From Forest House, Leytonstone, Essex to Cross Hall, Morley Common near Leeds, Yorkshire. He has sat down to answer her letter about the malt because he is afraid that 'from being unacquainted with the nature of SPECULATIONS you may be involved so deeply as hardly ever to get the better of it - by speculation, I mean engaging in any commodity either by buying, or by retaining what is already on hand in order to get by the rise of price etc'.
Her maltster's first scheme, as he understands it, is to keep £500 worth of malt until next Summer. The consequence of this would be follows - as the price of barley and consequently malt has been higher than anyone can remember, immediately after next harvest the price will begin to fall and by November will be lower by eight or ten shillings a quarter and in the event of a good harvest (God grant that such be the case) it will probably be twelve or fourteen shillings lower. This will certainly happen unless the harvest is bad which cannot be likely as the last was so "short". If barley is cheaper by between ten and fourteen shillings a quarter then malt will also fall in price by at least as much. In which case 'pray consider whether the swelling of the malt will pay for the loss of one quarter or one third of the capital…besides the interest of the money & the inconvenience of lying so long with so large a sum tyed up'. His conclusion is based on the probability of at least a reasonable harvest. To put it another way - 'all merchants…accustomed to speculate in any commodity allways take the price their commodity has [unreadable word] for many different years & putting them all together, see what the mean price is, or as they call it the average price - & whenever the commodity they mean to speculate in, can be brought under that average price, they think they may safely engage, as they have reason to suppose it will rise, in order to come up to its usual price'. Therefore if malts are cheaper now than they have been for the last ten years, her investment would probably be a sound one although she could hurt herself by loss of interest and possible damage to the stored malt itself. If however the malt is more expensive than average, it would be madness to speculate as a fall in price would almost certainly occur. The careful speculator only buys when prices are low. It is true that not all speculators abide by these principles but there has been a recent instance of the danger associated with such practices in the financial ruin of Sir George Colebrooke.
He feels that Mary should sell as much as she can even if it means taking a lower price '& here I must remark that you should not have gone on malting so fast for if the corn has been still in barley, no doubt by sending it to market you might have had ready money - perhaps by sending the malt to market it would sell for money - here arrives another observation you are hardly aware of - that the malt trad [trade or traditionally] is allways famous for this kind of disadvantage & more people have been ruined…in this way of trade, than in hardly any other…'
Samuel must caution her about engaging too deeply in this kind of thing. It was precisely this that caused so much distress to [missing Christian name] Bosanquet despite the fact that he had capital of his own and others amounting to over £70,000. Defaulting on payments occasioned his misfortune and let his story be a caution to Mary.
Her note to Billy [their brother William] will be destroyed.
He is sorry to hear that she is so indisposed 'as to need the bath'. She has doubtless had good advice and hopefully she will derive benefit.
Samuel cannot send the papers in time but if she sends him a forwarding address [in Bath, Somerset], they can be sent there as easily as anywhere else. She will require just two witnesses.
His wife [Eleanor] and the children send their love.
- Sir George Colebrooke: Prominent banker and a director of the East India Company