money or credit could easily be obtained. This remark will apply, even if we suppose that only men of real wealth embarked in it; since their capital would be too closely locked up in their regular business to be employed on these sudden speculations: but it applies much more strongly when we consider the real state of the case, that the persons who chiefly engaged in them were men of no substantial wealth, who were therefore more easily tempted to engage in commercial enterprises, which might place them by one fortunate stroke, and in a very short space of time, on a level with those who had plodded to riches by the more slow and laborious means of industry, application, and knowledge. If then this speculating commerce which we have been considering, is really an evil to the country, and a very doubtful good even to those who are successful, it will be proper to state not only the circumstances of the times which produced the temptation or the necessity to engage in it, but also the source from which the credit or pecuniary means, without which it could not have been carried on, proceeded.

The bank of England was the principal source of those pecuniary means. Provided they guarded themselves against loss, by refusing to discount any bills but such whose payment was secured by undoubted and substantial security,they willingly advanced money to such as were anxious to begin or to extend their commercial concerns. Of course, when any new channel for commereial speculation suddenly opened; when the prospect of enormous gain tempted the merchants to venture on large exports, they had recourse to the bank. It may, indeed, be arged, that since the security which

they offered for the payment of their bills was in every case un doubted, and such as the bank. approved the latter was perfectly justified in its transactions; and int fact only supplied the place of the person who guarantied the regular and full payment of the bills. There can be no doubt that, as the latter lent his name, he was willing to have supplied the pecuniary means, had he been able, or had it been convenient to him: but besides that it was not so, there is a wide difference between lending capital already in existence, and ena, bling another person to borrow it, and becoming security for his bills, which are to be discounted at the bank of England. In the latter case an increase is made to the circulating medium, which would not otherwise have existed;-in the former, a part of the circulating medium already in existence and employment is merely transferred from the possession and use of one person to another. If therefore the bank of England had not come forward so freely with its discounts, few of these speculations could have been engaged in; since capital only to a small amount could have been borrowed at a time, when all were eager to increase it, and when the same opportunities which called forth new adventurers, would absorb whatever portion happened to be then unemployed.

But it was not the bank of England alone which encouraged these rash speculations: the country banks, which had increased in number to an extent which we shall afterwards notice, were even more forward in their assistance. As a rivalship existed among them, from which the bank of England was necessarily free, each was eager to push its notes into circulation,, and extend

them

them over a tract of country before supplied by other banks. Where there was so much competition, and such great gain from extending their issues, it is easy to imagine that the same spirit of speculation would exist in the country, among the manufacturers and merchants of our provincial towns, which distinguished the metropolis. These speculations were not confined to manufacturing or exporting goods for a market suddenly opened, which promise immense profits, and which might as suddenly be closed: many of them aimed higher: they endeavoured, on the support and by the means of the paper money which the banks so liberally supplied, to draw within their power the greatest part of any commodity, which at the time might be of heavy and low sale, but which they, expected would hereafter meet with a better market. In short, they calculated upon remote and very slender probabilities; and they engaged in traffic, trusting more to chance to render it lucrative, than to regular industry, accurate knowledge of the nature of the concern in which they had embarked, or the slow but certain operation of real capital.

The consequence was, that a great proportion of mercantile capital was afloat on rash speculations, the success of which depended on other things; on the relaxation by Bonaparte of his plans against our commerce, or on the practicability of eluding his vigilance. The state of this country and America also still further increased the rage for speculation. In consequence of disputes between them, all commercial intercourse had either been suspended, or carried on in such a manner as to be inadequate to the supply of either nation. This un

certain and inadequate supply, of course gave rise to great profits; while the prospects that the differences would be accommodated, having appeared more, than once very near and certain, tempted our merchants to prepare for a trade so long interrupted, or so inadequately supplied. But the disputes between this country and America still continued: the time for paying the bills, with which they had purchased their goods in the hopes of an adjustment, arrived'; and the merchants found themselves with their capital locked up, and their circumstances embarrassed if not completely ruined.

Those who trusted to a renewal of the trade with the continent,-or at least to its being still continued in the same manner, either by license or by eluding the vigilance of Bonaparte,-met with a similar disappointment. The French emperor compelled all the powers in Europe (with the exception of the Peninsula) to enter into what he called the continental system. And perceiving that the mere confiscation of English property was not eff ec tual, he decreed that it should be burnt wherever found; and took effectual care that his decree should be carried into execution by appointing the military for that purpose, One of the principal places from which English property had been smuggled into the continent was Heligoland. As Bonaparte could not wrest this island from us, he annexed Holland, the north of Getmany to the confines of Denmark, to the French empire, and guarded the coasts in such a manner that all intercourse from Heligoland was cut off.

