Dick, "Walter Scott and the Financial Crash of 1825: Fiction, Speculation, and the Standard of Value"
Romanticism, Forgery and the Credit Crisis
"Walter Scott and the Financial Crash of 1825: Fiction, Speculation, and the Standard of Value"
Alex J. Dick
University of British Columbia
1. In 1822, the Scottish adventurer Sir Gregor MacGregor issued a bond on the London Stock Exchange to fund a British colony, Poyais, on the Mosquito Coast of Eastern Central America. A veteran of the Peninsular campaign and the Bolivian War of Independence—he was married to Simon de Bolivar’s sister—MacGregor told his investors, mostly fellow Scots, that he had family connections to the Darien expedition of the 1690s and the Jacobite Rebellion of 1745. He even claimed to be descended from Rob Roy MacGregor, who had been recently immortalized in a novel by Walter Scott. A national infrastructure and civil service, he bragged, were already waiting in Poyais for lawyers, bankers, and merchants. MacGregor raised close to 200,000 pounds; the next year, three ships carrying 240 settlers crossed the Atlantic.
2. By August, 180 of them were dead. The British press, always on the lookout for charlatans, accused MacGregor for having summarily duped his investors. Poyais, they said, was a fraud, a fiction, a country that didn’t exist. Interestingly, most of the surviving settlers accused MacGregor’s agents and publicists, not MacGregor himself, for spreading false information about the colony. But MacGregor had already decamped to France. For the next fifteen years, he tried to sell his Poyais scheme, at one point even penning a constitution, but he could not attract any further investment. He moved to Venezuela in 1838 and died penniless in 1845.
3. Gregor MacGregor was one of many pseudo-aristocratic fraudsters whose stories enliven historical accounts of eighteenth- and nineteenth-century bubbles and booms, from John Law’s Missisippi Scheme of 1720 to the Railway Bubble satirized in Trollope’s The Way We Live Now (1875).  Recently, however, historians of the Latin American and Caribbean independence movements have reassessed the relationship between military heroism, financial investment, and print culture to suggest that figures like MacGregor embody a complex mixture of fact and fiction, force and fraud, tradition and temerity that underlies the hybrid American identity (Brown). Likewise, literary scholars have argued that forgery and fraud in the Romantic period can hardly be understood simply in terms of a stark difference between fiction and fact; rather they must be treated as evidence of a new kind of subjective and, indeed, aesthetic consciousness in which truth and lies are always blurred.  Studies as different in kind as Tom Mole’s Byron’s Romantic Celebrity, Robert Miles’ Romantic Misfits, and Margot Finn’s The Character of Credit underscore the shifting intersections between gothic heroism, industrial print, personal debt, and media manipulation that constituted a new kind of literary and cultural celebrity. In this perspective, MacGregor seems less like a criminal and more like a Byronic hero.
4. The Waverley Novels, from which MacGregor drew some of his inspiration, also use the historical mystique of a Scottish cultural tradition to manufacture a myth of spectacular heroism to ground both the threat and the banality of Britain’s speculative commerce. Following Burke, Ferguson, and other “conservative” thinkers, Scott put monarchy at the centre of a pan-British bildung to guarantee national unity and economic purpose. The spectacle of the British monarchy was the standard—both literally and figuratively speaking—for its speculative finance and trade economy. I use the word “speculative” here in two senses: (1) as a synonym for “visual” in the sense that the hero or monarch who guarantees an investment tends to be visible or at least represented in highly iconographic terms; (2) to connote a sense of futurity or wishfulness, thereby acknowledging that the ventures being guaranteed by the hero or monarch are conjectural investments in a possible future. If these two uses of the term seem contradictory, they are, and most especially as they are used by Scott. Thus, to take a familiar example, in Waverley the idea of a reclaimed Stuart monarchy is embodied in the noble figure of Prince Charles, though his gambling and foolhardiness are also indications of the “speculative” nature of the Jacobite campaign. Scott’s monarchs are not absolutists. Bonnie Prince Charlie, Richard the Lionheart, and Charles II, among other of Scott’s monarchs, are fallible and sympathetic, charismatic, but often highly imaginative and, indeed, speculative. They often find themselves in situations where their authority is in doubt and their identities insecure. But, in the context of Scott’s historical romances, these qualities lend them the sheen of realism. Monarchy is seen in Scott to be something imaginary and, indeed, fictional (as it is in Burke) but nevertheless symbolically vital to the unity of the nation. Scott’s brilliant fictionalizations of the monarch as someone that understands the doubts and hesitations of his people, and falls into the same errors and doubts, make its ghostly presence the symbolic earmark of a lost but eminently valued historical tradition, one both ironic and redemptive. 
