In May, 1819, the British House of Commons decided, by a unanimous vote, that the resumption of cash payments by the Bank of England should not be deferred beyond the ensuing February.  The restriction had been continued from time to time, and from year to year, Parliament always professing to look to the restoration of a specie currency whenever it should be found practicable.  Having been, in July, 1818, continued to July, 1819, it was understood that, in the interim, the important question of the time at which cash payments should be resumed should be finally settled.  In the latter part of the year 1818, the circulation of the bank had been greatly reduced, and a severe scarcity of money was felt in the London market.  Such was the state of things in England.  On the Continent, other important events took place.  The French Indemnity Loan had been negotiated in the summer of 1818, and the proportion of it belonging to Austria, Russia, and Prussia had been sold.  This created an unusual demand for gold and silver in those countries.  It has been stated, that the amount of the precious metals transmitted to Austria and Russia in that year was at least twenty millions sterling.  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.