3\\v ii y \\uiMV[Ry/A vvios-Ascfifr> ^ G. jp* -5 r* = ilSSvs ^ g ^ ^A e ; ..W,Elfr S ^""7,0 ) < =; U y ~ , <^/ ^ 3 r ^ 1 ir / i money, and, if he were sure, that these promis- sory notes would not be brought in for payment ; but, if this was not the case, he would be com- pelled to keep the hundred pounds in his drawer ready to give to those who did not like to keep his promissory notes ; and, in such case, it is clear, that the money would be of no use to him, and that he might full as well have none of his notes out. Just so with the Bank Company, who, at no ca.iso time, could have in hand gold and silver enough to pay off all their notes at once ; nor was this necessary as long as the people regarded those ,,f notes as being equally good with gold and silver. But, it is clear, that this opinion of the goodness of the Company's notes, or, rather, thejeclingof ,i lft confidence, or, still more properly, perhaps, the absence of all suspicion, with respect to them., must, in a great degree, depend upon the quantity of notes seen in circulation, compared with the quantity of gold and silver seen in cir- 16 PAPER AGAINST GOLD. deciioeof citation. At first, the quantity of notes was very small indeed ; the increase of this quantity was, for the first twenty years, very slow ; and, Confidence though it became more rapid in the next twenty years, the quantity does not appear to have been large till the war which took place in 1755, in the before which time the Bank Company put out no notes under 120 pounds in amount. Then it was that they began to put out 15 pound notes, and afterwards, but during the same war, 10 pound notes. During all this time, loans, in every war, had been made by the government. That is to say, the government had borrowed money of individuals, in the same way as above- mentioned, in the year 16)4. The money thus borrowed was never paid off, but was suffered to remain at interest, and was, as it is now, called the NATIONAL DEBT, the interest upon which is annually paid out of the taxes raised upon the people. As this debt went on increasing, the bank-notes went on increasing, as, indeed, it is evident they must, seeing that the interest of the Debt was, as it still is and must be, paid in bank-notes. Bank Notes. It is not simply the quantity of bank-notes, that are put out into circulation, which will ex- cite alarm as to their solidity ; but, it is that quantity, if it be great, compared with the quan- tity f gld and silver, seen in circulation. If, as the bank-notes increased, the circulating gold and silver had increased in the same proportion ; LETTER I. 17 then, indeed, bank-notes would still have re- tained their usual credit ; people would still have had the same confidence in them. But, this could not be. From the nature of things it could not be. The cause of the increase of the bank-notes, was, the increase of the interest upon the National Debt ; and, as it grew out of an operation occasioned by poverty, it would have been strange indeed had it been accom- panied with a circumstance, which would have been an infallible indication of riches. Without, however, stopping here to inquire Bank Notes for into the cause of the coin's not increasing with smaller and the increase of paper, suffice it to say, that such smaller sums. was the fact. Year after year we saw more of bank-notes and less of gold and silver; till, in time, such was the quantity of bank-notes re- quired to meet the purposes of gold and silver in the payment of the interest of the still increasing Debt, and in the payment of the taxes, many other banks were opened, and they also issued their promissory notes. The Bank Company's notes, which had never before been made for less sums than 10 pounds, were, soon after the beginning of PITT'S war, in 1793, issued for Jive pounds, after which it was not to be sup- posed, that people could have the same opinion of bank-notes that they formerly had. Every part of the people, except the very poorest of them, now, occasionally, at least, possessed bank-notes. Rents, salaries, yearly wages, all C 18 PAPER AGAINST GOLD. sums above five pounds, were now paid in bank-notes; and, the government itself was now paid its taxes in this same sort of currency. suspicion of the In such a state of things it was quite impos- goodness of sible that people should not begin to perceive, Rank Notes that gold and silver was better than bank-notes ; and that they should not be more desirous of possessing the former than the latter ; and, the moment this is the case, the banking system must begin to tremble ; for, as the notes are payable to the bearer, and payable on demand, it is very certain, that no man, with such a preference in his mind, will keep in his pos- session a bank-note, unless we can suppose a man so absurd as to keep a thing, of the good- ness of which he has a suspicion, while, for merely opening his mouth or stretching forth his hand, he can exchange it for a thing of the same Nominal value, and of the goodness of which it is impossible for him or any one else 'to entertain any suspicion. " Public Credit/' as it has been called, but, as it may more properly be called, " The credit of bank-notes," has been emphatically denominated, " SUSPICION ASLEEP." rotuedin 1793,1 tne m 'dst of events like those of 1793 and the years immediately succeeding; in the midst of circumstances like those above-mentioned, re- lating to the bank-notes, it was impossible that SUSPICION should sleep any longer. The put- ting forth of the 5 pound bank-notes appears to have rouzed it, and, in the month of February, LETTER I. 19 1797, it became broad awake. The stoppage an a broad of payment on the part of the Bank Company awake in 1797. was the immediate consequence; but,, a par- ticular account of that important event, which totally changed the nature of all our money transactions, and which will, in the end, produce, in all human probability, effects of the most serious nature, must be the subject of a future Letter. In the mean while I am, Your friend, . W M . COBBETT. State Prison, Newgate, Thursday, 30th August, 1810. C 2 20 PAPER AGAINST GOLD. LETTER II. What are the Funds and Stocks and National Debt? Neces- sity of clearly understanding what these Words mean Meaning of them Inquiry into the Origin of the Funds and Debt The English Revolution Act of Parliament, 4th William III, Cap. 3, begins the Funding and Debt System First Loan to Government Nature of Funds and Stocks and National Debt Explanation of how " Money " is put iu the Funds" Illustration in the case of Messrs. Muckworm and Company and that of Farmer Greenhorn The Funds shown to be NO PLACE, nor any thing of a mystical nature. CENTLEMEN, inquiry into -HAVING in the foregoing letter, taken & the cause of the sketch of the History of the Bank of England, Bank stoppage, and of lis Notes, from their origin down to the time when that Bank stopped paying its notes in gold and silver, the next thing to do, in our re- gular course of proceeding, will he to inquire into, and clearly ascertain, the cause of that stop- page ; for it is very evident, that without ascer- taining this cause, we shall not be able to come to any thing like a decided opinion with regard to our main question, namely, WHETHER THERE BE ANY PROBABILITY, THAT THIS BANK WILL BE ABLE TO RETURN TO THEIR PAYMENTS IN GOLD AND SILVER, LETTER II. 21 in which question every man of us., from the highest to the lowest, is so deeply interested. But, it is necessary for us to stop a little where what is meant we are, and not go on any further with our in- bytheword8> quiries into the cause of the stoppage at the Pm)ds and Na _ Bank of England, until we have taken time to tionalDebt? look a little at the FUNDS and the NATIONAL DEBT. These are words, which are frequently made use of ; but, like many other words, they stand for things which are little understood, and the less, perhaps, because the words are so very commonly used. As in the instance of Shrove Tuesday, or Shrovetide,, words which we all, from the oldest to the youngest, make use of; but, as to their meaning, we content ourselves with supposing (or appearing to suppose,) that they contain a commandment for us to eat Fritters and Pancakes and to murder poor un- offending cocks ; whereas they mean, the Tues- day, or the Time, for going to confess our sins to, and to get absolution from the Priests; to shrieve, being a word equal in meaning to con- fess, and shrove to confessed; and the use of them in the case here mentioned having been handed down to us from the days of our fore- fathers, when the Catholic worship was the wor- ship of the country. Monstrous, however, as is the perversion of perversionof the meaning of words, in this instance, it is scarcely more so than in the case of the Funds 22 PAPER AGAINST GOLD. the meaning of and the National Debt; but, there is this very these words, important difference in the two cases ; that, while, in the former, the perversion is attended with no mischief to either individuals, or to the nation; in the latter, it is attended with great mischief to both ; with the ruin and misery of many a thousand of widows and orphans, and with woes unnumbered to the nation at large. But, if a right understanding of the meaning Necessity of of these words be, in all cases where words are rightly under- used, of some consequence, it is of peculiar con- standing their sequence here, where, as may have been gathered meaning. from the preceding letter, we shall find the Funds, the Stocks, and the National Debt, to be so closely interwoven with the Bank Notes, as to be quite inseparable therefrom in every possible state or stage of their existence. The word FUND means, a quantity of money, Usual meaning nut or collected together. The word STOCK, of these words. * as applied to such matters, has the same mean- ing. Both words may admit of meanings some- what different from this ; but, this is the mean- ing which plain men commonly give to these words ; and it is, too, the fair and sensible meaning of them. Now, we shall presently see, in what degree this meaning belongs to what are commonly called the Funds, or the Stocks, into the origin and progress of which, we are now going to inquire ; and, an inquiry it is, worthy of the undivided attention of every true English- man ; every man who wishes to see this country LETTER II. 23 of his forefathers preserved from ruin and subju- gation. Soon after the ENGLISH REVOLUTION ; that is to The Funds, say, soon after our ancestors, who had too much stocks, and spirit to be dragooned out of their liberty and Nat i ,iai Debt their property, had driven away king James the Second^ and had brought over the Prince of Orange and made him king in his stead, and had, at the same time, taken measures for stripping the family of Stuart of the crown for ever, and putting it upon the heads of his present Majesty's family ; soon after this Revolution, the existence of Funds, Stocks, and a National Debt began, under the auspices of that same b ega n with Prince of Orange, who was then become our William IIL King William III. and who appears to have lost but very little time in discovering the effectual way of obtaining money from the English, without resorting, as the Stuarts had, to those means, the use of which had, ever and anon, excited commotions against them ; which had brought one of them to the scaffold ; and which, at last, after driving another from the land, had for ever stripped them of their crown. The real motives for creating a National Debt we shall, by-and-by, perhaps, have occasion to notice ; but, at present, our business is to get at a clear notion of the way in which it was created. William the Third was hardly seated upon A 24 PAPER AGAINST GOLD. pretence for the the throne before a war was begun against first Loan. France, and, in the 4th year of his reign, being the year 1692, an act of parliament was passed imposing ee Certain Rates and Duties upon Beer, collection of names, or sounds, and keep fully the efiect. J and clearly and constantly in our sight, these plain facts : FIRST, that the Funds, the Stocks, and the National Debt, all mean one and the same thing; SECONDLY, that this Debt is made up of the Principal money lent to the Govern- ment at different times since the beginning of the thing in 1(^2; THIRDLY, that the Interest upon this principal money is paid out of the taxes ; and, FOURTHLY, that those persons who are entitled to receive this interest, are what we call fund-holders or stock-holders, or, according to the more common notion and saying, havd an( l> to give the same name to our country bank-notes was, therefore, to proclaim, as far as this writer was able to proclaim, that these notes, being more than one half of all our circulating medium, were as bad, if not worse, than the paper-money of France, which pro- duced so much individual misery to so many millions of people. Not that this was betraying any secret to the world; for, it is beyond all comprehension foolish to suppose, that all the world, particularly our sharp-sighted enemy, are not fully acquainted with our situation in this respect, more especially now that the Bullion Report is abroad ; but, what I find fault of, is, that this description of country-bank notes, as contradistinguished from the London bank-notes, has a tendency to excite popular hatred, and, in cases that may happen, popular violence, against that part of our paper-money makers, called country-bankers ; than which nothing can be much more unjust in itself, or be more likely to lead to universal confusion, the experience of the world having proved, that commotion, when LETTER III. 35 once on foot, is seldom limited to the accomplish- ment of its original object ; and, we may venture to affirm,, that nothing was ever better calculated to render popular commotion violent, and to push it beyond its natural bounds, than the hatred and revenge, which it would seem to be the object of the print above mentioned to' excite in the minds of the people. The country paper-money makers are not,, country as we shall soon see, any more to blame than inkers no are the paper-money makers in town. Paper- more to b j ame money making is a trade, or calling, perfectly thanthetowll innocent in itself, and the tradesmen maybe very Bankerc moral and even very liberal men. Amongst them, as amongst men of other trades, there are, doubtless, sharpers and even rogues ; and, the trade itself may be one that exposes men to the temptation of becoming roguish ; but, it does not follow, that all the paper-money makers, or, that the paper-money makers in general, are men of dishonest views. It is, therefore, not only illiberal, but unjust in the extreme, to con- demn the whole of the trade in a lump, to call their wares ft destructive assignats, vile rags, " dirty rags } " and the like, whence it is, of course, intended that it should be understood, that all the issuers of them ought to be regarded as pests of society and treated accordingly ; ^ have when the truth is, as we shall presently see, the / grown out of tb? fault is not in individuals, but in the system, out t J trade. of which the swarm of paper-money makers D 2 36 PAPER AGAINST GOLD. have grown as naturally and as innocently as certain well-known little animals are engendered by, and live upon, an impoverished and sickly carcass. inquire into Having thus endeavoured to put you upon the increase of y our S uard against the tendency of this very the National un j us t representation of our country bankers and their money, an endeavour, which, it appeared to me, ought not to be delayed, we will now proceed with our subject, and, as was proposed, at the close of the last Letter, inquire into the progress of the Funds and Stocks ; or, in more proper terms, into the INCREASE OP THE NATIONAL DEBT. We have before seen what is the nature of disregarding, at ,. this debt: we have also seen how it began : we present, the di- shall, hy-and-by, have to show the effects of it : vers denomina- j J J jj but, what we have to do, at present, is to inquire tons c: it. into, and ascertain, how it has gone on in- creasing, and what is now its amount. We shall next inquire into the schemes for lessening the Debt ; and, then we shall distinguish what is railed Redeemed from Unredeemed debt; but, first of all, let us leave all other views of it aside, and confine our attention merely to the sums borrowed. We have before seen, that the money has been borrowed in various ways, or under various denominations. In some cases the money borrowed was to yield the lender 3 per centum, (hut is to say 3 pounds interest, yearly. LETTER III. 37 for every hundred pounds of principal. In some cases the lender was to receive 4 per centum ; in some cases 5 per centum ; and in some cases more. Hence come the denomina- tion of 3 per cents and 4 per cents, and so forth. But, to the people, who have to pay the interest, these distinctions are of no consequence at all, any more than it would be to either of us, whe- ther our bakers' bills were made out upon brown paper or upon white. We shall see afterwards what we have to pay yearly in the shape of interest., which is the thing that touches us home ; but, let us first see what the principal is, and how it has gone on increasing ; bearing in mind, that, as was shown in the foregoing Letter, page 24, the borrowing, and, of course, the Debt, began in the year I6i)2, in the reign of William the Third, and that, the loan made in that year amounted to one million of pounds. When QUEEN ANNE, who suc- , , ,,,-.,,. ., Amount of tke ceeded William, came to the , . , . . , Debt at several throne, which was m the year 1701, the Debt was .1 6,394,702 periods< When GEORGE I. came to the throne, in 1714, it was - - 54,145,363 When GEORGE II. came to the throne, in 1727, it was - 52,0^2,235 When GEORGE III. came to the throne, in 1760, it was 146,682,844 After the AMERICAN WAR, in 1784, it was 257,213,043 38 PAPER AGAINST GOLD. At the latter END OF THE LAST WAR; that is to say, the first war against the French Revolu- tionists,, and which, for the sake of having a distinctive appellation, we will call the ANTI-JACOBIN WAR: at the end of that war, in 1801, the Debt was - - - - 579,931,447 At the PRESENT TIME; or, rather, in January last - - - 811,898,082 Divers soi ts of That is to say, eight hundred and eleven the Debt millions, eight hundred and ninety eight thou- sand, and eighty two ; and these in pounds,, in English pounds, too ! There are, in the ac- counts, laid before parliament (from which the last mentioned sum is taken) some shillings and pence and even FARTHINGS, in addition; but though these accountants have been so nice, we will not mind a few farthings. Part of this Debt is what is called funded, and a part un- funded; part is called Irish Debt, part Emperor of Germany's Debt, and another part the Prince Regent of Portugal's. But, interest upon the whole of it is payable in England; and that is all that we have to look after ; it being of no consequence to us what the thing is called, so that we have to pay for it. So that we are taxed to pay the interest of it, what matters it to us what names the several parts of it may go by ? I hope, that there is not, at this day, a LETTER HI. 3i> man amongst you, who is to be amused with empty sounds : I hope, that your minds are not now-a-days, after all that you have seen, to be led away from the object before them by any repetition of mere names. So long as toe are taxed to pay the interest upon the Debt, that man must be exceedingly weak, who is to be made to believe, that it is of any consequence to any of us by what name that debt is called.* Such, then, has been the progress of the Na- increase of the tional Debt ; and, it is well worthy of our atten- Debt) during tion, that it has increased m an increasing pro- the An tijacobin portion. It is now nearly six times as great as war it was when the present king came to the throne ; and, which ought to be well attended to, more than two thirds of the whole of the Debt has been contracted in carrying on, against the French, that war, which, at its commence- ment, was to succeed by means of ruining the finances of France. When the ANTIJACOBIN WAR began, in 1793, the Debt was, at the ut- most, .257,213,043. It is now .81 1,898,082. Such has, thus far, been the financial effect ; such has been the effect as to money-matters, of the wars against the Jacobins. How many times were we told, that it required but one more campaign ; one more ; only one more vigorous campaign, to put an end to the war ; to destroy, to annihilate, for ever, the resources * There is, besides the above, the INDIA DEBT; but of that we will speak another time. 40 PAPER AGAINST GOLD. of France. Alas ! those resources have not been destroyed. They have increased in a fear- ful degree ; while we have accumulated hundreds of millions of Debt in the attempt. How many writers have flattered us, from time to time., with the hope, nay, the certainty, (if we would but persevere) of triumphing over the French by the means of our riches ! To how many of these deceivers have we been so foolish as to listen ! It is this credulity, which has led to the present state of thinsrs ; and, unless we shake it off at O * once, and resolve to look our dangers in the face, we shall, I greatly fear, experience that fate which our deceivers told us would be ex- perienced by our enemy. PITT, it is well known, grew into favour with the nation in con- sequence of his promises and his plans to pay off the National Debt ; and, this same PITT, who found that Debt 257 millions, left it upwards of 600 millions, after having, for twenty years, had the full power of managing all the resources of the nation ; after having, for nearly the whole of that time, had the support of three fourths, if not more, of the Members of the House of Commons ; after having, of course, adopted whatever mea- sures he thought proper, during the whole of that time. He found the Debt two hundred and fifty odd millions, and he left it six hundred and fifty odd. This was what was done for England by that PITT whose own private debts the people had to pay, besides the expence of a monument to his memory ! This is what LETTER III. 41 every man in England should bear constantly in mind. Having now seen hozv the National Debt has The progressive increased, let us next see how the EXPENCES, increase in tb of the Nation have increased ; and, then take a National look at the increase of the TAXES ; for, in E x P ences. order to be able to form a correct opinion upon the main points, touched upon by the Bullion Committee, we must have a full view, not only of the Debt but of the Expences and the Taxes of the nation. When QUEEN ANNE came to the throne, in 1701, the whole Expences of the year, including the interest on the Na- tional Debt, amounted to - .5,610,987 Peace. When GEORGE I. came to the throne, in 1714, and just after Queen Anne had been at war eleven years - - - 6,633,581 Peace When GEORGE II. came to the throne, in 1727, 5,441/248 Peace. When GEORGE III. came to the throne, in 1760 24,456,940 War. After the END OF THE AMERICAN WAR, and at 4$ PAPER AGAINST GOLD. the beginning of PITT'S Administration, in 1784 21,657,609 Peace. At the latter End of the last, or ANTI-JACOBIN WAR, in 1801, - 61,278,018 War. For the last year, that is, the year 1809, .82,027,288 5s. l|d. War. Can this thing Now, witliout any thing more than this, let S o on thus? me a k an y f y u ; t whom I address this Letter, whether you think it possible for the thing to go on in this way for any great length of time ? If the subject did not present so many considera- tions to make us serious, it would be quite im- possible to refrain from laughing at the scrupu- lousness that could put Jive shillings and a penny three farthings at the end of a sum of millions that it almost makes one's head swim but to think of. Laughable, however, as we may think it, those who have such accounts made out, think it no laughing matter. It is, on the contrary, looked upon by them, perhaps, as no very unimportant part of the system. comparison be- Upon looking at the above progress of the tivccn the in- Expenditure, it is impossible to avoid being crease of late struck with the increase, during the present years ami ti,nt re ^g n - The year 1 760 was a time of war as well of former years. aSllie P reSent '> but ^ aS we See ; a year of War then, cost only 24 millions ; whereas a year of war now costs 82 millions. We see, too, that a v LETTER III. 43 year of war now costs 20 millions more than a year of war cost only ten years ago. What, then, will be the cost if this war should continue many years longer,, and if, as appearances threaten, the enemy should take such measures, and adopt such a change in his mode of hostility, as to add greatly to the expensiveness of our defence ? This is a very material consideration ; and, though it will hereafter be taken up, still I could not refrain from just touching upon it in this place. Am I told, that our money is depreciated, or fallen off in value ; and that the increase in our Expences is more nominal than real ; that the increase is in name ; merely in the figures, and not in the thing ; for that a pound is not worth any thing like what a pound was worth when the king came to the throne ? Am I told this ? If I am, I say, that we are not yet come to the proper place for discussing matters of this sort ; that we shall come to it all in good time ; but, that, in the meanwhile, I may hope to hear no more abuse of our doctrines, from those, at least, who, in this way, would reconcile our minds to the enormous increase in the Nation's yearly Expences. Having now taken a view of the increase of i ncrfasc f f t! , e the Debt, and also of the yearly Expences of the RcvenuP) or nation, let us now sec how the Revenue, or TaxCP Income, or more properly speaking, the TAXES; that is to say, the money received from the people, in the course of the year, by the several 44 PAPER AGAINST GOLD. sorts of Tax-gatherers ; let us now see how the amount of these has gone on increasing. When QUEEN ANNE came to the throne, in 1701, the yearly amount of the taxes was - . 4,212,358 When GEORGE I. came to the throne, in 1714, it was 6,762,643 When GEORGE II. came to -the throne, in 1727, it was 6,522,540 When GEORGE III. came to the throne, in 1760, it was - 8,744,682 After the AMERICAN war, in 1784,'itwas 10,300,921 At the close of the Anti- Jacobin war, in 1801, it was - 36,728,971 For the last year, that is 1 809, it was 70,240,226 Minute errors. It is quite useless to offer any comments upon this. The figures speak too plainly for them- selves to receive any assistance from words. As to the correctness of these statements, there may, perhaps, be found some little inaccuracies in the copying of the figures, and in adding some of the sums together ; but, these must be very im- material; and, indeed, none of the questions, which we have to discuss, can possibly be affected by any little error of this sort. I say this in order to bar any cavil that may, possibly, be attempted to be raised out of circumstances, such as I have here mentioned. LETTER III. 45 Thus, then,, we have pretty fairly before us, a Meet of taxa- view of the increase of the Debts, the Expences, tion upontt* and the Taxes, of the nation ; and a view it is people, quite sufficient to impress with serious thoughts every man, whose regard for his country is not confined to mere professions. There are per- sons, I know, who laugh at this. They may have reason to laugh ; but we have not. The pre- tence is, that taxes return again to those who pay them. Return again ! In what manner do they return ? Can any of you perceive the taxes that you pay coming back again to you ? All the interested persons who have written upon tax- ation, have endeavoured to persuade the people, that, to load them with taxes does them no harm at all, though this is in direct opposition to the language of every Speech that the King makes to the Parliament, during every war ; for, in every such Speech, he expresses his deep sorrow, that he is compelled to lay new burdens upon his people. The writers here alluded to, the greater part Defence of tax- of whom live, or have a design to live, upon the ation by the taxes, always appear to consider the nation as Tax . Eaters . being rich and prosperous in a direct proportion to the quantity of taxes that is raised upon it ; never seeming to take into their views of riches and prosperity the ease and comfort of the peo- ple who pay those taxes. The notion of these persons seems to be, that., as there always will be more food raised and more goods made in the 46 PAPER AGAINST GOLD. country than is sufficient for those, who own and who till the soil, and who labour in other ways, that the surplus, or super-abundance, ought to fall to their share ; or, at least, that it ought to be taken away in taxes, which produce a luxu- rious way of living, and luxury gives employ- ment to the people ; that is to say, that it sets them to work to earn their own money back again. Thig is a mighty favour to be sure. Taxes i-rcate The tendency of 'taxation is, to create a class .Irenes, f persons, who do not labour : to take from those who do labour the produce of that labour, and to give it to those who do not labour. The produce taken away is, in this case, totally de- stroyed ; but, if it were expended, or consumed, amongst those who labour, it would produce something in its stead. There would be more, or better cloth ; more, or better houses ; and these would be more generally distributed ; while the growth of vice, which idleness always en- genders and fosters, would be prevented. v honour the If, by the gripe of taxation, every grain of earnings of the tne surplus produce of a country be taken from * ne l wes t d ass of those who labour ; they will have the means of bare existence left. Of course, their clothing and their dwellings will become miserable, their food bad, or in stinted quantity ; that surplus produce which should go to the making of an addition to their meal, and to the creating of things for their use, will be 3 LETTER III. 4-7 annihilated by those who do nothing but eat. illustration in Suppose, for instance, a community to consist of a supposed so- a farmer, four cottagers, a taylor, a shoe-maker, detyof Ten a smith, a carpenter, and a mason, and that the Men. land produces enough food for them all and no more. Suppose this little community to be seized with a desire to imitate their betters, and to keep a sinecure placeman, giving him the tenth of their produce which they formerly gave to their shoemaker. The consequence would be, that poor CRISPIN would die, and they would go bare- footed, with the consolation of reflecting that they had brought themselves into this state from the silly vanity of keeping an idle man. But, suppose the land to yield enough food for all ten of them, and enough for two persons besides. They have this, then, besides what is absolutely necessary to supply their wants. They can spare one of their men from the field, and have besides, food enough to keep him in some other situation. Now, which is best, to make him a second carpenter, who, in return for his food, would give them additional and permanent con- venience and comfort in their dwellings ; or, to make him a sinecure placeman or a singer, in either of which places he would be an annihilator of corn, at the same time, that, in case of emer- gency, he would not be half so able to defend the community. Suppose two of the cultivators became sinecure placemen, then you kill the car- penter or some one else, or what is more likely, all the labouring part of the community, that i< 48 PAPER AGAINST GOLD. to say, all but the sinecure placemen, live more miserably, in dress, in dwellings, and in food. This reasoning 1 applied to tens, applies equally well to millions, the causes and effects being, in the latter case, only a little more difficult to trace. Rents do not Such is the way in which taxes operate ; the operate in the distinction between which operation and the ame manner as operation of rents being this, that, in the latter Taxes. case, you receive something of which you have the particular enjoyment, for what you give; and, in the former case you receive nothing. It is by no means to be understood, that there should be no persons to live without what is generally called labour. Physicians, Parsons, Lawyers, and others of the higher callings in life, do, in fact, labour; and it is right that there should be persons of great estate, and without any profession at all ; but, then, you will find, that these persons do not live upon the earnings of others : they all of them give something in return for what they receive. Those of the learned professions give the use of their talents and skill; and the landlord gives the use of his land or his houses. Taxes, in some Nor ought we to look upon all Taxes as so cases, not inju- much of the fruit of our labour lost, or taken rious> away without cause. Taxes are necessary in every community ; and the man, whether he be statesman, soldier, or sailor, who is in the ser- LETTER III. 49 vice of the community, gives his services in re- turn for that portion of the taxes which he re- ceives. We are not talking against taxes in general ; nor, indeed, will we stop here to in- quire, whether our taxes, at their present amount, be necessary ; or, whether, by other counsels, they might, in great part, at least, have been avoided. These are questions, which, for the present, we will wholly pass over, our object being to come at a correct opinion with regard to the effect of heavy taxation upon the people who have to support it, reserving for another opportunity our remarks and opinions as to the necessity of such taxation in our par- ticular case. By national prosperity the writers above al- what are the luded to mean something very different indeed true signs of from that which you and I, who have no desire national pros- to live upon the taxes, should call national pros- perity perity. They look upon it, or, at least, they would have us look upon it as being demon- strated in the increase of the number of chariots and of fine-dressed people in and about the pur- lieus of the court ; whereas, reflection will not fail to teach us, that this is a demonstration of the increase of the taxes, and nothing more. National prosperity shews itself in very different ways : in the plentiful meal, the comfortable dwelling,, the decent furniture and dress, the healthy and happy countenances, and the god E 50 PAPER AGAINST GOLD. morals, of the labouring classes of the people. These arc the ways in which national prosperity shows itself; and, whatever is not attended with these signs, is not national prosperity. Need I ask i/ou, then, if heavy taxation be cal- culated to produce these effects ? Have our la- bourers a plentiful meal of food fit for man ? Do they taste meat once in a day ? Are they decently clothed ? Have they the means of ob- taining firing ? Are they and their children healthy and happy ? I put these questions to you, Gentlemen, who have the means of know- ing the facts, and who must, I am afraid, answer them all in the negative. The poor-rates But, why need we here leave any thing to of this country: conjecture, when we have the undeniable proof their amount before us, in the accounts, laid before Parlia- and increase. HlCHt, of the amOUttt of the FOOT RtttCS, at tWO different periods, and, of course, at two different stages in our taxation ; namely, in the year 1784, and in the year 1803 ? At the former pe- riod, the taxes of the year, as we have seen above, amounted to .13,300,921; and then the Poor Rates amounted to .2,105,625. At the latter period, the taxes of the year) as will be seen from the Official Statement in Register, Vol. IV, page 1471) amounted to .41,951,747 ; and the Poor Rates had then risen to .5,245,500. What must they, then, amount to at this day, when the year's taxes amount to upwards of 70 millions of pounds ? LETTER III. 51 Here, then, we have a pretty good proof, that Taxation and taxation and pauperism go hand in hand. We Pauperism go here see what was produced by the ANTIJACOBIN hand in hand. WAR. The taxes continued nearly the same from 1784 to 1793, the year in which PITT began that war ; so that, by the ANTIJACOBIN WAR alone the poor rates were augmented, in nominal amount, from . 