THE UNIVERSITY OF ILLINOIS LIBRARY 332 B875 V/8 t4 ^ ''^''JM^m<0^'M ESSAY ON THP. y^ CURRENCY; ALTERATIONS IN THE VALUE OF MONEY, THE GREAT CAUSE DISTRESSED STATE OF THE COUNTRY. COMPARISON BETWEEN THE STATE OF THE CURRENCY IN THE REIGN OF WILLIAM III. A N 1> ITS PRESENT DEBASED OR DEPRECIATED STATE, ORIGINAL. LONDON. 1820. ESSAY, 4 c. 4-c. \Jke great error which has been committed by those who advo- cate a restoration of the Currency to its ancient standard, and which has occasioned much confusion of ideas, and greatly tended to bring the country into its present difficulties, has been the repre- senting and believing, that the depreciated state of our Currency of late years, is analogous to the deranged or debased state of the coinage in former periods of our History, and more particularly to its state in the Reign of William the Srd, from l692 to I697. A candid and impartial inquiry will show, that a very wrong view has been taken of this subject, and that the deranged or debased state of the Currency, by clipping of the silver money in William the Third's time, was little similar in its nature, and less so in its effects, to the depreciated state of our Currency at the present mo- ment. Mr. Peel, in his Speech on the subject of the restoration of the Currency, when introducing and recommending the bullion pay- ment plan, May 24th, 1819, is reported to have said, " If the House would look to the arguments on both sides, (alluding to the reformation in the coinage m William the Third's Reign) at those ad- vanced by Lowndes on the one side, and those by Locke on the other — they would see how analogous they were to those advanced at present, Lovvndes complained that the value (price) of silver was enhanced, and wished for the return of the good old times when silver was at 5s. Id. an ounce, while then it was at 6s. Sd.; and also contended that the shilling was the real standard of value. 3] Mv. James's Essai/ on the Currenciiy S;c, 503 Locke on the other hand maintained, that the pound weight of silver was the standard of vahie, and that the coin was depreciated and not the bullion raised. The present value (price) of silver he affirmed to be as formerly, 5s. Q.d. an ounce, and therefore not at all altered except in comparison with the deteriorated Currency (dipt money) ; silver in coin was of the same value as silver in bullion. Jt was perfectly true, he said, that an ounce of silver, which the Mint regulations determined to be only OS, ^^/. in value, had risen to 6s. 3 J.; but that was only because the silver coin had been dipt or reduced in value, by the difference between 5s. dd. and (h. 3fl. * Give me,' says he, ' Five shillings of Standard weight aiidjiiieiiess, as origi- nally coiiiedy together ztith 2d., and I will w ith that sum purchase for you an ounce of silver, tor which you now give 6s. 3d. (in the dipt money).' Mr. Locke had no abstract idea of a shilling, or standard of value, as detached from something substantial and tangible." " These arguments, (says Mr. Peel) happily prevailed, and not- withstanding the expence, the project of the new coinage was carried into execution." In another part of this speech Mr. Peel acknowledges with can- dor, the errors which he had before entertained on this subject, viz. " that the Currency or paper money had not been depreciated," and he says, he does it without pain or remorse ; but he now sees that the paper money had been depreciated : and silver having risen to 7s. 3d. an ounce, and gold to 1 10s. an ounce, at tiie close of the war, as paid for in the paper money, was a clear and convincing proof of that depreciation. But when Mr. Peel was acknowledging his former errors, he ought to have been particularly cautious that he was not again running into errors on the opposite extreme, quite as great, and much more injurious to the interest and perma- nent welfare of his country. Instead, therefore, of hastily forming his opinion again, upon this intricate and embarrassing subject, from assertions unsupported by proof and from the opinions of others, had he carefully read throughout, and attentively considered, the treatises and arguments of Lowndes and Locke, he never would have come to the conclusion to which he did come, or have recom- mended the restoration of that depreciated paper money Currency again to its former standard, at this critical juncture. For, had he read those treatises attentively throughout, he must have perceived the great distinction, and wide difference, existing between the two cases, and that they bore little analogy to each other. And if Mr. Peel will now give himself the trouble to read over those treatises and carefully reconsider the subject, possessing as it is be- lieved he does possess, great candor and sense of justice and hu- manity, he will perceive with pain, that the measure which he then recommended, and which is now being acted upon, has been the 60 i Mr. James s Essaij on [4 cause of bringing upon a great mass of his countrvmen tlieir present ruin, tuisery, and degradation ; and lie will, or ought to be, among the lirst candidly to come forward and acknowledge the contrary error, vvliich he has been led into, and bt fure it be too late, do all in his power to endeavour to relieve the country from the evils now impending over it, which are fast destroying its peace and prosperity, and which he has been so greatly instrumental in brijiging about. In order to understand this subject more clearly, it w ill be ne- cessary to consider with attention the arguments, which really were made use of, between Mr. Lowndes and Mr. Locke, and particularly those of Mr. Locke, in whose treatise (setting aside some trifling errors on the abstract subject of money) the whole affair is clearly explained. The true state of the Currency then was much as follows : Jn William the Thiid's Reign (according to Locke,) 'silver was the legal money, and standard of value. The gold coins were then permitted to pass, or to find their value in the silver money by an agio, or at whatever j)eop!e pleased to give or to take for them, the Guinea usually passing for 21s, Qd. in the legal silver money. Lrom 1690 to 1697 "as a period of continental wars, and it was in the early part of William's lieign, that the Bank of England was lirst established, and the paper money and funding systems began. To go into the detail of all the transactions of those periods as connected with the subject of money, would occupy too much time; but it may be necessary to refer to some of those transactions, in Older to form a more correct idea of the cause of the then debased .Slate of the currency, and of the effects, which such debasement, and the subsequent reformation of the money, had upon individuals and upon llie general prosperity of the country. Dunng that war, in consequence of subsidies and payments abroad, the balance of payments and the exchanges became unfa- vorable to this country ; this balance could only be made good by ti.e transmission of bullion or coin, consequently as long as this untavorable balance continued, no bullion would have been brought into this country to remain in it, or to be taken to the Mint to be coined into money ; but what did arrive from Spain or fron> Ame- rica, «as immediately bought up for exportation to the Continent, at a price above the price paid by the Mint, to coin into money. The Mint price at that j)eriod, was 5s. 