint Stock Companies are proposed to re- 
 lieve it ! Then, it is attributed to over-issues of paper; 
 and then increased issues still farther are recommend- 
 ed ! ! It is next attributed to the country bankers cal- 
 ling in their notes, and then securities are proposed to 
 be required, which would annihilate their notes at 
 once ! Then the country bankers are accused of being 
 too weak, and Joint Stock Rivals are proposed to in- 
 crease their weakness still farther ! Again it is pro- 
 posed to establish Joint Stock Banks, for the purpose 
 of rendering the circulation of country notes perma- 
 nent and secure, and in the very next day, it is pro- 
 posed to prohibit the circulation of such notes after 
 three years ! ! There is in short no end to the inconsis- 
 tencies of Parliament upon this important subject. 
 
 You ask what was the effect of our House giving up 
 the issue of small notes five vears asfo. The effect 
 was little or nothing, because we replaced them 
 with sovereigns, and our circulation was a 
 mere trifle, compared with the general circulation of 
 £l notes. In the present state of the country, 1 
 should apprehend, however, that the general with- 
 drawing of the small notes would be tantamount to 
 nearly an equivalent diminution of the Circulating 
 M edium, us in the present state of things, the bankers
 
 117 
 
 cannot be supposed to have both the power and the will 
 to issue sovereigns in the place of their notes. Five 
 sivths of the country bank note circulation are, pro- 
 bably, kept afloat by means of discount, or of tem- 
 porary advances to the public. If the banks are com- 
 pelled to withdraw their Cash Notes on the one hand, 
 and to have their Cash deposits withdrawn on the 
 other hand, in consequence of the general alarm and 
 distress, it is very improbable that they should 
 have the means and the inclination of issuing" sover- 
 eiens in the Dlace of their notes. What the bankers 
 will do,and must do, is this; — they will pay sovereigns 
 where their customers have cash in their hands, and 
 where their customers have no cash in their hands, 
 they will pay nothing ! Five sixths of the country 
 circulation will thus disappear, and the Govern- 
 ment will be left to supply their place as they can, or 
 the most tremendous fall in prices will be the conse- 
 quence. This will be found, 1 apprehend, a far more 
 important thing than they think for. I estimated the 
 circulation of country £l notes at ten millions sterl- 
 ing, a few months ago, giving about £20,000 each 
 as the circulation of 500 country bankers issuing 
 them. The withdrawing of this circulation will be 
 found an immense and unmanageable calamity to the 
 country, although it may not possibly be of much di- 
 rect importance to the bankers. 
 
 Notwithstanding the argument drawn from the 
 Stamp Office Returns to the contrary, I am decided
 
 118 
 
 that the kite circulation of country £l notes was not 
 over-estimated at ten millions, a few months ago. 
 The report about country bank notes continuing in 
 circulation only three years, probably arose from 
 some misrepresentations of the bankers against the 
 hardship of raising the Stamps upon their notes. 
 
 Lord Castlereagh was not a man deficient in firm- 
 ness ; and yet he shrunk from a measure into which 
 the ministers now plunge with reckless desperation. 
 He saw wheat at four shillings and six-pence per 
 bushel ; he saw half the nobility of England virtual- 
 ly paupers, or preserved Jrom pauperism hy the ruin 
 of their tenants ; he saw half the labourers of Eng- 
 land begging their bread ; he saw all this produced 
 by the blind and cruel greediness for ^^ forte monnoie^^* 
 and he relaxed his grasp upon the nation's throat. 
 He found out that that the paying of debts, was at 
 least as difficult as the contracting of debts. He 
 knew well that we never could have borrowed two 
 thousand millions sterling of public and private debt 
 without the aid of the " monnoie foible ,'' and he 
 proceeded to give us tlie " monnoie foible" again, in 
 order to enable us to repay such enormous masses of 
 monied obligations. It was with these impressions 
 that he brought forward the Act to legalize the issue 
 of £ I notes for eleven years. Any man would have 
 deenied this great measure a positive proof that minis- 
 ters intended to bring forwards the Bank Restriction 
 Act when necessary, and this impression upon the 
 public n)ind could not but have been made still
 