2, 105^623 to .5,246,506 ; at which we shall not be sur- prized, if we apply to this case the principle above illustrated' in the supposed community of ten men, where it is shown, that, by taking the produce of labour from the proprietors of it, and giving it to those, who do not labour and who do not give the proprietors of such produce any thing in return, poverty, or, at least, a less degree of ease and enjoyment, must be the con- sequence. The poor-rates alone are now equal in amount Enormous iu- to the whole of the national expenditure, includ-crease of the ing the interest of the Debt, when the late king poor-rates, came to the throne ; and, the charges of manag- ing the taxes ; that is to say, the wages, salaries, or allowances, to the Tax-Gatherers of various descriptions ; the bare charge which we pay on this account amounts to very little short of as much as the whole of the taxes amounted to when King William was crowned. This charge; that is to say, what we pay <0TheTaxga- thc Tax-gatherers., in one shape or another, is there detour E ^ 52 PAPER AGAINST GOLD. as much as stated, in the account laid before Parliament for would keep the last year, at .2,886,201, a sum equal to a 92,500 families, year's wages of 92,500 labourers at tivelve shil- lings a week, which may, I suppose, be looked upon as the average wages of labourers, take all the kingdom through. Is this wo evil? Are we to be persuaded, that, to take the means of supporting 92,500 families, consisting, upon the usual computation (5 to a family), of 461,000 souls ; that to take away the means of support- ing all these, and giving those means to support others, whose business it is to tax the rest, in- stead of adding to the stock of the community by their labour ; are we to be persuaded that this is no evil ; and that, too, though we see the poor rates grown from 2 millions to 5 mil- lions in the space of 10 years? Are we to be persuaded to believe this ? Verily, if we are, it is a great shame for us to pretend to laugh at the Mahomedans. Next, inquire Having now taken a view of the progress of into the the -National Debt together with that of the K-hemes for National Expcnccs and Taxes ; and having (by arresting the stepping a little aside for a moment) seen some- increase of thing of their effect upon National prosperity, the Debt we vv *^ * n ^ 1C ncxt Letter, agreeably to the intention before expressed, inquire into the schemes for arresting this fearful progress ; or, as they arc generally denominated, plans for paying off, or reducing, the National Debt ; a subject of very great importance, because, as LETTER III. 53 we must now be satisfied, the bank-notes have increased with the Debt, and, of course, the re- ducing of the Debt would, if it were accom- plished, tend to the reduction of the quantity of bank-notes, by the excess of which it is, as the Bullion Committee have declared, that the gold coin has been driven from circulation. I am., Gentlemen, Your faithful Friend, WM COBBETT. State Prison, Newgate, Tuesday, llth Sept. 1810. PAPER AGAINST GOLD. LETTER IV. Schemes for paying off the National Debt Former Sinking Funds Origin of Pill's Grand Sinking Fund Changes made by Pill's sway in ihe slate of this Country Grand Sinking Fund Act Purposes of it The Commissioners and their manner of proceeding How they would buy up Grizzle Greenhorn's share of the Debt Whal Redemplion means Commissioners slep into Grizzle's shoes We still are taxed for the Interest Evils of the Grand Sinking Fund Whal would be really redeeming American mode of Redeeming Statement of the Increase of the Interest on the Debt Clause in Pitt's Grand Sinking Fund Act for ceasing to pay Interest, in 1808, upon Stock bought up. GENTLEMEN, inquire into V-JUR next business is to inform ourselves cor- tie different rectly with respect to the Schemes, which, at different times, have been on foot for PAYING OFF THE NATIONAL DEBT, and about which paying off we have, all our lives long, heard so much. schemes for We have seen how the Debt has gone on in- paying off the creasing from its first existence to the present National Debt, day ; we have seen how the Expences of the nation and the Taxes of the nation have gone on increasing with the debt ; we have also seen that the increase of the Bank -Notes has kept pace LETTER IV. 55 with the rest, till those notes have, at last, driven the gold coin out of circulation. This last, is the evil, for which the Bullion Committee have endeavoured to find out a remedy, and such a remedy they appear to think that they have found, in an Act of Parliament which they pro- pose to be passed for causing the Bank Company to pay their promissory notes in gold and silver in two years' time. One of our principal objects, in this discussion, is, to enable ourselves to form a correct opinion as to the practicability of this remedy,, even at the end of two years ; and, as we have, from what has already been shown, good reason to believe, that the quantity of bank notes, the excess of which has driven the gold out of circulation, cannot be lessened unless the Debt be also diminished, it is necessary for us to ascertain what has been done or attempted, and what is likely to be done, in the way of causing such diminution. From very early stages of the Debt ; indeed, From the be- almost from the very beginning of it, there were ginning there measures proposed for paying it off, the idea of were such an everlasting Debt, and an everlasting mortgage s upon the nation's means, being at first, something too frightful for our upright and sensible ances- tors to bear. Propositions, and even provisions.. were at different times accordingly made for pay- ing off parts of the Debt, and some comparatively small sums were, in the early stages of the pro- gress, actually paid off ; the Debt became less, 56 PAPER AGAINST GOLD. and less interest was, of course, paid upon it. Still, however, as new wars came on, new sums were borrowed ; and, as lending money to the government was found to be a profitable trade ; as so many persons of influence found their ad- vantage in the loaning transactions, the money was always easily enough raised. But, yet there continued to be a talk of paying off the Debt ; and, in time, a part of the yearly taxes were set aside for that purpose, which part of the sinking Funds, taxes so set aside was called a SINKING FUND. The meaning These being words, which, as belonging to of a sinking our present subject, are of vast importance, it is Fund. necessary for us to have a clear notion of their meaning. The word fund, as was before ob- served in Letter II. page 22, means a quantity of money put together for any purpose ; and, in the instance before us, the word Sinking appears to have been prefixed to the word Fund in order to characterize, or describe, the particular pur- pose, or use, of the taxes so set apart ; namely, the purpose of sinking, or reducing, or diminish- ing, or lessening, the Debt. So that the Sink- ing Fund, of which we have all heard so much, and of which most of us have known so little, means., in other words, in words better to be un- derstood, a Lessening Fund ; and whether the thing has, in its operation, hitherto, answered to its name, we shall by-and-by see, if, indeed, we have not seen enough to satisfy us upon this LETTER IV. 57 point in the increase of the Debt, as exhibited in the foregoing Letter. The amount of taxes thus set apart, or, to use Pitt's grand the words with which we must now grow fami- sinking Fund, liar, the Sinking Funds, which were, time after in nss. time, established, were in many cases, applied to other purposes than that for which they were des- tined, or intended. Indeed, they seem, for many years, to have been very little better than purses made up at one time and spent again at another, without answering any rational purpose at all; and, accordingly, the nation does not appear to have paid any great attention to them, or to have considered them as of any consequence, until the year 1786, when the present GRAND SINK- ING FUND was established by PITT, who, but a little while before, had been made Prime Minister, and whose system has continued to this day. Gentlemen, we are now entering upon a part Necessity of of our subject, which not only demands an un- laying aside common portion of your attention,, but, into the party pre- discussion of which you will, I hope, carry such juices. a spirit of impartiality as shall subdue all the pre- judices of party and dissipate all the mists of ig- norance which have therefrom arisen. It is, even yet, impossible to mention the name of PITT, without exciting feelings that struggle hard against reason, and that, in some minds, over- come it. During his administration, the nation 58 View of the destructive measures of Pitt. PAPER AGAINST GOLD. was divided into two parties, so hostile to each other,, that both were easily made subservient to his views ; and,, it is,, with every man who really loves his country, matter of deep regret, that the same, or nearly the sarae, divisions continue to the present day. It is not for me, who, at one time, really looked upon PITT as the greatest minister thatEng- land ever saw, to reproach others, who may still be as ignorant of the truth as 1 was then, for their attachment to his memory, for their high opinion of the schemes of his inventing,, and for their blind adoration of those schemes ; but when they have, as 1 have, taken a fair and full view of all his measures ; when they have compared his deeds with his professions, his performances with his promises ; when they have seen, that he added threefold to our Taxes and our Expenditure, and that, notwithstanding this, the power and the ter- ritory of France were extended in proportion to the sacrifices he called upon us to make for what he called resisting her ; when they see, that that standard of national misery, the poor-rates, rose, during his sway, in almost a triple degree ; when they see, that the war at the outset of which he relied, in no small degree, for success upon the destruction of French assignats, did, at the end of four years, cause the stoppage of gold and silver payments at the Bank of England, and that its prolongation has led to a state of things, in which a public print devoted to the government,, LETTER IV. 59 has described the largest class of English bank* notes as ( e destructive assignats ;" when they see this, and when they see, that, the National Debt, which he himself called " the best ally of " France;" when they see, that that Debt, which he found at 200 millions and odd, he left at 600 millions and odd, while France, during his wars against her, had exchanged her assignats for gold, and had extended her territory and her sway to a degree which made that nation, whose power our forefathers despised, an object of con- tinual dread to England ; when the former par- tizans of PITT see this, as they must, aye, and fed it too, will they still persist in asserting the wisdom of his plans ; and, above all, will they, when they see the Debt tripling in amount under his hands, still persist in asserting the efficacy of his Sinking Fund, and, upon that bare assertion, reject all inquiry into either the nature or the effect of that celebrated scheme ? Let us hope, that, in a country boasting of the T hose who live thoughtfulness of its people, there can be but very upon the taxcs few persons so besotted as this ; and, indeed, it stillapplau! , is due to the country to say, that there do not ap- th(Ji , lfatal pear to be any such left, excepting amongst those who live upon the taxes, and whose pervcrscness arises not from their want of information. ]Juf, be this as it may, I am satisfied that you, my Friends and Neighbours, who, like me, Imvc no interests separate from those of our country, will not, whatever may have been your prejudices m asiiivs. 60 PAPER AGAINST GOLD. heretofore, wilfully shut your eyes against the truth ; and that you will accompany me in this inquiry with that great attention, which, as I be- fore observed, the subject demands. sinking Fund Pitt's Sinking Fund was begun in the year Act of 1786. 1786, by an Act of Parliament (being Chapter XXXI of the 26th year of the reign of George III) entitled cf An Act for vesting certain sums " in Commissioners, at the end of every Quarter t( of a Year, to be by them applied to the Re- " duction of the National Debt." In virtue of this Act a certain part of the taxes was, in each year, to be paid to certain persons, named in the Act, as Commissioners for managing the concern; and, these taxes, together with the accumulations upon them, have been, as formerly, called a Sink- ing Fund. The word redeem in- troduced. It is no matter what was the amount of the sum, or sums, of money, thus to be set apart out of the taxes, and to introduce particulars of that sort would only embarrass our view. Suffice it to know, that certain sums of money, being a part of the taxes, were set apart, and that, with this money, together with its growing interest, the Commissioners, appointed by the Sinking- Fund-Act, were, at stated periods, and with cer- tain limitations in their powers, to redeem the Debt as fast as they could, the word redeem hav- ing now come into fashion instead of the word pay off. It is of no consequence what were the LETTER IV. 61 periods, what were the days of the week or the times of the moon, when this work of redemption was to be performed. The effect is what we have to look after ; but, in order to have a clear view of even that, we must see the manner of doing the thing, the manner of redeeming or paying off the Debt; for, without that, we shall be continually exposed to be bewildered and de- ceived ; and, indeed, we shall be quite unable to form any thing like a clear notion of what the Sinking Fund really is. The Commissioners, with the money thus put Look back, to under their care and management, were to pur- see trhat chase up stock from individuals, which stock stock means. would then become the property of the nation. But, stay. We must go gently on here, or we lose ourselves in a moment. We must, indeed, not proceed a step further, till we have gone back to Letter II, at pages 26, <17, 28, and have taken another look, and refreshened our memo- ries as to what STOCK means. Having done so, and read on to the end of the first paragraph in page 9, we may proceed by repeating, that the Commissioners were to go to work with the money lodged in their hands, out of the taxes, and purchase up Stock. We have seen, in the pages just referred to, how Stock is made ; we have seen how MUCKWORM lent his money to the government ; we have seen how he got his name written in a book in return for his money ; we have seen that Stock is nothing 1 that can be seen, 62 PAPER AGAINST GOLD. heard, smellcd, or touched ; we have seen that it signifies the right of receiving interest upon money lent to the government, which money has been long ago expended; we have seen the operation by which Muckworm became possessed of stock : and,, lastly, we have seen our neigh- bour, FARMER GREENHORN, purchase two thou- sand pounds worth of MUCKWORM'S stock, which the former bequeathed to his poor daughter GRIZZLE. AH instance of Now, then, observe, the whole of the Stock, redeeming, in of which the National Debt is made up, is the purchasing exactly the same sort of thing as this two thou- U p, of Grizzle gand pounds worth of Stock, belonging to Grizzle Greenhorn's Greenhorn. There is a book, in which a list of stuck. the names of all those persons is written, who have, like Grizzle, a right to draw interest from the government out of the taxes ; against each name in this list is placed the amount of the sum for which the person has a right to draw interest. Some have a right to draw interest for more and some for less. And these sums make up what is called the National Debt. Of course, the Sink- ing Fund Commissioners, in order to pay oft' the National Debt, or any part of it, must pur- chase up Stock from individuals ; or, in other words, pay them off their share of the Debt. If, for instance, Grizzle Greenhorn has a mind to have her two thousand pounds to lay out upon land, or to do any thing else with, she sells her stock, and, if it so happen, she may sell it to the LfeTTEB IV. 63 Commissioners ; and thus) as they pay her for it with the nation's money, it is said, that, by this transaction, they have redeemed (by which I should mean paid off) two thousand pounds of the National Debt. Grizzle, who was the credi* tor, has got her money again ; she has no longer any right to draw interest for it ; and of course, you would think, that these two thousand pounds worth of debt were paid off, and that the nation, that we the people, had no longer any interest to pay upon it ; you would naturally think, that we were no longer taxed to pay the interest upon this part of the Debt. Greatly, however, would you be deceived ; Butj though cruelly deceived, if you did think so; for, not- saidtober ,_ withstanding the Commissioners have redeemed dJemed the these two thousand pounds, we have still to pay 1 J interest on it the interest of them every year; we are still. J J is still paid, taxed for the money wherewith to pay this in- terest, just in the same way as if the tico thou- sand pounds worth of Debt had not been re- deemed at all, but still belonged to Grizzle Greenhorn ! This is an odd way of redeeming; an odd way of paying off : do you not think it is, Neighbours ? We have before seen, that the National Debt is a mortgage upon the taxes. It is constantly called so in conversation, and in writings upon the subject. But, should not either of you, who happened to have a mortgage upon your land or house, think it strange if, after you had redeemed a part of the mortgage, 04 PAPER AGAINST GOLD. What the true y ou had st >^ to P a Y i nterest Upon the part re- meaning is of deemed as well as upon the part unredeemed ? *.. T0 REDEEM, as applied to money engage- debt ments, means to discharge , to set free by pay- ment. This is the meaning of the word redeem, as applied to such matters. It sometimes means to rescue or to ransom, from captivity , from for- feiture., or from peril of any sort, by paying a price. But, in every sense, in which this word is used, it always implies the setting free of the object on which it operates ; and, when applied to a mortgage, a bond, a note of hand, or a Debt of any sort, it implies the paying of it off'. How, then, can the two thousand pounds worth of Debt, purchased from Grizzle Greenhorn, by our Sinking-Fund Commissioners, be said to be redeemed by us, if we are still taxed to pay the interest upon it, and, of course, if it be not dis- charged, and not set free ? Nothing, at first sight, appears more plausible. The Sinking nothing more reasonable, nothing 1 more clear. Fund Commis- \ than the mode above described, of redeeming the sioners take _ Debt by purchasing from the several individuals. the place of J J who, like Grizzle Greenhorn, own the Stock or Grizzle Green- the Debt, their respective shares thereof. And, horn. . , the operation is as simple as any thing can be. For, the Sinking-Fund Commissioners, having, for instance, received two thousand pounds from the Taxgatherers, in virtue of the Sinking-Fund Act, go and purchase Grizzle's stock ; they give her the two thousand pounds ; her right to draw LETTER IV. 65 interest from us ceases ; her share of the Stock or Debt is redeemed or paid off; and her name is crossed out of the Book. Ah ; but, alas ! the names of our Sinking-Fund Commissioners ate written in tlie Book instead of hers ! Aye ; we have to pay the interest of the two thousand pounds to them instead of to her ; and our taxes on account of this which is called the redeemed part of the Debt,, are just as great as they were before this curious work of redemption began. " Well then," you will say, ' f what does this Thc sinkin fc thing mean ; and what can it have been in- Fund a source " tended for ?" Why, to speak candidly of the of new wars, matter, though the thing was an invention of debts, and , under whose sway so much mischief came upon this nation, I believe,, that the thing was well meant. I believe that it was intended to free the nation from its Debt. But, I am satis- fied, that it has been productive of no small part of the evils, which England and which Europe have experienced since its invention ; for, by giving people renewed confidence in the solidity of the Funds or Stocks, it rendered government borrowing more easy ; and, of course, it took from the Minister that check to the making of wars and the paying of foreign armies, for the want of which check the Expences and Taxes and Debt of the country have been so fearfully augmented, to say nothing, at present, about the dreadful changes which those wars have made in our affairs both at home and abroad. F taxes. 66 PAPER AGAINST GOLD. The expected To produce such effects was, however, cer- operationand tainly not the intention of the scheme. The effect of the intention was, that the Sinking-Fund Commis- scheme sioners should, with the money put into their hands out of the taxes, purchase up Stock, or parts of the Debt, belonging to individuals ; that the parts, so purchased up, should not cease to exist ; that they should be written in the Great Book under the name of the Commissioners ; that the Commissioners should receive the in- terest upon them, instead of its being received by individuals as before ; that this interest, as fast as it came into the hands of the Commis- sioners, should, like the money paid to them annually out of the taxes, be laid out in pur- chasing up more Stock from individuals ; and that the thing should go on thus, till the last of the Stock, or Debt, got into the hands of Com- missioners ; when, of course, the government might burn the Great Book, and the National Debt would be paid off. i'iiis:i,i... u , on T"' 8 scheme was very pretty upon paper; i ,. i . ;ri . it made a fine figure in the newspapers and pamphlets of the day ; and looked quite solemn when embodied into an Act of Parliament. There was, to be sure, when people looked into the matter more closely, something rather whim- sical in the idea of a nation's paying interest to itself; something very whimsical in a nation's GETTING MONEY' by paying itself interest its oixn Slock. Many persons thought so, LETTER IV. 6? at the time, and some said so; but the formidable tables of figures made out by court calculators, and the flowery and bold speeches of PITT, soon ^3ut all such persons out of countenance, and re- duced them to silence ; or exposed them to the charge of faction and disaffection and disloyalty. The country, infatuated with its ef Heaven-born ff Minister," became deaf to the dictates of com- mon sense ; and, with as much fondness as the mother hangs over her smiling babe, it cherished and fostered the fatal delusion. As the execution of the Sinking-Fund Act Executior>of proceeded, more and more of the Stock, or parts theSillking of the Debt, became of course entered in the FundAct Great Book in the names of the Commissioners. Hence arose a new denomination in our national money accounts ; namely, the redeemed debt ; that is, the parts of the debt, as aforesaid pur- chased up by the Commissioners, was now called the cc redeemed debt;" a phrase which contains Redeemed a contradiction in itself. But, still it was un-i>ct>t. avoidable; for, it was not paid off ; it was bought up, but we had still, and have still, to pay interest upon it ; and, therefore, it could not be said to be paid off; for, it would be folly too gross to pretend that we had paid oh" a debt or a mortgage, for which we were still paying interest. If, indeed, the parts of the debt, which were pur- chased up by the Commissioners, had been, at once, done awsiv, and we had ceased to pay interest upon them, then those parts would have 68 PAPER AGAINST GOLD. been reaUy redeemed. If, for instance, Grizzle Greenhorn's two thousand pounds worth of Stock had been crossed out of the Great Book., and had not been inserted in it again under any othef name, that two thousand pounds worth of the debt would have been redeemed in reality. This is the way in which the Sinking Fund of the American sink- American States operates. They raise yearly a ing Fund. certain sum in taxes ; with that sum they pur- chase up part of their debt ; and then that part of the debt ceases to exist in any shape whatever. The next year they raise a like sum in taxes, and again purchase up parcels of the debt. And, thus they proceed,, having every succeeding year, less and less interest to pay upon their debt. This is real redemption : this is real paying off. But, the way in which we proceed bears no resemblance to it ; nor has any thing in common with it, except it be the name. interest of our Let us, before we proceed any further, take a j> ebt and the view of the increase of the interest that we have to pay upon the debt. We have seen in Letter III. page 37, how the debt itself has gone on increasing. But, we have not yet taken a look at the increase of the INTEREST ; though this is very material, and,, indeed, it is the only thing, belonging to the debt, worthy of our at- tention. The statement of the amount of the debt itself is of no practical use, except as it serves to illustrate, to render more clear,, the part of the subject upon which we now are. LETTER IV. 69 For as \ve have seen, the Debt is nothing more increase of the than a right possessed by certain persons, called interest. Stock-Holders, to draw interest from the nation ; or, in other words, to take annually, or quarterly, part of the taxes raised upon the people at large. Let us, therefore, take a look at the progress of this interest. When QUEEN ANNE came to the throne, in 1701, the annual interest on the National Debt was - - - .1,310,942 When GEORGE I. came to the throne, in 1714 3,351,358 When GEORGE II. came to the throne, in 1727 2,217,551 When GEORGE III. came to the throne, in 1760 - - - - 4,840,821 After the AMERICAN WAR, in 1784, and just before the making of Pitt's Sinking Fund 9,669,435 At the latter end of the ANTI- JACOBIN WAR, in 1801 - 21,778,018 For the LAST YEAR, that is 1809 32,8/0,608 There are included in this sum " charges foi* J Emperor or f management ;" and, as \ve have before seen, Germany and there is some of the Debt (small portions) called Prince of Por- the loans, or debts, of the Emperor of Germany, J tugal's Debt. and of the Prince Regent of Portugal, which, it is possible^ they may repay us ; but, this is, 70 PAPER AGAINST GOLD. as it is called in the account laid before Parlia- ment,, during the last session, the " Total charge tc on account of Debt, payable in Great Bri- " tain." And, let me ask any sensible man, what consequence it can be to us, what the Debt is called ; what consequence by what name the different sorts of it may go, so that the interest upon it still goes on increasing, and so that we have to pay the whole of that interest out of the taxes ? A time was When PITT'S Sinking Fund was established, fixed i-i the Act there was a time fixed, when the interest should when the in- begin to be diminished. 