'id. an ounce for silver and 77s. lOjJ. an ounce for gold, and the exportation of the coin of the Realm was prohibited under severe penalties. Consequently, as long as the balance of payments continued against this country, a demand for bullion for exportation would continue also, and silver bullion would then bear a price above the value of the coin, as much higher as would cover the risk of the illegal exportation 53 the Currency, &;c. 505 of the coin. This difference would be about \(L or 2rf. an ounce, and it would raise the price of silver, in bullion, which could be freely exported, up to 5*. 3 convinced, that if all the dipt pieces of silver money in England could be weighed together, they would be found deficient full half of their standard weight. " If all the pieces in England, that are more or less dipt, do amount by tale to four millious, (as is before supposed) then 1 infer that the recoining of the same, upon the old foot, would make but two millions; and the loss would be as much. But by recoining the same upon the foot of 6s. 3d. for the present crown piece, as is before proposed, then the same quantity of dipt money will make two millions and five hundred thousand pounds, and the loss will be fifteen hundred thousand pounds, to be borne either by public aid, or by the particulars interested in the dipt money, or by both," Page 113. " in the present condition and circumstances of our silver money, this nation and the trade and dealings thereof, are in a great measure deprived of the use and benefit of the whole species now in being, as well the heavy pieces as the light ; the former of which have for the most part been hoarded by the particu- lar persons possessed thereof" — " and it is not likely they will soon be brought to light, without raising their value, and recoining the dipt money ; and as for the latter, a great part thereof, when oflferedr in payments, is utterly refused, and will not pass, and consequently doth not serve to the end or purpose for which it was made ; so that both the one and the other (for the greater part) are become as it were dead cash in the kingdom." '^ In consequence of the vitiating, diminishing, and counterfeiting of the current money, it is come to pass, that great contentions do daily arise among the king's subjects, in fairs, in markets, shops, and other places, throughout the kingdom, about the passing or refusing of the same, to the disturbance of the public peace ; many bargains, doings, and dealings, are totally prevented and laid aside, which lessens trade in general. Persons before they conclude any bar- gains, are necessitated first to settle the price or value of the very money they are to receive for their goods." An idea may be formed from these extracts, what the real state of the Currency then was. The loss to the country, or the expence to the Government, occasioned by the recoinage of the dipt money, amounted in reality to about 1,200,000/. Therefore, taking it upon the previous assumption of Mr. Lowndes, that the amount of silver money of all sorts, dipt and unclipt, in the country, before the the recoinage, was 5,600,000/., and that the dipt money on an average was debased one half in its original value ; it will follow, that the dipt money then really amounted to only 2,400,000/. instead of 4,000,000/. as was supposed by him. And that there was in exis- tence in the country, to fulfil all legal contracts, 3,200,000/. of good and lawful sterling money, instead of 1,600,000/., which shows that 7] the Currency, S^c. 607 the clipping had not been carried to that extent which Mr. Lowndes had previously imagined. Mr. Lowndes appears to have recomnaended the depreciation of the standard of the silver money, more for the purpose of saving part of the loss, which would have been occasioned by ihe cailing- in and recoining of the dipt money, than fron> any other motive; not perceiving the injustice which would at that time have been committed by such an act, or by a legal alteration of the standard. It is clear from what Mr. Lowndes has said, and from Locke's answer to him, that the general circulation of the country, or the legal sttmdard of value, had not been altered or debased ; that people refused to take the dipt or debased money, just as they pleased ; that the dipt or debased muney had not been made a legal tender, and compulsory in payments ; that contracts had not been entered into, and transactions founded upon that dipt or debased money, as in legal money ; that purchases of land and rents of land, money borrowed, and taxes and rates imposed, had not taken place in that dipt or debased money, as in the lawful money of the Realm ; but, that it was permitted to pass for its real value only, some pieces which were previously shillings passing for seven pence, some for eight pence, or what they were worth ; ** Persons before they concluded any bargains, being necessitated first to settle the value of the money they were to receive in pay- ment." And that two prices had actually taken place, one in the good and lawful money, and the other in the dipt money, which from the scarcity of silver change, was permitted to pass current, only, for convenience sake, until the nuisance became too great, and no longer to be endured. Locke distinctly states (page 107.) "That no man was compel- led to receive the dipt or depreciated money in legal payments, and that there was a Law in existence, with severe penalties, against those who tendered dipt money in payment." And page SI he says. *' I cannot but wonder at Mr. Lowndes, a man so skilled in the Laws, especially of the Mint, the Exchequer, and of our money, should all along in his arguments, speak of dipt money, as if it were the lawful money of England. Therefore, a quantity of dipt shillings, or dipt pieces of silver money, having within a few years crept into circulation, was not, in Mr. Locke's mind, a sufficient justification for depreciating the old lawful standard of our coins. And it was because rents of land, and other contracts and prices, had not taken place and become founded in that dipt or depreciated money at that time, and be- cause the lawful money and standard of value had not become altered or depreciated, that Mr. Locke combated, and justly com- 508 Mr. James's Essay on [8 bated, and prevailed over the arguments of Mr. Lowndes, for de- preciating the hiwful coins, or the then standard of silver money. But had Locke lived to the present day, would he have disco- vered no difference between the present depreciated state of our whole Currency, and the dipt money in William the Third's Reign r Would he have advocated a restoration of this depreciated curren- cy again to its former standard, or an increase in its value of nearly one third, or between 40 and .50 per cent., after that money, the iXiliole circulating medium of the country, had become depreciated to that extent ; after