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 SUB-COMMITTEE ON CURRENCY, 
 
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 In accordance with the resolution of the Acting Committee 
 on the 4th of March, 1850, the Sub-Committee for Currency 
 have addressed themselves to the subject of the Currency of this 
 country, in its relation to the just remuneration and Protection of 
 Native Industry; and their inquiry has resulted in a strong convic- 
 tion that any plan of protection which is formed without a due 
 consideration of this important element of the question, must prove 
 incomplete. 
 
 It is impossible to over-estimate the advantages which the system 
 of commercial credit has afforded to the development of our manu- 
 facturing and commercial undertakings. But it is obvious that the 
 existing laws for the regulating of Banking and Currency have in a 
 great measure rendered insecure and limited these means of finding 
 scope for the industry of our manufacturing and commercial classes ; 
 while the recurrence of repeated monetary crises has so shaken con- 
 fidence as to destroy the credit, and with it the independence of 
 many who formerly, by adding their industry to the use of com- 
 paratively small capitals, afforded wide-spread and continued em- 
 ployment, as well as the means of elevation, to the industrious 
 classes. 
 
 If our monetary legislation has had such obvious and powerful 
 effects in restricting the operations of small capitalists engaged in 
 manufactures and commerce; and, by shaking or destroying the 
 credit of all but the large capitalists, restricting trade virtually 
 to the hands of a few, whose mere subordinates and dependents 
 the minor traders have in too many instances become; it is ob- 
 vious that the same causes must have operated with extended 
 effect upon farmers as a class, and upon farming as a trade. 
 The restrictions imposed on the country bankers by the Acts of 
 1844 and 1845 have greatly impaired their inducements to ac- 
 commodate farmers; and have obviously tended to increase the 
 
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2 
 
 deficiency of credit and banking accommodation, so severely felt by 
 the agricultural classes. In fact, loans to farmers under these ar- 
 bitrary restrictions are becoming mere matter of history. It is true, 
 however, that there is also another reason, at the present moment, 
 for the indisposition of country bankers to make advances to farmers 
 — the belief that loans would not permanently save them from the 
 ruin which is impending over them. 
 
 It is scarcely necessary to observe, that the credit which will 
 afford the farmer banking accommodation, must be for longer periods 
 than that which is required by the manufacturing and mercantile 
 classes ; because the capital of the farmer is reproduced, or, to use 
 a common phrase, is turned more slowly. His requirements, too, 
 are periodical and dependent on the seasons ; which renders the rule 
 that restricts the note circulation to the capricious fluctuations of 
 the bullion in the Bank of England, utterly inapplicable as a 
 regulator of the country circulation ; upon which the accommodation 
 to farmers must mainly depend. This is the more to be lamented, 
 because from their local knowledge of the character and industry of 
 the parties, country bankers contribute materially to the emanci- 
 pation of honest exertion from the ranks of mere manual labour ; 
 and thus afford the most beneficial, or rather the most beneficent, 
 means of monetary distribution. 
 
 The object of this Association being to secure remunerative prices 
 and wages to all the industrious classes, your Sub-Committee cannot 
 overlook the fact, that a permanent rise of prices in this country is 
 inconsistent with its monetary policy. Your Sub-Committee have 
 observed that every period of general prosperity, consequent upon 
 full employment and remunerative prices, has been shortly and 
 suddenly interrupted during the last thirty years, by a commercial 
 crisis; which has prostrated the energies, and endangered the 
 security of all the productive classes of the country; and thus 
 countenanced the attempts of the enemies of Protection, who have 
 untruly attributed to that old and valuable system the blame trace- 
 able only to an inadequate and tyrannical monetary arrangement. 
 
 But, since it appears that these periodical effects have oc- 
 curred only during the existence of our present monetary system, 
 this Sub-Committee cannot but consider that system as antagonistic 
 to the object for which this Association is combined, viz. a reason- 
 able remuneration to native production ; and that, in undertaking to 
 elucidate this subject generally, and in seeking a remedy for the evils 
 incident to our present system, this Association is only performing 
 a function necessary to the full accomplishment of the great task 
 which it has undertaken. 
 
3 
 
 The low rate of interest in the money market, on bills of short 
 date, is no proof of a prosperous state of our agricultural, ma- 
 nufacturing, or commercial interests, or of confidence in our 
 internal resources and trade ; but the reverse. It is a proof that 
 men of business dare not avail themselves of a low rate of inte- 
 rest, for fear of the danger which our monetary and commercial 
 legislation entails upon the value of all protracted investments. 
 This low rate of interest affords, in short, the strongest evidence 
 of the depression to which our interests and industry are exposed. 
 Translated into plain language, it means — that the producing 
 classes have so often had their property confiscated by sudden and 
 violent jerks in the value of money, within the last thirty years — 
 that the most respectable houses dare not embark in commercial 
 adventure even when accommodation is offered to them at the 
 tempting rate of 1J per cent. 
 