1 mean, a time was , fixed, when the people should no longer pay teret should be L J taxes to defray the interest upon the Stock, or diminished. parts of the Debt, which should after thai time be purchased up Inj the Commissioners. The time so fixed was 1808, two years ago. The year was not named in the Act ; but, it was known to a certainty ; because this ceasing to pay interest was to begin, when the interest upon the Stock, or parts of the Debt, bought up, together with the sums paid to the Commissioners out of the taxes, should amount to a certain sum (four millions annually) ; and, as the sums to be paid to them were fixed, it was a mere question of arithmetic when the paying of interest would cease, agreeably to the terms of the Act; as ex- pressed in the XXth clause, as follows: " And " be it further enacted by the authority afore- LETTER IV. 71 e< said, that whenever the whole sum annually " receivable by the said Commissioners, in- ff eluding as well the quarterly sum of two hun- {C dred and fifty thousand pounds herein before " directed to be issued from the Exchequer, as " the several Annuities and Dividends of Stock sc to be placed to the Account of the said Com- " missioners in the Books of the Governor and (e Company of the Bank of England, by virtue ." of this Act, shall amount in the whole to FOUR ff MILLIONS ANNUALLY, the Dividends due on such " Part of the Principal or Capital Stock as shall " thence-forth be paidoifby the said Commis- rf sioners, and the Monies payable on such An- " nuities for Lives or Years as may afterwards " cease and determine, SHALL NO LONGER " BE ISSUED AT THE RECEIPT OF (f HIS MAJESTY'S EXCHEQUER, but shall be CONSIDERED AS REDEEMED by ' ' Parliament, and shall remain to be disposed of ec as Parliament shall direct?'' In what icay it might have been supposed, that Parliament, in its wisdom, would dispose of these parcels of redeemed debt, I shall not, for my part presume to hazard a conjecture ; but, as was before ob- served, it was easy (the sums being given) to ascertain the time, when the provision in this clause would begin to operate ; and, that time was, the year 1808. There was another Act, passed seven years Ac t,f 179* 72 PA PER AGAINST GOLD. later, ( 1 7.92), allotting more of the taxes to the same purpose (Chapter 52 of the 32nd year of this king's reign) ; and still the same provision was made ; namely, that, when the produce of the Sinking Fund should amount to 4 millions annually, all the Stock, or parts of the Debt, that should be purchased up by the Commis- sioners after that time, SHOULD NO LONGER HAVE INTEREST PAID UPON IT OUT OP THE TAXES ; but that these parts of the Debt should (mark the -words !) "be considered " : AS REDEEMED." And so they would. They really, in that case would have been re- deemed ; but the word redeemed is now applied, even in the Accounts laid before Parliament, to those parts of the Debt, bought up by the Com- missioners, the dividend, or interest, on which parts, IS STILL ISSUED AT THE EXCHE- QUER ; that is to say, is still paid out of the taxes ! And all this goes on amongst {C the e( thinking" people of England ! The year of But ^ >vliat was done ^ in tnc long- expected year promise. * s08 ? What was clone, when the year of pro- mise came ? This is the most interesting part of this most curious history ; but, as to bring to a close the whole of the discussion, relating to the Sinking Fund, would extend this letter to double its present length, I think it better to make the remaining part of it the subject of another Letter, beseeching you, in the meanwhile, to LETTER IV. 73 make up, by your patience in the perusal., for whatever want of clearness may be discovered in the writer. I remain, Gentlemen, Your faithful friend, W*. COBBETT. State Prison, Newgate, Thursday, September 14, 1810. T4 PAPER AGAINST GOLD. LETTER V. " 1 would inculcate one truth with peculiar earnestness; namely, that " a REVOLUTION is NOT the necessary consequence of a NATIONAL " BANKRUPTCY." PURSUITS OK LITERATURE. Digression respecting the use of Bank-Notes as a Political Sup- port to the Government Mr. Addington's Notion of con- vincing Buonaparte by the means of a Tax Answer of the Moniteur Advice given to Mr. Addington in the Register in 1803 Passage quoted from a Government News-paper describing Bank-Notes as necessary to the Existence of the Government Same Doctrine promulgated by Mr. Paine in his Rights of Man How different is this from what the World has been told Effect of it to encourage the Enemy Resume the subject of the Sinking Fund No Interest taken off in 1SOS Addingtou's Act of 1802 George Rose quoted to prove that it was clearly held forth to the Nation that Taxes would be repealed in consequence of the Sinking Fund P. S. Sir John Sinclair's Pamphlet. GENTLEMEN, Unfounded JLJEFORE we resume the discussion, relating to Pitt's Grand Sinking Fund' which \vant of apprehensions room obliged us to break off, at the close of the last letter, I think it may be useful to submit to you here an observation or two^ calculated to obviate any unfounded apprehensions that might otherwise be excited by the apparently inevitable fate of the paper-money ; and this I deem the more necessary ., as publications are daily appear- LETTER V. 75 ing, from the pens of ignorant or interested per- sons, the evident tendency, and, indeed, object, of which is, to persuade the public, that the exis- tence of the government ; that the existence of law and order ; that the safety to persons and property ; nay, that the continuance of the very breath in our nostrils, depend upon the credit of the Bank Notes. The author, from whose writings I have taken exc ited b y the my motto to this present Number of my work, inevitable fate was, you see, of a very different opinion ; and, I ofthepaper . have quoted his sentiment upon the subject, * money. because his work is well known to be of what is called the ANTI-JACOBIN kind, that is to say, a work the tendency of which is to prevent men like you from having any thing to say or to do, any more than your horses, in the affairs of government. This writer, who, however, might mean well, and who is certainly a very clever man, so far from supposing that the existence of the government depended upon the credit of bank-notes, is, you see, fixed in his opinion, an opinion that he wishes cc to inculcate " with peculiar earnestness," that a REVOLUTION, thereby meaning a change in the form of go- vernment, is not the necessary consequence, even of a National Bankruptcy; that is to say, not only a total discredit of all the paper-money and especially the Bank of England Notes, but also an utter inability to pay, in any way whatever, 76 PAPER AGAINST GOLD. the interest upon the National Debt, or any part of it. Mr. Addington This is my opinion also, as it always has been and the French s ^ nce * turne d my attention to the subject. At Moniteur * ne beginning f tne present war, MR. ADDING- TON, who was then the Prime Minister, told the House of Commons, that one of his principal ob- jects in laying on the Property Tax and other war taxes, was, (C to convince Buonaparte, that f( it was hopeless for him to contend with our tc finances." To which the MONITEUR, or French government-newspaper, replied : " Pay vas " hopeless for him to contend with our ruptcy " finances," you, Gentlemen, are as likely to be able to judge as any body that I know. I, for my part, blamed the Minister for holding out such a motive for his taxing measures. I said to him : The true way of convincing your enemy, that this war upon your finances will be useless, is to state explicitly to the world, that you are not at all afraid of the consequences of what is called a national bankruptcy ; for, while you endeavour to make people believe, that such * Register, Vol. III. page 918. June, 1803. LETTER V. 77 an event cannot possibly happen, they will cer- tainly think that you regard it, if it should happen, as irretrievable ruin and destruction ; and,, there- fore, as you never can quite overcome their appre- hensions, the best way is to be silent upon the subject, or, to set the terrific bug-bear at dejiance. To Buonaparte's exultation at our approaching bankruptcy the answer is always ready : France has been a bankrupt ; France has not paid her paper-money in specie ; yet France is not the weaker for that ; France is, in spite of her ruined finances, in spite of the long pamphlets of Sir Francis D'lvernois and Mr. Rose, in spite of the longer speeches of Lord Mornington, Lord Auckland and Mr. Pitt, in spite of the innumer- able columns of figures which these noblemen and gentlemen have drawn up in battle array against her ; in spite of all this, France is yet powerful, yea, much more powerful than she was before she experienced what is called a national bankruptcy. What ground, therefore, have the French to rejoice at our finances being about to undergo a similar operation ? Such were my sentiments and my reasoning Ideaoflhe upon this subject, seven years ago; a time, M ine of the Doctor. But, it is more probable, that the breach " of national faith will be the necessary cft'ect of wars, defeats, mis- ' fui tunes, and public calamities, or even, perhaps, of victories and " conquests." HUME on Public Credit. Saving that a Man writes from a Prison is not a satisfactory Refutation of his Arguments Proceed with the subject of the Sinking Fund Alledged grounds of Addington's Act in 1802 The Time when it was to begin to yield us Relief, to wit, 45 Years Mr. Brand's Answer to an Argument of mine He denies thai Interest is paid upon the Redeemed Stock Acts of Parliament aud Public Accounts say the contrary Examination of the Example stated by Mr. Brand Great Error in regarding things as alike which are essentially dissimilar in their Properties Consequence of this Error shown in the supposed case of Thrifty Grand Fallaqy in supposing that what we pay to support the Sink- ing Fund, would otherwise be of no use to us Conclusion of the subject of the Sinking Fund P. S. Mr. Randall Jackson's Speech at the Bank Company's House, in Thread- needle Street. GENTLEMEN,, |_T was naturally to be expected, that those venal men, who for want of industry to " lahour (C with their hands the thing that is good/' and from a desire to live upon the labour of others, LETTER VI. 91 have chosen the occupation of writing, instead of obeying the voice of nature, which bade use the brush and not the pen, to blacken shoes and not paper ; it was naturally to be expected that those venal men, who gain their livelihood by serving the corrupt and by deceiving the weak, and the number of whom, in this Town, is, un- fortunately, but too great ; it was naturally to be expected that this description of men would feel alarmed at the progress of these Letters, which, by making honest and useful truths so familiar to the minds of the people, threatened literary venality with destruction. Accordingly these instruments of Corruption have shewn their anger and resentment against me ; but, To say lhat a the only answer they have offered to me is this : manwr i tcs f rom " that I discharge my gun from a stone-bat- J o a prison is no " ten/ ;" meaning that I write from a prison : ^ ' answer to hi therein giving the public a specimen of their wit arguments. as well as of their manliness. This is always the way ; it is the constant practice of those, who, while they are, from whatever motive, im- pelled to oppose a writer, want either the ma- terials or the ability to shew that he is wrong ; and, Gentlemen, you may lay it down as a maxim, that when any publication is answered by abuse, and especially personal abuse, the author of such publication is right, or, at least, that his abusers zcant the ability to shew that he is wrong. Facts and reasoning, if erroneous, always admit of refutation : but, if correct, no one can refute them ; and, if erroneous, to re- 92 PAPER AGAINST GOLD. fute may still require some ability ; whereas, to abuse the person from whom they have pro- ceeded, is within the power of every one, a gift not denied to any creature capable of uttering articulate- sounds or of making marks upon paper. The great cause, however, of abuse in such cases, is the weight of the truths, against which such abuse is opposed : for it is here as in common verbal disputes, he who has the truth clearly on his side, is always seen to be in good temper, while his opponent scarcely ever fails to discover impatience and anger, and, in but too many cases, to give way to personal in- vective and false accusation ; and, be you well assured, Gentlemen, that even the venal men, above-described, answer me by saying that I ivritcfro?n a prison, only because they have no other answer to give. Return to the Leaving them in the full possession and un- Snkin Fund env i e d enjoyment of all the advantage and of all the honour which such a mode of answering can give, let us proceed with our inquiry into the effects of the SINKING FUND, just cast- ing our eye back first, and refreshing our me- mory as to the foregone facts ; namely, that the Sinking-Fund Acts of PITT, which provided for the cutting off some part of the interest upon the Debt in 1808 ; that these provisions, which led the poor nation to hope for a taking oil' of part of its taxes in 1 808 ; that these prov isions, which, as we h^ve seen, were held forth to the LETTER TI. 93 believing people of England, in the pamphlet of GEORGE ROSE, as the sure and undoubted pledge for the taking off of taxes in 1 808, or thereabouts ; that these provisions, in order to begin to taste the benefit of which, the people were to pay a million a year of additional taxes for twenty-two years ; that these provisions ; yes, we must bear in mind, that these provisions, after the people had gone on hoping for sixteen years out of the twenty two : that these provi- sions, were, by ADDINGTON'S Act of 1802, re- pealed., done away, made of no more effect than if they never had been enacted by the Parliament. fc Well," you will say, " but upon what we have, for twenty four years, been paying In Fortv-five LETTER VI. 95 taxes for the purpose of paying off the Debt ; unless another and now, at the end of these twenty four years, hastening Act those of us who are alive have the consolation to should be reflect, that we have only thirty nine years more passe d. to wait and to pay these Sinking Fund taxes, before we shall begin to taste the fruit of all this patience and all these sacrifices, and that, at the blessed time here-mentioned, some of our taxes will be taken off, unless another Act should be passed, between this time and that, for rendering the last made Act cc MORE (f EFFECTUAL." Gentlemen, need I say more ? Certainly it is Further vicwsof not necessary ; but, there are still some views this matter. to take of this matter, which having taken, we may defy all the world to puzzle us upon this subject again. We have seen, that we still pay interest upon Gross absurdity the whole of the Debt ; we have seen, in Letter in supposing IV. p. fiy, that, since the Sinking Fund was es- thatanation tablislicd, the interest we pay has increased cangctmoney from nine millions and upwards to thirty-two, y by paying m- millions and upwards; and, we humbly think, tejvst to jtself at least I do, that so lone; as I am compelled to upon its own pay interest for a Debt, it is no matter to whom, or under what name, I pay it. This is an obvious truth. There is something so con- summately ridiculous in the idea of a nation's getting money by paying interest to itself upon its own stock,, that the mind of every rational 96 PAPER AGAINST GOLD. man naturally rejects it. It is, really, something little short of madness to suppose, that a nation can increase its wealth ; increase its means of paying others ; that it can do this by paying interest to itself. When time is taken to re- flect, no rational man will attempt to maintain a proposition so shockingly absurd. I put the thing in this way in an Article, published by me in 1804,* and I requested the late REV. JOHN BRAND, who had written a great deal upon the subject, to look at the Article, and to tell me what sort of answer he could find to this part of it. He did so, and the following was his answer : argument. ec \ have looked at your observations on the ec Sinking Fund ; and the following is my an- tc swer to your great argument ; namely, " that cc " the Debt said to be redeemed is an ima- " " ginary discharge, because INTEREST ce " thereon continues to be paid."- If the " interest does continue to be paid, the conclu- cc sion is just ; and this is the fundamental " principle of much of what you have said. 4 " It is, reduced, therefore, to a question of fact, " and I should say the interest docs not continue ff to be paid. The same tax continues to be ec levied, it is paid also away, but it is paid for ' ' another purpose ; it is yearly applied to the ff paying off more principal ; no part of it is e( applied to the payment of interest. -Take f( an example in a private concern, A has on his * REGISTER, Vol. V. page 591. LETTER VI. 97 te estate a mortgage of .70,000 at 3 per cent. ef which he has the liberty to pay off as he rc pleases. He determines to diminish his ex- ff penditure by . 1,000 a year, at the end of ef the year he pays the interest .2,100, and fe part of the principal .1,000, his payment " that year is .3,100, and this sum he con- fc tinues to pay annually till the debt is anni- fc hilated; it is now reduced to .69,000; at fc the end of the second year there will be due " for interest .2,070, being 30 less than the (C year before ; when, therefore, the second " payment of .3,100 is made, it will consist " of two parts, .1,030 for principal, and tf .2,070 for interest. The interest of the ' .1,000 paid off the first year does not con- ff tinue to be paid in the second, and the .30 ff interest of the part of the capital redeemed or " paid off is now applied to the payment of f{ more capital. Such mortgager at the end (f of the year has actually paid off .1,000, ec of year two .2,030, and of year three cc .3,060 18s. And that he continues to pay ' annually the same sum on account of debt, e that is, on account of principal and interest ' ( jointly, does not in the least affect this con- (f elusion." Now, in the first place, you see, MR. BRAND He gives up the takes up " & new position," us most combatants j ( ] ea of our pay- do, when they are afraid to meet tlicir antap:o- in; , intcrcstun nist. lie is obliged to say, that we DO NOT II 98 PAPER AGAINST GOLD. the redeemed continue to pay interest upon the part of the part. Debt, which is bought up, or, as it is called, redeemed. Aye ! but,, what say the Acts of Parliament ? They say, that interest is con- tinued to be paid thereon : they say, that, when any Stock, or parts of the Debt, are bought up, or redeemed, by the Commissioners, e( the di- (< vidends thereon shall be received by the said " Commissioners/' or by the Bank on their account. And, what is the language of the Accounts, laid before Parliament ? Why, in the account of the nation's Expenditure of last year, there is the following item : ff INTEREST on Debt of Great Britain REDEEMED, " .4,443,519." So that, either the Acts of Parliament and the Public Accounts make use of misnomers, or, I was right in calling it in' terest. Besides, how completely does this de- nial of MR. BRAND dissipate all our fine dreams about the gains of the Sinking Fund ? Is it not the commonly received notion, that we gain money by this fund ? Are we not continually told, by the venal writers of the day, about what the Fund yields ? Were we not told by them, less than six weeks ago, that this Fund had pro- duced such and such sums ? And, what is meant by a Fund's yielding and producing, if you cast the notion of interest aside ? In what other way is it to yield ? In what other way can it produce an addition to its amount ? Yet, on the other hand, it is impossible to adhere to this notion of interest, without falling into the gross absur- LETTER VI. 99 dity, before mentioned, of supposing that the nation can get money ; that it can increase its means of paying others, by paying interest to itself, by becoming the lender of money to it- self, by becoming its own creditor ; an absur- dity, which, as we have seen, MR. BRAND dared not risk his reputation in attempting to support. We now come to MR. BRAND'S ' f example in Mr. Brand's fe a private concern." And here, Gentlemen, example in a suffer me once more, and in a more pressing private concern. manner than before, to solicit your attention ; because we have now before us the ground work of all the sad delusion, which has so long existed and which does still exist, upon this subject. It is a natural propensity of the mind of man The ground- to assimilate things, which he wishes to under- wor k of his stand, with things which he does understand. error . Hence the application of the terms mortgage f redemption, and others, to the Debt of the Na- tion. But, in this work of assimilation, or bringing things to a resemblance for the pur- poses of illustration, we ought to take the greatest care, not to make use of violence, not to regard as alike, things which are essentially different in their properties ; for, if \ve do this, error must be the result, and I think, you will find, that this has been done by all those, who have reasoned like MR. BRAND ; that is to say, the whole of those writers and speakers, who u 2 100 PAPER AGAINST GOLD. have held forth the Sinking Fund as likely to produce relief to the country. .NO similarity We know, we daily see, that private persons between the pay off encumbrances upon their estates; and,, private concern we know very well and very familiarly, how fast and ti.is public the money of private persons increases by being concern. permitted to lie at compound interest. This very common portion of knowledge appears to have been quite enough for our Financiers, who had,, therefore, nothing to do but to look into interest tables, where they would not fail to find, that a million a year set apart, in 1786, would, at compound interest, pay off the then existing Debt, in the space of sixty years from that time. They ask no more. This quite satisfies them. They have no doubts upon the subject ; and, accordingly, they set apart the million a year ; that is to say, they make a law for applying, as we have seen, a million a year of taxes, raised upon the nation, to the paying of the nation's Debts. But, where is the real similarity be- tween this proceeding, and the proceeding of the individual as supposed by Mr. Brand, Mr. M* Arthur, Mr. Pitt and others; for they have all made use of the same sort of illustration ? Where is the similarity in the cases ? rinifi. MR. BRAND'S individual, to whom, for the ..iv'i.sj. sake of clearness, we will give the name of THRIFTY, diminishes his expenditure by a thou- LETTER VI. 101 sand a year ; that is, he, instead of spending it upon beer, wine, bread, beef, and servants^ pays it annually to GOLDHAIR, who has the mortgage upon his estate. Now, this you will clearly see, is to be a thousand a year SAVED by THRIFTY ; and, besides this, he resolves to pay to GOLD- HAIR (who has the mortgage on the estate, mind) as much more every year as will make each payment equal to what he formerly paid on account of the interest of the whole debt. This is an odd sort of way to do the thing, but it is THRIFTY'S humour, and there can be no doubt, that, in time, he will, thus, pay off his mortgage. But, again, I ask, what similarity there is in the case of THRIFTY and the case of A NATION ? can- THRIFTY, we are told, f ' determines to di- A nation (f minish his expenditure." Can a NATION do not act, in such this? THRIFTY knows to & certainty what h is a case, like an income and what his expenditure will be ; the in former is fixed, and over the latter he has com- plete controul. Is this the case with a NATION ? Prudent THRIFTY does not, and indeed, the sup- position will not let him contract a debt with SILVERLOCRS, while he is clearing off with GOLD- HAIR. Is this the case with A NATION ? But suppose, for argument's sake, that, as to all these, there is a perfect similarity ; still is there a point of dissimilarity, which nothing can re- move. THRIFTY, we are told, SAVES a thou- sand pounds a year. How does the saving arise ? Why, he has less beer, wine, bread,, 103 PAPER AGAINST GOLD. beef, and servants than he had before. His sav- ing, then, is made from the brewer, the wine- merchant, the baker, the butcher, and the foot- men ; or, rather, it is made from the public ; it is made from the nation ; it is made from a third party. But where is the NATION to find a third party from whom to make its saving ? The Grand But, what we are now going to view is the Fallacy of GRAND FALLACY. In this case of THRIFTY the Scheme, it is supposed, that he makes retrenchments from useless expences ; that (C he determines fc to diminish his expences by a thousand a ff year," and that, what he WASTED before, what HE GOT NOTHING BY THE USE OF BEFORE, he now applies to the paying off of his mortgage. This is very rational, and very efficient it would be ; but, is this the case with A NATION ? Would the money, which is col- lected from the people in taxes, for the purpose of supporting the Sinking Fund, be wasted, if not collected from them ? Would it be squan- dered away by the several individuals who pay it, in the same manner that THRIFTY'S thousand a year is supposed to have been wasted, before he began the work of redemption ? Would it, in short, be of no advantage to them, if it were not taken away to be given to the Sinking Fund ? Oh, yes ! And it would produce a compound in- terest, too, in the hands of individuals, as well as in the hands of the Sinking Fund Commis- sioners. What has the nation gained, then, by LETTER 71. 103 paying 1 millions to Commissioners, instead of keeping those millions in their own hands ? SINCE THE YEAR 1786, THE NATION HAS PAID UPWARDS OF 160 MILLIONS INTO THE HANDS OF THE SINKING- FUND COMMISSIONERS; that is to say, so much money has been collected from the people in taxes for the purpose of redeeming Debt; and, if this sum had been left in the people's hands, would it have been of no use to them ? Would it not, at any rate, have helped to pre- vent the Debt; since that time, from being AUGMENTED IN THE SUM OF 600 MILLIONS. Let us give the thing one more turn, and then, it is, I think hard, if we may not safely quit it for ever. THRIFTY is supposed to take his thousand a Gross absurdity, year out of what he before wasted; out of his illustrated in superfluities. But, does our Sinking-Fund the case of money ; do the taxes that we pay towards the Thrifty, silver- Sinking Fund, come out of our superfluities ? locks, and And, why suppose that THRIFTY wasted any Go!dhair> money before ? Why suppose that he had any money to waste ? Is THRIFTY'S being in debt, and having his estate encumbered; are these reasons sufficient for concluding, that he had it in his power to <( determine to diminish his ex- 1 pences?" Are they not rather reasons suffi- cient for concluding, that he was in circum- 104 PAPER AG-AINST GOLD. stances of distress ? Yes ; and if, when we have come to that rational conclusion, we suppose him persuaded to believe,, that he will get out of debt by borrowing from SILVERLOCKS all the money that he pays off with GOLDHAIR, and loading 1 his estate with a new mortgage, with the addition of the cost of bonds and fees, then we shall have before our eyes ef an example in " a private concern/' pretty well calculated to illustrate the celebrated scheme,, which we have now been discussing, and of which I now flatter myself that a single word more need never be uttered to any man of only common sense. I am, Gentlemen, Your faithful friend, W M . COBBETT. State Prison, Newgale, Thursday, 10th Sept. 1810. Mr. Randall P. S. - PR1DAV, GlstSEPT. - 1 have JUSI S Jackson's in the public Prints, a report of a Speech, said speed, at to nave ^ een delivered yesterday at the Bank tu Bank. Company's House, in Threadneedle Street, by MR. RANDALL JACKSON. I shall not, as I said before, suffer any publications of the day to in- terrupt the course of my discussion. In my next LETTER, which will open the way to that memorable transaction, the Stoppage of Gold and Silver payments at the Bank of England, I shall, in all likelihood, have occasion to notice LETTER VI. 105 Mr. Jackson's Speech, not so much on its own account, as because it appears to have been highly applauded by the people at the head of the Bank Company, for whom, perhaps, MB. JACKSON, who, it seems, is a lawyer, made it in the way of his profession. One word, how- ever, I must beg leave to add upon the part of this Gentleman's speech, in which, as the re- porter says, he alluded to me, as one who had exulted at the appearance of the Bullion Re- port, because that Report, coming from such high authority, had put the stamp of correctness on my opinions. Never did / say this ; never did I think this. Never did I look upon the Bullion Committee as a high authority; and, meanly indeed should I think of myself, if I thought any thing, that they could say or do, capable of adding the smallest weight to my opinions. No : what I exulted at was, that my principles and doctrines, as to paper-money, had, at last, produced practical effect, a proof of which was contained in the Bullion Report ; and that, it w r as now more likely than before, that such measures would, in time be adopted, \as would be likely to secure the country from the natural consequences of that overwhelming CORRUPTION, and that want of love for the real Constitution, which I regarded as the fruit of the Paper-money System, and which, years ago, I proved, as I think, to have proceeded, in great part, from that poisonous and all-degrad- ing root. This was the cause of my exultation. 