Alexander J. Dick, “On the Financial Crisis, 1825-26”


The crash of 1825-1826 was the first modern financial crisis. Unlike earlier speculative bubbles, the 1825 crisis was not caused only by exogenous circumstances like war or overzealous investment. The real cause of the 1825 crisis was the diversification of the finance economy into tiny investment units—a loan here, an insurance policy there—offered as seemingly responsible ways to maintain credit and generate capital. When the market finally did crash, no single group or class could be blamed for causing it. Economists came to realize that the market was always at the mercy of booms and busts and that no single individuals or professions within it could be said to be in charge of it. In other words, 1825 marks the moment at which capitalism grew from an ideological enterprise into a global condition. 1825 also marks a crucial transition in the publishing industry, the point at which the traditional market for vellum-bound epics and triple-decker novels was eclipsed by cheap reprints and serial publications. It thus signals the end of what we might call the Romantic ideal and the emergence of an existential malaise in English literature that persists in Victorian writing and beyond.

Bank of England

Figure 1: The main Bank of England façade, c. 1980

The crash of 1825-1826 is sometimes called the first modern financial crisis. Popular accounts of the crash have occasionally exaggerated its immediate effects, but there is no question that it had a marked influence on the way people thought about the economy, the state, and their place within them.[1] It was in the wake of the 1825 crisis that economists realized not only that Britain had a fully commercial society but also that commerce operated according to rules and principles in which individuals had little direct, moral influence either as legislators or as managers. Cultural commentators and literary writers began to conceive of the market economy not as something distinct from the self or its communities but rather as the condition in which all selves and communities exist and to which, paradoxically, they owed that existence. If the late Georgian and early Victorian periods were an era of existential crisis, one instigator was the 1825 crash.

Speculation and Diversification

Historians often think that the 1825 crisis was a speculative bubble or mania, like the Tulip Mania of the sixteenth century or the map iconMississippi and South-Sea schemes of the 1720s. There are similarities. Like these earlier crises, the 1825 crisis was fueled by a frenzy of speculative investment. But in the earlier cases, the success and collapse of the ventures could be blamed on misguided people or extraneous circumstances: a bad harvest, a war, and so on. In the wake of the South-Sea bubble, conservative critics like Alexander Pope and Jonathan Swift and Whig moralists like Daniel Defoe and James Thompson found new support for their view that real value lies in real property and civic virtue, or the struggle to maintain them, rather than in speculation or fashion. The distinction between commerce and property or, as Raymond Williams labeled them, ‘society’ and ‘culture,’ continued through the eighteenth century. Though they are not each without specific complexities, the economic crises of the early 1760s, the 1790s, and the 1810s, were all connected directly to ongoing military expenditures. The economic controversies surrounding these crises reflect fundamental divisions in Britain between an aristocratic order and a new commercial spirit.

The 1825 financial crisis was different. It was occasioned neither by war nor by fashion but rather by ordinary financial activity—an investment here, a loan there—conducted in good faith. The roots of the crisis lie precisely in decisions and actions intended to stabilize the financial system overall. In June 1816 the British government instituted the first official gold standard in history. With the end of the war against map iconFrance, economists, Parliamentarians, and radicals campaigned to resume cash payments that had been suspended in 1797 and return the country to establish a currency based on the convertibility of paper into gold, the so-called “ancient standard of the realm.”[2] The introduction of such a standard would limit the Bank’s ability to issue money at will, restrain the national debt, and prevent forgery. Itself non-circulating, gold would be the standard for all other currencies, a mixture of low-value token coins and limited, high-value notes. Just about everyone endorsed the new standard: from the Tory Prime Minister, Charles Jenkinson, the Earl of map iconLiverpool, whose father had helped devise the scheme in his 1805 Treatise on the Coin of the Realm, and the cabal of ‘philosophical radicals’ led by the educators Jeremy Bentham and James Mill, to the Jewish stock-broker David Ricardo and his protégé, the economist and Edinburgh reviewer, J. R. McCulloch.

But the Bankers and the government understood that suddenly limiting loans and note issues would panic the markets and ruin the country’s farmers who had sustained the war effort through cheap credit.[3] Rather than lifting the suspension and refusing to issue paper, the bank and the government introduced a series of measures to shift the economy gradually onto a self-restraining standard without risking confidence. First the Bank stockpiled a massive amount of gold (newly available from the continent) but did not release it in order to keep its price high and prevent its customers from cashing in their notes. Second, they issued a series of low-yield, low-risk stocks at reduced discounts. On its part, the government made gold legal tender only for transactions greater than 40 shillings (2 pounds), released a new series of 3% bonds, and mounted a massive building campaign of roads, ships, gas lighting, churches, and schools.