 An opinion of great weight has been recorded against the 
 baneful and delusive Act of 1844, by the House of Lords, in the 
 following terms, in the Report of their Committee of 1848 on Com- 
 mercial Distress : — 
 
 “ It is true that to those who may have expected that the 7th & 8th Yict., c. 32 
 “ (1844) would effectually prevent a recurrence of cycles of commercial excitement 
 “ and depression, the contrast between the years 1845 and 1847 must produce a 
 “ grievous disappointment. To those who anticipated that the Act would put a check 
 “ on improvident speculation, the disappointment cannot be less, if reliance is to be 
 “ placed (as the Committee are confident it may) on the statement of the gover- 
 “ nor of the Bank, and of other witnesses, that ‘ speculations were never carried 
 “ to such an enormous extent as in 1846 and the beginning of 1847.’ If the 
 “ Act were relied on as a security against violent fluctuations in the value of 
 “ money, the fallaciousness of such anticipation is conclusively proved by the 
 “ fact, that whilst the difference between the highest and lowest rate of discount 
 “ was in the calamitous years 1837 and 1839 but 2 ~ to 2| per cent., the differ- 
 “ ence in 1847 rose to 6f. If it was contemplated that the number and the 
 “ extent of commercial failures would have been lessened, the deplorable 
 “ narrative of the governor of the Bank, recording the failure of thirty- three 
 “ houses, comparatively in large business, in London alone, to the amount of 
 “ 8,129,000^., is a conclusive reply. If the enormous extent to which railroad 
 “ speculation has been carried be considered as an evil to which a sound system 
 “ of banking could have applied a corrective, such a corrective has not been 
 “ found in an Act, since the passing of which, during a period of three years, an 
 “ increased railway capital of upwards of 221,000,000^. has been authorized to 
 “ be raised by parliament, and when the enormous sum of 76,390,000^. is stated, 
 “ on high financial authority, to have been actually expended on railways in two 
 “ years and a half. If the power of obtaining banking accommodation on 
 “ moderate terms were considered to be promoted by the Act of 1844, it cannot 
 “ be said that this important object has been attained, since it appears in evi- 
 “ dence that in 1847, in addition to an interest of 9 or 10 per cent., a commission 
 “ was also frequently paid raising the charge to 10, 20, or 30 per cent., accord- 
 “ ing to the time which bills had to run. * * * * 
 
 A 2 
 
4 
 
 The Sub-Committee desire to call attention also to the following 
 important passages of the Lords’ Report : 
 
 “ Under the Currency Act they (the Bank of England) found themselves 
 “ under the necessity, suddenly, of not only withdrawing their usual accommoda- 
 “ tion by way of discount, but of calling in with a severe and unrelenting hand 
 “ the loans they had made upon the security of bills, exchequer bills, &c. The 
 “ suddenness and severity of this change was forced upon the Bank by the 
 “ Currency Act. 
 
 “ The reserve of notes, which had been £2,630,000 on the 16th October 
 “ [1847], had fallen on the 30th October to £1,176,000 — having decreased 
 “ nearly £1,500,000 in the short space of 14 days. 
 
 “ No more than £568,470 was held in London, making, with the gold coin 
 “ in the Banking department, £719,723. Atthe same time, the private Deposits, 
 “ for which the Bank was responsible, amounted to £8,580,000, independently 
 “ of upwards of £4,766,000 of Government deposits. The total deposits on 
 “the 30th October were £14,500,000; the deposits of the London Bankers 
 “ being more than £2,000,000 at the same time.” 
 
 The subjoined replies were made by the Governor and the 
 Deputy Governor of the Bank to the Lords’ Committee : 
 
 “ You had only £1,600,000 in the Banking department for the payment of 
 “ your liabilities ? — Yes. 
 
 “ If any body had called upon you for anything beyond that million and a 
 “ half, you must have stopped payment ? — Yes, we must.” 
 
 The Sub- Committee believe that, when understood, it will not 
 be endured that this otherwise great nation should be so depressed 
 and degraded, in its manufacturing, agricultural, and commercial 
 interests, by this frightful incubus ; which thus makes money the 
 master of commerce instead of its servant. 
 
 Not only was the legislation of 1844 condemned by the Com- 
 mittee of the House of Lords in their Report on the Commercial 
 Distress in 1848, but by the evidence given before a packed Commit- 
 tee in the House of Commons simultaneously sitting; although the 
 latter inquiry, at its conclusion, was stifled by a Report proposed by 
 the Chancellor of her Majesty’s Exchequer, in entire contradiction 
 of the evidence recorded. 
 
 The following clauses of the Resolutions proposed to the Com- 
 mercial Distress Committee by Mr. Cayley, the member for the 
 North Riding of Yorkshire, at the time the Report was under con- 
 sideration, will show how differently the evidence was viewed by 
 that Honourable Gentleman, and the large minority which con- 
 curred with him : — 
 
 “ 6. That the frequent alternations of prosperity and adversity which this 
 “ country has experienced since the war, are mainly traceable to sudden and 
 “ violent oscillations in the value of money — the necessary offspring of themone- 
 “ tary system we established on the return of peace, which rests the profits of 
 “ trade and the wages of labour on the accidental variations in the supply of gold; 
 “ the extreme severity of which system towards our trade and industry the Act 
 
5 
 
 « of 1844, for the first time, made it impossible for the Bank of England to 
 mitigate or evade. 
 
 “ 7. That, therefore, if it be desirable to restore a more lasting prosperity to 
 <x trade, with its concomitant blessings of better employment and greater comfort 
 “ and contentment to the people, no time should be lost in repealing laws which 
 “ directly contribute to monetary derangements, and in enacting others which 
 “ may offer some assurance that the natural risks of capital embarked in commerce 
 “ shall not be artificially increased by constant fluctuations in the value of money ; 
 ** and that prudent adventure and honest industry shall not be disappointed of 
 “ their fair reward.” 
 
