South America, was paving the way for the most ruinous mania
of speculation known in England since the south sea bubble. It was well
that sound and sober-minded economists now guided the action of the
government, and that Liverpool proved himself a worthy successor of Sir
Robert Walpole during the great financial crisis of 1825.[72]

The speculative frenzy of 1825 differed from the railway mania of the
next generation in that it had no solid basis of remunerative
investment. The development of the railway system, after the application
of locomotive steam engines to iron tramways, offered a legitimate
promise of large profits, and this promise would have been still more
amply realised but for the shameful waste of capital on competition and
law expenses. It was otherwise with the dupes and victims of the rage
for speculation which possessed all classes of society in 1825, and
arose out of an immense accumulation of wealth for which no safe
employment could be found at home except at a modest rate of interest.
The weakening of the hold of Spain on South America left her colonies
open to foreign trade, but the enterprises there and elsewhere which
absorbed the hard-won savings of humble families, by thousands and tens
of thousands, were nearly all chimerical, and some of them grotesque in
their absurdity. Whether or not warming-pans and skates were actually
exported to the tropics, it is certain that Scotch dairy-women emigrated
to Buenos Ayres for the purpose of milking wild cows and churning butter
for people who preferred oil. The incredible multiplication of
bubble-companies was facilitated by a marvellous cheapness of money,
largely due to an inordinate issue of notes by country bankers, and even
by the Bank of England, in spite of the fact that gold and silver were
known to be leaving the country in vast quantities, especially in the
shape of loans to France. The inevitable reaction came when the Bank of
England contracted its issue of notes in order to arrest the drain of
gold; goods recklessly bought up had to be sold at a fearful loss, bills
upon which advances had been made proved to be of no value, and several
great London banking houses stopped payment, bringing down in their fall
a much larger number of country banks dependent on them.

In the month of December, 1825, the crisis was at its height, and it is
stated that within six or seven weeks after the failure of the banking
firm of Pole & Company on the 5th