106 PAPER AGAINST GOLD. I looked upon the Bullion Report as tending to this great object ; and, as I prefer the accom- plishment of this object, as I look upon the hap- piness and honour of my country as of far greater value to me than any other worldly pos- session, I said, and I still say, that the Bullion Report has given me more pleasure than I should derive from being made the owner of the whole of Hampshire. As for any idea of a party nature, I shall, I am sure, be believed when I say, that I did not care one straw to what party the Committee belonged. If I had a wish as to party it certainly would be, that no change of ministry should take place ; for,, (without prejudice to the OUTS, who, I think, would do the thing full as well with a little more time) I am quite satisfied that the present men will do it as neatly and as quickly as any reasonable man can expect LETTER VII. 107 LETTER VII. " REAL MONEY can hardly ever multiply too much in nny country; " because it will always, as IT increases, be the certain tign of the " increase of TRADE, of which it is the measure, and consequently " of the soundness and vigour of the whole body. But this PAPER " MONEY may, and does increase, without any increase of Trade ; " nay often when Trade greatly declines, FOR IT IS NOT THE " MEASURE OF THE TRADE OF ITS NATION, BUT OF THE " NECESSITY OF ITS GOVERNMENT; and it is absurd, and " must be ruinous, that the same cause which naturally exhausts the " wealth of a Nation should likewise be the only productive cause of " money." BURKE. Review of the Ground over which we have passed in the fore- going Letters Opening the Way into the History of the Bank's Stoppage in 1797 Vague Notion about the Increase of Bank-Notes being a Sign of an increase of Trade and Wealth and Prosperity This Notion examined Mr. Randle Jackson's Speech inveighing against those who have recommended that he and his Partners shall be compelled to Pay their Promissory Notes in two Years His Notion that an Increase of Bank-Notes naturally arises from an Increase of Trade Abuse heaped upon those who wish the Bank to Pay its Notes Such Persons called Riflers and accused of wishing to destroy the Credit of Old England An Increase of Promissory Notes is a Proof of an Increase of Debt Five Ways in which Bank-Notes get out into circula- tion Absurdity of supposing that an Increase of Promises- to-pay are a Sign of an Increase of the Means of Paying N. B. An Account of the Distresses arising from the Failure of the Banks at Salisbury and Shaftsbury. GENTLEMEN, JLN the foregoing Letter, we closed the discus- Retrospect O f lion relative to the Sinking Fund; and that 108 PAPER AGAINST GOLD. brought us to a point, to a sort of stage, or rest- ing place, on our way, from which point it will be advantageous for us to take a brief review of the ground over which we have passed ; for, when the design of the writer is to serve the cause of truth, and especially when the truths he wishes to make apparent, have been indus- triously enveloped in darkness ; in such a sase, every other quality in writing ought to yield to that of clearness. It was stated, at the out-set of our inquiries, that the Chief Object of them was, to ascertain, or, at least, to enable ourselves to form a decided opinion, " Whether it be possible., without a " total destruction of all the paper-money., to " restore Gold and Silver to circulation amongst ee us." In pursuit of this object, it became ne- cessary for us to make some preliminary inquiries as to the cause of the Gold and Silver having gone out of circulation. said The cause, the immediate cause, that is to say the cause which came close before the effect, was the increase of the paper-money. This cause was evident to every one ; but, then, it became us to inquire what had been the cause of that in- crease ; otherwise our inquiries would have been as useless as would be those of a farmer, who, upon finding a score of his sheep dead, should content himself with ascertaining that they had been killed with a knife, without making any in- LETTER VII. 109 quiry as to the person by whom the destructive instrument had been used. Common sense, therefore., dictated to us to inquire into the cause, or causes, of the increase of the paper-money ; and, in order to come at a clear understanding with respect to these causes, we were obliged to go back to the inauspicious origin of the paper- money system, that fatal system, whence arose the National Debt, that Debt which even PITT himself, the great abettor of the system, called " the best ally of France." During this retrospect, we have seen, that the upon the fore- Bank of England is merely a Company of traders, going parts of whose charter arose out of a loan which they the subject. made to the government, and that, at its institu- tion, it never entered into the mind of man, that these traders were ever to be protected by law from paying, in the king's coin, their promissory notes, as they have been from February 1797 to the present day. We have seen, in proceed- ing to inquire into the cause of this non-payment, or stoppage., on the part of the Bank, in 1797, that the Bank-notes have gone on increasing in quantity, and that these notes, of which, for more than half a century, there were none under 20 pounds, appeared, in the war of 1755, in the shape of 15 pounds and 10 pounds; and, during PITT'S war against the French revolution, which war he carried on, in part at least, for the avowed purpose of destroying the fi nances of France, we have seen that they appeared in the shape, 110 PAPER AGAINST GOLD. first, of 5 pounds, and, at last, in the shape of 2 pounds and 1 pound. We have, in order the better to understand the history of the Bank Stoppage in 1797, and the better to estimate its consequences, taken a view of the Funds and Stocks and National Debt ; we have seen how they arose ; we have described their nature ; we have traced them in their dreadful progress ; we have seen how the National Debt has gone on increasing, from the reign of William the Third to the present day ; we have seen how exactly the increase of the National Expenditure and the Taxes and the Poor Rates have kept pace with the increase of the Debt ; and, in the three last Letters, we have seen an ample developement, a clear exposure, of the schemes for " redeeming/' or cc paying off," that Debt, and we have seen, that, during the operation of those schemes of redemption, the Debt has gone on increasing, and, that the interest we pay upon the Debt, has, since the Grand Scheme of PITT has been in force, been augmented from 9 millions a year to 32 millions a year. GO on to the This is what we have seen and what we have history of the done. And having now, to use the sportsman's Bank stoppage, language, made good our ground, we may begin to move forwards towards the interesting history, of the stoppage of gold and silver payments at. the Bank of England, in 1797. inquire how Our first step, in opening the way into this LETTER VII. Ill history,, must be to obtain a clear notion with re- Bank Note gard to the manner, in which bank notes are get into cir- issued, or put out into circulation among thecuiation. people ; or, rather, with regard to the imme- diate causes of putting them out. For, unless we have a clear understanding upon this point, we shall have but a confused idea of the more distant causes of their increase. There is, apparently, a vague, or indistinct, The fallacy of notion, floating in the minds of some men, that th notion, the increase of the bank notes is an indication, or that an m- sign, of an increase of TRADE, of WEALTH, and crease of Bank of PROSPERITY, which, as you must have perceived, Notes is a sign are, by such persons, always jumbled and con- ofanincrease founded together, for want of proper attention to ofTradcand the facts and principles, which we have stated Wealth and laid down in Letter III, from page 45 to page 52. But, we must not suffer ourselves to fall into this confusion ; and, indeed, does not common sense reject the notion, that an increase of promissory notes, which necessarily argues the want of the means of the person, issuing them, to pay in specie ; does not common sense, does not the plain understanding of every plain man, reject, with scorn, the notion, that such an increase is a sign of increasing wealth and pi*os- perity in the person, or body, or community, by whom the issue is made ? Why does our neigh- instance iu bour NEEDY give a note of hand in payment of the case O f his rent or of his taylor's bill ? Why, because he Needy. has not the money in his pocket or his drawer. 112 PAPER AGAINST GOLD. And, arc we to be made to believe, that the cir- cumstance of his not having money to pay what he owes is a proof of his wealth and prosperity ? We have been persuaded to believe many things; but, I think, that,, at this/ day, we shall not be per- suaded to believe this. At the time of the nume- rous bankruptcies, in 1793., just after PITT'S war broke out, PITT asserted, that they were a sign of national prosperity , and was almost huzzaed for the assertion ; but, we have had time now to ex- perience, time to feel, the worth of PITT'S asser- tions, predictions, plans, and measures ; and, with the benefit of this lesson, we shall not, now, be so easily persuaded, that bankruptcy is a sign of prosperity ; though, it must, I think, be allowed, that it is full as true a sign of prosperity as that which has now been discovered in the in- crease of promissory notes, which increase is, and must be, always an infallible sign of a want, in a greater or a less degree, of the means to make payment in money. increase of As to the increase of Trade, that, indeed, will Trade requires demand, as we shall hereafter more fully see, a an increase of certain increase of circulating medium, or money, money. as must be evident to every man, who reflects, but for one moment, upon the subject ; because, where there are ten purchases of a pound each to be made (supposing them to be made in the same space of time) twice as much money will be wanted as where there are only five purchases of a pound each to be made. But, the increase LETTER VII. 113 of trade, that is to say, the increase of purchases and sales, or, in other words, the increase of MONEY'S-WORTH things, though it is a very solid reason for the increase of money, is no reason at all for the increase of promissory notes, and especially of promissory notes which will not bring money in exchange for them. The man, who is in a great way of trade, gives more promissory notes than a man in a small way ; but, he has proportionate means, and, at any rate, does not give notes without possessing the value of them in goods, orproperty of some kind, in money's-worth things ; and of course his notes are convertible into money ; but, is this the case with the notes of the Bank ? Is this the case with the notes of any of our Banks ? Such a man stands in need of no law to protect him against the demands of the holder of his notes ; but there is a law to protect the Bank of England against the demand of any holder of its notes, who may wish to have guineas in exchange for those notes. And, can the increase of such notes be regarded as a sign of the increase of trade ? Yet this is a favourite fallacy with those, who Fallacy ineni- either do not understand the matter, or who, c; . to a b y the while they do understand it, wish to deceive the partizans of the world, and the people of this country in par- Hank- ticular. This same fallacy was put forth with great assurance, at the House of the Bank in Threadneedle-Street, London, no longer ago I 114 PAPER AGAINST GOLD. than last Friday, by the Gentleman, a Mr. RANDALL JACKSON, mentioned in the Postscript ta the last Letter, page 104, in a speech, the whole of which, (together with the speeches of the GOVERNOR OF THE BANK and of a Mr. PAYN, a Country Banker), as reported in the Morning Chronicle, of Saturday last, will be found in the APPENDIX, A, and which I beg leave to recommend to your attentive perusal. Mr. u.ndaii MR. JACKSON, who is, it would seem, a pro- jack.-o.i's abuse prietor of Bank Stock ; that is to say, one of the of te Bullion Bank Company ; that is to say, one of the per- connnittep. sons * u whose name the Bank-notes are issued ; that is to say, one of the persons, who put forth the promissory notes of the Bank ; that is to say, one of the persons >vho derive a profit, who get rich, from the putting out of those notes ; MR. JACKSON most loudly inveighs against the Bullion Committee, and, indeed, pretty roundly abuses them ; pretty roundly abuses a Committee of the House of Commons, for having recommended to the House to pass a law to oblige him and his partners to pay their notes agreeably to promise ; and, this he does, you will observe, at the very time that he is railing against the revolutionists es of France for their levelling principles, and in- sinuating, that there are such levellers now at work in England ; all which may be very na- tural in MR. JACKSON; for, who that is protected by law from the payment of his promissory notes, would wish that law to be repealed, and its place LETTER VII. 115 supplied by a law to compel him to pay ? It may be very natural for a gentleman, so situated, to abuse the Committee; but, it would be very foolish in the people ; very foolish in the holders of his notes; very foolish in his creditors, to join in such abuse. Upon this part of his speech, however, we shall find a more suitable place for extending our remarks, and also for noticing what he said about the vast increase of Country Banks, without seeming to perceive, that that increase has been owing solely to the law which protected, and still protects, the Bank of England against the Gold and Silver demands of its creditors. Upon these parts of his speech, and upon his assertions respecting a debt said to be Debt owing to due to the Bank from the public ; upon his 1 the Bank from statement of the causes of the Bank stoppage : ' the Public. upon the wonderful unanimity of all the speakers at this Meeting of the partners of the Bank Company, in declaring, that there would be NO GOOD in their paying of their promissory notes in Gold and Silver ; upon all these topics, and upon some others, brought forward at the Bank Company's Meeting, we shall find, hereafter, a more suitable opportunity for making and ap- plying our remarks, which, indeed, belong to other parts of our subject, and, therefore, we will,, at present, confine ourselves to the only topic, introduced into these speeches, which be- long to the part of our subject now immediately before us ; namely, the notion, that the increase i 2 116 PAPER AGAINST GOLD. of bank-notes naturally arises from an increase of trade. Those a re called Since, however, I have digressed so far, I riflen who wish ta ^ e tne liberty to continue on a little further for the B.nk to pay tile P ur P ose of noticing a paragraph, in a news- its notes paper of this very morning (Monday, 24th Sept.) which imitates MR. JACKSON in abusing those, who are desirous of seeing the Bank Company once more pay their promissory notes in Gold and Silver. " We are happy," says this writer, fe to find, that the opinion we have " more than once expressed upon this subject is " sanctioned by the first authorities intheCoun- " try, and that the mischievous idea of throwing cf open the Bank immediately to be rifled by the " engrossers and exporters of guineas,, is uni- " ver sally reprobated. Sir John Sinclair has " taken up the pen upon the subject, and most " ably does he treat it. Neither the authority " of the Committee, nor the clamours of those (C who wish to destroy the public credit of Old " England have been sufficient to intimidate cf that high, > n which paper-maker, an engraver, a printer, and the &-,,* notes g <* person who puts his name, in writing, at the out i nto oircu- bottom of them. Being thus brought to perfec- | atioiu tion, they are delivered at the Bank Company's House, or Shop, FIRST, to any persons, to whom the Company may owe money, for work done to their buildings, or to others for keeping their books, or for paper, or for printing, or, in short, for any services performed for them. A SECOND way, in which the notes get out, is through what is called discounting ; that is to say, loans of bank notes made to private persons, for which the borrower leaves in possession of the Com- pany a note of hand or bill of exchange, that is to say, an engagement to pay back again as much as he receives together with interest for the time, or, rather, the interest is deducted when the loan is made. A THIRD way, in which the notes get out, is through the advances, or loans, which the Bank makes to the Government, by way of anticipation upon the taxes, before they come in. A FOURTH way is through the payment of the interest of Exchequer Bills, or Navy Bills, which are a sort of promissory notes, given by the government, and upon which the Bank some- times pays the interest, and, at other times, dis- counts them, or purchases them of the holders at the current price ; but, in every case, a fresh parcel of bank notes, get, through the means of these bills, into circulation. A FIFTH way, in 120 PAPER AGAINST GOLD. which the notes get out, is through the payment of the dividends or the interest, of the Stock, or National Debt, which dividends are paid quar- terly ; and, as we have before seen, the amount is three times as great as it was at the beginning of PITT'S war against the Jacobins of France, which we have called the ANTI-JACOBIN WAR. The c!iiMMi- Now, without enumerating any more of the ways, in which bank-notes get into circulation, is ness of sup- J * it not as clear as the Sun at noon-day, that they ixt^iug, that an are always the representatives of DEBT ? Is it increase of the J J not a fact that no one can deny, that the increase moans of pay- of them proceeds from the increase of Debt, and ing produces an not from the increase of trade ? Away, then, increase of pro- . with the nonsense of those dreamers, who would inises to pay. . . ,. persuade us that an issue 01 promissory notes proceeds from an increase of money's worth things ! Away with the idle talk about an in- crease of things of real value calling for an in- crease of paper promises ! Away, away, with the confused, the childish notion, that an in- crease of the means of paying produces an in- crease of promises to pay ! As well might any one tell you, that the increase of the paper of the Salisbury* and Shaftesbury banks arose from the * The scenes at SALISBURY, on account of the failure of the Banks at that city and at Shaftesbury, have been truly distressing. At Salisbury in particular, where the greatest jv.irt of the sufferers live, the poor people were, in many cases, without victuals or drink for some time, and many persons, in a respectable way of life, were for rqauy days to- LETTER VII. increase cf Ike means of paying their debts, an assertion, which, with the present scenes before gether, obliged to sit down to dine upon little more than Salisbury and bread, no meat being to be purchased with the only sort of Shaftesbury. money (if a debased paper ought, tor a moment, to go by that name) which was, generally speaking, in possession of the people. Many persons, in the lower ranks of life, who had gathered together a few pounds, the fruit of long labour and anxious care, of frugality, and of forbearance from enjoy- ment ; the fruit, in short, of an exercise of all the domestic virtues, and destined to be the provision, as the saying is, " against a rainy day," that is, to be the source of comfort in sickness or in old age ; many persons of this description, the heart ache of one of whom ought to give us more pain than to see fifty thousand Public Robbers swinging from so many gibbets ; many persons of this description ; many of these very best of the people, saw their liltle all vanish in a moment, and themselves reduced to the same slate with the improvident, the careless, the lazy, the sju-ndthrift, the drunkard, and the glutton, looking back upon a life of labour and of care, and looking forward to the misery and disgrace of a workhouse! To describe the scene, wh^n the Meetings of Creditors took place, at Salisbury, would be im- possible. The Council Chamber of the cily ^for no other place, except the Cathedral, would have contained a twentieth part of them), was surrounded with such multitudes, and so eager were they, in pressing forward, that some were in danger of their lives ; and the constables, from necessity, perhaps, laid their staves about the heads of many of (hose who came to demand their due, particularly, as I am in- formed, on the 7th of this month. \Vhat a scene was this! Here, PITT, if he had still been alive, might have seen a specimen of the fruits of his system ! The holders of the notes, were, I understand, each of them compelled to be at the expence of an affidavit, and obliged also, to attend in person, or by an attorney, at the Meeting of Creditors, and also for the receipt of the dividends whenever any shall take place. It is easy, therefore, to conceive ir/iat portion of paymtnt will ever fall to the lot of hundreds of poor men and women, living at a distance from Salisbury, and scattered PAPER AGAINST GOLD. your eyes, might be a little more impudent, but not a whit more contrary to truth than the Distresses at about in country places, where a news-paper is hardly ever seen. One of the banks was called the Salisbury and Shaftesbury bank, and part of the notes are dattd at one place, and part at the other. Those notes, which were dated at the latter place, were to be proved at meetings to be held there; so that, many of the poor fellows, who had brought their notes to Salisbury, were told, that they must carry them to Shaftesbury, a place at twenty milis distance ! The holder of each note, was, I understand, compelled, in order to have a claim to any dividend, to swear that he had given the full value of the note ; so that, one man could not demand payment of the note of any other man ; and, people could not sell the notes for any thing below their nominal value. It is evident, that, under circumstances like these, a great portion of the poor people who hold any of these notes, will lose the whole amount of them. I have two men, for in- stance, who had the misfortune to be of this number, James Gullingham and William Hurckett, the former of whom had a Jive pound note, and the latter a one pound note, both issued under the names of Bowles, Ogden, and Wyndham, and both which notes I have now lying upon the table before me. These men are at twenty-eight miles distance from Salisbury; to present the notes at the Meeting would have required three days absence from home in the midst of harvest, besides their expencesat Salisbury and upon the road, which, without the expence of the affidavit, would have amounted to more than the one pound note of Hurckett, to say nothing about the expences attending the receipt of the dividends. Indeed, upon the circumstances being related to me, I was quite satisfied that any attempt of poor Gullingham to recover his debt from Messrs. Bowles, Ogden, and Wyndham, even supposing them to pay 20 shillings in the pound, would be a losing concern, and that the best way was for me to take the debt off their hands. I intend to send the pretty little bits of paper down to them, with a request, that they will paste them upon two little boards, and hang them up in their cottages, not only by way of ornament, but as a lesson to their neighbours and their children. I dare say, that LETTER VII. assertion above noticed, and, I trust, completely refuted. I am, Gentlemen, Your faithful friend, W*. COBBETT. State Prison, Newgate, Monday, September, 1810. there are many considerate masters wiio will act in like Sa!i>bury and manner ; but, it must be manifest to every one, that hundreds of poor families will suffer, and very severely suffer, from this one failure. What, then, must be the consequence, if these failures should become general; and, does it not become every one, who wishes to see the peace and independence of the country preserved, to use his utmost endeavours to con- vince the public of the necessity of measures to restore to cir- culation the gold and silver coin, and thereby to prevent, if possible, those dreadful convulsions, in which the issue of a paper currency, not convertible into specie, have but too fre- quently, not to say invariably, ended I 124 PAPER AGAINST GOLD. LETTER VIII. " That provisions and labour should become dear by the increase of " trade and money, is, in many respects, an inconvenience j but an ' inconvenience that is unavoidable, and the effect of that public ' wealth and prosperity which are the end of all our wishes. It is ' compensated by the adrantages which we reap from the possession ' of those PRECIOUS METALS, and the weight which they give the nation in all foreign mars and negotiations ; but there appears no reason for increasing that inconvenience by a counterfeit money, ' which foreigners will not accept of in any payment, and which any ' great disorder in the state will reduce to nothing." HUME. Further Observations respecting the fallacious Notion that Paper Money is the Consequence of an Increase of Trade and of National Prosperity Sir John Sinclair's Idea about Roads and Canals Exemplification in the Instances of France and the American States Destruction of the Paper Money in both those Countries, the dawn of National Prosperity Our own History shows the Influence of a National Debt in producing Bank Notes Our Bank was the Offspring of the Debt The Bank was necessary in order to pay the Interest of the Debt Boldness of Mr. Jackson and Sir John Sinclair in asserting that Paper Money is necessary to Trade, and is a Mine of National Prosperity What would Hume have said if he had been told that Scotland would produce a Man to assert what Sir John Sinclair has asserted? The " LO " HERE!" and the " LO THERE!" The real cause of the increase of the Bank-Notes That Increase shown to have kept pace with the Increase of the Debt Conclusion of this part of our subject. GENTLEMEN, Debt, and not _J_N the foregoing Letter we opened the way wealth, towards the history of the Stoppage of Gold and LETTER VIII. Silver, or, Real-money payments, at the Bank of generates pro- England, in the year 1797, by showing the divers missory notes, ways, in which bank notes get out into circulation, or, in other words, the divers motives for making those notes ; and by clearly showing also, in reasoning upon general principles, that it is Debt and not Wealth, that generates promissory notes, of whatever sort they may be, or by whomsoever issued. So fond, however, have we been upon this subject, and such great pains, for so long a time, have been taken to make us believe, that the increase of the paper-currency proceeds from an increase of Trade, or of something favourable to us, that I should not be perfectly satisfied with myself, were I to hasten forward, without first submitting to you all the observations that have occurred to me upon this part of our subject. When those, who, from whatever motive, have sir John sin- written in favour of the Paper System, have had C | a j r > s notion to account for the vast increase in the quantity about Roadt of the bank notes, they have always had recourse,, J J Canals, and to our {( increasing trade" and Cf wealth" and Enclosures. of some believe they will. They will, I should suppose, sortorctherarc rather choose to confine themselves to a dull re- inse arable assertion of their former assertions, interspersed, may be, with a seasoning of abuse upon those, by whom their ignorance, or insincerity, is de- tected and exposed. But, without resorting to the instances furnished in foreign countries,, have we not, in the history of our own finances, quite a sufficient proof, that paper-money, or, indeed, bank notes of any sort, are not the representa- tives of any thing but Debt ? In every country, of which we have any knowledge, a government Debt has been accompanied with bank notes, or payments in paper, of some sort or other, no matter under what name. The Debt, in Eng- land, did, as we have seen (Letter II, p. 24), be- gin in the year 1692; aid there appeared, at first, no intention to pay cither the interest or th K 130 PAPER AGAINST GOLD. principal in any thing but the usual gold and sil- ver coin of the country. People lent their guineas and crown pieces, and there was not the smallest notion of their being repaid in any thing but guineas and crown pieces. But, it was soon found, that to pay the interest of its Debt, the government needed something other than gold and silver ; which, indeed, any one might have foreseen, because the Debt itself necessarily arose from the want of gold and silver within the reach of the government. It was, therefore, su- preme folly to suppose, that the government, who had borrowed people's guineas from want, would long have guineas enough to carry on wars and The Debt and to pay those people too. Accordingly, in only the Bank grew tw years after the Debt began, the Bank was up together, established ; the Bank made notes ; these notes, as far as they went, supplied the place of real money ; and, very soon, by giving all possible countenance and support to the Bank, the go- vernment got great part of the interest of its Debt paid in bank notes. Thus were the bank notes, from the very outset, as, indeed, all pro- missory notes must be, the representatives of Debt, and not of wealth,, of prosperity, or of trade ; and, if this was the case, at a time when these notes were convertible into gold and silver, shall we now look upon them in a better light ? i'T Joi.n sili- In spite, however, of the voice of history and fMt-f of reason, and even in spite of common sense, there are (as in the instances of MR. RANDALL LETTER VIII. 131 JACKSON and SIR JOHN SINCLAIR) men to bemineofnationai found, so ignorant or so hardy as to hold up prosperity. bank notes, promissory notes, and promissory notes, too, not convertible into real money; there are men to be found to hold up this paper money, which, as we have clearly shewn, is al- ways issued in consequence of Debt, in conse- quence of a want of real money, and which paper-money is, as BURKE (See the Motto to Letter VII. page 107) well describes it, aj>er, Oct. 1. L 146 PAPER AGAINST GOLD. called matter of opinion. What I am now going to state is matter of fact, and of fact, too, that the people of England should have been made fully acquainted with long ago. I allude to this man's transaction with SIR JOHN PETER in the funding of Exchequer Bills, and which transaction is related in a Report made by a COMMITTEE of the House of Commons, which was ordered to be printed on the 14th of May last, and which will be found at page 193 of the Appendix to Vol. XVII of the Parliamentary Debates. And here, Gentlemen, we shall have a view of something of no small interest to us as belonging to the Inquiries, in which we are engaged. Exchequer Bill In Letter VII, at page 1 19, mention was made Funding of Exchequer Sills ; and they were described as one sort of the promissory notes, issued by the government in payment of persons, to whom they owe money. They are like other promissory notes, with this difference, that they bear an in- terest of so much upon each hundred pounds every day, the rate of which interest varies ac- cording to circumstances. In short, an EX- CHEQUER BILL, which derives its name from the place whence it issues, is like a bank-note, not convertible into money at the will of the holder, except that the bank-note does not bear interest, and the Exchequer Bill does. You will easily perceive, that these Exchequer Bills, while out, form a part of the National Debt. They belong Co what is called the unfunded debt ; and, they LETTER IX. 147 are sometimes paid off and taken up, as a private person pays off and takes up his notes of hand. But, sometimes, the government, like the private person, finds it inconvenient to pay off these bills ; and, in such cases, it funds them ; that is to say, it makes an advantageous offer to the holders of them to exchange them for Stock ; and, when this is done, the amount of such Ex- chequer Bills is, of course, added to the great mass of the permanent National Debt ; which, as you will perceive, is a way of borrowing money that occasions much less talk and noise than would be occasioned by a new loan. The loan, this year, was for 14 millions ; but, then, there were Exchequer Bills funded to the amount of 8 millions, so that the addition to the perma- nent or funded Debt, has, in fact, in this one year, been 22 millions. I have just said, that, when the government Exchequer nni finds it inconvenient to pay off and take up Ex- office. chequer Bills, it makes an advantageous offer to the holders of them, by which these holders are induced to give them up, and to take Funds or Stock, in lieu of them. The Bills are brought by the holders to a certain place, called the Ex- chequer Bill Office, where they are received, and where the voucher is given which procures the holder stock in exchange for them. Upon these occasions, there is generally a great struggle of the Bill-holders to get first into the office ; be- cause when the quantity of Bills to be funded 148 PAPER AGAINST GOLD. have been presented and received, all the rest must, for the present, at any rate, still remain with the holders ; and, as there is an advantage in getting them funded, it is evident enough, that there must always be an anxious rivalship in pursuit of that object. Exchequer Bill Upon an occasion of this sort, in the month scramble. of March last, ABRAHAM GOLDSMIDT attended,, amongst others, with a view of getting into the Exchequer Bill office ; and, being unable to get in at the common door, so early as some others, he went to a passage leading to another part of the office, where he met SIR JOHN PETER, one of the Paymasters, or persons who conduct the bu- siness of the office. " To this person, he " delivered his pocket-book, containing Ex- " chequer Bills to the amount of 350,000 pounds, " and then went away. SIR JOHN PETER " carried in the book and the bills ; and, in con- ; and Omnium left ce off at 6^ discount. Various causes zvere as- " signed for this effect (a descent upon Ileligo- cc land, a subsidy to Russia,) all equally impro- ff bable. We can do no more at present than fc state the fact, though we strong!?