 It thus appears that gold and not labour is the basis of our 
 monetary legislation : and the Sub-Committee conceive that no other 
 evidence can be wanting to show that the necessary consequence of 
 such a system is, and must be, a low scale of remuneration for 
 labour, and periodical confiscations of capital. 
 
 In order to show how, and out of what former systerfi our present 
 monetary laws have grown up, your Sub-Committee have found it 
 necessary to refer to a period ’as far back as the latter part of the 
 last century ; and they have ascertained, from official documents and 
 other sources, the following facts : — 
 
 That the standard measure of value and the circulating medium, 
 consisting of the precious metals and paper money, which existed 
 prior to the Bank Restriction Act in 1797, was considerably more 
 favourable to the producing classes than that which now exists. The 
 currency at that time not only bore a larger proportion, than at pre- 
 sent, to population and the then existing extent of agriculture, ma- 
 nufactures, and commerce ; but, conjointly with Gold at its present 
 rate, (which then much more nearly approached its market value than 
 at present,) Silver , by tale or weight, (with the exception of nine 
 years terminating with 1783,) was a legal tender to any amount, at 
 the option of the debtor. Coined money, also, was prohibited from 
 exportation under penalties. But even in this condition, more favour- 
 able as it was to the industrious classes of that day relatively with the 
 mere monied consumers, it was found that the larger amount of 
 taxation, and the extended scale of production, which prevailed 
 during even the earlier years of the European war, imperatively 
 required a more expansive currency. In the year 1797, the Bank 
 of England was relieved from the obligation of paying its notes 
 in the precious metals ; the Directors were allowed to issue one and 
 two pound notes, and gold (otherwise than the current coin) was 
 left to find its price in the market, like every other commodity, in 
 the notes of the Bank of England ; which were virtually authorized 
 as a legal tender by Government : — 
 
 That, under the system of money then introduced, it was compa- 
 
ratively easy to raise an amount of taxation much greater, compared 
 with the population, than at present : while it is notorious that very 
 great prosperity then prevailed among all classes ; and public works, 
 such as enclosures of common lands, canals, and other improvements, 
 were extensively, uninterruptedly, and successfully undertaken. That 
 from the nature and sufficiency of the currency at that time existing, it 
 was not only more easy to raise a larger amount of taxation from a 
 much smaller population than that levied at present from one greatly 
 increased ; but prices were then, with justice to all parties, permitted 
 to rise so as to allow the employer of labour to recover, in price, 
 the taxation he had advanced during the process of production ; and 
 to enable him to afford more ample wages and fuller employment to 
 the labouring classes. So satisfactory was then the return for 
 capital and skill employed in agriculture, manufactures, and trade, 
 and so rapidly did wealth increase, that in less than twenty years 
 the sum which now constitutes five hundred millions of our National 
 Debt, was lent to Government from surplus capital : — 
 
 That under this system no approach to any of those destructive 
 disturbances of the nature of commercial panics occurred ; except in 
 periods when the Bank Directors, agitated by the public discussion of 
 the question of a return to cash payments, felt themselves under the 
 necessity of contracting their discounts in preparation for such a 
 contingency • 
 
 That under the system which then existed, taxation rose, for 
 the last four years of the war, to an average of sixty-nine millions 
 annually, from a population in Great Britain increasing, during 
 the same period, from 12,800,000 to 13,420,020. General pros- 
 perity prevailed : and this, because, although taxation was on a 
 much higher scale than now, compared with population, it was possible 
 for prices , under that currency, so justly to expand , that taxation on 
 production could be added to natural value in the price to the consumer : 
 and this extended equally to manufactures and to agriculture : — 
 
 That had the same expansive monetary system under which the 
 large sum of debt was contracted by the State subsequently to 1797 
 been continued to the present time, there is no doubt that, without 
 obstructing industry, or without the same pressure from taxation as is 
 at present felt, the entire sum of five hundred millions contracted 
 during the war might have been paid off ; and taxes such as those 
 on Malt, and Windows, might long ago have been repealed : — 
 
 That by an Act of Parliament passed in the year 1816, the 
 standard measure of value of this country was materially changed in its 
 bearing upon the debtor and producing classes. Silver was excluded 
 from the legal tender beyond forty shillings. This altered standard 
 
7 
 
 was first brought into effect by the Act of 1819 ; and therefore the 
 opinion entertained at that time, and which is even now enter- 
 tained by some, that in that change we returned to the “ ancient 
 standard of value,” is entirely erroneous. The standard of 1816, 
 by the exclusion, from the legal tender, of silver (the general 
 currency of the world) beyond the sum of 40s., rendered both the 
 standard and the currency far less favourable to productive industry 
 than before the war ; as the costly experience of the years especially 
 of 1820-22-25-26-30-32-37-39-40 and 1847, manifested to our city 
 and provincial merchants; and the distress of the years 1820-1-2, 
 1830-3-4-5, manifested to the agricultural districts. Furthermore, 
 it should be recollected that the Act of 1819 expressly provided 
 for the free exportation of our metallic currency ; upon the presence 
 of which our entire paper circulation is now made to depend ; with 
 the following inevitable consequences : — no gold, no paper ; no 
 paper, no money ; no money, no trade : — 
 