 119 
 
 stronger, when the other operations of the Govern- 
 ment upon the Currency, during" the years 1822, 
 IS'ZSy and 1824 were considered. These operations 
 ought certainly never to have been adopted, if it 
 was not intended to persevere in them. We ought 
 to have met the ruin in 1822 ; but Lord Castlereagh 
 had not nerve to face it. It is left for the present 
 Ministers to abandon measures which Mr. Pitt sup- 
 ported, and to adopt others which Lord Castlereagh 
 feared to adopt ! ! 
 
 And well might that unhappy nobleman shrink 
 back from the destruction of the £1 notes. He saw 
 how the habits and wants of the country had become 
 accommodated to them. He saw how they had in- 
 woven themselves for thirty years in the very roots 
 of society. He saw them radiating as it were from 
 500 centres, into the uses of industry, created at the 
 very points oj time and place where they happen to be 
 wanted, and disappearing at the very points of time 
 and place where they happen to be no longer 
 wanted, and he very justly concluded, that in- 
 struments of this powerful character, thus inwoven 
 with the national vitals, could not be rudely torn out 
 with impunity ! 
 
 Under these impressions, Lord Castlereagh caused 
 to be passed the Act of Parliament which legalized 
 £l notes for 11 years to come. And now, yN\\en pub- 
 lic faith has been thus gravely pledged to the nation ; 
 when men have been induced to lend and to borrow,
 
 120 
 
 to buy and to sell, and to contract debts and obliga- 
 tions upon the strength of this important measure, 
 the whole is gravely proposed to be violated, 
 leaving the wild havoc of such violation to rectify 
 itself! 
 
 Now, it must not be thought that the Act of Lord 
 Castlereagh for legalizing £[ notes, and the other 
 measures of the Government for encreasing the circu- 
 lation, adopted about the same time, have in reality 
 caused the present distress. Nothing is more false. 
 They have in reality prevented it from happening 
 three years ago ! ! If these measures had not been 
 adopted, the £l notes would have become illegal in 
 May IS23, when Wheat was at 4s. 6d. per bushel, 
 and beyond the shadow of a doubt, if the £ I notes 
 had then been suffered to disappear, the price of 
 wheat would, in all probability, have fallen to 3s. 
 or perhaps 2s per bushel ! ! 
 
 The country would, in fact, have been struck to 
 the earth, as with a Cannon Ball ! In the tempest 
 of the human passions which would have been then 
 excited, the Government, and the Standing Army, 
 and the boasted omnipotence of Parliament^ would 
 have been like feathers in the storm ! The £\ note 
 Act, and the other measures of a similar character, 
 have procrastinated this mighty convulsion ; but they 
 have not occasioned it. It is the pressure of the un- 
 just Metallic Standard which occasions it. Take off 
 the Standard, or adopt a practicable Standard, that
 
 J2l 
 
 will measure some degree of justice between man and 
 man, and we shall have no distress at all. But if we 
 persevere in exacting- the payment of ^^Jorte monnoie'* 
 out of the blood and bones of the country, we may 
 rest assured, that we have yet to witness such dis- 
 tress and such anarchy as no eye has ever witnessed 
 before. 
 