5. But something changed in the crisis of 1825. Scott was confronted with the possibility that the “speculative” national and political identity he had constructed for Scotland in his historical fictions and had linked in several of them with Scotland’s vibrant paper money system—The Antiquary, Rob Roy, The Fortunes of Nigel—would be lost in an ocean of debts and obligations under which both he and the nation found themselves. In the wake of the 1825 crisis, Scott was exposed as a bankrupt and the Scottish financial system, one of the most extensive in Europe, was charged with insolvency and impracticability. The solution to the crash, which included the reformation of the Scottish system, was not simply the institutionalization of a fixed standard of value—that had actually existed in England for a decade already—but rather the centralization or, in the language of the time, consolidation of British finance under the auspices of a central but largely invisible authority: the Bank of England. What is important about these reforms is that this central authority had no symbolic or visual presence: with the introduction of branch and deposit banking and by offering many, small alternatives for investment, the Bank of England assumed a new authority by diversifying itself and its services into a myriad of new exchange forms. In this way, the Bank succeeded where the London Corresponding Society and the Political Register had failed in loosening the government’s grip on economic decisions, only this was not in the service of social reform but rather of financial (and profitable) centralization.
6. My argument is that much of Scott’s later writing can be interpreted as a response to the process of financial consolidation through diversification. In several works published in the years during and following his financial collapse, including his most direct and sustained contribution to the debates about money, authority, and standardization The Letters of Malachi Malagrowther, Scott would attempt to revive rhetorically a spectacular standard of value. In my reading, “speculation” is not the problem which Scott and other critics of the Bank of England were trying to solve. Rather speculation was an alternative to the perceived consequences of financial diversification: that is, the way that the end of the wartime economy and the breakdown of the old monopoly trade networks produced a highly varied field of investment opportunities all existing as free but interconnected network of values and units that made the financial market almost impossible to conceive in humanistic or political terms. My sense is that this attempt to revive an economics of spectacle, which Scott writes into Letters of Malachi Malagrowther succeeded as a work of rhetorical polemic but failed as a work of monetary economics, in much the same way that Gregor MacGregor’s efforts to fund a colony on the back of a fictionalized heritage and military exploits both succeeded and failed to create a nation called Poyais. But the Chronicles of the Canongate, the collection of connected short narratives that Scott wrote in the aftermath of his own bankruptcy hearings and published in early 1827, suggests a different tone and a new purpose for historical fiction in the wake of the changes to the financial system precipitated by the 1825 crash. While many critics appreciate the melancholia that pervades these stories and the authorial narrative that connects them, I want to suggest that the dismay at the failure of spectacular heroism which Scott documents in Chronicles also offered a new way to conceive of the relation between fiction and finance. In Chronicles of the Canongate recurrent episodes of awkward or disturbed reading signal the failure of heroic specularity and mark a new kind of aesthetic expression.
The Panic of 1825: Speculation or Diversification?
7. Throughout the 1820s, Scott’s publishers, Archibald Constable and James Ballantyne, issued handsome advances to their authors. They hoped to generate a culture of gentlemanly condescension and respect that would belie their fundamentally commercial provenance (Eliot 94). In the meantime, through his London agents, Constable had invested heavily in the Latin American mining boom. By the end of 1825, caught in the tailspin of a financial bust, both houses were in serious trouble. Their most coveted asset and heaviest backer, Walter Scott, found himself in debt for more than 120,000 pounds. The following spring, in a hearing at Chancery meant to preempt bankruptcy proceedings, the judges gave Scott a choice: either sell Abbotsford or assign a sizeable proportion of the proceeds for all forthcoming works to his creditors. Scott agreed to the latter. Scott’s publishing interests were signed over to Robert Cadell, whom Scott regarded as a middle-class upstart.
8. To fulfill his financial obligations, but also to stem the tide of depression, Scott embarked on one his most productive periods: he completed a novel, Woodstock, the 9-volume Life of Napoleon, a collection of stories, Chronicles of the Canongate, the first volumes of his history of Scotland, Tales of Grandfather, several essays and reviews, and, in a brazen act of authorial truculence, the Letters of Malachi Malagrowther, an impassioned defense of the Scottish credit and banking systems.  Cadell knew that he was working with literary gold. Plans were already afoot to republish the complete Waverley series, the Magnum Opus. What connects these various projects is their testimony to a change in Scott’s authorial appearance. No longer mystified as a singular presence through the serial publication of individual novels, Scott and the Author of Waverley were systematically and serially “unbound” (to borrow a phrase from Benedict Anderson), that is spread through a myriad of genres and venues, from the shortest note to the complete works that never quite measure up to the totality they are meant to comprise. Rather than a mysterious presence on which the reading public could speculate as it absorbed each successive work in turn, Scott, his pseudonyms and personae, his editors and his publishers, became pieces in a puzzle that never produced a coherent image.