 That under the change of circumstances produced by the legis- 
 lation of 1816 and 1819, it cannot be a matter of surprise that there 
 was a deficiency of revenue between the years 1837 and 1842 of twelve 
 millions, and consequently no reduction of the National Debt ; which 
 now stands nearly at the total amount at which it stood at the close 
 of the war. Nor will it occasion surprise that a monetary system 
 for a great producing and commercial nation like this — founded 
 on so narrow a basis as that of 1819 — should have broken down as 
 it did in the year 1839, when in order suddenly to replenish their 
 metallic treasures, the Directors of the Bank of England were 
 obliged, by a direct or indirect operation, to seek accommodation 
 from the Bank of France : — an occurrence scarcely less creditable to 
 this nation than that of a subsequent period of our monetary history, 
 when the Government was seen rejoicing over the importations of 
 bullion which constituted large investments of the Emperor of Russia 
 in our national funds, at a moment of their extreme depression. 
 What would have been the position of this country if the Bank of 
 France had been either unable or unwilling to furnish the required 
 assistance ? — 
 
 That those who promoted the passing of the Act of 1819, as well 
 as those who were engaged in the parliamentary inquiry of 1810, 
 were actuated by a persuasion that the return to cash payments 
 would only change values some 3 or 4 per cent. The public men of 
 that day, however, might have seen the error into which they have 
 fallen at once, if they had only compared the then existing silver 
 coinage with the new standard of value to which they were invited 
 to return. They would have found that the silver tokens of 3s. and 
 
8 
 
 Is. 6c?., coined as recently as 1815, and worth according to the stand- 
 ard of 1816 2s. lc?. and Is. only, were then in circulation; .and that 
 the Spanish dollar was legalized in our currency at 5s. 6c?., which 
 was at the same standard worth 4s. 2c?. only, showing a differ- 
 ence of 33 j per cent. ; and enhancing to that degree the pressure 
 of taxation, and of the public debt. The proof of the error then 
 committed will be further apparent by comparing the present price 
 of wheat per quarter with the average price which ruled during 
 the war, — namely, 82s. Making every allowance for the expendi- 
 ture and consumption of the war, it will be found that under existing 
 prices the farmer is at the present moment giving for rent, taxes, 
 tithes, poor-rates, wages, and other outgoings, at the rate of two 
 quarters of Wheat for what cost him only one before 1819 : — 
 
 That when the promoters of so-called “Free Trade” allege 
 that reductions have taken place in the price of corn, even during 
 the existence of protection, as in 1815-16, 1822, 1835, and in 
 1844, it is readily to be proved that these reductions were ascriba- 
 ble, and by the most thoughtful judges were then ascribed, to 
 those cycles of an imperfect monetary system ; — or rather to those 
 erroneous acts of legislation which, while on the one hand they pro- 
 mised protection up to a given sum per quarter for wheat , on the other 
 hand, by an unperceived action on the monetary system , rendered that 
 protection periodically inoperative. This all-important subject is ably 
 and clearly illustrated in the speeches, evidences, and writings of Mr- 
 Mathias Attwood, Lord Ashburton, Mr. John Taylor, and Mr. James 
 Taylor, of “ The Scotch Banker ,” and the “ Circular to Bankers : ” — 
 
 That only in those years when the rigidity of a pure metallic cur- 
 rency was somewhat relaxed, as for nearly a century before 1797, 
 and especially in the years succeeding 1797 and up to 1819, (inter- 
 rupted only by the attempted preparation for cash payments in 
 1815-16,) when the fixed price of gold was suspended in our 
 currency, has protection been enjoyed as was intended by the 
 Legislature. Under the system of money existing between 1797 
 and 1819, prices rose commensurately with taxation, because Bank 
 of England notes were virtually a legal tender for all sums of one 
 pound and upwards, with bank tokens of silver, of low intrinsic value, 
 for the fractions of a pound. 
 
 The Sub-Committee may adduce a corroboration of the facts 
 herein stated, by reference to what Sir James Graham recently 
 declared in the House of Commons : 
 
 “ I have always contended, and the Hon. Member for Warwickshire (Mr. 
 “ Spooner) will agree with me, that the most improvident bargain that could 
 “ have been made by any great class was that which the landlords made in 1819, 
 
9 
 
 “ when, in consideration of an exclusive Corn Law, which gave them the sole 
 “ possession of the home market up to 80s. per quarter, they consented to the 
 “ restoration of a depreciated standard of value, — a standard which had been 
 « depreciated for a quarter of a century. That that was an improvident bargain 
 “ I thought then, and I think so now.” — Vide, also, “ Corn and Currency ,” 
 18*26, Sir James Graham, Bart. 
 