 In my letter of the 4th January, (see page 24,) I 
 described two modes of conduct which the Ministers 
 might adopt, viz. the decisive policy, and the 7nid- 
 dle or temporising' policy. I perceive they have 
 adopted the latter. The renewed purchases of Ex- 
 chequer Bills by the Bank, and the loan of three mil- 
 lions to the Merchants and Manufacturers will cer- 
 tainly relieve the distress among those classes, for a 
 short period. It will enable them to meet their en- 
 gagements, and when this is done, they will take 
 care not to contract any more. But it will not re- 
 lieve the Mechanics. These unfortunate men will be 
 thrown out of employment, and out of bread through- 
 out the whole country. We shall again hear the 
 changes rung upon ^' over-production j'^ and **over- 
 tradiny^ and '■'over-population^'" and ^' over- fanning ^^ 
 and upon ''Hhe chawje from war to peace.'* We shall 
 again hear of ^^specidation," cxwd. ^[fictitious credit^'* 
 and the '•'■want oj demand^' and the ^'■want of econ- 
 omy,*' ^r\d the want of every thing but of common 
 sense, applied to the common affairs of life, by 
 men experienced in those affairs, — which is in truth 
 
 Q
 
 122 
 
 all that we do want. But it is useless saying more* 
 1 have described how the mischief of the temporizing 
 policy will work in my letter of the 4th January. 
 
 1 think nothing- can be more unfounded than the 
 supposition, that the late Joint Stock Companies 
 can have had any thing to do in producing* the pre- 
 sent distress. There have been no Joint Stock Com- 
 panies in Manchester, or Liverpool, or Devonshire, 
 and yet there the distress began and is greatest. Not 
 more than four or five millions can possibly have been 
 paid up upon all these new concerns, taken together. 
 I am sure that not so much as £20,000 has gone out 
 of the town of Birmingham, to such Companies, in all 
 shapes and ways, and yet Birmingham used to pay 
 £60,000 per annum to the property tax ! How absurd 
 then is it to suppose that such paltry investments as 
 these can have had any influence upon the prosperity 
 of a nation which, during the war, could raise up- 
 wards of 100 millions per annum for three years to- 
 gether ! ! The fall of consols alone, from the price of 
 97 to that of 77 in the last twelve months, has caused 
 a loss of one hundred millions sterling to the Fund- 
 owners ! ! How then can we speak of the losses by 
 Joint Stock Companies, in the face of such enormous 
 losses as these? 
 
 Nor are the speculations upon which these Joint 
 Stock Companies have been founded, so wild and 
 improvident as some people may infer, who have
 
 123 
 
 no better means of jadg;ing" thau the mere fall in the 
 price of the shares. The speculations are many of 
 them perfectly sound and judicious, and would bring- 
 now a g-reater premium than ever, if the surplus 
 money existed upon which they were founded, and 
 without which no great public undertaking can ever 
 be beneficially carried into effect. The fall in the 
 price of shares is nothing. It could not exist, if the 
 former plenty and cheapness of money was restored. 
 It is the emptying of the people's pockets which de- 
 presses the shares, and not the want of confidence in 
 the speculations upon which they are founded. 
 
 I think I have said enough to shew that the Joint 
 Stock Companies, ov ^^ Bubbles'' as they are called, 
 can have had little or nothing to do in producing the 
 present distress. 
 
 But if we are to speak of ^^ Bubbles,'' what ^'Bub- 
 ble" can exist in nature like the " Bubble'' of the 
 National Debt P Does it become gentlemen *' to throw 
 stones at their neighbours' houses, whose own houses are 
 made of Glass ? And if we are to speak of *'• fraud," 
 in continuing the paper, or in reducing the coins, 1 
 would ask what ^fraud" can exist in the whole uni- 
 verse like the * fraud" of borrowing 1000 millions sterl- 
 ing in depreciated paper money, and then quietly com- 
 pelling that enormous sum to be repaid in undepreci- 
 ated gold money ? Does it never strike Mr. Huskisson,
 
 124 
 
 that in the contract of a debt^ a valuable consideration 
 is necessary to render it valid ; and that to attempt 
 to tnke advantage of a legal quibble in the letter of a 
 contract, in order to compel its fulfilment, when no 
 valuable consideration has been given, is deemed by 
 all lawyers a positive fraud ? W hat valuable eon- 
 sideration has either the public or the private creditor 
 ever given, which can entitle him to receive payment 
 in heavy yold,wheve he advanced only non-convertible 
 paper ? 
 