/ suspect <( tliat we. know the cause." Another p..ff. tnc - Ot ^ : 1 con f 1( j e nce. rung over and over again, till the speech became full as enlivening and instructive as a peal of the three bells of Botley Church. But, what be- comes of these fine things, if the scribbling of a a news-paper writer, or of a pamphleteer, or, if the sudden death of a Jew, is capable of so ma- terially affecting them ? What, in that case, be- comes of that Capital, Credit, and Confidence, which were to counterbalance all the acquisitions of France, and were to prove a never-failing de- fence to England ? cc True," said the adherents of PITT, who wished still to find something to say by way of apology for his ruinous measures ; c true," said they, " France has made con- ' quests; she has gained sea-ports; she has acquired and now quietly possesses, the f 160 PAPER AGAINST GOLD. ef means of rearing a navy ; but, look at the fe immense CAPITAL of England ; look at her t we come to this comfortable conclusion ; Pillars, f the tn at tne defence an( l preservation of (lie country depended upon SIR FRANCIS BARING and GOLD- < (institution. * LETTER IX. )61 SMIDT, one of whom has died and the other shot himself within the last three weeks ! And this is the effect, is it, of the PITT system of what is called Public Credit ? If what we are now told be true, what se- Ticklish tenure curity have we, that things will stop where they of property and are ? What reason have we to conclude, or to O r national suppose, that the same causes will not continue sa f e ty. to operate, 'till the whole of the Funds are an- nihilated ; that is to say, until nobody will give any thing at all for any sort of the Stock ? We are told, that the fall, which has already taken place, has, in part, been the consequence of com- binations of individuals, which must mean, com- binations not to purchase ; and, who is to put an end to such combinations ? Who is to pre- vent the force of them from increasing ? Then, again, we are told, that the fall has partly been produced by jobbers, intent upon their own in- terests ; and, who, let me ask, is to alter the nature of these jobbers ; who can say, or even guess, when these interested jobbers will be pleased to desist from their selfish and mis- chievous practices ? If the causes of the fall be such as have been stated to the public, in the above-cited and other publications, who will pretend to say when, or where, the fall will stop ? And, I should be very glad to hear any reason, why, if those alledged causes be founded in truth, the Funds should not continue to fall, 'till they are not worth owning ; 'till it is not M 162 PAPER AGAINST GOLD. worth GRIZZLE GREENHORN'S while to have her name written in the Great Book. This must de- We here see, that these boasted friends of light Napoleon, their country ; these men of such high-flying loyalty ; these writers who accuse of Jacobinism all those who cannot believe, and who will not say, that the Paper-money is as good, if not better, than Gold and Silver ; we here see, that these boasted friends of their country, who, ap- parently, would eat Buonaparte raw, if they could get at him ; we here see these outrageously loyal writers proclaiming to that same Buona- parte what must delight him more than almost any thing that he could hear, namely, that such is the state of our public credit, such the state of our pecuniary resources, such the confi- dence in our funds, such the confidence in the security of our government bonds, that this confidence is shaken by a combination of jobbers or the death of a Jew. How much abuse has been, at various times, heaped upon those, who have expressed their doubts as to the dura- bility of the Paper-money system ! Nay, the Bullion Committee themselves have been very grossly abused for their Report upon the sub- ject, by which Report, their opponents say, they have injured the credit of the country. They are charged with having injured the credit of this country, because they have recommended, that the Bank of England should pay its notes in Gold and Silver. What, then, are those men LETTER IX. J63 doing, who now assert, that a combination of individuals ; that the tricks of interested job- bers ; that the erroneous opinions of political writers : what are the men doing, who assert, that these things are capable of causing the go- vernment securities to fall in value ; and, who scruple not to tell us, that the men, who were the pillars of the Public Funds, are dead ? What are these writers doing ; and how will they now be able to hold up their heads and complain of the endeavours of others to destroy what they call public credit, which, if it admit of destruction by the means of the pen, must as- suredly fall for ever under the pens of these writers. If what these writers say be true ; if the Can we rc , ar() stocks are to be lowered in value by combina- as erl tions of individuals, by the errors of writers, by thin my statements and my reasoning upon a sober and most important subject of political economy. The abuse here heaped upon a person, whom * Morning Post, Saturday, October 6, 181U. 176 PAPER AGAINST GOLD. our Commander in Portugal, in his public dis- patches, recognizes as an " Emperor," and who, in our courts of justice, has been recognized as " Sovereign of France," to say nothing of our negociations and treaties with him ; the abuse here heaped upon Napoleon, who is not only called a monster, but is distinctly charged with " boasting of the monstrous vice,," for being guilty of which several infamous wretches have lately stood in the pillory in London, can, surely, not meet with the approbation of any man upon earth ; for, one would fain hope, that there is not another man like this writer. Yet is it a serious consideration for the country, that such an accusation should be thus boldly put forth in our public news-papers, and in a news- paper, too, which, from its uniform praises of the men at present in power, is called a minis- terial news-paper, and is, in general looked upon as a sort of half-official print. As far as concerns this particular article, every man in England will be ready to acquit the ministers; and, indeed, every one will readily believe that it must meet with their sincere reprobation. But, this may not be the opinion abroad ; and. I leave you to guess what an impression such a publication is calculated to give the world of our national character. Bank Paicrthc There is one declaration hero, about the best Bond of paper-money, that I wish you to bear in mind ; security! namely that t. the people), the annual charge on account of Debt, which, together with interest includes management and Sinking fund allowance. Four years and a half of the Anti- Jacobin war nearly doubled these ; and, according to the principles we have before laid down, in Letters VII and VIII, the bank notes would necessarily increase in the same proportion as the Debt and Interest increased ; because, every quarter of a year, the dividends to be paid at the Bank, became greater and greater. Before the Anti-Jacobin war began, the divi-Th-- Divuiu, '. dcnds of a i/ car, amounted, as we see above, tObt-fon. tt^t <),66<),435/, To obviate all pettifogging cavil v . a r btn. here, let me state, that this sum was not ivholly dividends, or interest ; but consisted, partly, of 180 PAPER AGAINST GOLD. ' ( charges for management," paid to the bank of England ; and also of charges on " account of " the Sinking Fund." But, as was observed before, this is of no consequence to the people, who pay the taxes, out of which the whole sum comes ; and, I only make the distinction to avoid a cavilling charge of misrepresentation, or error. When, therefore, we speak of the amount of the Interest of the National Debt, let it be under- stood, that we include these charges ; and that, by the word Interest is meant the annual charge on account of the Debt. The Dividends To resume, then ; before the Anti-Jacobin in 1197. war began ; the dividends, or interest, of one ye^ir amounted, as we have seen, to 9,669,455 pounds ; and, before the nation got to the end of the fifth year of that war, a year's dividends, or interest, amounted to 1 7, Olo, 149 pounds ; not much short of double. The Bank therefore,, having nearly twice as much to pay yearly in in- terest of the Debt ; having, to speak in round numbers, 1 7 millions to pay under this head, where it had but 9 millions to pay before the beginning of PITT'S Anti- Jacobin War; having twice as much to issue on this great score as it had previous to the war, was, of course, com- pelled to increase the quantity of its paper pro- mises, or the quantity of its Gold and Silver coin; because, as we have before seen (Letter VIT, page 117), an increase in the number and amount of payments must necessarily demand an LETTER X. J81 increase of the money, or medium, in which those payments are made ; and, why this increase, at the Bank of England, would take place in paper promises, and not in Gold and Silver coin, we have seen in Letters VII, and VIII, where it was shown that an increase of Debt must produce an increase of paper-promises, or notes, when once a paper-system has begun. That the experience of the times, of which we are now speaking, perfectly corresponded with the principles here stated, we shall now see by adverting a little to the manner, in which the pay- ments of interest at the Bank were formerly made. It has before been observed, that, when the \ V hen th National Debt first began, the whole of the In- D^ began terest was paid in Gold and Silver, there being the intereft then no such thing as bank-notes, and no such was a] , aid thine: as a Bank, in this country. It has also . J m coin. been observed, that, very shortly after the Debt came into existence, it produced its natural off- spring, a Bank, which issued its promissory notes, and in which promissory notes the interest of the Debt was, in part, at least, paid. At first, it appears, that the Bank paid an interest upon its notes, or bills ; but, this was soon left off; and, from that time, the bank notes, or bills, became part of the circulating medium of the country. When the Stock owners, or Public Creditors, It was after- coin or in mfcs at th.' opt ion of the PAPER AGAINST GOLD. as they are sometimes called, went to the Bank to wards paid in rc ceive their dividends, or interest, they might have either bank notes, or Gold and Silver, ac- cording to their choice. Some persons chose the coin, and some the paper. But, as the Debt in^ creased, and, of course, the amount of the divi- dends, or interest, it was evident, from what has already been said, that the Bank would possess a less and less quantity of Gold and Silver in pro- portion to the quantity of its paper. And, fur- ther, the payments of interest having, as we have seen above, become nearly double in amount to what they were in 1793, previous to the Anti- Jacobin war, it is natural to suppose, that there would be double the number of Stock-holders, and, of course, double the number of payments to make. Therefore, as, at every payment, the re- ceiver had his choice of paper or Gold and Silver coin, there were double the number of chances against the Bank ; and, at any rate, as there were, as yet, no bank notes of an amount less than TEN POUNDS, there must necessarily be, upon every payment an issue of Gold and Silver from the Bank, to the amount of every demand, or part of a demand, falling short of ten pounds. ii.it the Bank f.u;>[>ort This the Bank could bear before the Anti- -Jacobin war; but, when that war had nearly doubled the Debt, the Interest, and the number of the payments, on account of Interest ; when this increase had taken place, the Bank found it necessary, not only to augment the general LETTER X. 183 quantity of its notes ; it found it necessary not after the Anti- only to add to the total amount of its notes ; that jacobin war is to say, to put out a greater sum in notes, than began : it had out before the Anti-Jacobin war ; but, it also found it necessary to put out some notes of a lower amount than it already had, in order to pay the parts of ten pounds, which we have just mentioned. Hence came the FIVE POUND NOTES. And, Hence the you will perceive, Gentlemen, that causes pre- fi ve P0 und cisely similar had formerly produced the FIFTEEN notes . POUND NOTES and the TEN POUND NOTES ; namely, an increase of the National Debt, and, of course, an increase of the dividends, or inter- est ; these being always paid at the Bank, after the establishment of the Bank Company. Here let us stop for a little and look back at Look back at the MOTTO, or, rather MOTTOS, to this Letter. themottos. In the FIRST, the passage from BURKE, we have uurke's picture a picture of English Bank .Paper previous to the O f English war ; aye, to that very war, which that very Bank notrs picture and others in the same publication greatly prev ; olls to tended to produce, and were., without, 1 believe, the Anti any bad motive, intended to produce. Look acobill war well at that picture, gentlemen. Look at the triumphant contrast there exhibited between the money of England and that of France, which latter country had then a paper-money. And, 184 PAPER AGAINST GOLD. when you have viewed that picture in all its parts ; when you have fully examined the contrast; then turn your eyes to what is now exhibited to the world : then see what English Bank Paper now is, and what in this regard is the state of France,, where all the paper- money has, long ago, been destroyed, and where there is no cur- rency but that of Gold and Silver coin, part of which coin consists of English Guineas, those guineas the absence of which all men of sense and of public-spirit so sorely lament, and the practicability of causing the return of which is, as you will bear in mind, the chief object of our Inquiries. rhino's opinion In the SECOND motto, the passage from PAINE, a< to the con- (the mortal antagonist of Burke as to every thing se(v>fcnces of else) we have an opinion as to the consequences inning the 5 of the Bank having made 5 pound notes. We iK.md notes. ^ iave a prediction as to the inability which it will produce in the Bank to pay its higher notes. This prediction was, it appears, written in March, 1796, and it was published in England, in or about, the month of June of that year; which was, as we shall see by and by, only about nine months before the stoppage of gold and silver payments at the Bank actually took place. Vnd i-ivcr- In the THIRD motto, the passage from the late PO..I'S oj>iniun LORD LIVERPOOL, we have the opinion, not only as to the cause of the writer himself, who upon such a matter, LETTER X. 185 is no very mean authority, but, as he asserts, of of the Bank many others (doubtless, persons of distinction, as stoppage, in to rank, at least) ; we have an opinion, thus 1797. sanctioned, that the increase of the paper-cur- rency was the first and principal cause of the Stoppage of Gold and Silver payments at the Bank ; and which opinion perfectly corresponds with that of PAINE, there being this distinction in the merits of the two writers, that Lord Liverpool only recorded what PAINE had fore- told : the former was the historian, the latter the prophet ; and, it is not a little curious, that Lord Liverpool, a clerk in whose office had written under a feigned name, a sham life of PAINE, should become the recorder of the truth of PAINE'S predictions, and that too in ef a. Letter " to the King," in whose name the very work containing the predictions had been prosecuted as A LIBEL. Here are three writers, all of whom of great Curious agrec- understanding and experience, and the two ment of these former of abilities scarcely ever surpassed in any three persons, age or country, all opposed to cacl| other as to wi, disagreed every other question ; eacli one hating the other in ev ery thing two, and each two hating the other one : yet all e!se agreeing as harmoniously as their bones would now agree,, if they happened to be tumbled to- gether ; all agreeing as to these principles re- specting paper-money. Having now traced the increase of the Debt 186 PAPER AGAIN8T GOLD. down to the putting 1 forth of the 5 pound bank notes, we will rest here, and resume the subject in our next. I am, Gentlemen, Your faithful friend, W M . COBBETT. Stale Prison, Newgate, Monday, Sth October, 1810. LETTER XI. LETTER XL 187 '' These fae pound notes will circulate chiefly among little .hop- " keepers, butchers, bakers, market people, renters of small houses, " lodgers, &c. All the high departments of commerce, and the " affluent stations of life were already overstocked, as Smith ex- " presses it, with the Bank-notes. No place remained open " wherein to crowd an additional quantity of Bank-notes but among " the class of people I have just mentioned, and the means of " doing this could be best effected by coining five pound notes. " But no new supplies of money can, as was said before, now " arrive at the Bank, as all the taxes will be paid in paper. What, " then, -would be the consequence, weie the Public Creditors to " demand payment of their Dividends in Cash, or demand Cash for " the Bank notes in which the Dividends are paid ; a circumstance " always liable to happen?" PAINK. DECLINE AND FALL OF THE ENGLISH SYSTEM OF FINANCE. Published in 1796. " I should stop here, but there is a subject of so great importance, " and so nearly connected with the Coins of your Majesty's realm, " that I should not discharge my duty if I left it wholly unnuticed ; " I mean what is now called Paper-c urrenc ij ; which is carried to so " great an extent, that it is become highly inconvenient to your " Majesty's subjects, and may prove, in its consequences, if no " remedy is applied, dangerous to the credit of the kingdom. It " is certain, that the smaller Notes of the Bunk of England, and '' those issued by country Bankers, have supplanted the Gold " Coin*, usurped their functions, and driven a great part of them Alarm of Invasion - Arming 188 PAPER AGAINST GOLD. Acts--Mr. Fox's Opiniou of the Alarm Exaggerated Re- presentations of the Venal Prints French Fleet appears off the Coast of Ireland Effect of the Alarm begins to he felt at the Bank of England Venal Prints change their Tone all of a sudden, and accuse the Jacobins of exciting Alarm Run upon the Bank becomes serious Increased by a Re- port of a French Fleet, with Troops on board, being off Beachy Head Followed immediately by the landing of Tale and his Raggamuffins in Wales Bank receives its finishing blow Vain attempts to check the Run upon the Bank Order of Council issued Disappointment of the Crowd at the Bank in Threadneedle Street. GENTLEMEN, suspicion I N the foregoing Letter, we traced the Na- tional Debt, and the Interest thereon, in their progressive increase from the year 1793 to 1797 inclusive, in which latter year we shall find that the Stoppage of Gold and Silver payments, at the Bank of England, took place. We have seen, that, in the course of the afore-mentioned period, the amount of Debt and Interest was nearly doubled ; we have seen that the Bank of England, had, of course, nearly doubled the sum to pay in Divi- dends, or Interest ; we have seen how this in- crease of payments at the Bank of England pro- duced a new family of notes, so low in amount as FIVE POUNDS, there having been before the Anti-Jacobin War, no Bank Notes under TEN POUNDS ; we shall soon see how the same still growing and ever-prolific cause brought forth, at last, a still more numerous and more diminu- LETTER XI. 189 live litter ; and, when we have gone through the history of the Two and ONE Pound Notes, we shall want scarcely any thing further to convince us, that, in such a state of things, it was next to impossible for Gold and Silver to remain in circulation. It was observed, in Letter I, page 17, that, to awake sooa* when notes, so low in amount as FIVE POUNDS after the 5 came to be issued ; when rents, salaries, yearly pound notes wages, and almost all the taxes came to be paid were issued. in paper ; when this became the case, and when, of course, every part of the people, except the very poorest, possessed occasionally, bank notes, it was impossible that men should not begin to think, that there was some difference between Gold and Silver and Bank notes, and that they should not become more desirous to possess the former than the latter. In other words, it was impossible, that men should not begin to have some suspicion relative to the Bank notes ; and, it is very clear, that the moment such suspicion arises, there is an end to any paper-money, which is convertible into Gold and Silver at the will of the bearer, who will, of course, lose not an instant in turning that of which he has a sus- picion (however slight) into that of which it is impossible for any one to have a suspicion. Thus it happened in 1797, as PAINE, in his paine-s pre- pamphlet, published only the year before, had diction thu* foretold, in the words of the first of my mottos VC riikd. 190 PAPER AGAINST GOLD. to this Letter. He there told his readers hovr the issuing of Five Pound notes would operate ; he pointed out how this measure would keep real money from the Bank ; and he asked what must be the consequence., if (as it might any day happen) the people should go to the Bank and demand cash for the notes. This did happen the very next year ; and, as he foretold in another part of his pamphlet, those who went to present their notes first came best off. LORD LIVERPOOL, in the passage, which 1 have selected for my second motto to this Letter, had when he wrote, seen the thing happen ; he had seen the fulfilment of what MR. .PAINE had foretold, and spoke, therefore, of the " dangerous" conse- quences of an excessive issue of paper., with the fact before his eyes. Experience, which, says the pro- verb, ' ' makes fools wiee," had taught his Lordship, in 1805, what he might have learnt from MR. PAINE in 1796- Nevertheless, the opinions of Lord Liverpool have some weight, and are worthy of attention with us in England; be- cause, though his talents and mind were of a cast quite inferior to those of such men as HUME and PAINE and BURKE, and though there is no- thing in what he has said, which I had not said, in the Register, years before, still as being a man of great experience in business, as having, during this whole reign been a great favourite at court, and especially as having, upon this occa- sion, addressed himself directly to the King, his opinions, though of no consequence else- LETTER XI. 191 where, are worthy of some notice in this country, and may possibly, in some minds, tend to pro- duce that conviction, which, in the same minds, a stupid and incorrigible prejudice would have prevented from being produced by all the powers of HUME or PAINE. But, we must now return to the Bank, and Return to the see how it happened that the people went to de- Bank and see mand money in payment of the notes in 1797. how it hap- That it did happen we all know ; but, there are pened that not a few of the people forming the present po- people went pulation of the country, who have forgotten, or,who to demand have never known, the true history of the Stop- payment, page of Gold and Silver payments at the Bank of England ; yet, without a knowledge of this history, and a thorough knowledge of it too, we cannot possibly pursue our inquiries to a satis- factory result. We have seen abundant arguments to prove, Enormous in- that paper-money, that promissory paper of crcaseofthe every sort, is the offspring and representative of interestof Debt ; that a National or Public Debt never the Debt can fail to bring forth bank-notes, or paper pro- mises of some sort or other ; that, of course, as the Debt increases and its Interest increases, there will be, and must be, an increase of the paper, in which that interest is paid ; and, in the last Letter, at page 178, we saw, in the Table of increase of the Debt and Interest from the beginning of the Anti-Jacobin \Yar to the year PAPER AGAINST GOLD. 1797, we here saw, in practice, the cause of the making of the FIVE POUND bank notes. But, as we have since seen, that measure was not suffi- cient. We saw, at p. 182, that it was to avoid paying in Gold and Silver the sums, or parts of sums, from TEN to FIVE pounds, which must have induced the Bank to make and put out notes so low as FIVE POUNDS. If you look again at that Table, gentlemen, you will see how the increase went on ; you will see, that it was greater and greater every year. In the year 1793, the ad- dition to the annual Interest was (speaking in round numbers) only 2,50 thousand pounds; but, in the year 1797, the addition was, 3^ mil- lions ; that is to say, a third part of as much as the whole amount of the Interest previous to the Anti-Jacobin war. Thus did this war of PITT against the Republicans of France cost, in only one year, nearly as much, in addition to Debt, as the cost of the whole of the American War, the extravagant expenditure of which had, till now, been proverbial. The other There were, however, other causes at work, causes that at the time of which we are now speaking; were at work causes operating upon the paper system from to 1797. without ; causes which must be here fully stated ; for, besides that a knowledge of them is essential to our inquiry, it is demanded by justice towards those who opposed the ruinous measure of PITT, and who foretold their consequences ; and this demand is, in a peculiar manner, addressed to LETTER XI. 193 ME, who, from being so situated as tobeunablejukkedemanJs to come at, or even suspect, the truth, while a statement of many circumstances conspired to make me take these causes. for truth that which was false, was not only one of the dupes of the system, but who, unintention- ally, contributed according to the degree of my , talents, towards the extension of the circle of duplicity. Credit is a tiling wholly dependent upon opi- Credit nion. The word itself, indeed, has the same ent upon opi- meaning as the word belief. As long as men nion. believe in the riches of any individual, or any company, so long he or they possess all the ad- vantages of riches. But, when once suspicion is excited, no matter from what cause, the credit is shaken : and, a very little matter oversets it. So long as the belief is implicit, the person, towards whom it exists, goes on, not only with all the appearances, but with all the advantages of wealth ; though, at the same time, he be in- solvent. But, if his wealth be not solid ; if he have merely the appearance of wealth ; if he be unable to pay so much as he owes, or, in other words, if he be insolvent, which means neither more nor less than unable to pay. When an individual is in this situation, he is liable, at any moment, to have his insolvency exposed. Any accident, that excites alarm in the minds of his creditors, brings the whole upon him at once ; and he who might otherwise huve gone on for years, is stopped in an instant. 194 PAPER AGAINST GOLD. Aiarmsini797. Thus it will happen to Companies of Traders as well as to individuals ; and thus it did happen to the Bank Company, at the time \ve are speaking of, and at which time an alarm of invasion prevailed through the country. The Alarmist From the very out-set of the war, the in- system, during ventors and supporters of it had been,, from time the Anti-Jaco- to time,, propagating alarms of various sorts, by bin war. tne means of which alarms, whether they them- selves believed in them or not, they were ena- bled to do things, which never had before been either known or heard of or dreamt of in Eng- land. The mode of reasoning with the people was this : You see, that, in France, the revo- lution has deprived the people of both property and life ; there are those who wish to cause a revolution in England : the measures taken, or proposed, are absolutely necessary to prevent the accomplishment of this wish : therefore, you have your choice, either to submit quietly to these measures, whatever portion of your liberty or property they may take away, or let in upon you a revolution which will take away all your property and your lives into the bargain. There was no room for hesitation ; and thus were the people determined, and with this view of the matter did they proceed., until the time above re- ferred to, the ministers being, probably, full as much alarmed as the people, and certainly not with less cause. LETTER XL 195 At times, however, especially after the war Dark aspect of had continued for three or four years, the effect affairs at the of alarm seemed to grow very faint. Danger dose of 179C. had been so often talked of, that at last, it was grown familiar. In the year 1796, however, things began to wear a serious aspect. All the minister's predictions and promises had failed; his allies, to whom and for whose support so many millions had been paid by the people of this country, had all laid down their arms or had gone over to the side of France ; the assignats in France had been annihilated without produc- ing any of the fatal consequences which PITT had so confidently anticipated, and upon which, indeed, he had relied for success ; and a nego- ciation for peace, opened at the instance of Eng- land, had produced nothing but a convincing proof of the high pretensions of the enemy, and of his confidence in his cause and resources. When the parliament met, therefore, in Oc- Meeting of tober 1796, the ministers and their adherents parliament in seem to have been full of real apprehension. October, 1796. They failed not to renew the signal of alarm, in which, indeed, they were kept in countenance by the enemy, who had openly declared his in- tention of invading the country. The subject was mentioned in the King's speech, upon a part of which a motion was grounded on the 18th of October, for the bringing in of bills for the raising' men with all possible speed, for the purpose of defending the country against inva- o 2 196 PAPER AGAINST GOLD. The three arm- sioR. In virtue of a resolution passed in conse- ing Bilk quence of this motion, three acts were passed with all possible rapidity, the first for providing an augmentation for the militia to be trained and exercised in a particular manner ; the se- cond for raising a certain number of men in the several counties of England and Scotland (there were two Acts), for the service of the regular Army and the Navy ; and the third for raising a provisional force of cavalry to be embodied, in case of necessity, for the defence of these kingdoms;* which acts were finally passed on the llth of November 1796. When this mea- sure was under discussion, MR. Pox, MR. SHE- RIDAN, and others opposed it upon the ground of its not being necessary, and MR. Fox, w r ho called it a requisition, after the French manner, observed that, if it was necessary to our safety, it was the conduct of the ministers and of the last parliament who confided in them, which had brought us into that miserable situation, ff a Mr. FOX'S pro- fc parliament," he said, " which had done test against ' c more to destroy every thing that is dear to us^ them. fe than in better days would have entered into " the mind of any Englishman to attempt, or to cc conceive ; a parliament by whom the people PITT'S was, would have been spent in labour of any sort. It would, however, naturally give people time to think a little ; it would afford them leisure to reflect on the consequences of being without a farthing of cash in case of in- that the Directors of the Bank of England should forbear issuing any cash in payment until the sense of Parliament can be taken on that subject, and the proper measures adopted thereupon, for maintaining the means of circulation, and supporting the public and commercial credit of the kingdom at this important conjuncture; and it is ordered^ that a copy of this minute be transmitted to the Directors of the Bank of England, and they are hereby required, on the grounds of the exigency of the case, to conform thereto until the sense of Parliament can be taken as aforesaid. W. FAWKENER. 