that depreciated Currency, or medium of ex- change had been made by law, a legal tender between man and man, compulsory in payments, and the lawful current money of the country; after money had been borrowed in, purchases and rents of land made, excessive taxes, rates, and duties imposed, and nearly all transactions had taken place in, and become founded upon that depreciated currency; would lie, under such circum- stances have had so little sense of justice, as to have advocated a restoration of that depreciated legalized Currency again to its for- wier value ? Or, if he had done so, would he not at the same time, have also had that feeling of " retributive justice," to have recom- mended other measures to be adopted, to guard and relieve indi- viduals and the public, who must otherwise be ruined, or greatly injured, under its baneful and destructive effects? But a better judgment can be formed, of what Locke would have done, under such circumstances, from his own M'ords. — page 9. he says, " U"he standard once settled hi/ public authority, the quantity of silver o//re established under the several denominations, 1 humbly conceive it shou'd not be altered, till there were an ab- solute necessity shown for such alteration, which I think can never be." "The reason why it should not be changed is this — because the public authoiity is guarantee for all legal contracts. But men are absolved from the performance of their legal contracts, if the quan- tity of silver under the several denominations be altered; as is evi- dent, if borrowing 100/. or 400 ounces of silver, to repay the same quatitity of silver, (for that is understood by the same sum and so the Law warrants it,) or taking a lease of land for years to come, at the like rent of 100/., they should both pay the one, and the other, in money coined under the same denominations, with one fifth less of silver in it, than at the tinse of the bargain. The landlord here and the creditor, are each defrauded of 20 per cent, of what they contracted for, and is their due; and 1 a^k, how much juster it would be, to dissolve Uie contracts they had made, than that hence- forth all landlords and creditors, should be paid their past debts and rents for leases already made, in dipt money, twenty per 9l the Currency, &;c. ' 509 cent. lighter than it should be ? Both ways they lose twenty per cent, of their demand, with equal justice. *' The case zcould be the same, and legal contracts voided, if the standard should be altered nn the other side, andeach species of our coin be made onejijlh heavier. For then he that had borrorced or contracted for am/ sum, could not be dischar'^ed b\) paijing the quantiti/ agreed for — but be liable to be jorced to pay, 10 percent, more than he bargained for — that is, more than he ought. On the other side, whether the creditor be foiced t(j receive less, or the debtor forced to pay more than his contract, the damage and injury is the same whenever a man is defrauded of his due ; and whether this zcill not be a public failure of justice, thus arbitrarily to give one man a right and possession to another, tcithout any fault on the suffering man's side, or without any, the least advan- tage to the public, 1 shall leave to be considered." It is obvious, that it was because contracts and engagements had 'not been entered into in the dipt money, and the dipt money had not been made a legal tender, that Locke objected to any alteration in the standard at that time. And the reformation of the silver money, as it was then called, no more affected the Kingdom with regard to the weight of taxes, or individuals as to debts or credits, or their previous contracts, or the general state of prices, or the prosperity of the country, than a recoinage of the silver money, in the last Reign, would have done, had that recoinage taken place in or about the year 1790. In 1790, the silver money then in circulation was greatly depre- ciated in value by long wear, many of the plain shillings not having nmch more than one half of the original quantity of sterling silver remaining in them, and the six-penny pieces not so much ; the silver money on the average then, being nearly as much depreciated, by long use and wear, as it was in the Reign of William the Third by clipping. The only effect of calling ni, and recoining that depreciated silver money, would then have been much the same as in William's time by the recoining of the dipt njoney ; namely, an inconvenience to the public, for the moment during the opera- tion of calling it in and substituting another comage in its stead, and also, the expense to be sustained by the recoinage. Hut the weight of all taxes and rents, and all transactions, would have remained upon the same footing or basis after such recoinage as before. In William the Third's Reign, the standard of value wis kept perfect, by there being in circulation, not as Mr. Lowndes had guessed, only one million six hundred thousand pounds, but upwards of three millions, (as appeared to have been the case after the recoinage) of good and lawful sterling silver money ; and in the .510 Mr. J 2imes*s Essaj/ on [10 last Reign, the legal striiidard was kept perfect and undisturbed up to 17y7, notwithstanding the depreciated state of the greatest part of tlie silver Currency, by the circulation of good and lawful weigh- ty gold money. But from the year 1797, since the Bank ceased to pay its notes on demand, in the legal weighty sterling gold money of the Realm, from that period, up to 1814, the pound note, which was made the legalized pound sterling standard of value, and the sole Currency of the country, was regularly depreciating, as calculated in gold as well as in silver. If, in the year 1790, a recoinage of the silver money had been proposed, no one would at that time have thought of advocating a depreciation of the standard, merely because the shillings and six- penny pieces had become greatly depreciated by long wear ,• and all Loc-ke's arguments, and the arguments of others, against a de- preciation of the standard at that time, would have very justly ap- plied ; and it is astonishing that the advocates for the restoration of the ancient metallic standard now, have not discovered the great diflference existing between the two cases. This error among others, has greatly tended to plunge this na- tion into its present distress and difficulties, from the belief that the two cases are similar, and, that because the country soon over- came the inconvenience in William the Third's Reign, of calling in a quantity of dipt ehillings, or deteriorated pieces of silver money, and resumed its wonted prosperity, that it will now be ecjually able to support the ruinous and terrible effects of increasing, or of raising the value of the ty/fo/e Currency, or circulating medium again (gold as well as silver) nearly 50 per cent., after most tran- sactions had become founded in that greatly depreciated Currency. The effects of winch will consequently be, to increase all the bur- thens of the country in like proportion, to raise all rents, taxes, rates, and all previous contracts, in an equal degree, and to compel every person to pay nearly 50 per cent, more than he contracted for, or ought to pay. But if those who advocate these unjust and im- politic measures, were fully aware of the numerous acts of hardship which they are committing by them, and perpetuating upon the community, and the still greater evils, misery, and ruin, which must be entailed upon a great mass of the productive population ; if they possess any feelings of humanity, or regard for the good and pro- sperity of the counirv, they would review this system of ruin and injustice, with feeluigs of mingled remorse and shame. The country is now again laboring under the first effects of this mea- sure only, and the longer it is persevered in, the more cruel, the more terrible and distressing will be its effects every day. The circulating medium, or the paper Currency of the country. 