 The Sub-Committee deny that landowners were parties to any 
 compact at once so dishonourable and absurd. No such “ bargain” 
 was ever proposed by the framers of the Money Laws of 1816 and 
 1819. They, on the contrary, by the spirit of all their arguments, 
 denied the necessity of making any bargain on the subject. They 
 alleged, that their Money Laws would produce no depression of 
 prices, greater than from 3 to 4 per cent. The late Mr. Bankes, 
 M.P. for Corfe Castle, moreover, distinctly stated in parliament, 
 in answer to a question specifically addressed to him by Sir James 
 Graham, that the Report of the Currency Committee of 1819 was 
 adopted by the members of that Committee in entire ignorance of 
 its character. But, at all events, it must be self-evident that if the 
 Corn Laws were, as asserted by Sir James Graham, considered to 
 be a compensation for the change in the Money Laws, greater 
 injustice can scarcely be conceived than that of withdrawing 
 the protection extended to agriculture by the Corn Laws, and 
 retaining the disqualification imposed by the Money Laws. Sir 
 James Graham, therefore, and the free-trade politicians who have 
 repealed the Corn Laws, are on every principle of justice, honour, 
 and consistency, pre-eminently bound to insist on a revision of the 
 Money Laws. 
 
 To illustrate the effect which a rise in the value of money has 
 on the farmer, — and what is true of the farmer is true of every 
 producer, — let it be supposed that he goes to market with ten 
 quarters of wheat, which that morning he considers worth 505. a 
 quarter, and a dozen sheep worth 305. a piece. When he gets to 
 market, he is -told that, though wheat was worth 505., and sheep 
 305. each the day before, there has been a change in the value of 
 money, and that the sovereign will now go as far as two sove- 
 reigns did yesterday. The farmer, under these circumstances, 
 concludes, that it will do him no harm to take 255. for his wheat, 
 and 155. each for his sheep; thus taking home with him £12 105. 
 for his wheat, and £9 for his sheep. Next day comes the tax- 
 gatherer for £20, who indignantly refuses to accept £10 in lieu of 
 £20. The same answer is given by the tithe-collector and others. 
 In fact, the farmer finds that all he has to sell is halved in price ; 
 while almost all he has to pay remains the same., to his manifest 
 
10 
 
 dismay. While the converse of the supposed case produces a pre- 
 cisely opposite result, since a fall in the value of money — in other 
 words, a plentiful currency — is the same as a rise in the value of 
 all produce ; and is a real boon to the producer — the poor — whose 
 welfare should be paramount — to the inconvenience, perhaps, of 
 the rich — who can easily afford it. Hence the hopes excited by the 
 discovery of California. In truth, a fall in the value of money 
 would be tantamount to an equivalent Protection ; while a rise in 
 the value of money is an aggravation of the effects of “ Free 
 Trade,” in proportion to its degree. 
 
 The farmers will thus perceive how the frightful fluctuations in the 
 rate of money and interest in the periods of monetary panic, to which 
 we have alluded, must ruinously affect the commercial producer, even 
 although merely temporary in their duration. When the alteration in 
 the value of money assumes a permanent character, the agricultural 
 class is equally affected ; and even during temporary fluctuations, 
 producing a scarcity of currency, the markets for agricultural pro- 
 duce must always be depressed. Occasionally, however, the scarcity 
 of corn, as in 1839 and 1847, produces a rise in price in spite of the 
 scarcity of money. Corn would have risen much higher in those 
 years if it had not been for the simultaneous scarcity of money, and yet 
 would have been more accessible to the public ; because a plentiful 
 circulation gives general employment to labour, and thus secures to 
 the working class the independent means to purchase subsistence, 
 while a restricted circulation withdraws those means. The years 
 1845 and 1847 may be taken as illustrations of the opposite states 
 of cheap and dear money. 
 
 But the landlords and farmers are also directly, and often deeply, 
 affected even by temporary monetary pressure ; although not to the 
 same extent as the commercial and manufacturing interests — because 
 not carrying on their operations so much by means of bills of ex- 
 change, which, when falling due during a monetary panic, cannot 
 be converted into bank notes, — sometimes, even by an overwhelming 
 sacrifice of mercantile property. This will be readily admitted by all 
 those of the agricultural class who had the misfortune to be in want of 
 bankers’ assistance in the year 1847. And for the difficulty they then 
 experienced, they have to thank the Banking Act of 1844 ; — which 
 for the first time bound the Country Bankers as well as the Bank of 
 England, with the unyielding fetters of the Act of 1819. 
 
 The mode in which low prices are promoted in agricultural 
 produce by a change in the value of money, has been shown ; but 
 it may be useful to consider also how a similar effect is produced in 
 manufactures. . This will appear by the answers given to some 
 
11 
 
 searching questions put by Mr. Cayley, to the Governor and Deputy 
 Governor of the Bank of England, in the Committee of Inquiry 
 instituted in 1848, on “ 1 the Causes of Commercial Distress : ” 
 
 “ 3278. When the Bank i reserve is very low under the export of gold, is it 
 “ impossible to afford an indvj cement for a speedy return of gold without creating 
 “ great pressure ? — The meant > of getting back the gold is by making money dear, 
 “ and causing a fall generally . in the price of commodities, which will bring back 
 " gold. 
 
 “ 3279. Then the means of attracting gold back to this country, after it has 
 
 “ gone out, is to lower prices ? Prices will fall in consequence of the increased 
 
 “ value of money. 
 
 “ 3280. Under a great fall of p rices the Bankis comparatively safer ? — A great 
 “ fall of prices has a tendency to t 'ring capital into the country, and as bullion 
 “ flows into the country it acts upo* a the reserve of the Bank and of all private 
 “ bankers. 
 