The availability of money inspired the public to invest in new firms, funds, banks, and insurance agencies. These investments were not seen at the time to be excessive in any way. On the contrary, most of them were extensions of ordinary investment activity made possible by the increasing diversity and availability of loans and stocks. Times were good, as one contemporary account related:

We see the fields better cultivated, the barns and stockyards more fully stored, the horses, cows, and sheep, more abundant and in better condition, and all the implements of husbandry improved in their order, their construction, and their value. In the cities, towns, and villages, we find shops more numerous and better in the appearance, and the several goods more separated from each other; a division that is the infallible token of increased sales. We see the accumulation of wares of every kind adapted to the purses, the wants, and even the whims of every description of customers.’ (cited in Martineau, History 2.3).

But some observers noticed that the market in precious metals had grown up in the wake of the resumption of cash payments, and the discovery of mines in several newly independent Latin American countries had sent a good deal of the newly created capital overseas. In a letter to The Times published on April 2, 1825, Jonathan Williams warned of the inevitable calamity that would ensue. The map iconBank of England was shipping most of its existing metallic reserves overseas as part of the economic effort to increase its stock of gold reserves. Consequently, the Bank and its customers were in their quest for gold already operating within a paper system. “On the whole,” Williams wrote, “there appears to be a craving, violent demand for money, or the materials of money, (that is, gold and silver), in various parts beyond the seas; and as the world knows that (in our present humour at least) we care for nothing but paper, it is quite natural that every application should come to us; and so we get rid of the gold and silver.” He appealed to the Bank of England to “see the wisdom of early fear” and stop payment to get its house in order. Over the course of the year, many editorials and pamphlets appeared charging that the shipment of precious metals (rather than its import, as has been proposed) would eventually destroy the whole system.

In late April 1825, the Directors of the Bank of England began to curtail the frenzy and recoup their lost reserves by slowly withdrawing their notes from general circulation and calling in loans to joint stock companies. Investors began to sell their stocks and the market took a sudden dive. Many who had been encouraged to invest out of a general sense of well-being suffered heavy losses. Others tried to redeem their notes at local banks and were met with bemusement and reluctance, which only intensified suspicions. On December 10, a run on country banks was declared in the press and the panic intensified. Even prominent merchants and bankers were stunned by the rapidity of the crash. Henry Thornton Jr., the 25-year-old nephew of a former Governor of the Bank of England and son of Henry Thornton, the author of An Enquiry into the Paper Credit of Great Britain and an architects of the gold standard, came close to ruin when the family firm Pole, Thornton was forced to stop payments. His sister Marianne, in a letter to a close family friend, the evangelical reformer Hannah More, wrote that customers were withdrawing their capital at the rate of thousands of pounds. Apparently, one of the partners even “cried like a child of five years old” (cited in Forster 108).

What distinguishes the financial mania of the early 1820s from earlier bubbles is that it was caused not by ‘speculation’ but by diversification. On their own, each investment represented a tangible moment of economic transaction with real economic consequences and benefits. By the same token, the brunt of the crisis was felt by those who were neither adventurers nor charlatans, but people who were merely at the mercy of the bankers whose own profit depended on the confidence of their customers. In her autobiography, published in 1853, Martineau noted that her “father never speculated; but he was well nigh ruined during that calamitous season by the deterioration in value of his stock. His stock of manufactured goods was larger, of course, than it would have been in a time of less enterprise; and week by week its value declined, till, in the middle of the winter, when the banks were crashing down all over England, we began to contemplate absolute ruin” (Martineau, Autobiography 129). The fundamental problem in the market was not that investors were over-extending themselves but rather that they did not have enough information to appreciate how over-extended everyone else already was (Cooper 374).