11] the Currency ^ S;c. 511 which had become the only legalized money unit or standard of value, had been regularly depreciatuig in value for nearly twenty years. Just before the close of the war, in 1814, silver had risen in this depreciated paper money, the then only legal money or niediiim of exchange, to carry on all the transactions of the coun- try, from OS. 2d. an ounce (the old Mint price) up to ?•«■• 3d. or 7s. 4d. an ounce ; and gold had risen from 77s. I0{d. an ounce up to llOs. an ounce. This legalized paper pound sterling, money unit, or standard of value, had then beconie depreciated as calcu- lated in silver, from the value of nearly 4 ounces of silver, down to 2f ounces of silver; and in gold from 123 grains of gold, down to 87 grains of gold. And it was in this debased, diminished, dipt, or depreciated money standard, or money unit, of the value of 2^^ ounces of silver, or of 87 grains of gold, in which the great bulk of the public debt had been contracted, in which rents of land and houses had been contracted, in which the excessively great weight of taxes and rates had been levied, in which money had been borrowed on mortgage and on bond, in which purchases of land and contracts for other property had been entered into, and in which ninety nine, out of every hundred, of all existing transactions had become founded. And was it either humane, politic, or just, to increase the value again, of this legal depreciated Currency, or medium of exchange, nearly 50 per cent., by lowering of the price of gold from 1 10s. an ounce, down to 77s. Wld an ounce; and silver from 7s. 4r/. an ounce, down to 5s, an ounce .'' thus putting into the money unit or pound sterling, more of silver or of gold ; or increasing it in weight or value again, from 2^ ounces of silver up to 4 ounces of silver, and from 87 grains of gold up to 123 grains of gold. And by this ujeasure compelling every one to pay in the proportion of 400 ounces of silver for every 100/. they owed, or had contracted for; or an equivalent in property, to the value of 400 ounces of silver^ where they ought to have paid only 275 ounces of silver ; perpetu- ating the weight of all taxes and rates upon the country, at a rate nearly 50 per cent, more burlhensome than they ought to have been, reducing one half of the productive classes to ruin, misery, and disgrace, and the laborers to the greatest state of want, wretch- edness, and degradation. '* Is not tliis a failure of public justice, and the giving away of one man's right and possession to another, without any fault on the suffering man's side ;" and " a removing of the landmarks of property r" If it be not, it would be difficult to say what could be so. But some one may here observe, tliai the previous depreciation of money was also an act of injustice. Grant* ed, that it was so ; and let those, by whose acts it was depreciated, defend it if they can ; that is not the question now at issue. iJy 512 Mr. James's Essay on [12 a different mode of policy, that original depreciation might perhaps have heen prevented ; but although many reasons may be given, through tlie necessities of tlie war, somewhat to justify the policy of that depreciation, no just or good reason can be given for raising of the vaUie of the Currency back again. No doubt, many acts of hardship and of injustice, had been committed through the depre- ciation, but most of them had ceased to exist in 1813, or had been provided for. And the raising of the value of the currency again, or the attempt to bring back the old metallic standard, is not producing benefit to those who were before injured by the depre- ciation, or taking from others, who were being benefited by that depreciation, but in most instances jt is producing precisely the contrary effects. To explain this part of the subject, let it be supposed (and this case will apply in numerous instances) that at the commencement of the war against France, in 1793> a gentleman possessed an estate of 5000/. a year, up to the income of which he was accustomed to live, and which estate was then let upon leases for a term of years. Soon after the war began, he finds, from the increase of taxation, and from the advanced price of most commodities, occasioned thereby, and by increasing issues of paper money, and by the sub- sequent depreciation of that paper money, that he could not sup- port the same style of living which he had been accustomed to do, without year after year running into debt. The war continues, and taxes and prices, and the increase of and the depreciation of the paper money, continue to increase with it ; and his debts and in- cumbrances, added to the expense of raising money, increase in the same proportion. But as land, from the enhanced price of the produce of land, is also rising in nominal value, he looks forward to the expiration of his leases, to be then enabled to raise his rents, and to replace himself somewhat upon the fooling in which he stood before the war. Let it be supposed that in 1810 or 1812 his leases are expired, and that he was then enabled to raise his rents up to 8,000/. a year ; and having then to pay interest upon mortgages and other incumbrances, to the amount, say of 3,000/. a year, he would still have a nominal income left of 5000/. a year, the same as in 1 793, but with all taxes and prices greatly increased upon him. The paper money Currency was depreciated, at the close of the war, in its exchangeable and in its intrinsic value, full one third ; and soon after the war had ceased, measures are being taken by the Bank and by the Government, to restore this depreciated Curren- cy again to an '* healthful state ;" that is to say, to restore it to its former value with guineas, or to bring the guineas back again into circulation. The produce of land, and the rents and value of IS] State of the Currency. 