26 Ira Ryner 



As illustrative of the statement that investment in speculative 

 enterprises has a tendency to curtail exports we have a case cited 

 by Professor Dewey. According to him, "the value of flour and 

 grain imported into the United States as a rule was insignificant, 

 while that exported after 1830 was on the average about six mil- 

 lion dollars annually. \n 1837, however, the exports of grain 

 fell off nearly a million dollars, wiiile the imports of grain were 

 increased more than four and a half million dollars."^ Thus, 

 while previously to 1837 Vv'e have an insignificant import and 

 large export trade in grain, in 1837 we have a falling off of ex- 

 ports and an enormous 'increase of imports. 



Turning now to the gold movement, we find an efflux of the 

 precious metals from England in 1833 and 1834 due, though not 

 exclusively, according to Crump, 'to the loans made to Spain and 

 Portugal.^ During the slight panic of 1835, however, England 

 recovered her gold. Just after the issuance of the specie circular 

 in the United States gold began to leave for that country, and 

 this outward movement continued until the early part of 1837, 

 in spite of a rise of i per cent in the rate of discount. This 

 movement of the precious metals is generally attributed to the 

 money stringency in the United States occasioned by the attempt 

 to place the currency on a specie basis. 



During the whole of the year 1837 gold was continually pour- 

 ing into England.^ The crisis had broken out in 1836, and the 

 country was now g'oing through a process of liquidation pre- 

 paratory, apparently, to a resumption of prosperity. The bank 

 rate was lowered i per cent in February, 1838, and the reserve 

 remained' at 'a high level until the last month in the year. In 

 Decem.ber an export of gold began, and heavy outward shipments 

 continued until the latter part of the next year, when the rate of 

 discount was raised from 4 per cent to 6 per cent.* As a result 

 of extensive cotton speculation on the part of the management 

 of the United States Bank, a second crisis had broken out in the 



'Dewey, Financial History of the United States, 226. 

 "Crump, The Key to the London Money Market, 29. 

 'Crump, Ibid. 

 *Seyd, The Bank of England, Its Note Issue, and Its Error. 



168 