And yet, the market was not significantly damaged by the failure of many institutions and individuals within it. On the contrary, the crash probably did more to centralize and thus strengthen finance than any similar collapse before it. At the time, the response of the banking community was desperate. The London bankers and their clients insisted that the government suspend cash payments as they had done in 1797 to enable them to maintain their credit. They were not responsible for the collapse. They alleged that the smaller banks and investment firms channeling capital into diverse and uncharted investments were the real culprits. The government refused. The gold standard was in place; no interference in the financial system was necessary. In response, the bankers, including the Governors of the Bank of England continued to issue notes at low interest rates anyway. Over time, however, the banks came to see that the real cause of the crash had been structural problems with their own lending protocols and not only with the mismanagement of smaller partners.  Indeed, the government’s actions in the aftermath of the crash also helped to change the way finance was conducted in Britain. To help alleviate the panic, the government made three proposals: (1) the Bank of England would replace small firms with branches; (2) London banks would be allowed to compete for government business; (3) they would finally extend the gold standard to map iconScotland, where it had not been in effect until now, to curtail the Scots’ reliance on paper money. One of the consequences of the 1825 crash, then, was the centralization of the financial industry itself. The economy became not national, as Eric Helleiner and other historians have suggested, but rather international. The relationship between finance and regional or national identity was from that point on only symbolic–its real power lay in the constant flow of capital.

Crisis, Confidence, and Christian Economics

Edinburgh Review and the Scotsman. Convertibility, he claimed, would ensure economic stability; the blame for rising prices must be placed squarely on Parliament and the Bank of England for not understanding the principles of political economy and for extending credit far in excess to what the economy could hold to aristocratic landowners and country farmers. In February 1826, McCulloch published in The Edinburgh Review the first of three articles on the financial crisis, entitled “Thoughts on Banking.”  He understood “the vast advantages resulting from the substitution of a well regulated paper currency in the place of gold or silver” and that “the present distress” has not “in any degree shaken our confidence in the opinions we formerly advanced” on money, circulation, and convertibility (264). As long as the Bank limits its issues of notes and bills to a proportionate quantity of gold, then there will be a natural restraint on the amount of capital in circulation, leveling supply and demand, and creating a climate of assurance and trust. “Unfortunately,” in the real world, “no such security can be given. . . . The widest and most comprehensive experience shows, that no set of men have ever been invested with the power of making unrestricted issues of paper money, without abusing it; or, which is the same thing, without issuing it in inordinate quantities” (266). Since the Bank of England is a profit-making enterprise and since printing money is cheap, “is it to be supposed that they would not avail themselves of such an opportunity to amass wealth and riches?” (267). McCulloch acknowledged that trade had drained the country of metals and coin. But this was because so much paper currency was available to circulate in its place. In Scotland, where there is little gold and a small population, there are also a limited number of financial institutions whose publicized records ensure that their customers always know their worth (282). In England, with its hundreds of country banks, with their secretive metropolitan investors, mistrust is inevitable—and this leads to further demands for credit: “it is self-evident, inasmuch as the Bank of England and the country banks are the only issuers of paper, that when an over-issue does actually take place, it must be wholly owing to some erroneous proceedings on the part of one or both of these parties” (269).

By June, however, when he published the third article, “The Late Crisis in the Money Market Impartially Considered,” something had shaken McCulloch’s faith. The financial crash was not the fault of ignorant greedy bankers but rather the diversification of the market. “The advantages which any one class of producers derives from an increased demand for their peculiar produce, are uniformly exaggerated, as well by that portion of themselves who are anxious, in order to improve on credit to magnify their gains, as by the whole body of those who are engaged in other businesses.” But this growth can also lead to over-confidence:

The adventurous and sanguine. . . crowd into a business which they readily believe presents the shortest and safest road to wealth and consideration; at the same time that many of that generally numerous class, who have their capitals lent to others, and who are waiting until a favourable opportunity occurs for investing them in some industrious undertaking, are tempted to follow the same course. It occurs to few, that the same causes that impel one to enter into a department that is yielding comparatively high profits, are most probably impelling thousands. . . . A disproportionate quantity of capital being attracted to lucrative business, a glut in the market, and a ruinous depression of prices, unavoidably follow (71-2).

He claims no artificial forms of “arbitrary regulation” or “Legislature” can create capital, “it can only force it into artificial channels.” Yet he does not deny that “restrictions and prohibitions are, in every instance, productive of uncertainty and fluctuation.” Indeed, he goes on, once the capital of the country has been veered into speculative or “artificial” channels where it properly should have no business being, “a reaction must commence. There can be no foreign vent for their surplus produce; and, whenever any change of fashion, or fluctuation in the taste of the consumers, occasions a falling off of demand, the warehouses are sure to be filled with commodities which, in a state of freedom, would never have been produced.” Although these are actions and reactions that, according to the proper principles of economic behavior should not happen, they do—often with real, and dire, consequences. “The ignorant and the interested always ascribe such gluts to the employment of machinery or to the want of sufficient protection against foreign competition! The trust is, however, that they are the necessary and inevitable result of acting on an artificial and exclusive system; and of the application of those poisonous nostrums, by which the natural and healthy state of the public economy is vitiated and deranged” (75-6).