513 land and the price of most commodities, soon begin to fall, to adjust themselves to guinea prices again, or to the increasing value of this " healthful currency." And this gentleman soon finds his new tenants on the verge of ruin, (his old ones having become fund- holders, or his creditors on bond or mortgage perhaps,) and the value of his estate fast falling back to its original value in 1793, or to 5000/. a-year; leaving him with charges and in- cumbrances upon it of 3000/. a-year, to pay otF; thus having the prospect before him, of being left in possession of two fifths of his original income, or 2000/. a-year, to live upon, with all taxes and rates trebled since 1793. And this state of things brought about, by the attempt to restore the depreciated paper currency to its original value, or to a " healthful state." Many are at this moment, placed in somewhat the above situa- tion, being compelled to leave their family mansions, and to live in retirement abroad ; and many are totally ruined, who having bor- rowed money in the depreciated currency, are now called upon to pay back the principal, or to pay the interest, in money 50 per cent, more valuable. This case will apply to thousands, and to tens of thousands, and indeed in a degree to every one, in every station of life, who had en- tered into contracts of late years, in the depreciated currency in a state of high prices. And the same case applies to the nation at large or to the landed interest generally, who having mortgaged the re- sources of the country, and their estates, to the fundholders, and to others who live upon the taxes, when prices were high, in the depreciated currency, are now called upon to pay the taxes, or the interest of that mortgage, in money of 50 per cent, greater value. Who could have believed it possible, that the landed interest would have been among the tirst to propose the adoption of measures to increase the weight of the mortgage upon their estates 50 percent, at one blow, by calling for a restoration of the currency again to its " pristine, sound, and healthful state," or a restoration of the old metallic standard? The landed interest may flatter themselveSj perhaps, that they shall be able to preserve the present rents of their estates, through the operation of the corn prohibition bill ; but in this they will most assuredly find themselves lamentably disappointed, for in this measure " they are only making a way, through the ruin of trade and commerce, and of the other classes of society, ultimately to their own." They cannot keep np agricultural produce to that price which they wish to obtain through the corn bill, and pre- serve their present rents, in any other way than by returning to, and continuing in circulation, the depreciated currency ; or by making eight shillings out of the ounce of silver, and six pounds out of the VOL. XVIJ. Pam. NO. XXXIV. 2K 514 Mr. James's Essaij on the [14 ounce of gold ; and by enacting, that 2i ounces of silver, or 80 grains of gold, sliall be the lawful pound sterling ; which money, although smaller, would be as hard and as " sound," and quite as " healthful" to the landed interest, as the old metallic currency of 1793. In money of this value the Bank might soon return to unrestricted cash payments, and in it, perhaps, their tenants may obtain pretty steadily about lOs. a bushel for wheat, and for the other produce of the land a proportionate price ; but not in money of greater value. All other measures to raise prices will only end in destroying the resources of the country, and in producing in- creased misery and ruan, to the ultimate defeat of their own in- tended object. But to return to the state of the currency again, in William the Third's reign, and allowing, fur argument's sake, that the currency and standard of value had then become depreciated to the extent to which Mr, Lowndes recommended the new silver money to be made ; but this, from the authority of both Locke and Lowndes,^ was not tlie case, it being only a part of the currency, or the dipt shillings, which were depreciated, and which were not niade legal tenders ; yet, allowing that the whole currency or circulating medium had been so depreciated, this state of things had only continued for a shoit time, or for three or four years, and it had not had time to cause a rise in the rents of land,, or to penetrate into all the transactions of the country. But even had it effected a general rise of prices (which it had not), does it follow, because the nation could then bear the increasing of the value of the currency 20 per cent. ; at a time when rents were very moderate ; when the tiade and comnjerce of the country, and the system of commercial credit, were at a very low ebb; v\hen most transactions in business took place iu ready-money payments ; when there were few or no in- ternal taxes, or taxes on the necessaries of life ; when the price of food, and of most other things, was lower in this country than on the Continent; and when the whole revenue was little more than two millions a-year : does it follow— because the nation could then bear, without causing great permanent distress, an increase in tiic value of the currency or circulating medium of 20 per cent., at that time, and under those circumstaitces — that the nation can now sup- port an increase in the value of money of nearly 50 per cent. ; when the system of commercial credit has been carried to the greatest extent ; with a taxation of upwards of fifty millions a-year mostly levied in that depreciated cinrency, rents doubled in it, and all transactions, in private life and in trade and commerce, founded upon it ; which took root, an«l had gone on progressively increasing for nearly twenty years, and which had interwoven itself into all the affairs of the country, public and private ( 15] State of the Currency. 51.5 But the standard of money or the medium of exchange was not at all raised in vaUie in William the Third's time, as is before shown ; and the state of the currency, the state of the country, and the state of the world, are very different now to what was the case at that period. The old standard of value, therefore, can now never be restored to circulation again without producing a com- plete revolution in the value of all the property of the country, M'ithout rendering perpetual the greatest misery and distress, with- out destroying and driving from the country a great proportion of its capital and industry, and drying up the sources of its strength and power, its prosperity, and happiness. Had the Bank of England never ceased to pay its notes on demand in the old sterling currency of the country, and had the depreciation in the paper money never taken place, the public debt could not have been raised to half its present amount, or the taxes to half the amount they now are. Most prices would have remained throughout the war much the same as at the commence- ment of it, the natural value of properly would have been but little disturbed, and the piescnt disordered and distressed state of the country would not have arisen. No man now knovvs what the value of property will be (i or 12 months hence; to talk of the currency being now restored to its former value, and that no further fall in prices will take place, is absolute nonsense; this same doctrine was held by the same parties more than twelve months ago, vho then talked of a fall in prices of about 3 per cent., wlien the fall since that time has been nearer 25 per cent, on the average, and the fall yet to come must be as much or more. Even if the currency were now depreciated and