"Walter Scott and the Financial Crash of 1825: Fiction, Speculation, and the Standard of Value"

Although radicals and economists had been attacking the fiscal “speculation” of the credit economy since the seventeenth century as akin to forgery and theft, many conservative commentators on Britain’s financial affairs embraced it as the source of the heroic and imaginative power of debt and credit. This essay reads Walter Scott’s Letters of Malachi Malagrowther and The Chronicles of the Canongate as “speculative” responses to the financial crisis of 1825. Following a period of intense economic expansion, primarily in Latin America and mostly based on highly speculative development plans, and facing a sudden loss of confidence in the banking sectors, the British government and the Bank of England tested various forms of economic diversification. Rather than assuming total responsibility for the new debt loads, the banks, supported by legislation, converted it into a variety of repayment and deposit schemes in smaller institutions, including, for the first time, bank branches. But in Scotland, such schemes also entailed replacing an autonomous and thriving financial community. In the letters, Scott attempts to revive the idea of “speculation”—which I define as both an act of imagination and an act of seeing—against English models of economic diversification. Chronicles documents the failure of this speculative economy and replaces it with a tenuous if critical mode of socio-economic comparison.