Other economic thinkers were already realizing that the rational individualism that McCulloch and others of his circle assumed was too simplistic. It was in 1825, for instance, that Samuel Bailey mounted his sustained attack on David Ricardo’s theory of value for assuming that value could be situated in the cost of production and not, as Bailey asserted, only in the fluctuating relative values between commodities.[4] As Boyd Hilton and A. C. Waterman have shown at length, the most popular version of economic theory in the late 1820s and 1830s was an evangelical variety of Christian Political Economy, popularized, in particular, by Thomas Chalmers and Richard Whately. The evangelicals presumed that human action, motivated by individual desire, entailed some degree of suffering, but such suffering was also part of a Divine plan. The application of this doctrine of “atonement” led to the formulation of such important socio-economic principles as the business cycle, the idea that, as even McCulloch accepted, all excess production caused even by artificial demands would inevitably result in higher prices and eventually in an economic downturn.  That the doctrine of “atonement” began to achieve a high level of prominence in the economic arena during the late 1820s has a good deal to do with the charisma of writers like Chalmers, who was also a social reformer and electric preacher. But the financial crash of 1825, which left many families struggling to understand their dire straights, also encouraged the popularity of Christian economics.

The End of Romanticism?

In a way it is a convenience of history that the crisis of 1825 so closely follows the deaths of Keats, Shelley, and Byron, for these events might easily be thought to mark the end of “high” Romanticism and the advent of a “late” variant. Of course, the early demise of the young Romantics had nothing whatsoever to do with the financial frenzy of the 1820s—except perhaps in the sometimes dashingly Byronic guises of its garrulous speculators and the equally Manfred-esque aura of the downfalls. Still, there is a direct connection to be made between the events of 1825 and 1826 and the fate of literary Romanticism by way of the effects of the crash on the literary publishing industry. The crash did not destroy the publishing industry; there were just as many publishers in Britain in 1827 as there had been in 1825. But it did change its character.[5] Many of the old order of British publishers, those responsible for the mainstays of literary ‘high’ Romanticism, such as John Murray, Constable and Ballantyne, Taylor and Hessey, and Hurst and Robinson were severely shaken if not undone by the crisis. Romantic-era publishers were in the habit of paying their authors handsomely for their labours—as was their gentlemanly due—sometimes in the realm of hundreds of guineas, and often extended credit at terms much lower than those of the banks. To defray these advances, the publishers themselves were frequently in debt to prominent bankers and, at times, less than scrupulous creditors. As a result, when the banking crisis came, the publishers found themselves unwittingly caught in the downward spiral.

Some of the publishers survived. John Murray was involved, albeit indirectly, in the mining speculation. Early in 1825, Murray was approached by John Diston Powles, a prominent backer of the South American mining campaign. Powles had enlisted the young Benjamin D’Israeli to write a series of pamphlets in support of the mining campaign as well as edit a new journal, The Representative. Murray published the pamphlet and agreed to publish the journal on a promise from Powles to pay for its expense, from which Murray in turned paid D’Israeli 150 pounds. Powles never paid, and eventually D’Israeli paid Murray back. Another of Murray’s authors at the time was Captain Francis Bond Head (later Lieutenant-Governor of Upper map iconCanada), who rode 6000 miles across South America on behalf of the Rio Plato Mining Association investigating various reports of a new El dorado in map iconArgentina and map iconChile. Head duly reported that the entire scheme was fraudulent, and then published with Murray an account of his travels entitled Rough Notes Taken During Some Rapid Journeys Across map iconthe Pampas and the map iconAndes, for which Murray paid 100 guineas.  How much Murray himself had invested in the American schemes is not clear.  But the failure of The Representative and fears of financial calamity were damaging Murray’s health. In October 1826, having survived the crash, Murray wrote to Sharon Turner that he considered “the apparent misfortune as one of the chastening class which, if suffered wisely, might be productive of greater good” (Smiles 217).

