Reactions to the Panic
Late in June 1825, at almost the end of the session, Hudson Gurney warned parliament that a new monetary crisis was near at hand. He explained how the circumstances had evolved. Deflation stemming from ‘the enormous blunder’ of 1819, when resumption of cash payments was begun, had been countered in 1822 by inflationary government measures. Hence, from 1823,‘prices rose, interest fell, money became a drug. Thence, all the Bubbles and Projects, and Joint-stock companies, and Poyais loans, and the frauds of the Share markets—creating an immense mass of floating paper engagements’. At present, with the price of gold fixed by the Act of 1819 at,£3.17s.101/2d. per ounce the metal was being exported. This meant that soon the Bank of England would be obliged to reduce its note issue and set the economy on a deflationary course again. This, Gurney predicted, would have the effect of ‘stopping the whole country’.1
KeywordsFree Trade Money Supply Cash Payment Exchequer Bill Note Issue
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