peruKinenily n»ade of the value of S*. from the ounce of silver, and 120.s'. from the ounce of gold, and twenty of those shillings, either gold or silver, nuule the lawful pound sterling, it is doubtful (if the Bank were to pay in money of that value, on den):m(l, for all their notes out) if the aggregate of prices coidd be supported steadily at a higher rate than they now are : llie natural pnce of a bushel of wheat in time of peace, is now about the value of an ounce of silver (or :)() giaius of gold), it being grown and sold for legs than that prue ni all the agricultural anil manufacturing districts on the Continent; and its price nuist ulti-r mately fdl in this country to about the price of an ounce of silver, let the value of money, or the price of the ounce of sdver, be kept at what it may. The hmded interest are not now acting upon measures to preserve the puldic faith by paying 20.v. in the poiuiil, but are gratuitously compelling themselves, and all the otiier classes of society, to pay in money of the value of l)(h. ni the pojud, upon all their debts, taxes, and incumbrances. it is thought by some people because the } rice of gold and 516 Mr. James's Essay on the f 16 silver is now at the old mint price, and the pound note at present brought back to par with the old metallic standard, that all our diffi- culties are overcome : herein they commitanother great mistake, and the misconception in this respect is only exceeded by its mis- chievousness. It is true, that the intrinsic value of the pound note can only be ascertained by the quantity of gold or silver which it can be converted into ; and it is also perfectly true, that the rise in the price of gold and silver, above the old mint price, was, or ought to have been, to every reasoning mind, sufficient proof of a depreciation of the paper money to an equal extent ; but under the late artificial system, the Bank, or Ministers, could raise or fall the price of gold or silver, almost as much or rapidly as they pleased. And although the intrinsic value of the pound note would immediately conform to the price of bullion, it does not follow that all prices would as immediately conform to the altera- tions in the value of the pound note : many concurrent circum- stances may prevent this, and particularly when the alterations in the value of money take place in a way not obvious to all the world. The standard or the intrinsic value of the paper money may be quickly altered as compared with bullion ; but it takes a long time for all prices, for the value of land and of all commodities, to settle down to the altered value of that standard. And although the paper money may now be brought back to par, with the old standard in gold and silver, rents of land, and the annual value and fee simple of land, and the price of all things, have not yet adjusted themselves to this altered value of money, or to the old standard, nor by one tenth part yet. It took nearly twenty years, during the progressive increase of paper money and the gradual depreciation of that paper money, to elevate prices up to the highest point to which they had attained; and it may take several years for them all to settle down again ; but if gold be kept permanently at 77s. lO^d. an ounce, and silver in proportion low, a great mass of the farmers must be inevitably ruined, and the laborers reduced to the greatest state of want and misery, or to the brink of starvation ; many of the manufacturers, artisans, and mechanics, will be driven from the country, and the trade and commerce greatly diminished, if not nearly destroyed; wheat must ultimately fall to 5s. or Qs. a bushel, and, the other pro- duce of land fall in similar proportion ; rents of land and the value of land, and all prices, must, on the average, be lowered to about the level of prices before the war, or to the average rate of from 1 780 to 1790. Prices are at present held up in an artificial way, in a great degree through the operation of the corn bill ; but this cannot be contioued for many years : for if Ministers will act upon measures 17] State of the Currency, 517 to endeavour to keep up the price of the necessaries of life in- trinsically, to double the price in other countries ; or, in other words, if they will not permit the food, the necessaries and luxuries of life, to come into this country at a reasonable rate, a great part of the population of this country will emigrate to the cheap food, to escape intrinsic high prices, and excessive taxation. And how is it to be supposed, that the manufactures of this country can now florish, or that our manufacturers can contend against those other countries, who are obtaining their food, and all the necessaries of fife, at less than one half that ours do, and consequently are enabled to sell the productions of their labor at half the price : no superior skill, or industry, or ingenuity, can in the long run contend against this difference. Before the French war, or 30 or 40 years ago, the price of the necessaries of life was in this country much upon a level with the prices upon the Continent ; it was about that period our manufac- tures so greatly took root, and the trade and commerce of the country then naturally florished, as our manufacturing laborers could then contend, upon equal terms, with their rivals on the Continent, and they then enjoyed in a great degree the reward of their labor, which their superior skill and industry justly intitled them to. It is this attempt, forcibly to hold up prices in money of increas- ed value, or in the old metallic standard, or acting upon measures to benefit one class of society to the destruction and injury of the other, or to raise intrinsically the price of the necessaries of life, and at the same time to lower the wages of manufacturing labor, which is now occasioning so much misery and distress in the country, and which is driving so much of its capital and industry to seek more safe and beneficial employment abroad. When the manufactures, and trade and commerce, are driven from the coun- try, where are the landed interest then to look for a market for the produce of land ? Another very common misconception on the subject of money, is, that the quantity of gold or silver actually contained in any piece of money constitutes its only real intrinsic value ; this in some respects is true, but there are exceptions to this rule. It creates some confusion in arguing upon the subject of money, having two metals as standards ; it were better that one only should be fixed upon by all nations. Silver, for many reasons, is the best adapted for this universal money and standard of value; and gold should be permitted to pass by an Agio, or at whatever rate the public pleased to give, or to take, for each description of gold coin. Silver was formerly the standard in this country, and it is so at present in most commercial nations in the world. Taking silver, therefore, as the standard, let it be supposed, for 518 Mr. James's Essay on the |[18 Jjlgurticnt sake, that of the present silver money, 5 s.6d. is now coin- ed out of the ounce of silver, it will be perceived that each shil- ling so coined