=Source.=--_The Political Life of Sir Robert Peel_, by Thomas
Doubleday. London, 1856. Vol. I. pp. 329-331.
The most trustworthy account of the almost insane operations
of 1824 and 1825 is perhaps that of Mr. Tooke, the well-known
author of the treatise on "High and Low Prices," who in his
"Considerations on the State of the Currency," published in 1826,
immediately after the panic, thus describes the steps that led to
it.[2] Speaking of the latter months of 1824 and the first six
months of 1825, Mr. Tooke thus proceeds:
"Never did the public exhibit so great a degree of infatuation,
so complete an abandonment of all the most ordinary rules of
mercantile reasoning, since the celebrated bubble year of 1720,
as it did in the latter part of 1824 and the first three or four
months of 1825.
"The speculative anticipation of an advance was no longer confined
to articles which presented a plausible ground for some rise,
however small. It extended itself to articles which were not
only deficient in quantity, but actually in excess. Thus coffee,
of which the stock was increased compared with the average of
former years, advanced from 70 to 80 per cent.; spices rose in
some instances from 100 to 200 per cent., without any reason
whatever, and with a total ignorance on the part of the operators
of everything connected with the relation of the supply to the
consumption.
"In short, there was hardly an article of merchandise which did
not participate in the rise; for it had become the business of
the speculators, or of the brokers, who were interested in the
raising and keeping up prices, to look minutely through the general
prices-current, with a view to discover any article which had not
advanced, in order to make it the subject of anticipated demand.
If a person, not under the influence of the prevalent delusion,
ventured to inquire for what reason any particular article had
risen, the common answer was, 'Everything else has risen, and
_therefore_ this ought to rise.'
"Whilst such were the transactions in the markets for goods,
and whilst there was an extension of the system of loans to the
transatlantic states, some of them affording little or no security,
but almost all coming out at a premium, an enlarged field was
presented for the spirit of gambling to enter upon. New mining,
insurance, and other schemes, were set on foot, on the principle of
joint-stock companies, in immense number.
"The earliest South American mining speculations or associations
formed in this country had been entered into with considerable
circumspection, the parties with whom they originated having, by
local information and connexion, secured comparatively beneficial
contracts, and priority of the working of mines known to be most
productive. These apparent advantages being made known, attracted
numerous persons to buy shares from the original subscribers at
a progressively increasing premium. The great gains--or rather
premiums in anticipation of gains--thus obtained by one or two of
these associations, held out an inducement to the formation of new
ones.
"It is well known how numerously mining and other joint-stock
companies sprung up, and how successful they were for some time
in catching and turning to account the disposition for hazardous
adventure which now pervaded the nation. The operators on the
share market made the new schemes the basis for an enormous extent
of gambling. Many persons, quite removed from all connexion with
business--retired officers, widows, and single women of small
fortune--risked their incomes or their savings in every species of
desperate enterprize. The competition and scramble for premiums
in concerns which ought never to have been but at a discount,
were perfectly astounding to those who took no part in such
transactions. These operations in shares had an effect like that
of speculations in goods, in adding to the mass of the circulation
of paper and of credit; and this, be it still kept in mind,
concurrently with the addition which had been made to the Bank of
England issues.
"It is not possible to compute, with even any approach to accuracy,
the amount of the addition to the total of the circulating medium
by these united causes; but if I were called upon to hazard
an estimate, I should conjecture that the whole amount of the
circulating medium, including the transactions on credit without
the intervention of paper, must have been, on the average of the
four months ending April, 1825, _little if at all short of fifty
per cent. above what it had been in the corresponding period of
1823_. The approximation of this estimate to the truth is rendered
probable by the consideration that, upon the principles which
determine money prices and nominal values, such a general rise of
prices, amounting in some instances to above 100 per cent., without
even the allegation of any general scarcity, could not have taken
place without an immense expansion of the circulating medium."
Tooke's _Considerations of the State of the Currency_, 1826, p. 47.