22nd February 1826

Sir Walter Scott’s first Malachai Malagrowther letter appears in print

Banknotes aren’t real money, just promises to pay a debt owed. Previously, all banknotes were underpinned by an equivalent quantity of gold, which secured their value. However, when a bank had insufficient quantities of gold in its vaults it was technically unable to cash a note, which proved problematic in the aftermath of a crisis affecting English banks in the early 1800s.

British government thus ruled that no bank should produce a note worth less than £5, despite this posing particular problems for Scotland, where low value notes were the principal means of exchange, and whose banks had been largely unaffected by the crisis. Author Sir Walter Scott, who well understood the difficulties this could cause, took up his pen and wrote a series of three letters under the name Malachi Malagrowther, arguing against the ruling. He also noted that as it would be detrimental to Scotland in particular, it contravened clauses in the Acts of Union.

Clear and persuasive

Scott’s arguments were so clearly and cleverly constructed that they gained much public support and were debated in the House of Commons. As a result, Scotland was exempted from the bank on small value notes when it was implemented in England.

In an 1869 debate on currency in Ireland, MP Sir Frederick Heygate, recalled Malagrowther’s letters, telling the House, “In 1826 there was a great controversy in regard to an attack made by the Government on the £1 note currency of Scotland. Scotland was almost unanimously against such a change, and a famous series of letters then appeared on the subject in the Edinburgh Weekly Journal, under the signature of Malachi Malagrowther, and which were afterwards known to have been written by Sir Walter Scott. Malachi Malagrowther wrote thus — ‘Here stands Theory, a scroll in her hand full of deep and mysterious combinations of figures, the least failure in any one of which may alter the result entirely, and which you must take on trust, for who is capable to go through and check them? There lies before you a practical system, successful for upwards of a century. The one allures you with promises of untold gold, the other appeals to the miracles already wrought in your behalf. The one shows you provinces the wealth of which has been tripled under her management, the other a problem which has never been practically solved. Here you have a pamphlet there a fishing town; here the long-continued prosperity of a whole nation, and there the opinion of a professor of economics that in such circumstances she ought not, by true principles, to have prospered at all.’”

In other words, look at the evidence of our past successes, rather than unproven promises coming from the government. It was a simple and convincing argument, which won the day.