 “ 3281. But in order to attract £ Told back into the country, the more forced 
 “ sales there are, and the lower the prices, the safer the position of the Bank 
 “ is ? — The lower the prices of commo dities, the greater will be the tendency to 
 “ the increase of the importation of the i precious metals, and of the reserve of the 
 “ Bank, and of bankers generally. 
 
 “ 3282. Under that state of things, ti vat is, a pressure arising from a fall of 
 “ prices, in order to secure the return i ff gold, does not any accommodation 
 “ afforded to the public rather tend to obstrx ict the fall of prices ? — Yes. 
 
 ** 3283. The less accommodation, under l hat state of things, that is afforded 
 “ to the public, the safer to the system ? — Tha t accommodation must of necessity, 
 “ under that state of things, be reduced.” 
 
 The following answers subsequen tly given by the Governor 
 and Deputy Governor of the Bank, to q uestions put by the late Lord 
 George Bentinck, not only confirm the view indicated by the fore- 
 going answers to the questions put by M tr. Cayley, but leave hot the 
 shadow of a doubt of the tyranny ove. r labour exercised by the 
 existing monetary system : 
 
 “ 3882. Are you of opinion, that a great impu lse given to the collieries, and 
 “ iron mines, or lead mines of the country, or evei i to the cotton factories of the 
 “ country, would have that mischievous effect of cau sing an export of the precious 
 “ metals ? — It would have the same effect, except i'nas far as the manufactures 
 “ produced may be used as an export in lieu of bulli on. 
 
 “ 3883. The great desideratum would be to givt 3 all the labourers in this 
 “ country low wages, and to keep the gold at home; • is not that what it comes 
 “ to ? — There is no object in keeping the gold at horn* 3 ; the object is to have a 
 “ sufficient amount to regulate the foreign exchanges , and to secure the con- 
 “ vertibility of the note.” 
 
 Into so monstrous a dilemma were the manag ers of our monetary 
 system thus brought, despite the dexterous fenci ng of their replies ; 
 and the frightful conclusion to which this ever-to -be-lamented, cou- 
 rageous, and fair-minded nobleman had thus painfi, ’lly come, through 
 his attention to the evidence, was further pointedly 7 illustrated by an 
 
12 
 
 amendment proposed by Mr. Cayley, to on e of the clauses in the 
 Report introduced by the Chancellor of the ‘Exchequer : 
 
 “ It would greatly tend, in the opinion of your Committee, to the safety of 
 u the public, if there should prevail among the me rcantile and working classes 
 “ of the community, a clear perception of the positi on in which they stand under 
 “ the Act of 1844. That they should distinctly understand that when the gold 
 is exhausted in the coffers of the Bank, every merchant and manufacturer is 
 to suspend his operations, and every artizan ai\d labourer is to remain idle,. 
 “ without work and without wages, until the gold be restored to the coffers of the 
 “ Bank.” 
 
 The mild term of “ regulating the foreign exchanges,” means, 
 therefore, a determination, at whatever cost to the productive classes, 
 to bring gold back from abroad : it signified in 1847 no less than a 
 gradual rise of discount for the best commercial paper, from 3 per 
 cent, in January 1847, to 3J, 4, 5, 6j, and in October, 8 per cent. ; 
 the last rate of the Bank of England producing, with commission in 
 other quarters, 10, 15, and even 20 per cent. The variations in the 
 rate of discount between January 1845 and October 1847 amounted 
 generally to more than 300 per cent. ; in many cases to 700 and 800 
 per cent. How is it possible, it may be asked, for any nation to con- 
 tinue in prosperity under such contractions and fluctuations in the 
 most important element of all price, — namely, money ? How can 
 labour be continuously employ ed under such periodical fluctuations ? 
 What interests can be safe ? How can manufacturers frame their 
 plans with any degree of prudence ? How can farmers, — how can 
 retail traders, stand against such changes ? How can large vested 
 interests, like those in railways, be sustained ; at one time carrying 
 on their operations upon one rate of interest, and then upon another ? 
 The most prudent adventurer may be foiled — even when the adven- 
 ture itself, irrespective of the change in the value of money, would be 
 morally certain of success. 
 
 Were any other illustration needed of the great havoc produced 
 by the enactment of 1844 acting upon that of 1819, it might be 
 found in the instance of ’railway property ; since the first occurrence 
 of panic in that property arose from the insufficiency of the currency, 
 restricted by that legislation, to pay in bank notes to the 
 Accountant-General tlie sum of fifteen millions, which had pre- 
 viously been deposited by shareholders with their respective bankers. 
 This was untruly represented as an error in the Railway system, 
 rather than as proceeding from a defect in our system of currency. 
 Railways, as a mode of transit, are now become the established rule 
 in this country, and. ought to be fostered, and not to be depressed as 
 they are by the enactments of 1819-1844. Whatever may have been 
 the errors in its management, railway property would never have suf- 
 
13 
 
 fered as it has done in its wiser and legitimate arrangements, but 
 for the restricted and varying nature of the currency ; nor, had we a 
 monetary system capable of giving full effect to the industry and 
 producing powers of the country, would the traffic returns have 
 fallen so low as materially to have affected the value of the shares. 
 
 It is easy to perceive why the operations of a great interest 
 like that of railways have been crippled, if the state of the permitted 
 paper circulation before 1819 and after 1844, the year of the “ Com- 
 plement” Bill, be taken into view. 
 
