The Sun.
London, England, 1832-08-24 00:00:00

LONDON, FRIDAY EVENING, AUGUST 24, 1832.

sistance can only be afforded by means of real
capital. What the Government wanted was pro-
visions and clothing, naval and military stores, and
of these the Bank had nothing; nor could the Bank
furnish the Government with gold and silver where-
with to purchase these or any other commodities it
might require; because all the gold and silver in the
coffers of the Bank was the property of the holders
of its notes. The Bank, therefore, having neither
money nor money's worth, it is impossible that it
could render the least assistance to the Government.
Having, therefore, nothing real to lend, it lent a
fiction—paper. But to create and lend paper which
is to act as money, is but to lend the power to dis-
turb the natural relation between money and corn-
todities, and so to do a deal of mischief, and work
strange confusion in the affairs of the community.
Arid this we saw verified ; far in proportion as the
Bank increased its advances to the Government,
did the prices of commodities rise; and the great
expenditure of the Government during the war being
in commodities, it is plain that the more the Go-
vernment borrowed of the Bank, the more it acted
to its own prejudice; the real produce of the Go-
vernment taxes was diminished, and every new loan
from the Bank was but a fresh embarrassment. To
ire short, the system of borrowing paper from the
Bank, producing naturally a rise in the prices of
commodities, and the war expenditure of the Go-
vernment being in commodities, the more the Go-
vernment borrowed of the Bank, the more it was
obliged to borrow of the public, and then the whole
system stood thus :—By disturbing the natural re-
lation between money and commodities, the affairs
of the community were thrown into confusion, and
,o general mischief was produced; and next there
was mischief to the Government i►self, because every
rise in the prices of commodities rendered all its
money receipts, whether by means of taxes or
public loans, of less value, and then farther public
loans became necessary.
The system, therefore, being every way unprofit-
able, the next question is, whether it was of neces-
sity and unavoidable, and this may be determined
without having recourse to argument, and merely
by stating the facts.

At the breaking out of the war and on the
25th of February, 1793, the advances of
the Bank to the Government amounted to £10,529,828
The highest point which these advances
reached during the war was in the year
1813, when they amounted to 25,817,589
But at the conclusion of the war these ad
'trances bad been somewhat reduced, and
on the 25th of February, 1814, they
amounted to .. 24,484,039

It therefore appears that the war added
13,954,211/. to the debt due from the Government
to the Bank of England.
And from these premises it follows, that if from
the commencement of the war in 1793 till its ter-
mination in 1814, the sum of 634,282/. had been
annually borrowed from the public, the debt due
from the Government to the Bank would have stood
exactly as at the beginniag of the war—the currency
would not have been disterbed—the war, through-
out the whole period, would have been carried on at
infinitely less expense, and all the mighty mischiefs
that have ensued would have been prevented.
And now to determine whether it was impossible
to raise this money, we must look at the fact. From
1793 to 1811, the sum of 390,800,0001. in money
was raised by loan from the public (this is exclusive
of the amount raised by exchequer bills and other
unfunded securities); this gives an annual average
of 17,763,636/., and therefore to suppose that a
people who, during 22 years, are capable of supply-
ing a gross sum of 390,800,0001., are not able during
the same period to supply a farther sum of about
14,000,000/. is altogether impossible. Again, to
suppose that a people, who during 22 years are
capable of supplying about 180,000,000/. per an-
num, and riot able during the same period to supply
an additional SUM of about 600,0001. per annum, is
altogether impossible. Farther, while large sums
were annually raised by loan, still larger sums were
raised by taxation ; and of the money so raised, a
large sum was annually paid to the Bank as interest
for the use of its trumpery ware ; and therefore to
suppose that the public could not annually supply
the paltry sum of 600,000/. by loan, when the effect
of this loan would be to relieve them from an annual
tax to nearly the same amount, is altogether ridi-
culous; and here take this observation. During
the war the Government paid the Bank 5 per cent.
interest, arid the money raised by public loan was
borrowed at an average rate of interest of 5/.ls. 11d.
per cent.; and, therefore, the same interest was paid
for the use of paper as for the use of real capital.—
New kind of folly ! and the greatest of all follies,
because if even the paper had been borrowed free of
all interest whatever, it would still have been pro-
ductive of infinite mischief. There is yet a feature
in the case. The notes of the Bank of England
constitute a debt; on this debt the Bank made inte-
rest, and as if this in itself and alone was not suffi-
ciently opposed to all honesty, and reason, and com-
mon sense, there was a farther stipulation that the
Bank should not be called upon to pay this debt till
six months after a definitive treaty of peace. Was
there ever a more bare-faced robbery ? Could the
vilest rascal or the veriest dizzard that ever existed
on the face of the earth have invented a more absurd,
and contradictory, and destructive system ?
Thus stood the facts during the war, and from
these facts it is clear as the sun, that the Bank, so
tar from supporting or rendering the least assistance
to the Government, was, on the contrary, a clog on
all its operations, and a constant source of embar-
rassment, and the public were robbed for the mere
sake of the thing, and solely that mischief might be
produced. In one sense, however, the Bank may
be said to have supported the Government, and
that is in the sense that a halter supports a man that
i s banged ; it keeps him indeed from falling, but then
it strangles him.
I will now, with leave of the committee, turn to a
leading operation since the peace, the results of
which were greatly disastrous. The 4 per Cents.
were reduced in July, 1824. In the early part of
1824 the Bank of England, contrary to all sound
principles of banking, and in deviation from its
farmer practice, agreed to lend money to individuals
on the security of funded property; and it was very
soon able to lend in this way about 2,000,000/. We
must nett add the advances on the dead-weight an-
nuity, which in July, 1824, amounted to
4,596,4591., and so that by this means an artificial
capital of about 7,000,0001. was created, and
thereby the market rate of interest was reduced,
with every prospect of a farther reduction; because
by the bargaim between the Bank and the Govern-
ment relative to the dead-weight regular payments
were to be made by the Batik on this account till
July, 1828. It was in these circumstances that the
reduction of the 4 per Cents, was accomplished.
Farther, the dissentients in the reduction of the 4
per Cents. were paid off by means of a loan from
the Bank to the Government; and then it follows,
that towards the latter end of the year 1824, the
Bank, by its operations with the Government and
with individuals, had created about 13,000,001. of
fictitious capital. Nor did it even stop here; and
between July, 1824, and the same month of the
following year, additional payments to the amount
of 2,293,240/. were made on account of the dead-
weight; the deficiency bills had also increased upwards
of 1,200,000/., and so that by the middle of 1825, the
Bank had created upwards of 16,000,0001. of false ca-
pital. This coining of counterfeit money on the part
of the Bank of England led to a similar coinage by the
country bankers, who, during the years 1824 and