 It has often struck me with surprize, to see the ob- 
 liquity of intellect with which men of unimpeachable 
 honour sometimes defend the enormous fj-aud which 
 is committed in the attempt to convert Paper Money 
 into undepreciated Gold. A few years ago, 1 had a 
 conversation with a gentleman of fortune, which is 
 perhaps worth recording. It was verbatim as fol- 
 lows — "If I understand you right, Sir," said he, 
 " you would coin a real half-guinea into a whole 
 guinea." ** Certainly," said I. "Then," said he^ 
 " you would give me £4000 a-3^ear, instead of £8000 
 a-year, for the rental of my estate here; and that is 
 what I consider a fraud."" " Pray, Sn-/' said I, 
 " do you measure the fraud or the justice of contracts 
 by the intrinsic value of the instruments of money, 
 in which such contracts are fulfilled ? •' Certain- 
 ly," said he, I then replied — " In what kind of 
 money were your rents contracted ; in heavy coins or 
 in Bunk notes?" "In Bank notes, certainly," said
 
 125 
 
 lie. "Then," said 1, "If you call it tl fraud in 
 me, to give you intrinsic half-guineas, passing cur- 
 rent hy law for heavy guineas, in the payment of 
 your rents, what must I call it in you, who would 
 compel your poor tenants to pay you intrinsic guineas 
 where they only contracted to pay you the intrinsic 
 MTiXwe oi farthings?" "I consider that the Bank 
 notes were not depreciated," said he. *'Then,"said 
 I, "If your farthings were not depreciated, why 
 should my half-guineas be depreciated ? Surely it 
 is easier to preserve intrinsic half-guineas at a value 
 equal to that of heavy guineas, than it is to preserve 
 intrinsic far I kings at such value !" And here the con- 
 versation closed. 
 
 It is too late, however, to complain of the injustice 
 of a reduction of the Metallic Standard. That com- 
 plaint should have been made 30 years ago, when the 
 Bank Restriction Act was passed, which virtually 
 effected that object. To reduce it now, on the res- 
 toration of Cash Payments, is merely confirming and 
 rendering permanent, a practical reduction of the 
 Standard which has existed for 30 years. To crush 
 and confound all the obligations existing among the 
 present generation of men, in order to render a tardy 
 justice to the remnants of a generation long gone by, 
 is an act of gratuitous infatuation almost as dangerous 
 to the feeble objects of its protection, as to the unnum- 
 bered victims whom its remorseless policy grinds into 
 the dust.
 
 126 
 
 There can be no doubt that some few individuals 
 would be injured by a reduction of the Metallic Stan- 
 dard, but it would be perfectly safe and easy to make 
 them compensation. Foreigners who have invested 
 money in the English Funds, for instance, might 
 still be paid in the ancient coins, or receive two 
 coins for one, and the few individuals who yet hold 
 investments in the Funds, made 30 years ago, might 
 receive the same payment. The burthen of a few 
 little matters of this kind would be nothing, and 
 thus equal justice would be rendered to all classes of 
 the community. 
 
 A great deal has been said about the Paper Money 
 having been in excess. It is not true. The Paper 
 Money has not been in excess ; at least not during 
 the last three years to which the charge applies. It 
 might possibly be in excess in the year 1800, though I 
 apprehendjthat even then it was not quite so excessive 
 as the Taxation that was founded upon it. But dur- 
 ing the last three years, it has been barely sufficient 
 fw the absolute wants of the Country. It has just 
 kept the labourers employed, and no more. It has 
 just preserved the farmer from the workhouse, and no 
 Baore, It has given him 8s. to the bushel of Wheat. 
 It has just lifted him above the gripe of his landlord. 
 It has just lifted the landlord above the c/ripe of his 
 creditor. It has just lifted the country itself above 
 the grinding^ hitingy grasp of taxation^ and no more.
 