contains t'AO eleventh parts of an ounce of silver; but the present price of silver being only 55. an ounce, the real value of the shilling is at this time equal to two tenths, or one fifth of an ounce of silver ; that is to say, any person can convert it into, or can purchase with a shilling, one fifth of an ounce of silver, or 10 per cent, more of silver than is actually contained in the shilling. And supposing the price of silver to be higher or lower than bs. an ounce, the value of the shilling will be in pro- portion greater or less ; observing, that although it may become of much greater value than the quantity of silver actually contain- ed in it, yet it cannot become of less as long as the currency or silver money be permitted to be freely exported, which is now the case. And taking silver now at os. an ounce, it is the same thing, as to its effects upon general prices, (should this price con- tinue) as if the silver money were really coined of the value of 5s. from the ounce of silver, instead of 5s. Qd. This would be the case with a dipt money, or money greatly depreciated by long use, say to two thirds or less of its original value ; yet, as long as this dipt or depreciated money was allowed to pass current on equal terms with the original heavy money, it would be equally as valuable for all purposes as a circulating medium ; and silver being at 5s. an ontice, one of the depreciated or dipt shillings \vould be worth one fifth of an ounce of silver, because you might buy that quantity of silver with it, although the dipt shilling might not in itself contain one eighth part of an ounce of silver. This was much the case with our greatly worn silver money up to 1793, of which on an average eight shillings did not contain in them an ounce of silver, yet up to that tinje, as a person could generally buy silver at 5s. or 5s. Q.d. an ounce, with that depreciated silver money, it was really of equal value to a silver money actually coin- ed at the rate of 5s. or 5s. 2d. an ounce, or at the rate of the then price of silver, as it could upon all occasions then, with little dif- ficulty, be converted into that quantity of silver. This is nmdi the case at this day, with the silver money or current guilders in Holland, which are dipt away to about two thirds of their origi- nal value; they currently pass for about twenty pence of our present money, although they do not contain in them, perhaps, twelve penny-worth of silver. The calling-in of that dipt money in Holland now (perhaps the most dipt and depreciated that there ever was in the world), and recoining the same into pieces or guil- ders of their original value, actually containing half as much more silver as at present, would not alter the value of the present money standard in Holland, or the general price of commodities, or the exchangeable value of the guilder itself, as you may now 19] State oftlie Currency, 519 buy with a dipt guilder containing about twelve penny-worth of silver, the quantity of twenty penny-worth of silver. — This may be proved by going into any silversnuth's shop in London, who deals in foreign coins, and who will give as much (and ask as much) for one of the old Dutch guilders, whicli has nearly one third of its silver dipt away, as he will for one with nearly all its original quantity of silver remaining in it : the reason of this is, because he can sell it for as much to a Dutchman or to any person going to Holland, where the dipt guilder passes for an e(|ual value in all payments, with one of nearly its original full weight of silver in it. If this dipt money in Holland were now to be cried down, or not permitted to pass any longer by law, or to pass only for the value of the quantity of silver actually remaining in each guilder, each individual who happened at the lime to hold a few, would lose the value of a few sl)illings by them, (an act of hardship, as they had received them as of full value, by their being hitherto permitted to pass current by the government) ; but there the loss would stop, and all prices and all transactions between man and man would remain the same afterwards as before. Or, if th« government were to call them in, receiving them as of full value, and recoiuing them of their original weight, (which they are about to do), supposing the quantity now in circulation to be three niillions of guilders, and that on an average they had lost by clipping and long wear one third of their original weight of silver, this sum Mould only coin into two millions of new guilders, and the govern- ment would have to bear the loss of one million or the expense of the recoinage ; which would be done by a tax upon the commu- nity at large, (the same as was the case on the recoining of the dipt silver money in William the Third's reign in this country,) and those who happened to hold none of the dipt guilders, would bear an equal proportion of the expense of the recoinage, the same as those who did possess some ; which would be the more just, as the recoinage would be for the general advantage and good. But after such recoinage, the value of property would remain the same — the new guilders would pass for no more commodities, although con- taining perhaps 30 per cent, more of silver in them, than the dipt guilders did before; and all taxes, debts, and contracts, would re- main uj)on the same basis after such recoinage, as before it. This was the sort of recoinage or reformation of the currency which took place in William the Third's time ; and the depreciated or cli})t state of the silver currency then, was not at all analogous to the disordered or depreciated state of the whole of our currency er circulating medium, (gold as well as silver) of late years. It has been the more necessary to explain particularly this part of the subject, to show, that a curiency may be greatly deteriorated 520 Mr. James's Essay on the pO by clipping and long wear, and be again restored to its original value, without affecting the real value of the money standard, aa long as that dipt or deteriorated money will pass for its original value, and as long as the price of silver in it had not been permit- ted generally to rise above the price at which the coin was origi- nally made. Although to preserve the currency or standard of value as undisturbed and as perfect as possible, it were better at all times that dipt money should be made illegal in payments, and forfeited upon being tendered ; there would be then no temptation at the beginning, to the clipping of the coin, which by this means would be totally prevented. It therefore appears, that the real value of a piece of money is not upon all occasions to be measured by the quantity of gold or silver that is actually contained in its composition, but by the quantity of gold or silver which such piece of money can be exchanged for, or converted into, calculated at the price of gold or silver. This is the case with the pound note, which does not contain a particle of gold or silver in its composition, and the intrinsic value of which can only be ascertained by the quantity of gold or silver which can be bought with it. Let it be supposed, for