1825, manufactured about 6,000,0001. of base coun-
terfeit money ; and so that by the middle of 1825
the creation of spurious capital amounted altogether
to upwards of 22,000,0001.,—a thing unheard of
in the history of any currency in the world, at least
since Law's famous Mississippi scheme. Are we
then to wonder that this state of things gave rise to
joint stork companies, foreign loans, desperate spe-
culations in every kind of merchandize, and all
the nefarious schemes of 1824 and 1825 ? But
the bad drove out the good, and while we were
getting so wonderfully rich in paper, we got mortal
poor in gold, which during 1824 and 1825 was ex-
ported in large quantities. And this alarmed the
Bank directors; and accordingly, after the middle
of 1825, they took measures to contract the cur-
rency, and this they accomplished in four ways.-
1. By calling in their advances on stock, and re-
fusing to make farther advances. 2. By raising the
the rate of discount to 5 per cent. 3. By lessening
their discounts, and in many cases refusing to dis-
count altogether, however unexceptionable the secu-
rity. 4. By selling exchequer-bills. These mea-
sures of the Bank, added to the large quantity of
gold which had been exported, made money scarce :
then came a run on the Bank of England and the
country bankers, and then came the panic, and down
fell the whole building with a tremendous crash;
and the upshot and final issue of things was this, that
from the month of Nov., 1825, to the end of Dec.,
1826, there were 4,000 bankruptcies, 8,000 persons
took the benefit of the Insolvent Act—there were
from 8,000 to 10,000 private compositions with cre-
ditors, and altogether the community lost at least
30,000,0001. of capital. Show me any thing at all
comparable to this in the history of the currency of
any country on the face of the whole earth. And
now take one single fact which will set the system
in full sunshine. In the latter end of the year
1824, when the Bank directors were in high spirits,
and every thing wore the appearance of prosperity,
Mr. Rothschild, Mr. Baring, and others, entered into
a contract with the French Government for the re-
duction of the French 5 per Cents., but luckily for
these gentlemen, the law for this reduction was re-
jected in the French Chamber of Peers ; had it
passed, they would all have been ruined and sent
into the Gazette. What a monstrous system then
must that be, which renders it necessary that men
of capital should be ruined, and all manner of injus-
tice committed, in order that certain dealers in
moonshine, trading under the firm of the Governor
and Company of the Bank of England, should be
able to right themselves, and •,cape the conse-
quences of their own abominable conduct. But this
is the way of the Bank of England—to serve its
own private ends it first creates large masses of
paper, and this necessarily reduces the rate of inte-
rest. In this state of things, and after a period
more or less considerable, men of capital are en-
couraged to embark in operations with foreign coun-
tries; this causes a decline in the exchanges, and an
exportation of gold ; and then the Bank, to protect
itself, and to prevent a stoppage of payment, con-
tracts the currency, and all these men are ruined.
And so the Bank deals with men of capital as the
butcher does with the pig,—he coaxes him, and
scratches his poll, and then cuts his throat. Can a
nation prosper under so iniquitous a system ?
The result of what I have said respecting the
operations of the Bank of England and the country
bankers during the period of 1824-25, is contained
in the following account, which I beg leave to de-
liver in to the committee :