 127 
 
 How then has the paper money been excessive ? Let 
 the wants of the people be our guide, and not the in- 
 terests and prejudices of a few dozen of bullion bro- 
 kers and cambists ; and we shall readily acknovvledg-e 
 that the paper money of the country has not increased 
 faster than its paper debts arid taxes; and that it has 
 not exceeded the quantity which has been necessary 
 to keep the labourers fully employed, and to preserve 
 such an elevated range of nominal prices, as was ne- 
 cessary to prevent the industry of the country from 
 being literally suffocated by the prodigious growth 
 of its nominal burthens ! 
 
 The bullion brokers and cambists are accustomed 
 to look at the prices of bullion, to enable them to 
 judge whether paper is in excess or not. And because 
 in these paltry dealings, the difference between pa- 
 per and gold has been sometimes barely visible, and 
 has at other times amounted to 4 or 10 or 30 per cent, 
 they have been accustomed to consider the Paper cur- 
 rency in excess !! 
 
 Let us turn away our thoughts from these mole-eyed 
 views. Look at the gigantic dealings of the nation 
 at laro'e. Does the farmer, when he contracts a lease 
 upon 2k doubled rent, consider the prices of bullion or 
 those of agricultural prcduce ? Dees the King when 
 he raises the soldiers' pay, look at the prices of bullion 
 or at those of the necessaries of life ? Does the 
 manufacturer regard the price of ballion ? Does 
 the merchant regard it ? Does the land-owner
 
 UB 
 
 regard it M'heu he borrows money npon his estaff, 
 or charg-es his estate with legacies ? Does the 
 labourer regard it, when he stipulates for the humble 
 reward of his labour ? Does ije not ^rather look at 
 the prices of food and clothing, and shelter from the 
 elements ? What then has the price of bullion to do 
 ill enabling us to judge of the depreciation of the 
 currency > It is not the rise of bullion, but the 
 rise of commodities and labour, which constitutes the 
 depreciation of the currency. Bullion may fall in 
 price, and, in fact, become as low-priced as copper or 
 lead, and yet the depreciation of the currency may 
 go on until a pound sterling or a full weight sover- 
 eign may not be worth a bushel of oats ! This was in 
 some degree the case during the war, when bullion 
 thrown out of use in so many countries, became a 
 mere drug in England, and was not worth more than 
 one half of its former value, as I proved in my '''Ex- 
 position oj the Agricultural distress," presented to the 
 Agricultural Committee, in April, 1821. 
 
 When the ministers brought forwards Mr. PeeFs 
 Bill, it was generally said by them that they con- 
 sidered the price of gold as the criterion of the depre- 
 ciation of the currency, and that if they thought the 
 restoration of the standard, would reduce the prices 
 of property and labour, more than 4 per cent, 
 they would not support it. I told them that the 
 price of gold was no criterion, and I proved that the 
 depreciation of the currency during the war, was in
 
 129 
 
 reality full cent, per cent, instead of 4 per cent, and 
 that consequently the Metallic Standard ought to be 
 reduced one half! ! They would not listen to me, 
 and yet now I perceive that many public men have 
 adopted the same opinion. Mr. Tierney himself goes 
 nearly to that extent, when he states to the House of 
 Commons, that " the besetting vice of this country is 
 the love of high prices," and that " it is absurd to ex- 
 pect that under the present Metallic Standard, we 
 can preserve generally any higher level of prices than 
 our neighbours the French !"* If the Land-owner 
 will bear this great truth in mind, they will soon per- 
 ceive that they stand rather nearer to the workhouse now 
 than they did in 1822 ! There are indeed but three 
 modes of escape for them; — they must restore the Paper 
 System^ — or they must reduce the Metallic Standard, 
 — or they must drain the bitter cup of " Equitable 
 Adjustment r^ 
 
 It is vain to talk about an " interference with the 
 King^ s prerogative^''^ when such mighty alternatives as 
 these are at issue. The King will be right fortunate, 
 indeed, if he escape from the storm which his minis- 
 ters have raised, with no other injury than a mere 
 *' interference with his prerogative.'^ But the fact is 
 not so. The £l notes are no interference with the 
 King's prerogative. It is a mere argument " ad cap- 
 
 * How will you get down the Soldiers^ pay to this level, Mr. Tierney ? 
 
