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years (before 1805) Prussia had flattered herself that, by keeping aloof, she would avoid the storm, that she would succeed in turning the desperate strife between France and Austria to her own benefit, by enlarging her territory and augmenting her consideration in the North of Germany, and, hitherto, success had in a surprising manner attended her steps. At once all her prospect vanished, and it became apparent, even to her own Ministers, that this vacillating policy was ultimately to be as dangerous as it had already been discreditable." The state of universal contempt into which Prussia had fallen, precisely similar to that which she did in the Crimean War from an analogous course of conduct, was at last too strong even for her, and just then the Emperor Alexander arrived at Berlin, and, by his influence, a secret treaty was signed on the 3rd November by the two States, to curb the ascendancy of France in Europe. Prussia bound herself, in the event of Napoleon not agreeing to certain conditions to be offered him, to declare war against him on the 15th December, and the King bound himself by the most solemn oaths to adhere to his engagements. After considerable delay, the Prussian Minister started for the head quarters of the French Emperor on the 28th. Napoleon, who was then manoeuvring in preparation for the Battle of Austerlitz, but who was perfectly aware of the nature of Haugwitz's mission, put off receiving him for a short time, and sent him to Vienna. On the 2nd December, Napoleon destroyed the Russian and Austrian armies in the great Battle of Austerlitz, before the eyes of their respective sovereigns, and the Prussian Minister immediately rushed off to congratulate Napoleon on his successes and to propose to him a treaty of Alliance by which Prussia was to seize all the continental dominions which belonged to her ally the King of England. This treaty was signed with Napoleon on the 15th December, the very day on which Prussia had agreed to declare war against him. In the following March, Prussia, under the compulsion of Napoleon, issued a decree, prohibiting British merchandise from entering any port in the Prussian dominions, thus cutting off a principal source of the supply of corn to Great Britain.
35. Swift and sure was the retribution that fell upon Prussia for her matchless meanness and perfidy in 1805. Napoleon was
perfectly informed of the object of Haugwitz's mission to him. "You have come," said he, "to present your master's compliments on a victory, but fortune has changed the address of the letter;" and, though he was too anxious to forward a measure which would consign her to public infamy, and embroil her with Great Britain, he did not, nevertheless, for one instant from that time, pause in his determination to destroy her at the first opportunity. "From the moment the treaty was signed, Napoleon did more than hate Prussia, he conceived for that power the most profound contempt." He proceeded to treat her with the most unmeasured arrogance, and, after a series of aggravated insults, that perfidious power was astonished to discover that Napoleon was secretly treating with Great Britain for the restitution of Hanover to its lawful sovereign. Negotiations for peace had been going on for some considerable time between France, England, and Russia, which led to nothing. The popular ferment in Prussia had been increasing for a long time from her disgraceful position becoming more notorious and galling every day, and the Government, with a rashness, violence, and imprudence, only to be surpassed by its perfidy, sent a haughty summons to Napoleon to evacuate Germany. This insane insult reached Paris on the 1st October, when Napoleon was already far on his way to Berlin, and on the 14th, Prussia met her well deserved doom at the twin battles of Jena and Auerstadt. Napoleon visited the tomb of Frederick the Great on the anniversary of the day on which, on the same spot, the King of Prussia had bound himself by solemn oaths to the Emperor Alexander.
36. Soon after Napoleon arrived at Berlin he issued the Berlin decree against British commerce, on the 21st November. This decree was soon afterwards met by a retaliatory order in Council on the part of Great Britain, and during the course of 1807, a series of decrees were issued both by England and France, each endeavouring to outdo the other in violence, ferocity, absurdity, and illegality, the result of which was, however, to exclude the British flag from every port of Europe, except Sweden. This state of hostility, the avowed object of which was the destruction of British commerce, led to a short supply, and an apprehended scarcity of every article of European production required as raw materials for our manufactures. The
natural consequence was a boundless spirit of speculation in these articles; and, under the influence of this speculation, the prices of all the products of Russia, and the East of Europe, rose to double and triple the ordinary figure. At the same period Spain was occupied by the French, and similar speculations tripled and quadrupled the price of Spanish wool. France, too, was supreme in Italy; and the produce of that country, chiefly consisting in silk, rose in a similar proportion. Nor had our own conduct been less ruinous in other respects. The vindictive nature of the orders in Council had proved so destructive to the rights of neutrals, that a rupture with America was imminent, which produced an equally speculative rise in the prices of American products, such as tobacco and cotton.