206 PAPER AGAINST GOLD. vasion. According, on the Monday morning, they appear to have been quite prepared for furnishing themselves with real money., if it was to be had at the Bank Let us, however, as to this fact, take the words of the venal writers themselves. " Yesterday morning/' says the TRUE BRITON of Tuesday, the 28th of February, Rush upon the " a great run seemed to have been meditated Bank on the " upon the Bank, as A CROWD OF PEOPLE Monday Morn-" ASSEMBLED THERE AS SOON AS ing . (( THE DOORS OPENED. This design was (f HAPPILY defeated by a Resolution of the {C Privy Council, transmitted to the Bank Di- ff rectors on Sunday ; and, in consequence, Cf they had Hand-bills ready for delivery, a " copy of which, with the Order of the Privy ff Council annexed, our readers will find, as an " Advertisement in the front of our Paper."' Such, Gentlemen, was the manner in which the Stoppage of Gold and Silver payments at * Bank of England, February '27, 1797. Bank Notice. ' n consequence of an order of his Majesty's Privy Council notified to the Bank last night, Copy of which is hereunto au- nexed, The Governor, Deputy Governor, and Directors of the Bank of England, think it their dutv to inform the Pro- prietors of Bank Stuck, as well as the Public at large, that the general concerns of the Bank are in the most affluent and prosperous situation, and such as to preclude every doubt as to the security of its notes. The Directors mean to continue their usual discounts tor the accommodation of the Com- mercial Interest, paying the amount in Bank notes, and the Dividend Warrants will be paid in the same manner, FRANCIS MARTIN, Secretary, LETTER XI. 207 the Bank of England took place ; such was the manner of that event, which produced the evils, for which the Bullion Committee have proposed a remedy. Upon the Order of Council there is much to observe., before we proceed further; but, having laid before you a plain narrative of the event, it will be best to reserve those ob- servations 'till my next, and, in the meanwhile, I remain, Gentlemen, Your sincere friend, W M . COBBETT. State Prison, Newgate, Monday, 1 5th October, 1810, 208 PAPER AGAINST GOLD. LETTER XII. " Every victim of injustice and cruelty" (speaking of the French go- " verument) " bequeaths his revenge to his connections, to his friends, " and to his relations : or (if all these should be involved in the same " common fate with himself) every such execution raises detestation " and abhorrence, even in the breast of ordinary spectators, and unites " the public opinion against a Government, which exists only by the '* daily practice of robbery and murder. From this disgusting scent:, " let us turn our eyes to our own situation. THERE the contrast " is striking in all its parts. HERE we see nothing of the character " and genius of arbitrary Ji nance ; none of the bold frauds of bank- " fupt power ; none of the wild struggles and plunges of despotism in " distress ; no lopping off from the capital of debt ; no suspension of " interest ; no robbery under the name of loan ; no raising the value ; " no debasing the substance of the coin. HERE we behold public cre- " dit of every description rising under ail the disadvantages of a gene- " ral war; an ample revenue, flowing freely and copiously from the " opulence of a contented people. LORD MORN1NGTON (now Marquis Wellesley). SPEECH IN THE HOUSE OF COMMONS, '21st January, 1794. " The interest of the national funded debt is paid at the Bank in the " same kind of paper in which the taxes are collected. When people " find, as they will find, a reservedness among each other in giving " gold and silver for bank notes, or the least preference for the former " over the latter, they will go for payment to the Bank, where they " have a light to go. They will i!u tMs as a measure of prudence, " each one for himself, and tin. tr/^?-., or delusion, of the funding " system Kill be then proved. PAINE. DECLINE AND FALL or THE ENGLISH SYSTEM OF FINANCE. Published in 1796. " The great object, however, is to open the Bank of England and to " enable it to cany on its pecuniary transactions to the extent which " its resources will admit of, on thu solid principle of giving either " cash or paper at the option of the applicant. Until that is done " neither public or private credit, nor agriculture, nor commerce, nor " manufactories, n<> the credit of the Bank, began a regular new at- jacobins of tack upon the Jacobins, whom it had before re- being thecaus. viled for endeavouring to check the alarm, and f theStol)page . whom it now accused of causing the alarm. The notoriously venal prints before-mentioned (TRUE BRITON and SUN), which had, to the last moment, abused the Jacobins for (as they said) propaga- ting the false notion of the Bank not having gold to answer their notes. These prints, never p 2 PAPER AGAINST GOLD. equalled in venality, I believe, by any prints in the world, the MORNING POST only excepted, now abused those same unfortunate Jacobins for not acknowledging the necessity of the Order in Council. They (3rd March 1797) again ac- cused the Jacobins of having caused ' f a distrust ff of the Bank," and of having formed a design to ruin the credit of the country, in which " they had so far succeeded, at least, as toper- f the bankers and chiej 'plan for the merchants of London should be held in order to bring on some resolution for the support of the public credit in this alarming crisis; and they took the liberty to recommend to '"s at the Man- Mr. Pitt, to have a private meeting of some of the chief bankers s - at his house to-morrow, at three o'clock, in \vhich the plan for a more general meet ing on Tuesday or Wednesday next might be laid, in the propriety of which Mr. Pitt agreed, and s the other side. The Bank said : We owe the holders the amount of our Notes, but the Go- vernment owes us still more ; and not a word was said about Gold and Silver, though one would have thought, that this was the great, and indeed, the only thing to make inquiry about ; especially as MR. PAINE, in his pamphlet, pub- Mr. Paine's lished the year before, had made statements, statement re- whence he had drawn a conclusion, that the sp ecting the Bank, if put to the test, " had not money to mean s of the Cf pay half a crown in the pound." Bank< This was a charge, which, one would have thought, it would be the great object of the Minister and the Bank to do away. But, no such thing was even attempted, and the two Reports of the Committee,* did accordingly not * FJKST REPORT, March 3, 17.97- The Committee ap- pj rst rc p rtof pointed to examine and state the total amount of out-standing demands on "the Bank of England, and likewise of the Funds tha Committcf for discharging the same ; and to report the result thereof to 256 PAPER AGAINST GOLD. at all tend to the restoration of that sort of con- fidence, which would have enabled the Bank to open its doors to the applicants for Guineas. It Ihe House, together with their opinion on the necessity of providing for the confirmation and continuance, for a time to be limited, of measures taken in pursuance of the minute of Council on the 26th of February last ; and who are em- powered to report their proceedings from time to time to the House ; have, pursuant to the order of the House, proceeded to examine into the several matters referred to their consider- ation, and have unanimously agreed upon the following Re- port, viz. Your Committee have examined the total amount of outstanding demands on the Bank of England, and like- wise of the Funds for discharging the same ; and think it their duty, without loss of time, to state those total amounts, and to report the result thereof to the House. Your Com- niiltee find upon such examination that the total amount of out-standing demands on the Bank, on the 25th of February last (to which day the accounts could be completely made up) was ,.13,770,390; and that the total amount of the Funds for discharging those demands (not including the permanent debt due from Government of . 1 1,686,800, which bears an interest of three per cent.) was on the same 25th day of February last .17,597,'J80; and that the result is, that there was, on the 25th day of February last, a surplus of effects belonging to the Bank beyond the amount of their debts, amounting to the sum of c'.3,8'26,890 exclusive of the above-mentioned permanent debt of <.\ 1,686,800 due from government. And your Committee farther represent, that since the 25th of February last considerable issues have been made by the Bank in bank notes, both upon government securities and in discounting bills, the particulars of which could not immediately be made up ; but as those issues ap- pear to your Committee to have been made upon correspond- ing securities, taken with the usual care and attention, the actual balance in favour of the Bank did not appear to your Committee to have been thereby diminished. Second report. SECOND REPORT, Tuesday, 7th March. Mr. Brampstoo brought up the following Report: LETTER XIV. 257 was in vain that MR. PITT told the House, that put says the the reports of the Secret Committee were highly R Cport K consoling ; that the affairs of the Bank were in a high i y Coni0 i\ ns , most prosperous state ; that persons most con- versant -(alluding 1 to the Mansion House Re- solvers) believed in the solidity of its means ; that the public had nothing to do with the in- ternal economy of the Bank ; that it was suffi- cient for the public to know,, that the corporation was a rich corporation ; that the solidity of the Bank was asserted in the report of the Secret Committee then on the table ; that that report left ?20 doubt upon the subject; that it was an Funds amply important consolation, that there were funds sufficient. amply sufficient for the ultimate security of those who could not have their demands satisfied for a time ; and that as to what was due from the go- vernment to the Bank, it rested upon the best The Committee appointed to examine and state the total amount of outstanding demands en the Bank of England, and likewise of the Funds for discharging the same ; and to report the result thereof to the House, together with their opinion on the necessity of providing for the confirmation and continuance, for a time to be limited, of measures taken in pursuance of the Minute of Council on the 26'th of February last ; and who wero empowered to report their proceedings from time to time to the House ; have farther examined into the several matters referred to their consideration ; and have agreed to report to the House ; That, in their opinion, it is necessary to provide for the confirmation and continuance, for a time to be limited, of the measures taken in pursuance of the Order of Council on the 26//t of February last ; sub- mitting to the wisdom of parliament to determine for what limited time it may be necessary that those measures should be continued. s 258 PAPER A.GAINST GOLD. Debate, 9th possible security, because it rested upon the cg- March, 1797. gregate powers of the country. (See Debates th March; 1797). In vain did Lord Hawkes- bury, iu answer to MR. Fox, deny that the term Lord Hawkes- Bankruptcy applied to the situation of the Bank burj-. or tne government. He said, what was very true, that the embarrassments of .the Bank were imputed to the scarcity or want of specie. But, in vain did he question the truth of this propo- sition ; in vain did he say that want of money was no proof of poverty ; in vain did he say that a scarcity of guineas might arise from an in- crease of trade, and not from the excess of paper-, (Debate 9th March, 1797) in vain did s;r John Mit- Sir John Mitford, then Solicitor General (same ford. Debate) say that no man, however rich, would be able to stand a run ; that it was unfair to call the stoppage a Bankruptcy ; that the Bank was solvent, although at this time unable to pay in cash ; that the refusal to pay in cash could not be called a fraud, because the public knew that such an event might happen ; that the stoppage at the Bank was like that which might be en* forced by the door keepers of a theatre, upon a false alarm of fire, in order to prevent the peo- ple from rushing out all at once, to their destruc- tion or injury ; that if nothing had been done to put a stop to the run upon the Bank, the Bank calls ti.e /irmym ust have been totally ruined ; that there were and Aary pub- other public creditors besides the Stock-holders, He creditors, the army and the navy ; that they were as much public creditors as the holders of Bank notes LETTER XIV. could be, and that they required payment in cash more so than any other description of men in this country. In vain was all this said. MR. GREY (now Mr. Grey. Earl Grey), said that the evidence brought before the Committee had not satisfied him ; and the satisfaction to the public was evidently not greater ; for, if it had been satisfactory, or if the report of the Secret Committee had been satisfactory, there could have been no occasion whatever for continuing the power of the Bank to refuse payment in specie. This was told them by Mr. Fox and Mr. SHERIDAN, who asked : Mr. FOX. if the Bank be in so prosperous a situation as you say it is, why do you wish to pass a law to protect them against the demands of the holders of their notes ? If the Bank be so rich as you say it is, what need has it of any of your as- sistance ? You tell us, said Mr. SHERIDAN (al- Mr. Sheridan. luding to the speech of Lord Havvkesbury) that paper " is not only a cleaner, neater, and more " portable medium to represent property ; but ec that it is the very essence of wealth itself, and " that the flourishing state of our commerce is c ' the cause of this inability to produce specie to f answer demands upon the Bank of England." See Debate of yth March, where these observa- tions are followed up by an inimitable instance of what is called by logicians the reducfio ad ab- surdum. You tell us, said he, that the public are of your opinion, and that they reject our s 2 260 PAPER AGAINST GOLD. opinion ; you tell us that the public are satisfied with the report of the Committee ; you tell us that the public like Bank notes as well as guineas. Bat, with these assertions upon your lips, you pass a law to .protect the Bank against the de- mands of that public ; you pass a law to compel that public to receive paper at the Bank, instead of that gold, which you say they like no better than that paper. The Reports of The truth is, Gentlemen, the public, generally the committee speaking, knew nothing at all about the transac- produced no ^ ons between the Government and the Bank ; conviction. t nev ^ new nothing at all about the trade or the property of the Bank ; they knew that they held promissory notes issued by the Bank, payable to the bearec. on demand, and they looked upon these notes as being equally valuable with gold, because, until now, they could, at any time, carry them to the Bank, and receive gold in ex- change for them. Nothing, therefore, could have the smallest tendency to convince them of the solidity of the Bank, unless it, at the same time, tended to convince them, that there was goid in the Sank, sufficient to answer the de- mands of those, who presented notes for pay- ment, or who chose to demand gold in payment of their dividends, or interest upon their Stock. And, not a particle of conviction, in this way, were the reports of the Secret Committee cal- culated to produce. Debate Feb. as. Mr. SHERIDAN (see Debate 28th February LETTER XIV. 261 1797) said that he was " convinced that if the Mr. Sheridan. " Bank was not able to resume its payments im- " mediately , he foresaw it never would be able " afterwards to defray its outstanding engage- " ments in cash." And the reason he gave was that the suspension of cash payments would pro- duce the issue of a greater quantity of paper. This reason was so manifest, that it was impos- sible., that the truth of it should not be felt, though owing to the prejudices of the times, there were few persons amongst the Merchants and Bankers, by whom it would be acknow- ledged. The same was said,, by Mr. NICHOLLS Mr. Nichoiis and Mr. HOBHOUSE, in whose speeches,, together an afterwards given to the public by Mr. ALLER- DYCE, a member of the then Parliament, and a person who constantly voted with the Minister. The statement thus given was as follows : STATE OF THE FINANCES OF THE BANK OF ENGLAND, FEB. 25, 1797. Particulars of Debt Account. Drawing Account =.2,389,600 Exchequer Bills 1,676,000 Unpaid Dividends 933,730 Do. in Bank Stock 4.7,150 Do. in India annuities ... 10,210 Sundries unclaimed 1,3'50 Due from Cash on the loan of 1797 17,060 Uapaid Irish dividend ... 1,460 Do. on Imperial loan 5,600 5,130,140 Bank notes in circulation 8,640,250 13,770,390 Balance 3,826,890 Particulars of Credit Account. Bills and Notes dis- *\ counted Cash and 4, 1 76,080 Bullion J Exchequer Bills 8,228,000 Lands and Tenements ... 65,000 Money lent to India Company 700,000 Stamps 1,510 Navy and Victualling Bills 15,890 American Debentures ... 54,150 Petty Cash in House... 5,320 Sundry articles 24,150 5 per Cent, annuities ... 795,800 5 per Cents 1797 1,000,000 Treasury bills paid for the Government 1,51 '2,270 Loan to Government ... 376,000 Bills discounted unpaid 88,120 Treasury and Exchequer fees 740 Interest due on different Loans advanced to Go- vernment 554,250 17,597,280 17,597,280 268 PAPER AGAINST GOLD. This is a mere Now, what is all this ? Why, it is, with the account of exception of three of the items, a mere account paper. of paper between the Government and the Bank, and in which the people, who held the bank notes, could have no interest whatever. The Bank held Exchequer Bills, and Navy and Vic- tualling Bills, and had lent money (that is to say bank notes) to the East India Company and had five per cent, stock and Treasury Bills and had interest due upon loans ; all which might be very well for the Bank, but what was it to a man, who held a bank ncte and who could not get payment for it when he presented it to the Bank ? These fine articles of credit were very good for the Bank Company ; but what good were they to 'SQUIRE GULL, who, being alarmed at the prospect of a Jacobin invasion, wished, in spite of his loyalty, to turn his bank notes into guineas ? What use were they to our neighbour GRIZZLE GREENHORN, who now wished, of course, to put bye a few guineas, and who, of course, wished to receive her dividends in gold, to pre- vent her from doing which by law this very re- port was a preliminary step ? What consolation was Grizzle to draw from this account of debts due from the Government to the Bank, especially when it was clear, that if the Government ever paid the Bank, it must pay it in bank notes, seeing that in bank notes the taxes were now paid ? The three items to which the people would LETTER XV. 269 look, were those expressing on one side, the Amount of amount of the bank notes in circulation ; and, Bullion and on the other, the amount of the cash, or coin, Bank Note*. and bullion in the Bank Company's House, commonly called the Bank. According to the above statement these were on the 25th of Fe- bruary 1797, as follows : Amount of Bank Notes in circula- tion .8,640,250 Bills and Notes discount- ed, Cash and Bullion - 4,176,080 Petty Cash in the House 5,320 4,181,400 Difference 4,458,850 But, who is to say how much the Bills and Notes discounted amounted to ? Who is to answer, that they did not make one half; who is to say, that they did not make nine tenths of the sum of .4,176,080 ? Why was the amount of the cash and bullion huddled up in one sum along with the amount of Bills and Notes dis- counted ! Why were things so different in their nature confounded together ? If GRIZZLE GREEN- HORN wanted her bank notes payed at the Bank, she would not take discounted bills in payment. What the nation wanted to see, was, how much the Bank had of that sort of thing, in which bank notes could be payed ; how much it had of that sort of thing, the value of which no in- 270 PAPER AGAINST GOLD. vasion or revolution would destroy ; how much it had of that sort of thing, in which it had pro- mised to pay upon demand the bearers of its notes; how much, in short, it had of MONEY, and not of bills and notes discounted, with which the people had nothing at all to do, there being no man of common sense, who could care a straw about how much of its paper the Bank gave to others for their paper, so that he got guineas for his bank notes ; and, if he could not get this, what consolation was it to him to know, that the Bank had lent but little of its paper to the mer- chants ? Supposed As to the exact quantity of cash and bullion amount of m the Bank, when the Stoppage took place, Bullion. M r - ALLERDYCE gives a table, shewing the amount at stated periods, for several years, ac- cording to which Table, the total amount of the cash and bullion in the Bank, at the time of the Stoppage, was .1,272,000. Aye, ONE MIL- LION, TWO HUNDRED AND SEVENTY TWO THOUSAND POUNDS. He comes at this sum thus. The Bank of England have Numbers, to denote their quantity of cash and bullion. When they submitted their accounts to Parliament, in 17.97, it was thought necessary to keep the amount of the cash and bullion a secret from Parliament and the public. They, there- fore, only gave the Numbers for distinct periods in several years, in order to shew the propor- tionate increase or diminution of the cash and 9 LETTER XV. 271 bullion. From these Numbers, however, a dis- covery was, it is said, made, and the sum above- named, ascertained to be the amount of the cash and bullion in the Bank at the time of the Stop- page. But, upon this, I wish to place no re- liance ; nor do I care, whether the statement above given, of cash and bullion and discounted bills be correct, or not. These are things of inferior consequence compared with the great and well known facts ; namely, that no proof was produced, or attempted to be produced, that the Bank Company had gold or silver, or both together, sufficient to pay its promissory notes ; and that no account was rendered to the Par- liament of the amount of the cash and bullion in the Bank. Mr. PAINE had, only the year before, said, in Mr . p a j ne i s es - the words of my motto, that the quantity of cash timate of the in the Bank could never, on the evidence of cir- Bullion cumstances, be so much as two millions, and most probably, not more than one million ; that, on this slender twig, always liable to be broken, hung the whole funding system of four hundred millions, besides many millions in bank notes ; that the sum in the Bank was not sufficient to pay one fourth of only one year's interest of the National Debt, were the creditors to demand payment in cash, or to demand cash for the bank notes in which the interest is paid : a cir- cumstance always liable to happen. Mr. PAINE founded this opinion upon a statement of Mr. 272 PAPER AGAINST GOLD. EDEN (now Lord AUCKLAND) and Mr. CHALMERS, Clerk to the Board of Trade, who had given an y account, or, rather an estimate,, of the gold coin circulating in the kingdom; and,* it is truly surprising to observe how near Mr. PAINE was to the exact truth as to this point, though at the time when his pamphlet was published, its cal> culations and predictions were treated with scorn, and the work itself was ascribed to a ma- licious desire to cause the ruin of England; just as if it were in the power of PAINE, or of any one else, to injure the credit of a nation; or, as if any thing but the want, the real want of the gold and bullion could shake the faith of the public in such an establishment as that of the Bank. PAINE might have written 'till this time without persuading any one that a guinea was a thing not to be relied upon. He never would have written people out of their belief in the goodness of guineas. And, if the Bank had Stood a run for only one week, he might have written his pen to the stump, but would not have shaken the people's confidence. Credit that has a solid foundation need fear no assaults. Minister ^ * ne time, when this subject was under dis- ... cussion in the House of Commons, the Minister charged with was charged, by the Opposition, with having having sent the J taken the Money from the Bank and sent it money awuy in abroad in subsidies. This was certainly a very subsidies. great error, or, it was made use of for the pur- pose of annoying the Minister at the expence of LETTER XV. truth. I am, however, disposed to attribute it to error ; for, it was urged in such a manner, and by such persons, as to obviate all suspicion of its being a mere party weapon. Mr. HOB- Mr - HOUSE (Debate 128th February, 1797) said, that he suspected that the money had been buried in Germany, and not by the people of England, in dread of invasion. And Mr. HUSSEY said, that Mr. the Minister ce had laid his rapacious hands fc upon the sums destined for the payment of " the public creditor. He knew that the pub- ec lie creditors had been refused their just de- ce mands. He had witnessed the truth of this {C woeful circumstance himself. He had been " told by a person who had applied for payment, " that, in payment of a sum of twenty three cc pounds, three pounds in cash had been of- " fered, and the rest only in notes. Such a " melancholy day as this for England he had fc hoped never to live to see. Let the Chan- :c cellor of the Exchequer pay the ten millions " Government owed the Bank, and then it would c be able to fulfil all its engagements. It was ' not that the Bank was unable to satisfy its Sending money e creditors, but it was the continued demand o/' a broad. c money to feed the expenccs of this ruinous ' and disastrous war, which rendered it unjust ' to those who depended upon its credit." Mr. PITT, who seemed to have avoided this Mr. put point with all his care, and who, as I once heard T 274- PAPER AGAINST GOLD. greatly puzzled. MR. WiNDHAM describe him, was so dextrous in the selection and use of words as to be able " to speak a king's speech off-hand/' could not remain longer silent under this attack. He had been told nearly the same by MR. SHERIDAN ; but he seemed to be willing to take the chance of that being ascribed to party motives. When, however, he heard the same, seriously urged by Mr. HUSSEY, and saw that the notion was mak- its way amongst the public, and of course, that the whole of the calamity would be ascribed to him and his Anti-jacobin war, he could no longer refrain from declaring what was the nature of the property of the Bank, and to avow, that the whole of its transactions with government, or nearly so, were transactions of paper , a fact of which the country had, till that moment, been in cohiplete ignorance. Pitt shows that He said that Mr. HUSSEY was wholly in error the whole to suppose, that the Bank made advances to the is paper. Government in specie ; he said, that the ad- vances were made in notes, and paid in the same manner ; that, if the Government were to raise money and pay the Bank, the Bank would not thereby be supplied with an additional guinea in cash ; that the taxes were not paid in specie; that loans were advanced without any expectation of re-payment in specie; that the Bank never had it in contemplation that every quarterly dividend was to be paid in cash ; that LETTER XV. the receipt of the revenue was in paper, and that the whole of Mr. HUSSEY'S observations were intirely founded in mistake. Mr. SHERIDAN, in answer to this, said, that the Mr. Sheridan. deficiency, or inability at the Bank arose not merely from the positive want of cash, but from the disproportion between the quantity of cash and the quantity of paper ; and, of course, that, if their lent paper was returned to them, they would find themselves at liberty to issue more of their specie. This would have been true in a state of things where the difference between the quantity of specie and the quantity of paper was less ; but, in the present case, it was too great for confidence to be restored, and, of course, for the Bank to return to its payments in cash. Mr. PITT'S answer was complete. It was the plain truth, which he was obliged to bring out, in order to divide the blame with the Bank. He was told to borrow and to pay the Bank what he owed them. What good will that do, said he, when my loan will consist of Bank notes, and I must pay the Bank in those notes ? He was told to raise the sum in taxes and so pay the Bank. What good will that do, said he, when my taxes will consist of Bank notes, and I must pay the Bank in those notes. The answer was com- plete towards his adversaries in debate, and not less complete as a demolisher of his own repu- tation as a Minister of Finance. He now said precisely what Mr. PA.INE had said the year 276 PAPER AGAINST GOLD. Pitt confirms before ; he now confirmed,, with his own lips, what Paine what PAINE had been so abused for saying*, had said. He appears clearly to have perceived his dilemma ; but, to extricate him from it was beyond the power even of his dexterity. He was obliged to acknowledge, that the whole was become a sys- tem of paper, or, that he had taken the gold from the Bank, and, of the two evils he chose that, which would expose him to the least share of public odium. This view of the State of the Bank's Affairs Painc's Writings. * I speak here of those writings merely of Mr. PAINE, which relate to Finance, without wishing to convey any com- mendation of some of his other writings, the subjects of which, are in no-wise, connected with this subject. In the principles of finance he was deeply skilled; and, to his very great and rare talents as a writer, he added an uncommon degree of experience in the concerns of paper-monejl the rise and fall of which he had witnessed in the American States and in France. Truth is truth, come from whom it may; and there is no greater folly than that of rejecting it, that of shutting one's eyes and ears against it, merely because it pro. ceeds from persons, of whose conduct, in other respects, one may disapprove. The writings of LORD BACON are held, and justly held, in great estimation ; though he was, as our elegant and virtuous poet describes him, " the meanest of " mankind." The late Lord Liverpool, Mr. Pitt, Mr. Fox, Mr. Sheridan, Mr. Nicholls, Mr. Hnbhouse and others, and as we shall see by-and-by, a Committee of the House of Commons, have since acknowledged the truth of the princi- ples of Mr. Paine's work. Events have proved the truth of them, and, to point out the fact, is no more than an act of justice, due to his talents, and an act the more particularly due at my hands, I having been one of his most violent as- sailants. Any man may fall into error, but a fool or a knave will seldom acknowledge it. LETTER XV. 277 has led me further than I expected ; but it was quite necessary as an introduction to that of the Acts of Parliament, which will be the subject of my next. I am,, in the meanwhile, Gentlemen, Your faithful friend, W M . COBBETT. State Prison, Newgate, Monday, November 5th 1810. 