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Thomas Attwood saves the day!

April 12, 2011

On 10th December 1825, a run on the country banks began and one week later extended to the London banks. Almost seventy failed. Hunt quotes: ‘The exchanges were against this country; speculations in all sorts of property, in banks and joint stock companies, was at its height and the nation was in a state of financial fever. The Bank of England had scarcely a million worth of gold in its vaults’. 

Anticipating this, on the 22nd of November Thomas Attwood had addressed a note to Lord Liverpool, the Prime Minister, urging him to order the Bank of England to prepare an issue of £1 notes without delay but this proposal was not taken seriously.

 The panic escalated 

It was clear to Attwood that Britain was about to experience a severe financial crash. Desperately Att­wood appealed to his old friend and supporter Sir Robert Peel  (opposite) who sent a letter of introduction to the home secretary, Peel’s son . . . 

The panic escalated and on the 16th December, banks failed and there was a run on the Bank of England. Attwood travelled to London and, upon presenting Peel’s letter, was taken to see the prime minister. He explained that in panic bankers would be faced with demands for gold and they would withdraw their own small notes leaving none for ordinary business, the payment of wages or the buying of pro­visions. The subsequent distress would have to be relieved by the Bank of England. Prompt action was needed because it would require two hundred Bank clerks for six weeks merely to sign the necessary quantity. 

Two days later Pole & Thornton of London closed and brought down forty-three allied country banks. Panic-stricken, the Bank’s governor and deputy governor and the cabinet held angry and recriminatory discussions. 

Finally Attwood’s proposals were taken seriously 

After a briefing session with Lord Liv­erpool, Attwood was taken to meet the Chancellor of the Exchequer and then to meet a committee of directors from the Bank of England. At each stop Attwood outlined the measures he considered necessary and the Bank accepted Attwood’s proposal. The threat to the national credit was averted by following his advice and the Bank issued £5 million pound notes and purchased exchequer bills. Rothschilds then secured £300,000 gold for the Bank and, seventy-two hours later, £400,000 was sent from Paris. The crisis was over. 

Sources:

Thomas Attwood: Halesowen’s forgotten genius: an article by Joseph Hunt, written in 1980 and reprinted in BMI Insight, the journal of the Birmingham and Midland Institute and Library – Issue 4, 2001 

The passage relating Attwood’s action in anticipating the financial crisis of 1825 was an extract from The Birmingham Journal: March 8th 1856, quoted by Joseph Hunt in his article. 

Thomas Attwood: the biography of a radical by David J. Moss, McGill-Queens University Press, 1990 

Note:

The late Joseph Hunt founded the Romsley and Hunnington History Society and wrote a history of the area and of Halesowen, collaborating with his son Julian. He was the administrator of the Birmingham & Midland Institute for many years.

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