Other
large sums were sent to Prussia and to Denmark. The effect of this
sudden drain of specie, felt first at Paris, was communicated to
Amsterdam and Hamburg, and all other commercial places in the North of
Europe.
The paper system of England had certainly communicated an artificial
value to property. It had encouraged speculation, and excited
over-trading. When the shock therefore came, and this violent pressure
for money acted at the same moment on the Continent and in England,
inflated and unnatural prices could be kept up no longer. A reduction
took place, which has been estimated to have been at least equal to a
fall of thirty, if not forty per cent. The depression was universal; and
the change was felt in the United States severely, though not equally so
in every part. There are those, I am aware, who maintain that the events
to which I have alluded did not cause the great fall of prices, but that
that fall was natural and inevitable, from the previously existing state
of things, the abundance of commodities, and the want of demand. But
that would only prove that the effect was produced in another way,
rather than by another cause. If these great and sudden calls for money
did not reduce prices, but prices fell, as of themselves, to their
natural state, still the result is the same; for we perceive that, after
these new calls for money, prices could not be kept longer at their
unnatural height.
About the time of these foreign events, our own bank system underwent a
change; and all these causes, in my view of the subject, concurred to
produce the great shock which took place in our commercial cities, and
in many parts of the country.
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