9. My interpretation of Scott’s late career is meant to suggest what happens to Romanticism in the 1820s and especially in the wake of the financial crisis of 1825. This crisis of 1825 is generally thought of as a “speculative bubble,” similar to earlier crises such as the South Sea Bubble of 1722. But there are important differences. The South Sea bubble and the Mississippi Scheme were caused by massive amounts of investment, much of it fraudulent, in monopoly “Adventuring” companies. The 1825 panic was caused by neither delusory investment nor imperialist autocracy but rather by a series of institutional adjustments that helped turn Britain from a centralized war economy to a decentralized peace economy.  What made these adjustments precarious was not speculation but diversification. When the war against Napoleon ended, the decision was made in 1816 to adopt a fully mono-metallic gold standard and begin the processes necessary to resume cash payments. This could not happen until the Bank of England had accrued sufficient cash reserves. But an immediate curtailing of loans and notes would have caused a massive recession (which happened anyway, though for different reasons). The Bank was compelled to balance the need to reduce the amount of credit in circulation with the need to maintain commercial credit and sustain both the economy and its own profits. They did this in several ways, none of them entirely honest. First, they stockpiled a massive amount of gold (newly available from the continent) in order to keep its price high and prevent its customers from cashing in their notes. Then they withdrew a large number of notes from circulation that the government had been relying on for various repayments. Then they refused to lower discount rates to farmers and traders who had been adversely affected by the post-war recession. Not surprisingly, the Bank and the government received a good deal of negative press. But they received more criticism, notably from radicals like Cobbett, for delaying the return to cash payments than for trying, albeit for selfish motives, to slow its adverse effects. 
10. Once convertibility was in place, the bank and the government had to maintain their own solvency. Again, several tactics were employed. The government, which had not only built up a massive amount of public debt during the war years but had also, in a fit of post-war political fervor, eliminated the income tax that had funded that debt in the first place, issued a series of new 3% consols—bonds sold to investors on the proceeds of indentured aristocratic estates and other government owned property—in an attempt to stimulate investment without direct monetary controls.  Similarly, the Bank of England did its utmost to maintain consistent price levels by issuing low-yield, low-risk stocks at reduced discounts. The East-India Company followed suit. As a result, brokers and consumers had a range of investment choices, but this also meant that the prices of each stock tended to fluctuate in a way that had not been seen during the war years when all investment had been directed at a common goal. Two other factors diversified the market further. First, the government introduced several infrastructure initiatives: road works, ship-building, gas lighting, schools, and the like. This in turn helped to stimulate new manufacture and trade and led to the formation of new firms, funds, banks, and even insurance agencies in which the public could invest. Second, the resumption of cash payments and the newly-won political independence of several Latin American states threw open the market in precious metals. Many of the major metropolitan banks invested heavily in these mining ventures. The credit produced by them stimulated the domestic securities market which in turn led to the opening of more joint stock companies and country banks outside the capital.
11. Of course, there were charlatans and rapscallions among the mining and gasworks companies: Gregor MacGregor was only the most notorious. Eventually, the amount of cheap credit circulating through the market and the irregularities that the mining industry seems inevitably to confront began to make investors uneasy. By the end of 1825, there were bankruptcies and bank failures everywhere: some of the leading London firms went under. But what is interesting about the financial “bubble” of the early 1820s is that for the most part, and unlike the South Sea and Missisippi bubbles of 100 years earlier, the economic activity was “real” rather than fictitious, that is, the investment actually produced tangible, material results. Indeed, the leading cause of the boom was the rush to invest in precious metals, the very “real” thing that was—and is—often assumed to be the only correct alternative to such fictitious schemes.  The real cause of the panic was not credit itself, but its ready availability in small, diversified portions. On their own, each of these investments represented a tangible moment of economic transaction—purchasing an insurance policy, buying stock, or broking a loan—and all of them have real economic intents and benefits. Collectively, however, these individual transactions added up to far more activity than could be conceived within the terms of a “national economy,” that is, the domestic foundation on which most people based their confidence in the financial system.
12. When the bubble finally burst, the government and the Bank of England had no option but to react in a seemingly tangible manner. The country already had a convertible gold standard and, thanks to a sudden influx of metals from their trusted agent, Nathan Rothschild, the Governors of the Bank of England did not have to suspend cash payments (as they did in 1797) to prevent a bank run. But the Governors of the Bank of England also decided to extend their note issues in 1826 as a way to slow down incidences of bankruptcy. To the Liverpool administration, this was an alarming proposition because it entailed further increases in public debt, which the government felt it could not sustain, economically or politically. The source of the problem, the government contended, lay with smaller banks and investment firms through which local credit was apparently being channeled into diverse and uncharted investments. In January, 1826, the government made three suggestions. First, the Bank of England would set up its own branches to replace the smaller firms. Second, it would allow competition for government business from other London firms within the metropolis. Third, they would finally extend the gold standard to Scotland—where it had not been in effect before—as a way to curtail the Scot’s dependence on paper money and thus their dangerous inclination for financial adventure. The administration did not really believe that any of these suggestions would be implemented, the first being very difficult, the second being unwarrantable, and the third political suicide.