The Romantic writer most severely affected by the crash–one who was both a close associate of Murray’s and an icon of literary publishing–was Sir Walter Scott. Scott’s publishers, Ballantyne and Constable, had for a decade been banking more or less on the continuing success of the Waverly Novels. In the early 1820s Constable partnered the firm to Hurst, Robinson in London, who would be responsible for English distribution. As Ross Alloway explains, like most booksellers in the early nineteenth century, Constable paid his authors and printers with bills of accommodation—essentially circulating credit statements—endorsed by each and transferable between the signees as money (4). In 1825, the London banks began to limit the number of these they would issue. Robert Cadell, Constable’s financial officer, realized that if Robinson did not redeem any bills co-signed by Constable, then Constable would collapse. Cadell insisted that Constable assure the partners and customers of their solvency and negotiated with many prominent map iconEdinburgh bankers to ease their demands on the firm’s credit (6). Scott recorded in his journal that Constable in fact had persuaded Scott to lend the firm an additional 10,000 pounds above what they already owed him. Constable also suggested travelling to London directly to negotiate with the banks for surety against Scott’s copyright, valued at about 37,000 pounds. For a time, the partners thought these actions would keep them afloat. But then Constable declined to travel, claiming ill health. The firm declared bankruptcy on January 21 (Alloway 6). Scott feared that he would have to give up map iconAbbotsford. The courts took some umbrage: rather than be forced to sell his home, Scott was allowed to sign over the rights to all future fictions to his creditors. At Cadell’s behest, and to get around the legal restraints, Scott embarked on a series of prose works in addition to new fiction. The last five years of his life were also the most productive—and the rate of work probably killed him.

Scott’s involvement in the 1825 crash did not end there. Perhaps galvanized by his own bankruptcy, Scott took to defending the Scottish banking system against the threatened incursion of the gold standard. In February and March, Scott contributed three letters to the Edinburgh Weekly Journal in the name of Malachi Malagrowther.[6] Scott argued that the gold standard is a mere “innovation” and its importation to Scotland would break the terms of the union, which ensured Scottish financial independence. In contrast to the hierarchical tendency of English central banking, Scottish banks comprise a “republic, the watchful superintendence of the whole profession being extended to the strength and weakness of the general system at each particular point; or, in other words, to the management of each individual Company” (Scott, Letters 38). The medium of this security is publication: “every Bank throughout Scotland is obliged to submit its circulation, twice a-week in Edinburgh, to the inspection of the Argus-eyed tribunal. . . . The public have, in this manner, the best possible guarantee against rash and ill-concocted speculations, from those who are not only best informed on the subject, but, being most interested in examining each new project of the kind, are least likely to be betrayed intro a rash confidence, and have the power of preventing a doubtful undertaking at the very outset” (39).

Yet, such confidence in Scotland’s financial ‘republic’ belies Scott’s increasing embarrassments. In their defense of Scottish free banking, the Letters occasionally slip into a jingoistic and anti-modern mode. Scott hints that the Scots might take up arms to defend their financial liberty, such as the moment when he alludes to the magically-numbered “45” Scottish members of Parliament or refers to the government as “the enemy.” In a way, such truculence signals the persistence in the later Scott of a traditional, almost medieval honour system that underlies the ideology of the earlier novels and, as Margot Finn argues, the culture of indebtedness that pervaded the aristocracy through the nineteenth century. But the slippage from self-reliance to retribution also reflects a decline in Scott’s confidence—something apparent too in his journal and in his literary works. Woodstock, which was finished about the time Scott was writing Malagrowther, is the last of three historical romances about disguised kingship. While Woodstock retains a faith throughout in Charles’s kingly disposition, it also betrays anxieties about the viability of monarchy at a time when they were outpaced by more abstract notions of individual faith and political expediency. Ultimately, what saves Charles is the regard that others have toward him, the people’s recognition of his right to rule. By contrast, the characters in the Chronicles of the Canongate written immediately after Scott’s bankruptcy, struggle to identify with an economy that they find foreign and alienating if also inevitable.