37. Speculation in these productions was favoured by an expected narrowing of the sources of supply; circumstances of an opposite nature came to excite still further perturbations in the usual course of trade. The entry of the French into Spain and Portugal had paralysed their power over their colonies, and the Great South American continent became from this time virtually independent. It had been hitherto rigidly closed against British commerce. On the 13th November, 1807, Napoleon published a decree in the Moniteur, deposing the House of Braganza from the throne of Portugal, and Junot took possession of Lisbon, and the Royal Family immediately embarked for the Brazils. These events opened up the whole of the South American trade to the British, and the speculation of the merchants swelled in a proportion commensurate to the vastness of the markets that were thrown open to them. A complete phrenzy of speculation seized upon the nation. spread from commerce to joint stock companies. The infatuation of 1720 was reproduced. Joint stock companies of all descriptions, for canals, bridges, insurances, breweries, and multitudes of others, started up like mushrooms. At the same time, the Bank of England fanned the flame of speculation to an extent far beyond the bounds of ordinary rashness. It is stated by Sir Francis Baring, in his evidence before the Bullion Committee, that since the restriction he knew of many instances of clerks not worth £100, who had started as merchants, and had been allowed to have discount accounts of from £5,000 to
£10,000, which demand, he said, was caused by the Bank, and not by the regular demands of trade, and which could not exist if the restriction were removed. The paper discounted by the Bank, which had been £2,946,500 in 1795, rose to £15,475,700 in 1809, and to £20,070,600 in 1810.
38. Along with this extravagant speculation, partly caused by it, and partly fanning it, a multitude of country banks started up in all directions, and inundated the country with their notes, exactly as had happened before 1793. In the year 1797, they had been reduced to 270; in 1808, they had increased to 600; and in 1810, when the Bullion Committee was appointed, they amounted to 721, and the quantity of paper they had put into circulation was supposed to amount to £30,000,000. At the same time, the Bank of England had increased its issues to £21,000,000, a quantity declared by some of the most eminent witnesses far to exceed the legitimate wants of the country.
39. Concurrently with these extravagant speculations and issues of notes, the price of gold bullion rose rapidly, and the foreign exchanges fell with equal rapidity, exactly the same symptoms as had been manifested in Ireland in 1804. The following figures, taken at intervals, are sufficient to shew the rapid rise of the price of bullion and the fall in the foreign exchange :
40. Under these circumstances, Mr. Horner, on the 1st February, 1810, moved for several accounts relating to currency and exchanges. Mr. Baring stated that guineas then brought 268. or 27s. The Bullion Committee were then appointed.
41. Before proceeding to analyse this famous Report and the evidence produced before it, we may observe that what has so frequently happened when two or more persons or occurrences have contributed to any result, if one of these persons or occurrences has been much more prominent than the rest, the others come, in course of time, to be forgotten, and the whole merit or blame is attributed to the one which has attracted most public attention. So it has been in this case. The Bullion Report of 1810 has, from various circumstances, attracted so much public attention to itself, as to have thrown completely into the shade the Report on the Irish Currency of 1804; and that Report seems to have been so soon forgotten, that the directors of the Bank of England in 1810 had little or no knowledge of it. The circumstances, however, of the derangement of the Irish currency, upon which the Committee of 1804 sat, were precisely identical with those of the English currency in 1810, which caused the appointment of the English Committee. The same sets of opinions were delivered and adhered to stoutly by the professional witnesses in both cases, and the Report of the Committee in each case was precisely identical; in each case they condemned the doctrines and policy of the Bank directors in the most emphatic manner. The Report of the Committee of 1810 is written in a more methodical and scientific form, and is superior as a literary performance, but the principles adopted and enforced in it are absolutely identical with those of the Committee of 1804.
42. It may be interesting to compare the composition of the two Committees, who at different times came to similar conclusions as to the principles that should govern the Bank in its issues during the restriction of cash payments. The Committee of 1810 consisted of Mr. Horner, Mr. Spencer Perceval, Mr. Tierney, Earl Temple, Mr. Brand, Mr. Parnell, Mr. Magens, Mr. Johnstone, Mr. Giddy, Mr. Dickinson, Mr. Thornton, Mr. Sheridan, Mr. Baring, Mr. Manning, Mr. Sharpe, Mr. Grenfell, Mr. Foster, Mr. Thompson, Mr. Irving, Mr. Huskisson, Mr. Abercrombie. On comparing this list with that of the Committee of 1804, it will be seen that there were only two members, Mr. Sheridan and Mr. Foster, who were on both Committees.