13. In the first instance, however, the Bank called the Prime Minister’s bluff and proceeded to open branches around the country, leading eventually to the demise of the country bank and independent note issues. Consequently, other London firms increased their share of the financial market, since they no longer had direct competition from country bankers. Rather than curtail investment, though, these actions encouraged it in even more diversified ways thanks to the new practices of deposit banking and credit facilitation that large and more secure banks, including the Bank of England, could offer. This meant that at the same time as it was diversifying so radically, the financial system also became more centralized—though exactly where that central power lay was hard to discern. For a single scheme, it is possible to cultivate a visible, intentional, symbolic standard, something toward which the money promised can be balanced against: a commodity to be produced, a service to be procured, a hero to found a colony. Even in gigantic schemes like a war such symbols—king and country and all that — usefully defray the fear and anxiety that accompanies massive debts. But when a network of diversified investments exceeds the bounds of customary symbolic associations, when the channels of these investments are controlled by a huge consortium of competing interests, when the real value of money can no longer be “seen,” where does it lie? What is its standard? These are the questions that Scott asked in his responses to the panic of 1825.
Diversity and Speculation in The Letters of Malachi Malagrowther
14. Scott defended the Scottish banks on the essentially nationalist grounds that a “diversity” of financial institutions will better serve the mixed British economy than either an abstract principle of “uniformity” or “innovation.”  His ground for such a claim was essentially nationalistic. “For God’s sake,” Scott declared, “let us remain as Nature made us, Englishmen, Irishmen, and Scotchmen, with something like the impress of our several countries upon each! We could not become better subjects…if we all resembled each other like so many smooth shillings!” (373). Via such contentions, the attempt to bring the gold standard to Scotland is thus easily interpreted as an act of rank imperialism and its failure a triumph of the Scottish anti-colonial spirit; as Silvana Colella points out, “the banks present a specifically Scottish alternative to the English search for uniformity . . . . Diversity rather than uniformity is, in fact, the distinguishing feature of the Scottish monetary system” (58). Beyond national autonomy, though, Scott also committed himself to a speculative system based on local trust or “confidence” as opposed to a consolidated system based on diversified, mathematical equivalence. Because its relatively small population and rugged geography prevented the easy transport of metallic currencies, Scotland had little in the way of metallic reserves, relying instead on locally-issued paper credit. This credit was kept afloat by the combination of private diligence and public accountability. To English charges that Scottish banks were financially suspect because they did not rely on reserves of precious metals, Scott answered that the security of the Scottish banking system is based on a form of public accountability, “the watchful superintendence of the whole profession being extended to the strength and weakness of the general system at each particular point; or, in other words, to the management of each individual Company” (336). The mechanism of this security is publication: “every Bank throughout Scotland is obliged to submit its circulation, twice a-week in Edinburgh, to the inspection of the Argus-eyed tribunal“ (337). The Scottish banking system is a “republic” and “the public have, in this manner, the best possible guarantee against rash and ill-concocted speculations, from those who are not only best informed on the subject, but, being most interested in examining each new project of the kind, are least likely to be betrayed intro a rash confidence, and have the power of preventing a doubtful undertaking at the very outset” (337). Scott models his idea of the “republic” of Scottish finance on the model of the sociable public sphere of the Scottish Enlightenment republic of letters. The English “seized with a jealous tenacious, wrangling, overbearing humour” intended to undermine the very Enlightenment principles, Scottish of course, which had brought Britain its economic power in the first place. “We cease at once to be the Northern Athenians… we have become the caterpillars of the island instead of its pillars” (361). In letter three, Scott invents an English rival, Christopher Chrysal, who defends the English system on a decidedly irrational love for gold. This is why Scott can give Scottish banking the somewhat paradoxical epithet of “practical system.” It is a system, to be sure, but it is one that embodies the dynamics of real practice and not the enthusiasms of theory. As a system, then, Scottish financial practicality is something to be admired, a mark or “impress” (as I quoted early) of their national spirit.
15. The association of Scottish bankers and “the Northern Athenians” points to a speculative strain of early nineteenth-century Scottish economic thought. This is not the political economy of Ricardo and McCulloch that “rose” in the period just prior to the 1825 crash, and strongly influenced the policy decisions made after it, but a conservative economics that looked to the country estate rather than the trading house for its guarantees against “rashness.” For what scholars of this period often overlook is that the field we call “political economy” consisted of a wide variety of doctrines and perspectives; these differences, moreover, had a profound influence on the ways money was used and defined during the 1810s and 1820s. The root of this branching tree of monetary positions, surprisingly, is Adam Smith’s Wealth of Nations (1776). Smith actually offers two quite distinct theories of money. The first, in Book I, chapter 4, "Of the Origin and Use of Money," cribbed from Francis Hutcheson’s System of Moral Philosophy, uses classical history and legal arguments to suggest that the value of money lies not only in the scarcity and utility of precious metals but, more importantly, in the “virtue” of those governments that have been able to keep the inherent value that results from the scarcity pure (2.53-64). This historical aesthetics was given pride of place by Dugald Stewart in his lectures on political economy at the University of Edinburgh and then disseminated throughout England by his students Francis Horner, Henry Brougham, James Mackintosh, and James Mill in several articles in the Edinburgh Review. Smith’s second chapter on money, in Book II, chapter 2, "Of Money Considered as a particular Branch of the general Stock of the Society" is a much more technical description of the way money circulates in relation to other forms of capital. It is here that Smith warns that an extensive paper money system was only so many “wagons in air” borne by “Daedalian wings.” Smith argued here that the most effective way of regulating paper credit is not to associate it with unadulterated coin, but to limit it to small communities in which the various borrowers and lenders are already known to each other and to terms of short, manageable durations: the so-called “Real Bills Doctrine.” By contrast to the defense of gold, this more nuanced defense of paper credit was appropriated by financial experts and bankers to give some credence to their actions during the wartime financial crash—most notably the continuation of the suspension of cash payments—though by and large they appealed to practical expediency more often than they did philosophical precedent.