With the established houses’ setbacks, hitherto less-reputable publishers than Murray and Constable took advantage of the slump and completely changed the literary market. The high end of the market for vellum-bound poetry and triple-decker novels fell off, and the lower end market for cheaper productions, pamphlets, miscellanies, sermons, and children’s books took off. Taking advantage of the misfortunes of their former competitors, smaller publishers like Thomas Tegg began to buy up their stock at a fraction of the original costs and reissue them in cheap editions (Sutherland 157). Other publishing entrepreneurs such as Charles Knight and Henry Coburn soon followed Tegg’s lead and the market was soon awash in affordable editions. The equation, assumed by Murray and others, between literary reputation and expensive, limited editions was superseded in the market by the idea that financial reward came from mass sales. Indeed, establishment publishers responded in kind. Murray began issuing his Family Library and Longman the Cabinet Encyclopedia (Hilton, Mad, Bad 20). The vogue for these series reached its apex in the early 1830s with Scott’s Magnum Opus and Bentley’s Standard Novels. The demand for cheaper fiction after 1826 also inspired one of the most crucial literary trends of the nineteenth century: serialization.

After the opening of the book market, poetic satire, the watchdog of financial corruption, had a brief revival. The most famous of these is Thomas Love Peacock’s Paper Money Lyrics. Composed at the end of 1825, but not published until July 1837 (when a new financial panic was brewing), Peacock’s lyrics are a series of short parodic poems, imitating many of the leading lights of the Romantic movement (Wordsworth, Southey, Coleridge, Shelley, Scott, Moore) and contemporary economists. In “A Mood of My Own Mind, Occuring During a Gale of Wind at Midnight While I was Waiting to Write a Paper on the Currency by the Light of Two Mould Candles,” W. W., “Distributor of Stamps,” muses that the “news” of the financial collapse “my spirit doth perplex.” It seems that “out of all the mass of promises to pay,/ the devil will get his due.” Amid gales and spells of panic and outrage, W. W. nevertheless continues to side with the bankers and agents: “I hold the paper money men say truly, when they say. They ought to pay their promises, with promises to pay;/ And he is an unrighteous judge, who says they shall or may,/ Be made to keep their promises in any other way.” Peacock deliberately parallels Wordsworth’s confessional quietism with an almost conscious disregard for material economic conditions. “The promise works extremely well, so that it be but broken/ ‘Tis not the promise to be kept, but a solemn type and token,/ A type of value gone abroad on travel long ago,/ And how it’s to come back again, God knows, I do not know” (232). Similarly, “S.T.C., Esq. Professor of Mysticism,” retells the story of the three men in a tub as “The Wise Men of Gotham,” “who science drank,/ from Scottish fountains free;/ The cash they sank in the Gotham bank/ Was the moon beneath the sea” (236).

That Peacock decided not to publish in 1825 suggests some reluctance or embarrassment on his part at the tenor of his own verse. As a devoted employee of the East India Company, Peacock was a natural antagonist of the Bank of England and all speculative ventures that seemed to be operating outside the regulative bounds of the imperial mandate. Yet his association of the “paper money men” with the leading economists and poets of the age suggests the degree to which finance had saturated even the most seemingly “natural” belief systems that culture had to offer. This feeling only intensified in the years between 1825 and 1837 when, in the wake of another financial panic, Peacock finally decided to publish the lyrics. His 1837 “Preface” to the series indulges in an elaborate image of bodily disease:

The Lyrics shadow out, in their order, the symptoms of the epidemic in its several stages; the infallible nostrums, remedial and preventative, proposed by every variety of that arch class of quacks, who call themselves political economists; the orders, counter-orders, and disorders, at the head of affairs, with respect to joint-stock banks, and the extinction of one-pound notes, inclusive of Scotland, and exclusive to Scotland; till the final patching up of the uncured malady by a series of false palliatives, which only nourished for another eruption the seeds of the original disease. The tabes tacitis concepta medullis has again biased law in new varieties of its primitive types—broken promises and bursting bubbles. Persons and things are changed, but the substance is the same; and these little ballads are as applicable now as they were twelve years ago. They will be applicable to every time and place, in which public credulity shall have given temporary support to the safe and economical currency, which consists of a series of paper promises, made with the deliberate purpose, that the promise shall always be a payment, and the payment shall always be a promise. (221-2)

The image of the nation ailing under monetary quackery is actually an old one: the money-blood metaphor goes back at least to the late seventeenth century, if not earlier, and it was common in the economic controversies surrounding the Seven Years War and the suspension of cash payments. But what distinguishes Peacock’s satire is its sense of utter hopelessness. There is no moral alternative here in economic science or in poetry.