278 FA PER AGAINST GO I/O. LETTER XVI. It is admitted that a paper medium, under the form of bank notes or Government securities, is circulated in France, England, and most other commercial countries : but nobody is compelled by law to receive the payment of any debt in such money: hence it is, that the paper of those countries bears no resemblance to ours, except in name. Every man receives a bank-note or refuses it at pleasure. When he receives it, he knows that on the next hour he may have it changed for gold or silver; as the Bank is obliged to make such payments on demand. For this reason, bank-notes being portable, are frequently preferred to coin of the weighty metals." SYLVIUS, on the American paper-money, 1787. Introduction of the Bank Restriction Act into the House of Commons The Origin of this Measure The Bill moved for by Mr. Pitt Suspension of the Two Acts Prohibiting Small Promissory Notes The Title and Preambles of those Acts The Principles of those Acts Title and Preamble of the Bank Restriction Act View of the Provisions of that Act The Legal Tender The Meaning anil Application of the Word Restriction. GENTLEMEN; w. Parliament relating to Take a view v T E have now to take a view of the Acts of of the Acts of Parliament,, passed in consequence of the Stop- page of cash payments at the Bank of England ; then to see what was., at the passing of these Acts, said by the advocates of them, respecting their duration ; and this will enable us to form a pretty correct judgement as to the statesman-like wis- dom of those advocates, and also as to the proba- bility of the Acts ever being hereafter removed, LETTER XVI. except by a total annihilation of the paper- money. Until the time at which the Bank Stoppage NOW cam* took place ; until the 26th day of February, 1 797, forth the fact, the Notes of the Bank Company were considered as good as real money, because, if the holder chose it, he could., at any moment,, demand and receive real money in exchange for them. But, when the Bank, in the manner that we have seen., refused payment upon demand, the nature of the Notes was wholly changed. They were no longer equal in value to real money ; and no- thing but a species of compulsion would, of course, induce the people to receive them in payment of any debt theretofore contracted. Now, then, came the pinch. Now came forth that Bank the fact, that it was beyond all the powers of Notes were, in hypocrisy, trick, and confusing verbosity any reality, forced longer to disguise : forth came the fact, that up0 u the Bank Notes were to be, in reality, forced upon people> the people ; that the man, who had a debt due to him, must take them in payment, or if he refused them, be unable to arrest his creditor : forth came the fact, aye, forth it came, after all the railing against French assignats ; forth came the fact, that no man who held a Bank note ; that no man who held a note of that Company of Traders, payable on demand, could compel them to pay him, except in other such notes. Forth came this fact, and yet those who had brought the finance* 280 PAPER AGAINST GOLD. of the country into such a state, were still kept in power ; to their management were the nation's a flairs still left : to their promises did the credu- lous and affrighted people still listen ; and of their measures has the nation ever since been feeling,, and will, it is to be feared, long feel, the consequences. view no* the The Order of the Privy Council (See it in Let- Bank and their ter XI, page 204) required the Bank Company Creditors. to stop paying their notes in money. The words are " to forbear issuing any cash in payment." I beseech you. Gentlemen, to consider well the nature of this transaction. Look back at the origin of the Bank. Consider it, as it really was, a mere Company of Traders. Then view the holders of the Notes, who were so many legal creditors, so many persons having a just and legal claim to be paid upon demand. See all these creditors at once deprived of their legal rights of payment by an Order of the Privy Council, of which the Minister himself was a member. See here a Company of Traders, hav- ing promissory notes out to the amount of many millions, required by the Privy Council "to for- " bear" to pay off the said notes ; and above all, things, observe, and NEVER FORGET, that this order, or request, was made in consequence, as we have seen from the official documents, of representations made by this Company of Traders themselves, who, as is stated in those documents (Letter XIII,, page 242), made such LETTER XVI. 281 representations in consequence of the drain upon their cash and of the alarm they therefore felt for the safety of their House. '--, This was a fine spectacle to behold: it was a why not pro- fine thing to be held forth to the world by atectothcr Minister, whose boasting about his financial re- Debtors in the sources and about his support of public credit same way. had been incessant from the day he first vaulted into the saddle of power. If this could be done with regard to one Company of Traders, why not with regard to any other Company of Traders, or any other single Trader, in the kingdom ? If the Privy Council, avowedly upon the representation of the Minister, were to protect this Company of Traders against the law- ful demands of their creditors ; what reason was there that other Traders, that other Debtors, should not be protected in the same way, if they should " feel alarm for the safety of their fc House ?" We must never lose sight of this fact, that the Order in Council arose from a re- presentation of the Minister; that representa- tion arose from one made to the Minister by the Bank Company ; and this latter representa- tion arose (See Letter XIII, p. 240) from the drain of cash at the Bank, and from the alarm, which the Bank Company felt for the safety of their House. This should be constantly kept in view. We should never, for one moment, lose sight of the fact, that the whole of this measure of protection to the Bank luid its origin in re- 282 PAPER AGAINST GOLD. presentations made by the Bank Company itself. And, if we keep this fact steadily in view, we shall be in no danger of coming at a proper conclusion. The privy Thus far, then, we have seen the transaction Council became going no further than the Privy Council. We a party to the have seen it originate with the Bank Company, transaction, the demands of whose lawful creditors had given them alarm. We have seen the Bank Company calling upon the Minister to know when he would interfere. And, we have seen the Minis- ter, after saying, on the 24th, that he would pre- pare a resolution of Council^ go to the Council^ on the 26th, and obtained the Resolution and Order that we have seen. Thus the Privy Council became a party to the transaction ; and we are now about to see how the Parliament put the finishing stroke to it by giving to the Order of Council the sanction of law ; we are now about to take a view of the Legislative Acts, by which, to use the expression of the late Lord Liverpool, paper-credit was exchanged for paper-currency 3 by which bank-notes were moulded into paper-money. The Restric- tion Act. In Letter XII, page 221, we have seen how the minister first introduced to the House of Commons the project of passing a law to sanction the Order in Council ; that is to say, to sanction the refusal of the Bank Company to pay their promissory notes. We have seen, that, upon being asked by MR. ALDERMAN COMBE, whether , LETTER XVI. 283 lie- meant to make the bank-notes a legal tender, he knew not what to answer ; that he twisted and writhed in great apparent embarrassment of mind : but, that he knew not what to answer. We have also seen, that, before the House met the next day (28th of February, 1797) the meet- ing at the Mansion-House had taken place, hav- ing been, as we have seen, previously contrived, in private, with the Minister. We have seen an account of the other Meetings through the coun- try ; and we have seen, in Letter XIV, the man- ner of forming the SECRET COMMITTEE, from whom came Reports (Letter XIV, p. 253), de- claring the affairs of the Bank to be in a most flourishing way, and that the Company were possessed of a great surplus of means. Thus prepared, and perceiving, by this time, put's motion that his adherents were resolved to stand by himf or theRe- (See Letter XIV, p. 250) the Minister, on the striotion Actt 9th of March, 1797, moved for leave to " bring ce in a bill to confirm and continue the Order in " Council of the 26th of February, for a time ff to be limited." This was the first motion to- wards making of the law for authorising the Bank to refuse to pay its creditors their just demands; that law, which has filled the kingdom with banks and with paper-money, and which, as we shall by-and-by see, has produced no small share of our present dangers and distress. But, before we proceed any further in the history of this ACT, which, you will bear in mind, is the Act, 284 PAPER AGAINST GOLD. which the Bullion Committee have proposed to repeal in two years from this time ; before we proceed any further in the history of this Act, we must shortly notice two other Acts, which were passed ' before it, and which, though of inferior importance, were the first-born of the Bank Stoppage. Bills to legalize The refusal of the Bank Company to pay their notes was, as every one must naturally sup- pose, productive of the consequence of driving all the gold coin out of circulation ; for, under such circumstances, the moment a guinea or a half guinea got into the hands of a person able to keep it, and not an ideot, it would, remain very quiet in the chest of that person ; and, as the smallest notes then in circulation, were notes for Jive pounds, the difficulty in making payments would necessarily be very great. The distress, arising from this cause, was so great, that, on the 1st of March, it was resolved by the House of Commons to bring in a bill to legalise the issuing of small notes by private persons ; and, on the same day a bill was read a second time for enabling the Bank of England to issue notes under Jive pounds. small Bills The reason for passing these Acts was this ; and Notes. there were in existence two Acts of Parliament, which prohibited the negociating of promissory notes and other paper of an amount under Jive pounds. These Acts are, upon this occasion, LETTER XVI. 285 worthy of our particular attention ; because they were passed upon the principle, that small paper promises were injurious lo the community. The first of these Acts was passed in the year 1775., and, as will be seen from the Title and Preamble, which I beg of you to read,* small paper cur- rency was, at that time, declared by law to be of " great prejudice to trade and public credit." There were in 1775, as we have already seen, no bank notes for sums less than TEN POUNDS, and, it was then supposed, that smaller notes would be an injury. In two years after the above Act was passed the effect of it having been found good, ano- ther Act was passed carrying the prohibition to any sum under Jive pounds. And, Gentlemen, I beg you to pay particular attention to the language * FIFTEENTH Geo. III. Chap. LI. An Act to restrain Act of 1775 the negotiation of promissory notes and inland bills of exchange under a limited sum, within that part of Great Britain called England. Whereas various notes, bills of exchange, and B 'H S - draughts for money, for very small sums, have for some time past, been circulated or negociated in lieu of cash, within that part of Great Britain called England ; to the great prejudice of trade and public credit ; Sfc. 6fc. Be it, therefore, enacted by the King's most excellent Majesty, by, and with the advice aud consent of the Lords Spiritual and Temporal, and Com- mons, in this present Parliament assembled, and by the autho- rity of the same, That all promissory or other notes, bills of exchange, or draughts, or undertakings, in writing, being ne- gociable or transferable for the payment of any sum or sums of money, less than the sum of twenty shillings in the whole, which shall be made or issued at any*time from and after the twenty-fourth day of June one thousand seven hundred and seventy-five, shall be, aud the same are hereby declared to be, absolutely void and of no effect, any law, statute, usage, or custom to the contrary, therefore in any wise notwithstanding. 286 PAPER AGAINST GOLD. of these Acts. The first says, that the circulation of notes for very small sums, in lieu of cash, is to the great prejudice of trade and public cre- dit; and, after the parliament have had two years experience of the effects of this Act, they pass another, in which, after declaring that the effects of the former Act have been " very salu- cf tary," they extend the provisions of it from the sum of twenty shillings to the sum of Jive pounds.* Thus, then, small paper currency was proved to have been an evil ; it was proved, by experience, to have been injurious to trade and to public credit ; and, therefore, while there were no bank notes for sums less than ten pounds^ the law forbade that there should be any other circu- lating or negociable notes, under five pounds. Thus, as to paper-currency, stood the law in Act of 1777 * SEVENTEENTH Geo. 111. Cap. XXX. An Act for further restraining the negociation of promissory notes, and in- azamst small . ... ,, ,. . . . . . land bills, or exchange, under a limited sum, within that part Notes and Bills. o f Great Britain called England. Whereas by a certain Act of Parliament passed in the fifteenth year of the reign of his present Majesty (intituled an Act to restrain the negocia- tion of promissory notes and inland bills of exchange under a limited sum, within that part of Great Britain called England), all negociable promissory or other notes, bills of exchange or draughts, or undertakings in writing, for any sum of money less than the sum of twenty shillings in the whole, &c. &c. and whereas t IK said Act hath been attended with very salu- tary effects, and in case\he provisions therein contained were extended to a further sum, the good purpose of the said Act would be further advanced, Be it, therefore, enacted, &c. And the Act extends the prohibition to any sum under^/tve pounds. LETTER XVI. 287 1797, when the Bank Stoppage took place; and Great distress as we have already seen, in the former part of for want of this Letter, the country was, in consequence of change. the Stoppage, thrown into the greatest distress for the want of something to represent small sums. The manufacturers, and, indeed, all the journeymen and labourers, throughout the king- dom, could not be paid in the usual manner. The coin had disappeared, as it naturally would the moment a bank note would not fetch its amount in guineas at the Bank ; and, the guineas and half guineas having gone out of sight, which they did instantly, there were no means of pay- ing small sums. Therefore, the very first thing to be done, was to provide something to supply the place of the guineas and half guineas, and, indeed, the whole of the coin except the ham-- mered-out shillings and sixpences, such as we now see current. For this purpose it was necessary to pass an Repeal ofthe Act to repeal, or, at least, to suspend, the two Acts of 1775 Acts, of which we have just taken a view, and, and 1777. accordingly a suspension Act was passed on the 10th of March 1797., the title and preamble of which Act are here inserted as worthy of atten- tion,, and, as matter for future remark.* This THIRTY SEVENTH Geo. Ill, Cap, XXXII. An Act to suspend for a limited-time, the operation of two Acts ofthe fifteenth and seventeenth years of the reign of his present Majesty for restraining the negotiation of promissory notes, and inland bills of exchange, under a limited sum, within that 288 PAPER AGAINST GOLD. Act, by which the suspension was to be conti- nued only till the first day of the then ensuing month of May ; that is to say, for forty days only, was, as we shall by-and-by see, afterwards extended in its duration, and has continued in force till this day. Power given to But, this was nothing without giving a power the Bank to of making small notes to the Bank of England. make one and The Bank had dividends to pay ; and, of course, otes, all the sums, or parts of sums, under five pounds (there being, as yet, no notes under that sum) they were still compelled to pay in cash, which was what they did not like, and, in fact, what they were not, perhaps, able to do. It was, therefore, necessary, above all things, to give them a power of making small notes. There was a doubt, whether the two Acts of the 15th and 1 7th of George the Third, above-mentioned, part of Great Britain called England. Whereas an Act of Parliament was past iu the fifteenth year of Ihe reign of his present Majesty, intituled an Act to restrain the negociatioii of promissory notes, and inland bills of exchange, under a li- mited sum, within that part of Great Britain called England And whereas another Act was passed in the seventeenth year of the reign of his present Majesty, intituled, an Act for fur- ther restraining the negociation of promissory notes, and inland bills of exchange under a limited sum, within that part of Great Britain called England; And whereas IT IS EXPE- DIENT that the said Acts should be suspended for a certain time, so far as the same may relate to any notes, draughts, or undertakings made payable on demand: &c. &c. &c. The Act then suspends those laws until the lirst d;iy of May 1797. LETTER XVI. 289 applied to bank notes ; and, it was thought, by some persons, that they did not so apply ; but, an Act of Parliament, the great cure for all doubts and difficulties, was passed to remove this doubt ; and such was the haste in doing this, that the Act was passed on the 3rd of March, though the bill was brought in only on the Q8th of February. This Act authorized the Bank to issue notes for sums under Jive pounds ; and, accordingly, two and one pound notes were immediately issued.* Now, Gentlemen, I beg you to stop here, for comparison of a moment, and take another look at the language the i anguag e O f of these Acts of parliament, these solemn decla- these Acts rations of the Legislature. In the year 1775, they say, that the circulation of small notes, in lieu of cash, is of ' c great prejudice to trade and (C public credit." In 1777 they declare, upon the evidence of two years of experience, that their having lessened the quantity of small notes had produced fc very salutary effects." And, in 1797, under the ministry of PITT, whose debts the public have paid, and for whom they are to pay for a monument; aye, under the ministry of this man, the Parliament were brought to declare, * THIRTY-SEVENTH GEO. III. Chap. XXVIII. An Act to remove doubts respecting Promissory Notes of the Go- vernor and Company of the Bank of England for payment of sums of money under five pounds. Whereas it is expedient for the public service, and for the convenience of commercial circulation, that the Governor and Company of the Bank of England should issue Promissory notes, payable to bearer, for sums of money undrrjive pounds ; &cc .&c. u 290 PAPER AGAINST GOLD. that, to make small notes, that to do just the contrary of what the above two acts wejje intended to effect, was cc expedient for the ce public service, and for the convenience of com- " merce." In 1775 and 1777 it was enacted,, that small promissory notes, in lieu of cash, were " a great prejudice to trade and public CREDIT." In 1797 it was enacted, that small promissory notes, in lieu of cash, were Cf expedient for the " public service and for the convenience of com- " merce." Gentlemen, when you have paid due attention to this, you will hardly want any thing more to enable you to answer those, who have yet the folly or the impudence to attempt a de- fence of the ministry of PITT, who, as it has been well observed, in reply to one of his eulogists, found the country gold, and left it paper. Ti.e-rand But, tnc grand measure was yet to come. measure was There was, as yet, no law to sanction the deed now to come ^ re f us i n & t P a V the bearers of the Bank's pro- missory notes. This was a thing that the people had yet to receive- at the hands of tho c e, who had plunged them into the Anti-jacobin war, and who had fed them with the hopes of beating France through her finances. Yes, the people of England, the ee most thinking people," had yet to swallow this ; they had yet to gulp this bolus from the hands of those, who had buoyed them up, for so many years, by comparisons of the flourishing state of the English finances com- pared with those of France, which last nation LETTER XVI. 291 they still believed to be, as PITT told them, " in " the very gulph of bankruptcy." This measure was, as we have seen, introduced Bank into the House of Commons, in form, on the 9th t ion Act of March, 1797, in a motion made by PITT, for passed< leave to bring in a Bill for continuing for a limited time, what he called the RESTRICTION (pray mark the word) upon the Bank, relative to its issue of specie. This Bill, after undergoing the discussions, some of which I shall have to notice more particularly by-and-by, became a Law on the 3rd of May, 1797.* THIRTYSEVENTH Geo. III. Chap. XLV. An Act for confirming and continuing for a limited time the Restriction contained in the minute of council of the twenty-sixth of Feb- ruary one thousand seven hundred and ninety-seven, on pay. mentsof cash by the Bank. Whereas, by minute of his Ma- jesty's Privy Council, made on the twenty-sixth day of Febru- ary one thousand seven hundred and ninety-seven, upon the re- presentation of the Chancellor of the Exchequer, stating, that from the result of the information which he had received, and the inquiries which it had been his duty to make respecting the effect of the unusual demands for specie, that have been made upon the metropolis, in consequence of ill-founded or ex- aggerated alarms in different parts of the country, it appeared, that unless some measure was immediately taken, there might be reason to apprehend a want of sufficient supply of cash to answer the exigencies of the public service ; it was declared to be the unanimous opinion of the board, that it was indis- pensably necessary for the public service that the directors of the Bank of England should forbear issuing any cash in pay- ment until the sense of Parliament could be taken on that subject, and the proper measures adopted thereupon for maintaining the means of circulation and supporting the public and commercial credit of the kingdom at this important u 2 PAPER AGAINST GOLD. sketchofth* When you have read the Title and Preamble provisions of of this Act, } ou will accompany me in a brief the Bank Re- sketch of its provisions, which you will find not strietion Act. only curious and interesting as an object of pub- lic attention, but useful also to each of you as in- dividuals, who will hence learn, how far you are compelled to receive payment in Banknotes, and in what way your previous contracts have been affected by this Act. preamble. The Preamble of the Act having repeated what was contained in the Order of Council, and having declared that to confirm and continue the refusal to pay in Gold and Silver, though such refusal was not zcarrantcd by law ; .having ac- knowledged the illegality of the things done, and declared the necessity of continuing to do them ; having made this beginning, the Act next pro^ indemnification ceeds, SECTION I. to indemnify the Bank Direc- ( ,f u.e Directors tors and all other persons for having done these conjuncture; and it was ordered, that a copy of llie said mi- nute should b transmitted to the directors o' fthe Bank of England, and they were thereby required, on the grounds of the exigency of the case, to conform thereto until the sense of Parliament could be taken as aforesaid: And whereas, in pur- suance of the minute, the said governor and company of the Bank of England, have, since the said twenty-sixth day of February one thousand- seven- hundred and ninely-seven,/(;r- Ibi'iit to issue cash in payments, except for purposes for which the i^ue of cash was dr fined unavoidable ; it is necessary that the Restriction in the said minute, although not warranted by l.tiu', should he Confirmed, and should be continued for a li- iviiu-d tiiiie, b> the authority of Parliament : Be it, therefore, LETTER XVI. 293 illegal things ; that is to say to protect all such and a n others persons against any appeal to the law that any concerned in suffering party might be inclined to make. So the order ID that, whatever loss or hindrance or injury any Council, and man might have suffered from the non-payment its evecutiou. of the promissory notes of the Bank Company, such sufferer was, by this Act, at once deprived of all legal means of obtaining redress. The Act next provides, in SECTION II, that the Bank Bank protected should be liable to no prosecution for the non- against the payment of any of their notes, that they might demands of be willing to exchange for other notes ; and, i ts creditors. that in case the Bank were sued by any one for the non-payment of their notes, they might apply to the Court to stop proceedings in such actions, who might stop them accordingly, and without costs to the plaintiff in any action brought against the Bank for non-payment of its notes, unless the Court should think the action neces- sary. SECTION III. Permits the Bank to issue Bank may it;n now. 1774 (14Geo. III. Chap. 42), which act pro- vided, that no tender in payment of money made in the Silver Coin exceeding the sum of 25 pounds, should be deemed a legal tender for more than its value by weight, at the rate of 5s. d. for each ounce of Silver. This Act con- tinued in force for two years, when it expired ; but it was again revived in the year 1799, and made perpetual. Thus, you see, that even Sil- ver coin was not, except in small sums, a legal tender, and is not a legal tender to this day. Rut, though the Bank of England notes were Bank Notes not by the Restriction, or Stoppage Act, made a nowmadea legal tender, to all intents and purposes, they lccral tcmkr were made so to a certain extent; for, by the tender of them in lieu of money, any debtor cx could escape arrest and also escape the giving of special bail ; and, as to the Bank of England, the Act not only protected it against the demands of its creditors ; that is, against the holders of to a certain lent. 300 PAPER AGAINST GOL0. its notes, but by the same Act, the Bank was to pay to the public, any thing due from the former to the latter, in its notes, and not to be compel- lable to pay in Gold or Silver. This was going some way, at least, in making bank notes a legal tender, and this seems to have been overlooked by Mr. HUSKISSON, (a Gentleman of whom we shall have much to say by-and-by), who in speaking of the change created by the Act of 1797, in our money system, observes, that that Act did not repeal any of the former regulations relating to the coin, and that it did not alter the Act of the 39th of the King. " It did not," says he, " alter in any respect the existing state last of the States, I believe, that clung to a legal tender in paper, was NEW JERSEY; and, the consequence was, that, even in the year 179-', when I first went to the United States, that part of the Union was still suffering from the disre- putation brought on it by the legal tender, which, before it was put an end to, had not only produced a total stagnation of trade, and had brought ruin upon thousands of people, but it had begun to drive the people out of the State ; and, had it not been put an end to, the State would, long ago, have been wholly depopulated. But we need not go abroad for any thing to Principles of convince us of the settled opinions of statesmen English states- and politicians as to the effects of a legal tender me n upon this in paper. We have only to look into our own sub j ecf Statute-Book, where >ve shall find the thing suffi- 302 PAPER A G A I N ST .0 L D. ciently reprobated, as in the Act passed in the year 1763, which declares such a tender to be discouraging and prejudicial to trade and com- merce, and the cause of confusion in dealings and a lessening of credit, in the Provinces where it was in use ; and, having declared this ; hav- ing laid down these as principles, the Act goes on to forbid the issuing of any more such paper ; it makes void all Acts of Assembly thereafter passed to establish or keep up such tender ; and it inflicts a fine of 1,000 pounds (with immediate dismission, and future incapacity to fill any pub- lic office or place of trust) on any Governor, who shall give his assent to such Act of Legal Tender.* Mr. Huskissnn. Mr. HUSKISSON, who was one of the Bullion Act of 1764 * FOURTH YEAR, Ceo. III. Chap. 34. An Act to pre- vent Paper Bills of Credit, hereafter to be issued in any of relatm" to . his Majesty's Colonies or Plantations, in America, from being paper-money m declared to be a legal lender in Payments of Money ; and to the Colonies, prevent the legal tender of such Bills as are now subsisting from being prolonged beyond the periods limited for calling in and sinking the same. Whereas great quantitiesof Paper Bills of Credit have been created and issued in his Majesty's Colonies or Plantations in America, by virtue of Acts, Orders, Resolutions, or Votes of Assembly, making and declaring such Bills of Credit to be legal Tender in payments of Money. And whereas such Bills of Credit have greatly depreciated in their value, by means whereof Debts have (>een discharged U'ith a much less Value than was contracted for, to the great discouragement and prejudice of the Trade and Commerce of his Majesty's Subjects, by occasioning Confusion in Dealings, and lessening Credit in the said Colonies or Plantations : The Act then proceeds as above described. LETTER XVII. SOS Committee, of the labours of which we shall soon see a good deal ; Mr. HUSKISSON, who en- Mr. Huskis- joys a large pension, paid out of the taxes raised son's upon the people, and who, therefore, ought to pamphlet. understand something of such matters ; this Mr. HUSKISSON (of whom I shall have to tell you a great deal before we have done) has just pub- lished a pamphlet, under the title of, " The ff Question concerning the Depreciation of our " Currency stated and examined ;" to the doing of which he was, it would seem, like Rosa Ma- tilda, reluctantly forced by the pressing partiality of friends. This Mr. Huskisson, in his pam- phlet, which is, apparently, intended to justify his conduct as a member of the Bullion Com- mittee, has said, that, ' ' if it had been proposed, ce at once to make bank notes a legal tender, and, (C in direct terms, to enact, that every man <( should thenceforward be obliged to receive ff them as equivalent to the gold coin of the (f realm, such a proposition would have excited <' universal alarm, and would have forcibly made -the ground, and the sole LETTER XIX. 41 ground for continuing, for five months longer, an Act of Parliament, which protected the Bank Company against the demands of their nu- merous creditors, the holders of their notes. In the course of his speech, the Minister, the fc heaven-born Minister/' said, " that he had ef the satisfaction to say, that there was in the tf affairs of the Bank, with regard to the means e expedient to continue the restrict ion now subsisting, with the reserve for partial issues of cash, at the discretion of the Bank, of the nature of that contained iu the present acts; and that it may be so continued, without injury to !hc credit of the Rank, with an advantage to the nation. Your Committee, therefore, having taken into consideration, the general situa- tion of the country, are of opinion, that notwithstanding the affairs of the Bank, both with respect to the general balance of its accounts, and its capacity of making payments in specie are in such a stale that it might with safety resume its ac- 346 PAPER AGAINST GOLD. Pitt propose* to for the printing of the Report, " in order that continue the (t all the Members might have the satisfaction Restriction " of informing themselves, in detail, of state- ' r merits so very pleasing and important ; those te gentlemen., he said, who had now heard the " report read, would think with him that after te the full examination the subject had un- ee dergone in the Committee; after the clear " and decided opinion that Committee had pro- te nounced upon it ; and after the distinct state- ef went not only of them but of the Bank Di- (f rectors ; it would be unnecessary to detain the " business merely on account of the printing ; fc and that it would be proper to proceed with- ef out delay to the object of that Report ; and " move for leave to bring in a bill for that fc purpose." He further said, that it was ne- cessary to continue the restriction during the war to defeat the object of the enemy, which was to destroy our credit ; that the further con- r. tinuation of the restriction could not reasonably produce any alarm or apprehension, since they had now indisputable evidence before them, that, so far from the gloomy predictions of the oppo- nents of the measure having been verified, the national credit had rapidly risen to the high con- dition of prosperity which had just been exhi- eustomed functions, UNDER A DIFFERENT STATE OF PUBLIC AFFAIRS; yet, that it will be expedient to con- tinue the restriction now subsisting on such payments, for such time, and under such limitations, as to the wisdom of parliament may seem fit. LETTER xrx. 347 bited. At the end of this harangue, he moved for leave to bring in a bill for continuing the Stoppage of cash-payments, at the Bank, till a month after the conclusion of a definitive treaty of peace ; which, by the Representatives of C( the most thinking people in the world," was agreed to without a single dissenting voice ! When, however, the subject came to be dis- opposition to cussed again on the 22nd of November, the me measure by thing was not suffered to pass off in silence. Mr. Mr. HOBHOUSE observed upon the new doctrine which was now brought forward in defence of the measure: " He reminded the House, that he fc had said on a former occasion that this would {f be the case ; and now the Minister was mak- " ing good his predictions, alledging as a rea- " son for so doing, that the nature of the con- " test in which we are engaged demanded it, ff though this was