 Country note circu- 
 
 
 Bank of En gland 
 
 lation of Scotch circulation, 
 
 Total 
 
 Population of 
 
 
 notes. England and Wales. 
 
 say, 
 
 circulation. 
 
 Great Britain. 
 
 1818. 
 
 27,771,070 
 
 20,507,000 
 
 3,000,000 
 
 51,278,070 
 
 14,000,000 
 
 1847. 
 
 18,750,038 
 
 6,742,789 
 
 3,000,000 
 
 28,492,827 
 
 20,000,000* 
 
 We have here fifty-one millions of permitted note circulation for 
 fourteen millions of people and their productions, and twenty-eight 
 millions for a population of twenty millions. It will be seen from 
 the previous context, why fifteen millions of paid-up deposits could 
 not be transferred from the London bankers to the Accountant- 
 General; why merchants were unable, in a moment of monetary 
 pressure, to convert either Exchequer bills or silver bullion into 
 money on any terms ; why consols could not be converted, except at a 
 ruinous reduction in their nominal value ; and why commercial panics 
 have periodically occurred, shaking society to its foundations. It is 
 true, under ordinary circumstances, that sovereigns have, in some de- 
 gree, taken the place of banknotes: but gold fluctuates with the state 
 of the foreign exchanges, and leaves the country : Bank paper, on 
 the contrary, always remains in circulation, and panics are thus 
 avoided. 
 
 That, in the foregoing statement, Wheat is a fair representative of 
 all other national and colonial productions, will appear, by a com- 
 parison with the prices of iron, copper, wool, cotton, sugar, coffee, 
 &c. But there is a test of the comparative produce of our national 
 industry in the records of the Board of Trade, which demonstrates 
 that both native manufactures and agriculture have suffered under 
 the change in the monetary system. It should be observed that 
 the “ official value ” is a record of ancient date, by which the 
 quantities of national manufactures have been periodically estimated 
 at the Custom-house. The “ declared value” represents the money 
 value declared at the Custom-house at the time of sending off the 
 
 * Extracted from Mr. Alison’s valuable Table in the “ History of Europe 
 during the French Revolution,” last edition (1848). “England in 1815 and 
 1845 and Free Trade and a Fettered Currency,” also by Mr. Alison, the dis- 
 tinguished advocate of Protection, should be read extensively. 
 
14 
 
 goods by the exporting merchants. The p >roportions ranged 
 
 thus — E> tcess of declared value 
 
 Exports, official value. Exports, declared value. o ver the official value. 
 
 1814. 
 
 £34,207,253 
 
 £43,447,373 
 
 23J per cent. 
 
 Ex cess of official value 
 o ver declared value. 
 
 1820. 
 
 £38,395,625 
 
 £35,823,127 
 
 3 ditto. 
 
 It will be seen here, that the declared value of t he exports stood 
 23 J per cent, higher in 1814 than the official value, which expresses 
 the amount of labour. In subsequent years, the two \ valuations of ex- 
 port approximated so nearly, that the year 1819 b* 3came the pivot 
 of the change. In 1845 they stood thus — 
 
 Exces s of official value 
 
 Exports, official value. Exports, declared value. over declared value. 
 
 1845. £134,599,116 £59,837,660 12 5 per cent.* 
 
 The official value in 1845 will be seen to have excoeded the de- 
 clared value by 125 per cent. ; whereas in 1814 the declared value 
 had exceeded the official by 23 J per cent. Allowing, there- 
 fore, for improvements in machinery and other forms of eco- 
 nomy, and comparing the far greater increase in the progressive 
 total of our exports at their official value with their declared value, 
 there is abundant proof that this country has been greatly im- 
 poverished under the pressure of foreign competition and of our 
 present money law ; especially as the year 1819 was so manifestly 
 the turning point. 
 
 It is impossible adequately to estimate the conditioi l into 
 which the industrial interests of Great Britain have been br ought 
 in their agricultural, manufacturing, colonial, and Irish relations, 
 by its monetary system, without considering the amount of debt 
 which was contracted during the war. A large amount of the 
 loans which constituted that portion of the national debt was, fi *om 
 the necessity of the case, taken up at about £55 for every hundred 
 pounds. These sums were paid in a currency varying from the 
 present standard of gold at £3 17s. 10 \d. per ounce, full 33 J p^r 
 cent., as will be evident to any person who recollects the pric e 
 of bullion, or the current price of light coined gold at that time.. 
 For every £100 in paper, therefore, so taken up, £37 only in 
 gold value was received. Now, after so long and so serious a 
 variation of the price of gold from the legal currency, it had surely 
 been sufficient to the public creditor, with every consideration 
 for an improved state of the funds, as a return for risk, to have 
 been repaid each £100 in the medium in which the debt was 
 
 * The answers of Mr. Taylor to questions 5671 et seq., before the Committee 
 of the House of Commons, “on Commercial Distress,” in 1848 — indeed the whole 
 of that gentleman’s remarkable evidence — should also be consulted. 
 
15 
 
 contracted : but, instead of this just arrangement, this large bonus 
 received a further increase by the Act of 1816 and 1819, of 30 per 
 cent, more ; in all, full 60 per cent. The £37 in gold lent by the 
 creditor, is now represented by £100 in gold. 
 