16. The “bullion controversy,” the pamphlet war debating the link between the market price of gold and the amount of banknotes in circulation that took place between 1809 and 1812, was a contest between those who appealed to Smith’s classical theory of value and those who looked to his modern account of paper credit. But after the war, there was a shift in the intellectual valence of this debate. Smith’s historical account of the gold standard gave way to David Ricardo’s argument in his Principles of Political Economy and Taxation (1817) that money does not need a standard of value. The ebb and flow of commodities and exchange is all the market needs. For Ricardo, exchange value was determined only by market forces and had nothing to do with utility. Corn, which had held pride of place as the most useful commodity available, was valuable only to the extent of its supply or demand. Labour, the ultimate source of value, was marginal to the exchange value of the commodities produced by it. For Ricardo and his followers—notably J. R. McCulloch who popularized Ricardo’s ideas in the Edinburgh Review and elsewhere—the economy had no symbolic guarantees, no inherent values. It was a diverse field of competing interests and, for the first time, classes: agriculturalists vs. merchants vs. labourers. And it was this model of economic diversity that drove the consolidation of economic policy after the crisis of 1825.
17. In response to these developments, conservative critics complained that economy was loquacious, impenetrable, and ultimately self-serving on one hand and built on little more than pure self-interest on the other.  But behind these complaints, many of them Scottish in origin, lay a counter-model of economic organization. Agriculturalists like Sir John Sinclair and Lord Lansdowne argued in pamphlet after pamphlet that the benevolent state, modeled on the manor, should control the economy paternalistically. The guarantee of this control was the managerial acumen and moral fiber of the benevolent landowner. Many were prepared to accept Ricardo’s practical account of how the market economy worked, though they refuted his claim that capitalism was the only possible basis for the idea of economic or, more to the point, social value. In an 1817 issue of Blackwood’s, for instance, John Gibson Lockhart wrote a positive review of Ricardo’s Principles. But he followed it with a blistering attack on McCulloch’s claim that Ricardo had proven that the various classes of society exist in a state of perpetual antagonism. “If political economists chuse to depart from the common use of language,” Lockhart wrote, to label the relations between classes “a perpetual opposition of interests, and, consequently, a state of perpetual hostility, let them have the consistency to call it a general opposition of interests; and let the rest of mankind admit that, if in one sense they be mutual enemies, in a more comprehensive view of the matter, they are mutual friends and cannot do without one another.” This contention leads Lockhart to compare the benefits of landed property and inherited wealth against the cut-throat competitiveness of the Ricardian marketplace:
18. Temperamentally, Scott sympathized with Sinclair, Lockhart, and other conservative critics: the true standard of value lay in the symbolic order of the country estate.  Indeed, my sense is that Scott’s description of Scottish banking in the Letters of Malachi Malagrowther comes directly from this Blackwoodian branch of conservative economic thought, the roots of which lie in the same Smithian economics as the Ricardian’s branch. To be sure, Scott was conscious of his own dependence on “speculation”—the flow of capital that sold his books—that he never endorsed outright his contemporaries’ more extreme paternalism. But his admiration for the practical “republic” and “tribunals” of Scottish finance, based like Lockhart’s “nature” on the traditional confidence of the country estate, at times led Scott, as it did Wilson, Lockhart, and others, toward a more affective, even violent defense. Several times in the letters, Scott hints that the Scots might take up arms to defend their financial liberty, such as the moment when he alludes to the magically-numbered “45” Scottish members of Parliament or refers to the government as “the enemy.” Initially, Scott claims that the “body politic” in Scotland is healthy and thus is in no need of “physic” as the English quack economists seem to think. By the third letter, that same body is being encouraged to lift the blazon for the “auld cause.” Scott’s respondents, including John Wilson Croker, writing in the character of “Edward Bradwardine” disparagingly pointed out the allusions to cudgels and regiments and the lost 45. Respondents were also quick to point out that suspension of cash payments and the credit system it endorsed were instituted and maintained largely for the symbolic purpose of fighting a patriotic war. In Familiar Epistles Daniel Dreadnaught denounced Scott’s argument on precisely these anti-Jacobite grounds. “I abominate the system,” he proclaimed, “which has heaped countless injuries on my country, for the navigation of a river with which she had nothing to do; for the restoration of an old man, about whose concerns we ought to have been regardless, and for the possession of a barren rock!” (11).