no part of the grounds for fc the former restriction^ and though in com- " paring the war now with its nature, at that cc time, it did not appear there was any ma- " terial difference. Why the nature of the " war, then, made a restriction of six months thanks me for the useful information that he is so good as to say he has received from this series of Let- ters, and begs me, in a very earnest manner, to tell him, whether I am quite sure, that I was correct, when I said, that any holder of Country Bank notes might compel the payment of them in gold and silver. Both these gentlemen have put their names to their letters ; but, as the same doubts and uncertainties may have occurred to others of my readers, I shall give my answer in this public manner, and, after having so done, there will, I trust, remain no doubt or uncer- tainty at all. I stated to you, Gentlemen, in Letter XVI, Ac tof 1797 ia that, as far as related to debts due from Ae t hi s respect. Sank of England, the notes of that Bank were, by the Act of 1 797, called the Bank Stoppage, or Restriction Act, made a legal tender ; that is to say, that the creditor was compelled to take those notes in payment, or to go without any payment at all. If, for instance, any one of you has a Bank of England note of ten pounds, and carry it to Threadneedle Street for payment, 384 PAPER AGAINST GOLD. the Bank Company may compel you to take other of their notes in payment, or, they may, if you refuse such notes in payment, refuse you payment in any thing else. Bank Notes a It is the same with regard to the payment of legal tender the dividends, that is to say, the interest of the Stocks or Funds. If, for instance, our neigh- bour, GRIZZLE GREENHORN, when she goes to re- ceive her half-year's interest upon her Stock, which, you know, is paid her by the Bank Com- pany, were to say : ' ( pay me in good gold and f( silver," would, or might, receive for answer, an assertion, that the law, the Act of 1 797, pro- tected the Bank Company against such an un- reasonable demand. In a word, the Bank Company might refuse, absolutely refuse to pay her her interest in any thing but their own pro- missory notes ; and, then, if she tendered them those promissory notes for payment, they might refuse to pay them in any thing but other of their own notes ; that is to say, they would be ready to give her fresh promises to pay in lieu of the promises to pay which they had given her before ; but, she could not compel them to give her one shilling's worth of gold or silver, except there might be due to her, in the way of interest, any fractional part of a pound. to a certain extent. Thus far, then, the Bank Company's notes are a legal tender. And, in the affairs between man and man, if such notes be once accepted LETTER XXII. 385 and received in payment of any debt whatever, they are, after such acceptance and receipt, to be considered as a legal payment in that case. If, for instance, I owe my neighbour a hundred pounds, and tender him Bank of England notes in payment, and he receive them in payment to the amount of the sum due to him, he is paid, I am acquitted of my debt ; he cannot afterwards sue me for the debt, upon the ground, that I have not paid him money, as he might do in the case of other promissory notes, if there were no particular agreement to bar him. But, here the legal tender of Bank of England x ot a legal notes stops. They are not yet, in any other tender in other case, put upon a footing with money. As to all cases> the transactions between man and man, except in the above circumstances., which can occur only where the Bank of England itself is a party, no person is obliged to take Bank of Eng- land notes in payment of any debt, or legal de- mand. And this is a thing well worthy of the attention of all those, who have it in contempla- tion to enter into contracts which are to have a future operation ; for, if the value of gold and silver, compared with that of Bank notes, should continue to increase, those who now make con- tracts for payments to be made some years hence, should bear it constantly in mind, that the party to whom they will have to make such payment, will, at all times, have it in his power to insist upon gold coin in payment. C c PAPER AGAINST GOLD. If this be the law, without any other excep- than those above named, it follows, of Notes may be course, that I can have not the least hesitation demanded in * n telling my Devonshire correspondent, that I GM am quite sure, that any holder of a Country Bank note has it, at all times, in his power to compel the payment of it in gold or silver coin from the King's mint, and of full weight and due fineness. I know, that a different notion has prevailed ; and, I have heard it said, or seen it stated in print, that this compulsion cannot be effected ; because, it has been said, if you were to bring your action of debt against Paperkite and Co. they would pay the amount into Court in Bank of England notes; and that, upon proof of their having done this being produced, the Court would stop the proceedings, or at least, throw all the costs thereafter incurred, upon you. otherwise the This would, indeed, make the Bank of Eng- Act would be a land notes a legal tender in fact, though not in fraud. law ; or, in other words, it would make an Act of Parliament a mere delusion, a shuffle, a cheat, a base premeditated fraud. But, this is all a mistake ; it is not founded in fact ; the Courts would attempt to do no such thing; for, if one could in any case, suppose the inclination to exist in the mind of a Judge, he would not do it, nor think of it, in the face of what has al- ready been done. LETTER XXII. 387 The question has been decided, and that, too, The case has with all possible solemnity, as will appear from been decided. the case which I am now about to lay before you, and the perusal of which will remove all doubts whatever upon the subject. There ap- pears to have been no doubt about the letter of the law, in the mind of either of my corre- spondents ; but they both doubt of its interpre- tation in the Courts; and the last mentioned gentleman says, that, though upon the face of the Act, there is nothing to warrant the suppo- sition, that a holder of a Country Bank note could not compel the payment of it in gold and silver, yet he thinks, that such holder would, by the judicial construction of the Act, be defeated in any attempt to compel such payment ; and, he seems to think, that this is pretty clearly demon- strated in the fact (as he supposes it to be), that no one has ever yet attempted to compel Coun- try Bankers to pay their notes in gold and silver. He will, doubtless, be surprised to find, that Grigby against the attempt has not only been made, but that ito a k. fully succeeded. In the year 1801, four years after the Bank Stoppage, or Restriction, Act was passed, a Mr. GRIGBY, in the county of Suf- folk, went to the Bank Shop of Messrs. OAK.ES and Co. of St. Edmunds Bury, and in present- ing them one of their own Five Guinea notes for payment, demanded money. The Bankers tendered him a five pound Bank of England note, aud^zje shillings, which he refused to re- c c 2 388 * PAPER AG41NST GOLD. ceive, saying, that the five pound Bank of Eng- land note was not money, and that he would not take it. The Bankers told him, that if he wanted specie for his accommodation, they would let him have it. He declined to receive it in that way ; he said that he stood in no need of it as an accommodation ; that he demanded it as a right; and that, unless they paid him in the coin of the kingdom, he would bring an action of debt against them. Upon this ground they refused him payment in coin, whereupon he brought his action and obtained a verdict in his favour at the Assizes ; but the question of law was, upon the motion of the Defendant's coun- sel, reserved for decision by the Judges ; and the following is the Report of the Case, as argued before, and determined by the four Judges, of the COURT OF COMMON PLEAS, on the 19th of Nov. 1801. Action of Debt. GRIGBY against OAKES and Another. fc This (e was an action on a promissory note ; the " Defendants us to all but five guineas pleaded " non assumpscrunt, and as to the remaining " five guineas they pleaded a tender. The " cause came on to be tried at the Summer " Assizes for Suffolk, before Mr. Baron Hotham, " when a verdict was found for the Plaintiff, lc with one shilling damages, subject to the opi- " nion of the Court upon the following case. " The Defendants are Bankers at Bury St. " Edmunds, and issued the note in question for tf question for the Court to decide is a mere Cf question of law, arising, as it has been con- tf tended, out of the provisions of the 37 Geo. (f 3> c. 45. In fact we are called upon to say fc whether it follows as a necessary consequence " from that act, that a tender in bank notes is tf equivalent to a tender in money ? It may be te very true that individuals may be occasionally " subjected to great inconveniences from the " operation of that act ; but are we therefore to ff say that the Legislature has enacted that " which the provisions of the act do not war- " rant ? If we were at liberty to refer to our ft own private knowledge of the language that tc was held in Parliament while this act was fc pending, no doubt could be entertained upon " the subject. We know that it was very much tf canvassed at that time, Whether or not the ' Legislature ought to go the length of declar- " ing bank notes a good legal tender ? If, there- " fore, it had been intended by the Legislature ef so to make them, that intention would have tc been expressed in such clear terms that no " question could have arisen upon the subject. " Indeed, it is expressly provided, in the 2nd " section of the act, that if the Governor and <( Company of the Bank of England shall be " sued on any of their notes, or for any sum of f( money, payment of which in their notes the S92 PAPER AGAINST GOLD. " party suing refuses to accept, they may apply " to the Court in which such proceedings are " instituted, to stay proceedings during such " time as they are restricted from paying in ff cash. But with respect to individuals it was fe not intended to prevent any creditor,, who " should be so disposed,, from captiously de- tf manding a payment in money, though such a send us gold, lished in all the London daily prints, stating, that the Chinese had just discovered that gold and silver were too abundant with them, and, it was added, that they were going to send great quantities of it hither, some of which might b D D 2 Gold seized on board of ship. A riol at Sampford. Hoarding. Mock Bank Notes issued. Cold exported, New issue of dollars an- nounced. Seizure of guineas at Dover. PAPER AGAINST GOLD. speedily expected. In the public prints of the 27th, 29th and 30th of April, it was stated, that ten thousand pounds in gold had been seized on board of a ship, about to carry it abroad. Many statements of this sort had appeared before, but this one was worthy of particular attention. Also that a riot, attended with acts of violence and killing, had taken place at Sampford, in consequence of the scarcity of change. A circular paragraph appeared at this time repro- bating the practice of hoarding, and hinting that it would be proper to punish it as a crime. At the same time another circular paragraph ap- peared advising people not to hoard the change, for that a new silver coinage was just coming out that would sink the value of the present coin. At the same time Mock bank notes were circulated from the King's Bench and Fleet Prisons, by the means of which some unwary persons were cheated. An account of gold lawfully exported during one week was published at this time, from which it was manifest, I hat the gold and silver were going to France and her dominions as fast as possible. It was now announced that the Bank had issued more Dol- lars, and that .300 worth had been sent to each of the Banking Houses iu London. Such, Gentlemen, were the symptoms of the effect of raising the nominal value of the dollar ; and on the 8th of May, it was stated in the public prints, that another seizure of guineas LETTER XXIII. 405 had been made on board a ship sent into Dover. The words of the statement were these : " Four thousand and fifty more guineas have ee been found on board the ship sent into Dover fe last week. It is supposed she will be pulled ec to pieces, as her very iron ballast is hollowed ee to receive gold. She is called the New Union time ! And, can you be made to believe, that the thing will stop zchere it is? Is it possible that you can be persuaded to believe, that the Bank Notes will now, or will ever, revive ? The grand effort now, with all those who wish to deceive the people, and to profit from their credulity, is to persuade them, that it is not the Bank Note that has fallen ; but, the gold and 406 PAPER AGAINST GOLD. silver that have risen. This seems to be the last trick in the budget ; but, what I have to say upon this head I must reserve till I come to my intended Letter Upon the subject of depreciation. Debates in In the mean while we must see what has been Parliament on passing in Parliament, relating to this matter; the Bullion so that, before we proceed upon the remainder of Report. our inquiries, we may have the whole history of the paper-money before us,, down to the very day when we shall come to our conclusion. In the foregoing Letters, there will be found, I am convinced, the most complete history of our Paper Money that has ever yet appeared in print. We have there traced it from its very outset to the day when the people of Salisbury became, all in a moment, destitute of the means of getting a dinner. In this Letter its history has been brought down to last Saturday ; and, all that we have now to do is to give, in as few words as possible, the history of the BULLION DEBATE, which, perhaps, would be unneces- sary for our present purposes ; but, this is a subject every fact belonging to which ought to be so recorded as to be capable of being here- after referred to ; and ought, if possible, to be made known in every part of the world. Time of the The Report of the Bullion Committee, which Report being vvas printed last year, was laid before the House published. of Commons but a short time previous to its rising. It was ordered to be printed on the 8th LETTER XXIII. 407 of June, and I must say, that it gives me great pleasure to reflect, that it issued from the press on the very day that I was sent to jail ! I shall always remember this with satisfaction. It will be a source of delight to me as long as 1 have breath in my body ; aye, and it will be borne in mind, too, long after the Bank Notes and all, yea all, that thereon depend, shall have come to their true level ; their proper state. The time being so short, the House could not take the Report into consideration, during the last session ; therefore, this part of the business was to be performed during this session. The Chairman of the Committee, Mr. FRANCIS HORNER, was to propose some measure to be adopted in consequence of the Report ; but, he being a lawyer and a placeman at the same time ; having to go the Western circuit and to manage the Nabob of Arcot's Debts, he, of course, could hardly find time for this Bullion affair. After many appointments and disappointments, how- ever, he, at last, brought the matter forward on rime *he Monday last, the 6th instant, when a Debate the Debate ensued, which lasted during four successive took placc> nights ; it being the custom in this Assembly to carry on the greater part of their works after it is dark. Previous, however, to this Debate, Mr. Propositions HORNER had laid upon the table of the House of Mr. Homer. a string of PROPOSITIONS, expressive of his 408 PAPER AGAINST GOLD. opinions as to the state of the coin and paper- money of the country, and also as to the remedy to be applied. In a few days after these Propositions of had been before the House, Mr. NICHOLAS VAN- Mr. Vansittart. SITTART, wllO took tllC Other Side of the question, laid before the House a set of opposing PROPO- SITIONS ; which he soon afterwards followed by a set of Propositions being the former set amended ; and these were followed by another paper from Mr. HORNER, containing Proposi- tions in the form of amendments upon his brother lawyer's Propositions, both of the gentlemen being " learned friends." Bullion Debate. The way being thus prepared, all the prelimi- nary steps having been taken, the discussion was entered upon on the day before-mentioned, at the end of one year, two months , and fourteen days from the time that the Committee commenced its labours. I have began inserting this Debate, and I shall insert all the principal speeches before I have done ; and I do it, because I wish to afford all my readers, and you, Gentlemen, in par- ticular, an opportunity of perusing, at your lei- sure, what these persons have said upon this im- portant subject ; and, besides, my wish is to place these speeches where they may be, at all times, conveniently referred to, seeing that my conviction is, that events are now hastening on apace ; events that will set all low cunning, all chicanery, all trick, at defiance; and that, of course, will put the opinions, contained in these LETTER XXIII. 409 speeches, to the test. My conviction is, that the time is not far distant, when it will be impossible to deceive the people of England ; when truth will reign ; and, at that time, it will be of great advantage for us to know what have been the opinions of men who have taken a part in these discussions, and to what point, whether good or evil, their endeavours have tended. * What we have to discuss is the question The question of of depreciation, or fall, in the value of the Bank Depreciation Notes ; and, after that, the remedy proposed by now to be Mr. HORNER and those who side with him. I discussed. shall, I trust, go to work in a way very different indeed from that of these gentlemen ; and, when I have written my opinion, there the matter will rest, and the truth of our several opinions will be tried by Time, which tries all things. I remain, Gentlemen, Your friend, W M . COBBETT. State Prison, Newgate, Friday, May 10th, 181 1. Appendix D. 410 I'APER AGAINST GOLD LETTER XXIV. " Sauce for the Goose it> sauce for the Gander." OLD PROVERB. injury to Commerce by Buonapart6 He is said to have caused the Gold to leave England The Fault is with our Government Our Appeals to the French People absurd Forged Bank Notes sent into Kent from France Forged Assisrnats Decision in the Court of King's Bench. GENTLEMEN, w. E have now to discuss the question of Depreciation. We have now to inquire,, whether the Bank of England Notes have, or have not, depreciated; that is to say, fallen in value. After what we have seen in the former Letters, and particularly in that immediately preceding 1 , it is, indeed, nearly useless to put this question to any man of sense, and much more so to make it a subject of serious discussion. Nevertheless, it will be right so to do ; seeing that these Letters are intended to treat of every part of this great subject, and to put upon record all the material facts and arguments appertaining to it. The Deprecia- In the House of Commons, during the Debate tkm denied in on the Bullion Report and on the Resolutions the House of thereon proposed, by Mr. FRANCIS HORNER on commons. the one side, and Mr. NICHOLAS VANSITTART on LETTER xxiv. 411 the other, it was contended, by those who were for Mr. VANSITTART, that is to say, by the MINISTRY, and their adherents ; by this part of the House it was contended, that the Bank paper had not depreciated, or fallen in value ; and, being asked, how they then accounted for the fact, that a guinea was worth 26s or 27s. they answered, that it was very true, that Gold and Silver had risen ; but, that the Bank paper had not fallen. They were then asked, how, since they would The fault of the insist upon it that it was a rise of Gold and discredit of Silver, it had come to pass at this time above all Bank Paper laid others. Allowing, for argument's sake, that itonNapokon. was a rise in the value of the guinea, they were asked how the value of the guinea came to rise. Their answer to this was, that it was owing chiefly to the injury done to our commerce by the extraordinary, the cruel, the savage mea- sures of the inexorable tyrant Buonaparte, whom they designated by every appellation cha- racteristic of a despot, and even a fiend. Gentlemen, we will stop here and make a few observe upon observations upon these charges against the this charge. Emperor of France ; for, it would be very foolish in us, who call ourselves ce the most ef thinking people in the world," to suffer our- selves to be amused with charges against Na- poleon, when we should be considering of the real cause of the mischief that is now come upon 412 PAPER AGAINST GOLD. us, and of the greater mischief that is still coming, and will come with most dreadful effect, unless we take timely measures for preventing that effect ; this would be selling ourselves to laughter indeed, making ourselves an object for the contempt of Europe, not excepting the Dutch and those other nations, whom, with empty insolence, our hireling writers and others affect to pity. The gold s^d to have been drawn away by Napoleon. We call upon the Bank for Gold and Silver in payment of their promissory notes. They have no Gold or Silver to give us ; or, at least, none do the Y %'"'* The y are protected by law against our demands. Some persons propose to remove this impediment to our demands. The men in power and a great majority of the House of Commons say, no ; and, they, in objecting to the proposition, say, that the Bank have not the gold and silver ; that they cannot get it ; and, that it is, therefore, impossible to make thempay. This is a sorry answer enough ; but, when we complain, we are told, that the fault is not with the Government or with the Bank, and that it is wholly with Buonaparte, by the means of whose laws, edicts, and workings of one sort and ano- ther, the Gold and Silver have been drawn out of England. Foiiy of this What should we think, Gentlemen ; what Apposition, should we " thinking people" think of a General, who was to write home word, that he had been LETTER XXIV. 413 beaten and routed and lost half his army ; but, that the fault was none of his, and that it was wholly the fault of the enemy's General, who had adopted against him a series of extraordinary, cruel, and savage measures ? What should we thinking people say to such a general ? What would Mr. QUIN, the editor of the Traveller news-paper, in his sublime orations, in the Common Council, say to such a general ? Would he vote him thanks and a sword ? I do not say that he would not ; but, I think, that you will agree with me, that such a general would, amongst most men, meet with but a cold recep- tion ; and, that he would be told, that it was the business of the enemy to beat him, to rout him, to break him up, to ruin him ; and that it was his business to prevent the enemy from so doing, and also to beat and break up and ruin the enemy. Just such, must, if we have a grain of sense The Ministers left, be our answer to the ministers and their ad- oug ht to pr e- herents, when they blame Buonaparte for having vent Napoleon deprived us of our Gold and Silver. It was their from doing us business to prevent him from doing us this mis- t |,j sm j si . h j,.f. chief. It was their business to protect the coun- try against the fatal effects of the enemy's mea- sures ; and, if they found themselves unequal to the task, they should have said so ; and, I war- rant them, there would not have been wanting others to take the labour off their hands. These ministers and their predecessors, for the last 414 PAPER AGAINST GOLD. twenty years, have had the complete command of all the means, all the resources, of this kin-- dom, of every sort. They have carried all the measures that they proposed. They have found out the way of putting down all opposition, or, at least, of rendering 1 all opposition quite in- efficient ; and, therefore, to them, and to them alone, the nation is to look for responsibility for whatever mischiefs exist, or are likely to exist. If, indeed, all be well ; if there be nothing- to com- plain of; if the nation be in no danger ; if there be no evil ; then, they have nothing to be blamed for; but, if there be any thing in our si- tuation, the existence of which we have cause to lament, to whom are we to look for responsibility but to them ? Napoleon has But, to take another view of the matter, what, an example in let me ask, has Napoleon done against our com- onr former merce and our currency, for which he will not oniucr. easily find a justification in our example ? Have we neglected any means in our power to injure the commerce and the finances of France ? Did not Pitt, from the very outset of the war against the French Jacobins and Levellers, call it a war of finance ? And, were not all our efforts bent down towards the beating of France through her finances ? This is notoriously the fact ; and, as to her commerce, it must be well known to every one, that we risked a war with the American States for the purpose of intercepting provisions in their way to the people of France, when they LETTER XXIY. 415 were menaced with famine. Was this fair and honourable warfare ? I shall be told that it was. I will not discuss the point. But, if it was so, what reason have we to complain now, when France prevents us, not from receiving corn from her dominions ; but, merely from sending our products to those dominions. This is the utmost that Napoleon does, or that he can do ; and, I put it, then, to any reasonable man, whe- ther we have real cause of complaint. We may be sorry for what Napoleon is doing; and we must be sorry for the individuals who suffer from his measures ; but, can we complain of him for not receiving our goods now, when we recollect, that we would not suffer the people of France to receive flour from America when we thought them in the midst of famine, and when we fur- ther recollect, that we openly avowed the wish and the endeavour to prevent their receiving Jesuit's Bark, a drug so necessary, in many cases, to the preservation of life ? This was fair in us, I shall be told. Very well. That I am not questioning ; but, if this was fair ; if a state of war tolerated this, have ive, I ask again, any reason to complain of him, any reason to call him tyrant (as GEORGE ROSE did) because he will not now permit any part oi his people to receive goods which are our produce or our property ? Oh, no ! We must expect that the people of Wc cannot, France have the same sort of feelings that we 416 PAPER AGAINST GOLD. then, blame have \ and, gentlemen, mark it well, I pray yon, the French. we intercepted the flour on its way to France long before Napoleon's name was known to us. We., or, at least, our venal writers, now affect a vast deal of compassion for the people of France. These writers appear to lament that the French people are subjected to so terrible a despotism. But, either the people of France hear what our writers say, or they do not : if they do not hear it, then it cannot possibly produce any effect upon them ; and, if they do hear it, they cannot fail to call to mind, that we have been at war against them through all their forms of govern- ment ; and, that while they were under a repub- lican form, or name, our hostility was much more decided and bitter than at this moment ; for, we then declared war against the principles of their constitution ; we declared that no rela- tions of peace were to be maintained with them ; and, now that they are under a monarchy (for that means a government by the will of one per- son), we affect to feel a great deal of pity for them ; we sigh to see them free ; and call upon them, as loudly as our venal writers can, to rise against their tyrant. Had we begun war with them only when their revolution had worked it- self into a monarchy, then, indeed, our appeals to them against their ruler might have been of some avail ; but, how is it possible for them to believe, that we are now desirous of seeing them free, when they recollect our conduct at the outset of the war; and for many years, during its LETTER XXIT. 417 continuance ? All our appeals, therefore, from Napoleon to the people of France are absurd ; and only bespeak the desperateness of our situation. To return more closely to our subject ; it ap- Ld. castle pears from the report of the Bullion Debate, reagh. that LORD CASTLEREAGH said, that the tyrant of the Continent had, thus far, been defeated in all his attempts against us ; that he at first at- tempted invasion, that he next endeavoured to excite rebellion,, that he then assailed our com- merce ; and, that having failed in all these, he was now endeavouring to ruin our currency. Now, how far this statement was true, I shall Forged Note* not pretend to say ; and, indeed, except as to from France the last point, it is beside my purpose to make and Holland. any remark upon what is reported to have been said by this Lord. That that part of the state- ment is true, there can, however, be little doubt ; for, it has been stated in the public prints, that there have been great quantities of forged Notes, purporting to be Notes of the Bank of England, sent into this country from France and Holland. This interesting fact has been very carefully kept out of the London daily papers ; but, the country papers have been less cautious, owing, I suppose, to their being at too great a distance from good advice and poiocrful arguments. The following article, which I take from the OXFORD MERCURY of the 4th instant, will be quite suffi- cient to explain the nature of what is going on E E 418 PAPER AGAINST GOLD. "Kent. We are sorry to learn that a vast ee number of forged notes, purporting to be ' those of the Bank of England, are in circu- tf lation, particularly on this coast, to an alarm- " ing extent ; we have heard to the amount of " 200,000/. having been recently imported into ef this county, from France and Holland, where fc it is said they are manufactured ! We know " not to what extent the evil may extend. Se- ef veral 5l. 10/. and even 20/. of those notes laws passed about two hundred years before such things as bank notes were ever heard of, was convicted, about a year ago, of the crime of ex- changing guineas for more than their nominal value in bank notes.* DE YONGE moved for an arrest of judgment ; the case, has been since argued before the judges, and their decision * The report of this Trial, together with observations thereon, will be found in the Appendix, (B.) 1 F 2 436 PAPER AGAINST GOLD. thereon has recently been promulgated. Other persons have been prosecuted in the same way and upon the same ground, the effect of which naturally lias been to deter people from openly purchasing and selling guineas, and also from tendering them generally in payment for more than their nominal value in paper. But, it is very notorious that the distinction is, never- theless, made, and that, in payments, men do take gold at its worth in comparison with the TWO prices paper. Two prices are not yet openly and ge- made in eflect. iierally made ; but, they exist partially, and the extent of them is daily increasing. To this point, then, we are now arrived, and here we see proof, not of a depreciation of money of all sorts, arising merely from that general plenty of money spoken of above ; but arising from the abundance, or plenty, of paper, that is to say, the great quantity of the paper compared with that of the coin. Hence we say, that the bank notes have depreciated, or fallen in value ; and, that there should be found any human being to assert the contrary, or to believe, or affect to believe, the contrary, is something that, were not the fact before our eyes, no man could think possible : but, we live in times when wonder no longer seems to form a feeling of the mind. The ol(l This state of things it was easy to foresee ; argument but, the nation has been deluded by the specious LETTER XXV. 437 argument of the equal powers of gold and papery the paper in purchases.