 R
 
 130 
 
 landum,*' and will apply equally well to Bills of Ex' 
 chanqe as to X'l notes. Is it proposed to go back to 
 the dark ag-cs, and to carry coins about on horses' 
 backs } If not, it is ridiculous to talk about an inter- 
 ference ivilh the prerorjative. Neither Bills of Ex- 
 change,* nor promissory notes at a date, nor promis- 
 sory notes on demand, either great orsmiU, none of 
 these innumerable instruments of money, which effect 
 ninety-nine hundredths of all the transactions of 
 life are any " interference^' at all. They are mere 
 creations of the national convenience, which are as 
 necessary to the nation, and which the nation has as 
 much right to use, asa plouffh or a spade. To make 
 Such instruments of money lec/al tenders, may indeed 
 
 * The enormous sum of Six Hundred Thousand Pounds, paid last year for Stamp 
 Duty merely upon Bills of Excliang-e and Promissory Notes, at a date, as stated 
 in a Parliamentary return of the 24th Februai-y, will give some idea of the magni- 
 tude of the transactions annually effected, by these multitudinous instruments of 
 money. If the Stamps of different sizes were separated in the Pailiamentaiy Do- 
 cument, the total amount of such instruments mig-Iit be estimated witli some toler- 
 able accuracy. If we were then to multiply such amount by 5, (allowing that num- 
 ber of transactions for each Bill to effect upon an average,) it would give us some 
 view of the immensity of these transactions in the aggregate. Certainly all the 
 Gold in the universe, and all the Paper money in England, would not be sufficient 
 to effect them, if it were not for the intervention of bankers. A Bill for a Thou- 
 sand Pounds, pays a stamp of 8s. 6d. which is considerably less than a Two Thou- 
 aand^/t part of the Bill. If this should be a fair avei-age, which however I hardly 
 expect, and if each Bill is presumed to perfonn five transactions, it would give Six 
 Tliousand Millions of Pounds sterling of transactions annually performed by these 
 instruments. I once drew a conclusion neaily to the same amount, from a calcu- 
 lation drawn from the annual returns of what is called the Clearing I]ouse,m 
 London, being the place where the London bankers arc in the habit of exchanging 
 and discharging their mutual claims upon each other.
 
 131 
 
 appear to be some interference ^itli the prerog'ative, 
 but it is an *^ interference'' which the safety of the 
 Crown requires, qiiiie as much as the interest of tne 
 people ; and it can only be avoided by a reduction of 
 the Metallic Standard, 
 
 But it is too late to bring" forward this argument 
 against making Bank notes legal tenders. Legislators 
 should have thought of it thirty years ago, hejoie they 
 hud borrowed one thousand millions sterling in cheap 
 money, and not now when it would make them at- 
 tempt to repay that enormous debt in clear money ! ! 
 Or if they must have coins of full weight, and coins 
 only, they must take the coins for the Juture uses of 
 the nation, and leave the Bank notes to settle with 
 the past. They must leave the Bank notes to wind 
 up the debts, taxes, expences, and engagements of the 
 last thirty years ; and they must give us the ancient 
 coins to begin again with, in all the new reckonings 
 between the government and the nation, and between 
 man and man. This, to be sure, would be a wild, 
 circuitous, and unnecessary proceeding, but it would 
 be a thousand times more politic, more just, and mo7'e 
 safe, than the road which the ministers ore now pur- 
 suing. It would give us two prices which most na- 
 tions have, and two prices would be nearly as conve- 
 nient as one. 
 