19. Scott was conscious of these dangers. In a letter to Croker written sometime after the Malagrowther skirmish was over, Scott explained what this rhetoric was meant to accomplish. “Scotland, completely liberalized,” Scott wrote,
Speculation and Comparison in Chronicles of the Canongate
20. I have been arguing that The Letters of Malachi Malagrowther represent Scott’s attempt to revive an economy of speculation, in the sense of both the unbacked credit system it defends and the spectacular or iconic confidence that it rhetorically conveys, in the face of its loss to the faceless powers of “innovation” and centralized diversification. Many of the fictional and historical works that Scott wrote in the years following the publication of the Letters project that same hoped-for revival. Woodstock, for instance, which Scott began in Autumn 1825 and published in May 1826, concerns Charles II’s escape from the Battle of Woodstock just prior to his flight to France by way of the “Royal Oak” in which it is said he hid. In Scott’s novelization, the Oak is on the Estate of Sir Henry Everard, whose family is divided between Royalist and Parliamentarian sympathies and much of the novel concerns Charles’ various attempts to hide from Cromwell and his proselytizing minions and convince the Everard family of his virtue. He succeeds, and the closing tableau of the novel, set on the day of his Coronation in 1660, might be seen as a testament to Scott’s belief in the power of enlightened monarchy—or at least his hope in its possible revival.
21. But by the time he began Chronicles of the Canongate, in mid-1826, much of this renewed confidence had receded to be replaced by its very opposite quality, the perplexity or “embarrassment” that Ricardo had warned against. Not a novel per se but a compendium of linked stories, Chronicles is already moving away from the hopefulness of Woodstock and the other romances and toward a darker, more fragmented sense of the end of speculative confidence in the face of financial diversification. The frame narrative, which is about Chrystal Croftangry, the last in a line of Scottish landowners who, having squandered the family fortunes, returns to Edinburgh to set up as an antiques dealer, is in itself a quite fully-realized statement of Scott’s misgivings about the possibility of national or Romantic revival. But I want to focus here on what I will describe as a pattern of deliberate misreading in the three stories that make up the Chronicle all of which point to the failure of the speculative economy that Scott had tried to resurrect. The violent consequences of “antiquing” as Scott warns in his letter to Croker, is the basic theme of the first two stories in Chronicles of the Canongate. "The Highland Widow" is the story of Elspeth, wife of the Highland outlaw Hamish McTavish, killed while garrisoned by the English after Culloden, and her son, also Hamish, who refuses to become an outlaw like his father and joins a Scottish regiment to fight in America. When Hamish visits his mother before he is due to depart, she drugs him and, having exceeded his furlough, shoots a sergeant who had come to apprehend him, is taken prisoner, court-martialed, and shot. Elspeth is the literal embodiment of “antiquated” feelings, but more than that she also represents the need to make a symbolic or speculative understanding of life, including money, meaningful at a time when such efforts are overshadowed by modern exchange practices. In a memorable scene, Hamish sends his mother a 5-guinea coin, the proceeds from his enlistment in the Highland regiment; she “remained gazing on the money as if the impress of the coin could have conveyed information how it was procured” (82). Re-employing the metaphor of impression that, in the first Malagrowther letter, Scott had used to define both the national feeling behind the distinct cohesiveness of Scottish banking and its grounding in Scottish empirical philosophy, Scott has Elspeth deliberately fail to read the coin and misunderstand its now strictly economic function. For Scott, coins, like the monarchs whose faces are imprinted on them, have both symbolic value and financial value as guarantees of the vitality of the nation. But to Elspeth, whose whole world is appreciable only as a series of meaningful icons, the systemic “meaning” of coins as instruments of fluid exchange makes no sense.
22. "The Two Drovers" is a complex tale about a Highland cattleman, Robin Oig, and his sometime English friend, also a cowman, Harry Wakefield. Having made their way to Cumberland, Oig and Wakefield unfortunately negotiate respectively with the squire and the bailiff for the same pasture. When the two arrive at the local alehouse, Wakefield is egged on by his fellow Englishman to challenge Oig, who initially refuses to fight, but then when provoked, stabs Wakefield with his dirk, which he had been keeping in trust for a lowland drover. Again, feelings and sensations become focused on an object which then becomes the means of a proto-revolutionary murder. The crisis at the heart of the “Two Drovers” is the substitution of Oig’s economy of trust and honour with an economy of omnipresent though invisible reason. The presiding judge at Oig’s trial offers this general assessment of what should have happened:
23. Similar complexities surround Richard Middlemas, the ambitious anti-hero of "The Surgeon’s Daughter." The longest of the three tales, really a novella in its own right, "The Surgeon’s Daughter" tells the story of Menie Gray, daughter of the Selkirk doctor, Gideon Gray, and the rivals for her hand, the doctor’s two students, Adam Hartley and Richard Middlemas, the latter the ward of Dr. Gray. Famous for its setting in colonial India (a setting in which not one but two colonial British armies operate, the regulars and the East India Company’s, the latter to which both Middlemas and General Tresham/Witherington belong), most of the story focuses on the circumstances and consequences of Middlemas’ birth. His parents, we eventually learn, are the eloping General, then only a captain, who is also both a Jacobite and a Catholic, and the daughter of a wealthy Portugese-Jewish merchant who pays Middlemas’ adopted Highland guardian, Dr. Gray, for his upkeep without any regard or fondness. Middlemas’ claim in early-adolescence that he is a “free-born Englishman” is ironic not only because he in conventional terms anything but, but also because his lineage acts to demonstrate just how fetishistic such national designations are becoming in an increasingly global economy.