Peacock’s complaint represents the end of what we call Romanticism, associated with high philosophical ideals and nostalgic systems of social value, and the beginning of a new, modern era characterized by hesitant realism and moral skepticism. But it also represents something else: the separation of this skepticism from a book market in which it feels itself to have no place. As a result, complex, self-reflexive poetry (which modality Peacock both satirizes and exemplifies) begins to recede into its more limited academic milieu, while cheaper, didactic and sentimental prose fiction takes over the literary marketplace in its wake. Yet, even here, the lesson is not that class or reputation can redeem the disasters of financial speculation but rather that the market, now as utterly ubiquitous as it is mysterious, must be survived. The key transitional work here is Martineau’s Illustrations of Political Economy, a compendium of 25 novellas each explaining a principle of political economy and modeled on James Mill’s Ricardan Elements of Political Economy. (See Lana L. Dalley, “On Martineau’s Illustrations of Political Economy, 1832-34.″) A long-standing reading of the Illustrations regards them as a vehicle for the way the Victorians came to survive the ups and downs of their economy—a reading that fits well with Martineau’s Unitarianism. Yet, as Brian Cooper observes, the Illustrations is “less of a tonic” than critics have surmised (363). Berkeley the Banker, comprising two installments of the Illustrations and covering financial panics and forgery respectively, demonstrate not how to avoid or overcome economy-induced panic but rather that surviving such panic is a matter more of “character” than of principle (Cooper 364). There is no perfect solution to the cycles of finance, just as there is no gold standard. One has to steel oneself for the inevitability of confusion and collapse.

As Martineau exemplifies, Victorian fiction comes to assume crisis as a crucial and defining formal principle. Instead of providing systematic moral solutions or idealistic utopian alternatives to the hardships that accompany the modern financial system, the novel and attendant genres come to model a disposition of individual choice or, frequently, embarrassment, in response to the diversity of commodities and investments the new economy offered and the risks it entailed. It is in this respect that to this day Victorian novels straddle the divide between academic and popular markets that the 1825 crisis had opened up. It is no wonder, then, that many novels by Dickens, Trollope, Eliot, and Hardy are about financial catastrophes and economic calamities.[7] The extent to which these works reflect the tribulations of later monetary crises reflects their indebtedness to the lessons of the first.

published December 2012

Alexander Dick is tenured Assistant Professor in the Department of English at the University of British Columbia. He is the author of Romanticism and the Gold Standard: Money, Literature, and Economic Debate in Britain 1790-1830 (Palgrave 2013) and of more than a dozen articles and chapters on eighteenth- and nineteenth-century British literature, philosophy, and political economy. He is also the co-editor of four collections of essays, including (with Angela Esterhammer) Spheres of Action: Speech and Performance in Romantic Culture (Toronto 2009) and (with Christina Lupton) Theory and Practice in the Eighteenth Century: Writing Between Philosophy and Literature (Pickering, 2008). His article, “‘The Ghost of Gold: Forgery Trials and the Standard of Value in Shelley’s The Mask of Anarchy” won the European Romantic Review Best Article Prize for 2007.


Dick, Alexander J. “On the Financial Crisis, 1825-26.” BRANCH: Britain, Reprsentation and Nineteenth-Century History. Ed. Dino Franco Felluga. Extension of Romanticism and Victorianism on the Net. Web. [Here, add your last date of access to BRANCH].


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Lana L. Dalley, “On Martineau’s Illustrations of Political Economy, 1832-34″


[1] Sutherland, for instance, lists several publishers’ memoirs referring to 1826 as a “lost year” (148). In her History of the Thirty Years’ Peace, Harriet Martineau called it “a chapter of modern English history which the moralists will regard, and will for a century come to regard, with wonder and shame” (1).

[2] Contrary to accepted wisdom, there was no gold standard in Britain (or anywhere else for that matter) before it was legislated into existence in 1816. See my Romanticism and the Gold Standard.

[3] The details below come primarily from Bordo and Neal.

[4] This view would later influence Marx. See Karatani.

[5] On the effects of the crash on the publishing industry, see Jack (421-24), Erickson (19-46), and Mason (22-3).

[6] The first letter was published as a pamphlet entitled Thoughts on the Proposed Change of Currency. Toward the end of the year, the three letters were collected and reissued as The Letters of Malachi Malagrowther. See Scott, xi-xxxiv.

[7] See recent studies by Klaver and Goodlad.