The preceding chapters may be instructively illustrated by a brief record of the variations in the value of Consols, and an examination of the trading and monetary disturbance in America which recently occurred. The illustration extends beyond its particular scope, since the factors whose action was evident are apparent more or less decisively in all stages of commercial troubles upon an extended scale.

I. Consols

Short history of variations in the price of Consols.

With a view to the detection of the recurrent causes of variation in the price of Consols the following brief history will enable an induction to be made by observing the conditions which are usually or always attended by the same results.

Prices In 1801

In 1801 the harvest was seriously deficient, and owing to the loss of this source of wealth, savings were reduced; the diminished demand compared with the unchanged supply of stocks resulted in a fall of price from 65½ in the preceding year to 55}.

Prices In 1802

In 1802 the price rose to 69⅛ as large imports of foreign wheat relieved the stringency of the former year.

Prices In 1803

The renewal of the war with France in 1803 entailed a considerable expenditure and borrowing by the Government, and the price, by the diversion of money from the market for investments, declined to 54½.

Prices In 1810

In 1810 the prices of commodities generally showed a substantial rise, and excessive supplies of raw materials were attracted to manufacturing industries with a view to sharing in this increased profit. Money accordingly was almost exclusively devoted to carrying on the augmented trades, and Consols, losing the support of buyers, gradually fell in price, descending to 56⅞ in 1813.

Prices In 1814

In 1814 trade (which had been depressed in the former year) resumed its natural elasticity, as a rebound from inaction, and the position was brightened by the country's success in the war. The French were retreating from Russia, which thus became open to trading enterprise. Gloomy feelings gave way to exaltation and hope; these found expression in a development of trade, and Consols advanced to 70½. But the Nemesis speedily arrived: overtrading (the stimulated manufacture of articles in excess of the genuine existing demand, and in the hope of that demand expanding), and the use of borrowed money in business had been incited by the former activity of trade: the need for manufactured commodities decreased: losses were sustained in consequence of the high rate of interest required upon the borrowed capital, and the unsaleability of superfluous goods: firms failed: commercial confidence or credit hence became undermined, and Consols revealed the general disquiet in a fall to 65¼.

Prices In 1818

In 1818 peace was proclaimed: money no longer devoted to the waste of war returned to commercial channels: peace fostered trade into vigour: savings thus became possible and found their way partly to Consols, which consequently rose to 79 3/8.

Prices In 1820

But again in 1820 the reaction in trade which inevitably and rhythmically follows a period of success, supervened: failure had been speedily forgotten: hope was always ready to be relit; industry grew inflated or hollow in its expansion; money was absorbed in the importation and manufacture of goods that were idly stored; credit received a shock from successive bankruptcies, and Consols fell to 67⅝.

Prices In 1822

The harvest of 1822 proved abundant and provided a new fund of wealth for extended trade and enlarged investment; and an increased demand for Consols was shown in the rise of price to 80$. A speculative mania thus ensued in 1823; securities were largely purchased on borrowed money in the expectation of a further ascent of price and profit; speculation, again, extended to subscriptions on a wide scale to foreign loans, and the importation of commodities from abroad. The mania eventually terminated in the customary collapse and the price of Consols fell to 73 J.

Prices In 1825

In 1825 a recovery of trade succeeded a previous depression, prosperity yielded a surplus of savings, and an excited rush to the market resulted in a response of higher values, Consols benefiting at the price of 93⅞.

The Lessons Of Failure Quickly Forgotten

This brief and fragmentary history (which need not be pursued, as the features described recur with regularity) is instructive and mournful; its general interest is the instability of human character and conduct; and the insignificant influence of success and failure upon the cultivation and steadiness of modes of judgment. There is an important sense in which we may rightly affirm that failure should not persist in memory, or hopeful energy would bo paralysed and progress arrested; but the melancholy lesson which the record enforces is the obliteration of failure in its genuine function as a beacon and guide to future acts. At the same time the reader here and there may acquire the command of his judgment in periods of perplexity by observing the punctual regularity with which depreciated values are succeeded by revival, and thus in his decisions become influenced by the steadying power of a sense of proportion.