24. Scott’s financial metaphors focus on the interplay between the economics of exchange and the affective power of persuasion and (self-) love. The scene in which Middlemas confronts his parents is a parody of similar scenes of familial recognition, such as, for instance, at the end of Burney’s Evelina. In Scott’s take, instead of “seeing” his parents as the fulfillment of his ambition to discover his “true” identity, Middlemas abjects them: “O, my more than father… how much greater a debt do I owe to you than to the unnatural parents, who brought me into this world by their sin, and deserted me through their cruelty!” (231). The result of this ignorant declaration is complete confusion: Zilia dies after bashing out a discordant lament on the harpsichord while the General forces his son to “look upon [his] parents who [he] hast so much envied—whom thou hast so often cursed. Look at that pale emaciated form, a figure of wax, rather than flesh and blood—that is thy mother—that is, the unhappy Zilia de Moncada, to whom thy birth was the source of shame and misery, and to whom thy ill-omened presence hath now brought death itself” (232). He then rages into a fury and threatens to kill his other children. The General’s, Zilia’s, and Middlemas’ understanding of themselves are revealed in this moment not to be ratified by a hidden bond, but rather by their individual miscomprehension of their systematic existences. Once set into contention by the exposure of this system, the organization breaks down.
25. The tragedy, then, is that the standard of value that might underlie the characters’ attempts to vindicate themselves before the others or serve as a possible point of comparison between them has been replaced by a new standard of systemic inevitability, much as the symbolic standards trusted by Oig are replaced at the end of the story by the “buckler” of the law. Not even Hartley and Menie Grey can withstand the “agitation” and “shock” of the events of their story: Hartley dies of a colonial disease two years later and Menie refuses to marry probably in memory of Hartley but also in her continual irrational devotion to Richard. Once again affection undermines security. This is not to say that the novella does not suppose a standard, that is, of fetishistic glamour of wealth and adventure such as is presented to Richard Middlemas by his credulous Nurse and Tom Hilary. But at the same time, it also presents to us the way in which these fantasies circulate as, in a word, systems and by extension, empires. As Tara Ghoshal Wallace observes, it is “such instances of the reality of imperial fantasies that constructs the imperial identity” (322). The trouble is, it is not the imperial fantasy that wins, but rather the ebb and flow of a diversified global capitalism.
26. Yet, I would also venture to suggest that "The Surgeon’s Daughter" provides a different kind of standard to both the “fantasy” of glory that Scott associates with empire and the systemic intransigence of finance. In a strange scene, Hartley and Menie are on their way into the interior of India when they come upon the near-lifeless body of Sadhu Sing and hear the story of how his bride was taken from him on their wedding day by a tiger. Via Hartley, the narrator makes the rather facile analogy between this story and “the probable fate of [Menie] almost within the grasp of a more formidable tiger than that whose skeleton lay beside Sadhu Sing” (271), the Indian Prince for whom Middlemas fought and whose wedding is disrupted by a tiger attack. But Scott also makes us aware that a comparison between these two marriages is possible: at the creek in the jungle, “the travelers stopped to drink, and to refresh themselves and their horses; and it was near this spot that Hartley saw a sight which forced him to compare the subject which engrossed his own thoughts, with the distress that had afflicted another” (270). Scott is here projecting a frame of reference outside the narrative that will be able to bring the two “systems” of the story—the British and the Indian—into a hybrid construction. They are not the same, as the narrative makes clear, for Menie’s fate is not that of Sing’s bride, any more than Scottish farms cultivated by free credit (as Scott describes in the Letters of Malachi Malagrowther) are the same as the “impenetrable thicket” that the plain has become once war has “suspended the labours of industry” (270). The end of the tale offers not a speculative vision of imperial or financial unity that might regulate or oppose the flow of finance, but rather an opportunity to view both the failure of speculation and the consolidation of capital flow as parts of a constellated object of a critical and comparative judgment, to see them, that is, as the “thicket” that they really are once the “labours” and “industry” of narrative are over.