instance, that the Bank of England were compelled by law to purchase gold at any given price, and to sell it also, at the same price — say at 6/. an ounce ; it would then be found, that the pound note or paper pound sterling, would be uniformly worth 80 grains of gold, or one sixth part of an ounce, neither more nor less ; for, as a person who had gold to sell, by taking it to the Bank could demand 6A an ounce for it, he would not sell his gold to any one else for less. And when any person was desirous to buy gold for any purpose, as he could, by going to the Bank, de- mand an ounce of gold for 6/. in notes, he would never give more than 6/. an ounce for gold. The pound note would then be con- stantly worth 80 grains of gold, and it would be equal in value to a piece of gold money, made of the weight of 80 grains of gold ; and gold would invariably remain at the price of 6/. an ounce. The same would be the case with silver, if the Bank were com- pelled by law to buy and to sell silver at any one fixed price — say at 8s. an ounce ; the pound note would then be uniformly worth 2| ounces of silver, neither more nor less, and it would then be equal to a piece of silver money containing 2j ounces of silver, in its intrinsic value, or to a piece of silver money coined of the weight of 2i ounces of silver. And either gold or silver, which- ever was then made the standard metal, and money of account, would never rise or fall in money price, but would constantly re- main at either 6/. an ounce for gold, or 8«. an ounce for silver, 21] State of the Curreticy. 521 and the money system would thus approach as near to perfection as a paper money circulation could do. This would ;ilso be the case, had we a gold or silver money stan- dard in general circulation, and a paper money convertible, at the will of the holder, into such metallic money on demand. Suppose the mint by law to be compelled to pay 6/. an ounce for gold — that is to say, to give 6 sovereigns, or 6 pieces of gold money called pounds, each piece of money or pound coined of the weight of 80 grains of gold, on demand, for every ounce of gold carried to the mint, it is obvious that no one would then sell gold for less. The Bank being also compelled to pay their notes on demand in this gold money — that is to say, to give a sovereign, or a piece of gold money containing 80 grains of gold, for every pound note demanded of them, it is also evident that gold would never rise in price above 6/. an ounce. Gold would then never rise or fall ui Us money price, but would invariably remain at 6/. an ounce, or at whatever other rate should be fixed upon by law. The same arguments apply to silver, should silver at any time again be made the nietallic money standard. In speaking of gold and silver here, it must be understood, that standard gold or silver, or one fixed fineness, is uniformly meant. If the comnuttees which have been repeatedly appointed, to ex- amine into the state of the currency, instead of occupying so much of their time to show that the currency had become depreciated ; a fact which ought to have been obvious to every man who pre- tended to judge of this question, or who could reason at all upon the subject, and which might have been clearly proved in a very short time ; instead of devoting so much of their time to that part of the subject, after having agreed upon that fact, (a fact which even those who before denied it, have since been compelled to assent to,) they ought then to have applied themselves to a care- ful investigation of the effects which had been introduced into all the transactions of the country through that depreciation, and to have examined into the numerous and permanent acts of hardship and injustice, which must be committed upon the community by returning to the ancient metallic standard, or by restoring that de- preciated paper-money currency again to its former value ; and they ought to have considered, whether or not, situate as the Country then was, and now is, overburthened with debt and taxes, It would not have been infinitely more just to have permanently continued that depreciation, as an act of necessity which the war had forced upon us. By so doing, or by acting upon the princi- ples of the plan recommended by Lord Lauderdale in 1813, they might have prevented that terrible and ruinous fall in prn ts, and depreciation in the value of property, and have averted nine teutb* .522 Mr. James's Essai/, &;c. [22 of the ruin, misery, and distress, which have already taken place, and the still greater and more permanent injuries and evils, which will take place, if this measure be persevered in. And if the Parlia- ment and the Ministers have the interest of the community at heart, and wish to do justice to the country at large, a committee will be instantly appointed, to inquire into the effects which had been produced by the previous depreciation of the money, and also to inquire into the contrary effects, which will be brought upon the community by returning permanently to the old metallic standard ; and immediately adopt measures to avert the impending and ge- neral ruin which must otherwise inevitably take place. There is no doubt but it is the acting upon the bullion pay- ment plan, or the preparation by the Bank of Ireland to return to the ancient metallic standard, which is now producing the present ruin and distress in that country ; and before it proceeds further, those members of Parliament, who are more particularly inter- ested in the welfare of that country, ought to consider, if greater evils even are not being committed in Ireland, than will be com- mitted in this country, through its unjust, ruinous, and cruel ope- ration. The currency of Ireland was about 10 per cent, less in value, than the currency of England ; but it would appear, that the Act of 59 Geo. 3rd. Chap. 99. which compels the Bank of Ireland to pay in bullion, at the same price with the Bank of England, and at the old standard price of the English mint, is actually a raising of the standard of the Irish currency 10 per cent, more in value in proportion, than is so impolitically and unjustly being done in England'; and will be virtually a raising of the taxes in Ireland, and of all debts and incumbrances, 10 per cent, more in value in proportion, than they ought to be. There is not an instance in our history, (or in that of any country in the world) where the currency, that is, the uhole cif culalirtg medium or standard of value, having once been depre- ciated m value, has ever afterwards been enhanced again, which may be proved from authentic documents; and Mr. Peel was equally unfortunate in his observations relating to the cur- rency in Edward Sixth and in Elizabeth's reigns, as he has been in William the Third's, having very much mistated what actually did take place, as to the state of the currency, and the alterations made in it, at those periods ; which shall be explained in a future let- ter, in which further arguments shall be adduced, to prove the great injustice and utter impracticability, at this time, of restoring the ancient metallic standard permanently to circulation. HENRY JAMES.