In 1826 the weavers’ wages went down again, from about 9 shillings to about 6 shillings on average. This brought them down from the description of “poor” to that of “suffering”. The reason seems to have been a contraction of the money supply brought about by the Bank of England in response to the failure of banks at the end of 1825 (“The Panic of 1825”). This caused a deflation of wages and costs in the whole country, and a suspension of payments to individuals and to companies.
“In 1826 the 1 l. notes were suppressed, and less money was of course in circulation in consequence of that suppression. The operations in currency had a material effect on wages; I am sure it had; if the currency was reduced to 40 or 50 millions, which I understand was the case, the same wages could not be paid when there was not money to pay them with; if the circulation amounts to 60 millions, and it is reduced to 30 millions, we should only be paid 10s. in the pound. The operations upon the currency have therefore had a very material effect in reducing weavers to the destitute state they are in. …..”
(Analysis of the Evidence taken before the Select Committee on Hand-Loom Weavers Petitions (1834-1835), Mr. Richard Needham, Weaver, p. 26)
“To what do you attribute this depression of wages?” “To the contraction of the currency.”
“Are you of the opinion that if the currency was placed upon its former affluent footing the same prices would take place again?” “Not the same prices, but improvement would take place.”
(Select Committee on Manufactures, Commerce and Shipping, 1833, evidence of Mr. James Grimshaw, Spinnner and Manufacturer of Cotton, Colne, Lancashire, p. 608)
“Can you suggest anything that would improve the prospects of the trade?” “…… I should however suggest at the same time, that the total amount of taxation should be reduced at least one-half, if the present state of the currency is to continue. ……”
“Will you explain what you mean by the present state of the currency?” I mean as contrasted with some years back, when we had a large quantity of 1 l. and 2 l. bank notes.”
“Do you think it would be serviceable to substitute 1 l. and 2 l. notes again for a metallic currency?” “I do not think so. I should recommend instead of that a reduction of all the expenses of the country of every description in proportion to the increased value of money; but if no such reduction is to take place, I say let us have as great an issue of paper-money as we had before.”
(Select Committee on Manufactures, Commerce and Shipping, 1833, evidence of Mr. Joshua Milne, Cotton Spinning and Manufacturing by Power, near Oldham, pp. 656-657)
What is not clear at the present time, is why only the hand-loom weavers had a long-term – and considerable – decrease in the wages. There was a downturn in industrial activity and capital investment in the next five years, but the wages of the other occupations recovered.