In the furtherance of his plan Bonaparte had much to struggle against. The people of the contiR 4

nent

nent had been so long accustom ed to British manufactured goods and colonial goods, that they will ingly paid an advanced price and ran great risks to obtain them. The latter Bonaparte attempted to raise: but his success was very incomplete; the quality was inferior and the expense very great. Unsettled as the continent was, it was impossible to establish manufactures which could vie in quality with those from Britain; or be sold, with all the advantages of a homemarket, of low-priced labour, and light taxation, nearly so cheap as British mechanism,skill and capital, could afford them. But Bonaparte was resolved that the people under his power should not encourage the produce of Britain. Provided he succeeded in this, he cared little for the misery he occasioned, or the murmurs and insurrections he excited. Sometimes indeed he relaxed; either because he despaired of success, or because he had need of the money which the licenses procured him: but about the middle of the year 1810, the intelligence of the distress and embarrassments of the merchants in Britain gave him fresh hopes, and induced him not only to persevere, but to be more rigorous in his perseverance.

If we merely compare the commercial embarrassments which took place about this time with those which occurred in the years 1793 and 1797, in point of pecuniary extent and consequences, we should be disposed to look forward to their termination as speedy, and to their effects as merely partial and temporary, in the same manner as trade and commerce regained their former footing shortly after the great failures in the latter years. But when we advert to the causes which preduced the embarrassments in the

year 1810, and the shock they gave the commercial credit and confidence; and compare them, in these most important points, with the embarrassments which occurred in the years 1795 and 1797, we shall be convinced that we are by no means justified in inferring or expecting, that, because in the latter periods commerce soon began again to flourish, and all traces of embarrassment vanished, therefore the same events will now take place.

We have already noticed some of the most important causes which produced the commercial embarrassments in 1810: the interdiction of our commerce on the continent, and even the partial suspension of that interdiction, which, holding out great profits, tempted many to embark in speculations ultimately ruinous; the access which we gained by our conquests in South Ame rica, and afterwards by the revolution in the mother-country of Spain, to a people eager after our manufactures, and who had hitherto obtained them only in an inadequate supply, and at a very exorbitant price. Here again the spirit of speculation was at work: some it ruined or greatly embarrassed immediately; others, who were excessively fortunate in their first adventures, it led, through the temptation of that very good fortune, to hazard all their gains, and to raise all they could on credit; and thus, by pushing their adventure too far and by aiming at too large a profit, to lose all they had previously gained, and to involve those who had lent them money in their own ruin. But another very striking difference be tween the embarrassments in 1793 and 1797, and the year 1810, was, that at the former periods not only were they partial and momentary, as arising from a state of things

which

which necessarily soon reverted to their usual courses, or at least adjusted themselves to a new direction of trade; but also as falling on men whose capital was undoubted, and who, though the check commerce had received had for the time prevented them from selling the merchandize in which that capital was invested, or from receiving their remittances if it had been sold, had not traded much beyond that capital, and therefore in their embarrassments involved but few in difficulties or ruin. In the year 1810, on the contrary, there was little or no prospect that commerce would revive: the causes which had struck at its prosperity not only continued to exist, but to increase in strength and permanency; whilst the want of confidence and credit, created by the embarrassments to an unusual degree, extent and duration, would even have prevented the merchant from taking advantage of the revival of trade. The paper system had been carried to such an extent, not only by the bank but by individuals, that men of the most substantial property found themselves possessed principally if not entirely only of bills, as the representative and security of that property. As all were nearly in the same state, no mercanțile man knew what he was really worth, or how far he could depend upon the bills he held: those from whom he had taken them he might indeed believe to be secure; but they in their turn might be connected with others, either by giving or accepting bills, and thus the ruin of one might bring down destruction on many. In such a state of things the merchant could have no temptation, even if he had the ability, to engage again in trade to any great extent. If his property was principally vested in bills of

which he was doubtful, it is evident he could not: and what property he might have engaged in commerce, he would be anxious to put into the shape of money, in order that if the bills he held proved not good, he might have wherewith to support his credit.

While things were in this state, consternation and suspicion struck still deeper among the mercantile menby another occurrence. Another distinction, besides those we have already marked, between the merchant of the present day and the British merchant half a century since, is, that the former draws much of his gain from speculating in the funds, and in the loans which government annually need. This also proves, what has been already observed, that the merchant of the present day prefers in his pursuit of gain that path which can be pursued with the least industry and knowledge; and in which wealth is reached rather by good fortune, chicanery, and the arts of gambling, than by perseverance in more slow but more honourable methods. The loan for 1810 had been taken by the houses of sir Francis Baring 'and A. Goldsmidt, at a very advan tageous rate for the public. Probably, if commerce had flourished, the contractors for it might have dis posed of it with a small profit, or at least with little loss: but com. merce being almost annihilated, and money of course in great demand to meet the existing and threatening difficulties, the omnium fell to a considerable discount. Even then little of the loan could be disposed of. About this period sir F. Baring died; and though not the slightest suspicion was entertained of his wealth, yet his death still further depressed omnium. Mr. Goldsmidt, the other holder of the loan, found

himself