British Speculation in South America

The new outlet for sales which thus seemed to offer itself gave rise to a violent speculation with all the distinctive characteristics of a boom—general optimism, great sales, industrial activity, and rising prices in the articles of speculation. As early as 1806 Sir Home Popham, the second in command of a naval expedition, had made of his own accord an attack on the mouth of the Plata and had taken Buenos Aires, upon which he sent home eight wagon-loads of silver accompanied by a boastful circular addressed to the manufacturing towns of England together with a list of all the goods that could find a ready sale in his conquest; but as ill luck would have it, Buenos Aires had to be evacuated before the goods had yet arrived. Now that access to those markets was secured, merchants were attracted, by the memory of the hope aroused by Popham's circulars and the loads of silver, into incredibly bold ventures in the way of exports. McCulloch, the political economist, describes the frenzy, after a contemporary source, as follows:

We are informed by Mr. Mawe, an intelligent traveller resident at Rio Janeiro, at the period in question, that more Manchester goods were sent out in the course of a few weeks than had been consumed in the twenty years preceding; and the quantity of English goods of all sorts poured into the city was so very great, that warehouses could not be provided sufficient to contain them, and that the most valuable merchandise was actually exposed for whole weeks on the beach to the weather, and to every sort of depredation. But the folly and ignorance of those who had crowded into this speculation was still more strikingly evinced in the selection of the articles sent to South America.... Some speculators actually went so far as to send skates to Rio Janeiro.

The final consequences of these speculations could not be advantageous, but for the time being the situation seemed flourishing. The total exports during 1808 exhibit approximately unaltered figures, but the exports of cotton goods rose by 29 per cent., irrespective of the change in price. But this did not hold good of Central and Northern Europe, where the British trade statistics indicate a very heavy decline for both British goods (from £5,090,000 to £2,160,000) and colonial goods (from £5,730,000 to £3,270,000). This, however, is largely counterbalanced by a corresponding rise in exports to the Mediterranean countries; and other information points to considerably larger exports to the north of Europe, as shall be shown shortly.

If we examine the position on the mainland and especially in Germany somewhat more closely, we find the greatest change in 1808 to be a unique rise in the price of raw cotton and a shortage in the supplies, which were obtained mainly from the sale of captured cargoes. At the Michaelmas Fair in Leipzig the price of Brazilian cotton (Pernambuco) rose 223 per cent. above the normal; and, as before, this was especially felt in France, where the textile industry in Nantes was enabled by government loans to go over from cotton to wool. As Great Britain herself suffered from a shortage of raw cotton, this can only in part be ascribed to the Continental self-blockade. With regard to its efficaciousness, Napoleon was able to record an advance in one quarter, namely, in Switzerland, where the smuggling of British goods ceased after 1808; but Holland, which was far more important from this point of view, was still a tender spot. It is true that King Louis, as early as January, did something to bring about an effective barring of the coast; but the smuggling went on so openly that, according to the evidence of Louis himself, the shops of Leyden displayed without disguise quantities of British manufactures. By decree of September 16, 1808, Napoleon, who a little earlier had asserted that there were people who had pocketed 20,000,000 francs through smuggling in Holland, had recourse in violent indignation to the measure of closing the frontier of France to all colonial goods from Holland. This seems to have had a certain effect, as one can see from the fact that the imports of British yarn and British manufactures, which last had already been insignificant, to Leipzig through Holland ceased entirely at this time. A month later (October 23, 1808) there was issued an extremely draconic Dutch decree as to the closing of the ports. This decree was so outré that it bears every mark of applying the principle suaviter in re, fortiter in modo: all exports were prohibited until further notice; no commercial vessels, domestic or foreign, might put in at any Dutch ports, under any pretext, on pain of being fired at; fishing vessels were to return to their port of departure, but were to be confiscated on the least sign of intercourse with the enemy, &c.