 The temporising policy will not save the Govern- 
 ment. They may " throw in assistance from time
 
 12^ 
 
 to time, under such parts of our monetary system as 
 are in the act of giving way," as 1 stated in my let- 
 ter of the 4th January, (See page 25,) but this will 
 merely convert 1825 into 1816. It will bring ruin 
 upon them, slow, sure, and most cruel, instead of 
 the "sudden and swift destruction," which lately 
 threatened them. Why not then retreat^ whilst yet 
 it is given them to retreat? Every hour .that they 
 exist renders retreat more difficult. I will mention 
 one proof of this. When we first issued sovereigns in 
 Birmingham, five years ago, we were obliged literal- 
 ly to /brce i/iem into circulation. Every one looked 
 at them with distrust and dislike. Not one man in 
 a hundred, rich or poor, would receive them wil- 
 lingly. They all preferred £l notes. Here was a 
 state of the public mind, which was a tower of 
 strength and security in the hands of a wise Govern- 
 ment. It almost annihilated the pressure of Taxation. 
 It rendered the National Debt a moderate and reason- 
 able burden, which the nation would not have felt, 
 and which would have been melted away even faster 
 than it had grown. Without Corn Laws, without 
 " Six -4c^9," without any restraints obnoxious to the 
 public feeling, or to public liberty, it presented the 
 means of securing the taxes of the King, the rents of 
 the landlord, and the profits of the farmer, merchant, 
 and manufacturer, and in general, all the existing 
 rights and relations of Society. Who would have 
 thought that the Ministers of the King, who may be 
 called the greatest debtor in the nation, and whose
 
 im 
 
 very Throne may be said to be mortgaged for one 
 thousand millions sterling -^who would have thought, 
 I say, that the Ministers of the King, who is thus 
 deeply involved in tlie Paper System, would have 
 been the first to raise a warhoop against it ? And 
 who would have thought that the Ministers of the 
 King should have been the first to call it a *' breach 
 of faiilil* and a " national bankruptcy," when it 
 was proposed to them to adjust the rights and inte- 
 rests of the community upon equitable principles, and 
 to depreciate the Metallic Standard to a level with 
 that existing depreciation of the Currency, in refer- 
 ence to which all the obligations of the community 
 have been contracted ? 
 
 And yet it is in this way, that the Ministers of the 
 King have themselves raised barriers against their 
 own retreat! They have at last destroyed that fine 
 disposition of the public mind, which harmonized so 
 entirely with the interests of the Crown and of the 
 people ; and now the Paper is no longer preferred ta 
 the Gold. A distrust and dislike of Paper is become 
 general ; and this distrust and dislike is at last direct- 
 ed against the Bank of England quite as strong ly as 
 against the Country Bankers themselves f ! Men 
 who have never known any other kind of money, 
 and in whose minds respect for the Paper has been 
 drawn in, as it were, with their mother s milk, be- 
 gin now to look upon it as a kind of '^fraud^'' which 
 the Government has been practising upon them for
 
 134 
 
 30 years ! ! And the same disposition is visible with 
 respect to a redaction of the Standard. Men who 
 have never known any other coins than Bank Tokens 
 and Birmingham Shillings, have now been taught by 
 the Government themselves, to look upon this cheap 
 money as a kind oi fraud, which the Government 
 had practised upon them, without reflecting" that 
 cheap money, if it means anything, means cheap 
 taxes f cheap debts, and cheap burdens! It is thus 
 that the Government have raised barriers against 
 their own retreat, which every hour become more 
 and more formidable. They have carried their Royal 
 Master through unknown seas, into unknown lands, 
 and now, when dangers of many kinds begin to 
 thicken around him, they have madly set fire to the 
 ships which furnish the only means of escape ! ! Lord 
 Liverpool may call this the ^'^stern path oj duty.'^ I 
 do not envy him his feelings. If 1 am not mistaken 
 in his character, the day is not far distant, when he 
 himself will envy tiie sufferings of the poorest victim, 
 of his remorseless policy. 
 
 I remain, my Dear Sir> 
 
 Your's, with sincere esteem, 
 
 THOMAS ATTWOOD^ 
 
 To the Right Honourable Sir John Sinclair, Bart. 8fc.