There had been a crisis in England’s silver currency for almost 100 years. The silver coinages actual contained silver with had an intrinsic value as a precious metal. For most of the eighteenth century the silver was worth more than the face values of the coin. This led to shortages. Silver coins were melted down and exported. Others were clipped by those wishing to pass the coin on and still gain a profit from some of the precious metal in it. Counterfeits were issued to replaced the good quality “Mint Shillings”
Due to silver’s softness, it could also be sweated-placed in a bag with other coins, shaken vigorously and the dust caused by the friction collected and sold. A “Dictionary of the Vulgar Tongue (1811) attributed this practice to Jews- an interesting example of the enduring anti-Semitic prejudices.
Many of the circulating coins were in a very poor state, especially those of a lower denomination, which circulated quickly. Two of nicknames for the 6d were the “cripple” and the “crook back”- this gives some hint of the condition that they were in .Therefore, even when they could be found, silver coins could often be damaged, completely smooth disks that could have come from anywhere. A letter in the Cambridge Chronicle on 27th September suggested that only one in 30 sixpences had any monarchs head on at all.
By 1811 there was a shortage of copper coinage as well, as prices were rising and they too were being melted down. Employers could often not find enough small coins to pay their workers. Many took the opportunity to produce their own copper coinage when this was allowed by parliament in 1797
By 1816 there system was a jumble of copper, silver, gold and bank paper. The preamble to the new 1816 law describes the problem
“Whereas the silver coins of the realm have, by long use and other circumstances, become greatly diminished in number and deteriorated in value, so as not to be sufficient for the payments re quired in dealings under the value of the current gold coins, by reason whereof a great quantity of light and counterfeit silver coin and foreign coin has been introduced into circulation within this realm, and the evils resulting there rom can only be remedied by a new coinage of silver money,”
The Coinage Act of June 22nd enacted a gold sovereign-a new word- of 20 shillings to replace the Guinea of 21 shillings. New sixpences and shillings were planned for February 1817 and the crown and half crown coins were introduced. All silver coins were of a higher face value than the value of the metal; there was now nothing to gain from sweating or clipping them. On September 16, Lord Liverpool approved the plan to take in the old silver coins and plan to distribute the new ones via the banks. This was kept secret; and like many secrets, caused panic when the news leaked out
There had been panics in June when the Bill was passed. It normally started when the local banks showed reluctance to take in the debased silver currency. It would then spread to locally businesses and then would cause distress to the poor who could not spent their money in the shops. This happened in Norwich in June; the bank of England had to step in the guarantee the exchange of any silver than had not been distressed or was not French or Irish.
By September, panic started again businesses all over the UK had stopped accepting the old debased silver currency. A rumour had spread that the Bank of England would not accept the old coins, despite Vansittart stating the opposite in June 1816. By September, old coins were not been accepted in Smithfield Market and this spread throughout London. London pawnbrokers were not prepared to redeem the small pledges it had, to the disadvantage of both sides.
The Lord Mayor of London, Francis Hobler probably stopped a panic by announcing that all silver coinage that was not foreign was still legal tender and there was a controlled tumult as the Bank of England exchanged the silver coins for Bills of Exchange. It did not help in the building of confidence that the replacement coins were not ready and not planned until February 1817. However, the whole operation went relatively well. Protection of the currency was one of the few responsibilities that the state took on with any enthusiasm
There’s a chapter about the currency crisis in my new book