27. In this way, Chronicles of the Canongate, provides a standard of comparison through which various cultures can be measured against each other—Britain and India, Scotland and England, The Highlands and India—which is apparent, in a way that the consolidated standard of financial diversification is not, in the tensions and contradictions of literary form. This is not the same thing as saying that Scott invents an imperial ideology, for there is no specific imperial agenda associated with the standard of comparison as such. The novel neither represents a standard (on the contrary all its speculative, monarchical figures are either absent, corrupt, or destroyed) nor embodies a particular economic system (as the Letters had done). Rather, the text itself, viewed as a collective whole, is an effect of the continual comparisons between different economic and cultural systems, manifest in the antiquarian tendencies of Croftangry and in the process of reading that he and other collectors in the frame narrative exemplify. By contrast to his polemical writings, Scott’s fiction allows us to recognize the conflicts and unevenness of the economic field by staging their de-consolidation. In this respect, while the Waverley Novels might be partly responsible for popularizing and acclimatizing the “heroism” of capitalism’s entrepreneurial spirit, they can also be seen to foreshadow the kinds of formal and logical critiques of capitalism, both conservative and radical, that would emerge in the nineteenth century and after.
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 On literary forgery in the Romantic period see studies by Baines, Ruthven, Groom, Mazzeo, and Russett. On monetary forgery and Romantic aesthetics see Dick, "The Ghost of Gold." BACK
 My brief account of the economic subtext of the Waverley Novels is drawn in part from several sources including (among others) Burgess, Duncan, Gamer, Trumpener, Gottlieb, and Sutherland. BACK
 The letters were first published in Blackwood’s Edinburgh Weekly Journal, Feb 22, March 1, and March 8, 1826 and subsequently appeared in pamphlet form, published by Ballantyne as Thoughts on the Proposed Change of Currency, and Other Late Alterations, as they Affect, or Are Intended to Affect, the Kingdom of Scotland, A Second Letter to the Editor of the Edinburgh Weekly Journal, from Malachi Malagrowther, Esq. on the Proposed Change of Currency, and Other Late Alterations, as they Affect, or Are Intended to Affect, the Kingdom of Scotland, and A Third Letter to the Editor of the Edinburgh Weekly Journal, from Malachi Malagrowther, Esq. on the Proposed Change of Currency, and Other Late Alterations, as they Affect, or Are Intended to Affect, the Kingdom of Scotland. The first two were printed by Blackwood; the last by Cadell, from London. All three letters were then published as The Letters of Malachi Malgrowther by Blackwood and Cadell, which went through 4 editions by the end of the year. The letters were subsequently included in Cadell’s edition of Scott’s Miscellaneous Prose Works as "Letters of Malachi Malagrowther on the Currency." In-text citations are from the 1836 edition. BACK
 My account of the 1825 financial panic is drawn largely from Neal with corrections from Bordo. BACK
 On Cobbett’s attacks on the Bank of England see Poovey, Gilmartin and Alex Benchimol’s essay in this volume. BACK
 For a brief but sufficient description of consols as an early and successful form of government bonds see Ferguson, 76-85. BACK
 The question of the “reality” of paper credit is, of course, controversial, though economic and finance historians largely agree now that it has always been credit rather than coin that has acted as the real medium of capital production and exchange. BACK
 The historian N. T. Phillipson observed in 1968 that the Letters of Malachi Malagrowther, which Scott wrote to protest the incursion of centralizing English financial policy on the Scottish “free banking system,” exemplify the general resentment Scottish rural people and Edinburgh elites alike felt toward London’s various attempts to integrate the bureaucracies of Scotland and England between 1780 and 1830, though ultimately, Phillipson concluded, like many such campaigns Scott’s letters did little more than express an “ideology of noisy inaction” (186). Caroline McCracken-Flesher in Possible Scotlands documents the wide support that Scott’s letters received, even from those like Henry Dundas Lord Melville who had originally approved of Parliament’s motion. Scott turned to his readers’ sense of their own “otherness” to recharge Scottish nationalism with a new progressive sense of its own difference within a changing British union. Those few scholars who have examined these works in relation to his financial troubles have tended to do so with an eye still trained firmly on the problem of Scottish national identity. See also Colella. BACK
 As Peacock pithily remarked, it was “the real art of talking about the imaginary art of teaching every man his own business” (321). Many of these conservative attacks came from Scotland. Writing in Blackwood’s in 1824, the conservative critic and philosopher John Wilson claimed that “political economy cannot be studied with advantage and satisfaction in the modern writers on the subject, by any person who wishes to be convinced of the soundness of its first principles;—who expects perspicacity, consistency, and accurate reasoning in the deductions from these principles, or to find them applicable to, and explanatory of what is occurring, or sure guides in the advancement and acquisition of social wealth” because it is so replete with “obscurity, contradiction, and ambiguity in the use of words [and] illogicalness in reasoning.” BACK
 Lockhart is performing a fairly standard conservative turn on the stadial theory of history, extending it toward redemption from the rather fraught present as described by Ferguson. Scott recounted a similar scheme in a chapter entitled "The Progress of Civilized Society" that opened the second series of Tales of a Grandfather (1828). For more see my "Scott and Political Economy" in The Edinburgh Companion to Walter Scott. BACK