 These facts are referred to with no view to what has been 
 termed “an equitable adjustment” of contracts, after so long an 
 interval : but to illustrate the mischievous effects of ignorance on 
 this vital subject. The manufacturer or commercial man exten- 
 sively engaged in the home trade, during the years in which the legis- 
 lation of 1819 was coming into effect, or when its action was from 
 time to time directly or indirectly suspended, and who reviews a 
 properly kept “ profit and loss account,” will easily identify the 
 effects upon his annual results which followed upon the enhance- 
 ment or relaxation in the value of money here described. 
 
 The Sub-Committee trust that it has now been shown that the 
 state of the circulating medium of this country, as settled by the 
 Acts of 1816, 1819, 1844, (and 1845 as respects Scotland and 
 Ireland,) most materially counteracted and impaired the Protection 
 nominally accorded to the industrial interests of the nation : peri- 
 odically paralysing its trade in all its ramifications, and continuously 
 contributing to the eventual overthrow of all fiscal protection. The 
 inquietude and dissatisfaction, thus engendered, have exposed the 
 middle and labouring classes to the fallacious doctrines of dema- 
 gogues, who have persuaded many of them, contrary to their real 
 interests, that organic changes, and the opening of our markets 
 still further to competition with the foreign producer, present the 
 only means of their relief. 
 
 Had it not been for the ignorance which exists in the highest 
 quarters of the great monetary error committed in 1819, the country 
 would not have heard the Noble Lord now at the head of Govern- 
 ment, when in opposition, recording as he did in 1844, in the fol- 
 lowing true and expressive terms, his conviction that some undis- 
 covered cause existed of depression to the labouring classes : 
 
 “ I hear from day to day, and from time to time, of the inadequate means 
 “ wherewith the people have to support themselves. If we take a general view 
 “ of the subject, it is impossible not to see that the labouring classes have not 
 “ advanced in proportion to the other classes. The higher and the middle 
 “ class have increased in wealth and the power of obtaining comforts and 
 “ luxuries ; but the labouring classes have not done so. If we compare the 
 “ condition of the working classes with what it was a century ago (say 1740), it 
 “ is impossible not to see, that while the higher and middle classes have 
 “ improved and increased their means of obtaining comforts, of obtaining 
 “ foreign articles of luxury, and facilities of travelling from place to place, the 
 “ labouring classes — the men who either till the soil or work in factories — have 
 
16 
 
 “ retrograded, and cannot now get for their wages the quantity of the neces- 
 “ saries of life they could a century ago.” 
 
 And what, with this experience before him, the Sub-Committee 
 would ask, has the Government of Lord John Russell done in 
 alleviation of the miseries the Noble Lord then so feelingly described ? 
 The revelations in the columns of the Morning Chronicle certainly 
 present no improvement in the condition of these classes. So far 
 from affording any alleviation, the Noble Lord and his Government 
 have rather extended the same miseries to the population of our 
 colonies, and to our honest and confiding seamen. Not satisfied 
 with extending the monstrous wrong of a free importation of foreign 
 untaxed labour among a heavily taxed people, they have, as has been 
 seen, done their utmost to maintain a pernicious monetary system, 
 against the fullest evidence of its evils to the country. 
 
 Your Sub-Committee feel that this great social subject, on 
 which so many errors have been committed by public men, several 
 of whom have acknowledged those errors, ought to be elucidated 
 by pamphlets and tracts, as well as by Public Lectures; and they 
 are of opinion that the explanations of this branch of the all-im- 
 portant question of Protection to Native Industry, should be entered 
 upon with as little delay as possible. They find that the subject 
 has been clearly comprehended when competent lecturers have 
 treated it ; and the Sub-Committee are persuaded that when the bear- 
 ing of the currency upon Protection to Native Industry and Capital 
 is fully understood and rectified, effectual means will be found for 
 obviating that unnatural class-collision which has so long distracted 
 this country. If the publications and lectures are rendered suf- 
 ficiently popular, it will be more and more seen that the low 
 unremunerative prices under which the farmer and the other 
 producing classes now suffer, in consequence of an unrestricted 
 import of untaxed foreign labour, is greatly aggravated not only by 
 the permanent artificial limitation of the amount of money, but by 
 its periodical scarcity, arising from its immediate convertibility, at a 
 fixed price, into the scarce, foreign, and fluctuating commodity — gold. 
 It will be seen by the labouring classes themselves, how much 
 better it would be for them, as it was before 1819, that a man 
 had higher wages, than that the price of the loaf were nominally 
 reduced by making money scarce, labour cheap, and employment 
 difficult to obtain. 
 
 The Sub-Committee do not deem it expedient at present to 
 suggest specific remedies for the monetary evils under which the 
 country has so long suffered, principally because until the public 
 shall be more aware of the nature of the disease, it will be unpre- 
 
17 
 
 pared to judge of the means necessary for the cure. Whenever our 
 real difficulty is generally understood, your Sub-Committee are of 
 opinion that the relief may be attained in more than one way, and 
 that without returning to the arbitrary issues of the war. But they 
 are convinced that the repeal of the restrictive clauses of the Acts 
 of 1844 and i845, and a modification of the rigid rule by which the 
 Bank of England is bound to reduce the issue of its notes in pro- 
 portion to the efflux of bullion, are in any case indispensable. 
 
 The manufacturers, traders, and farmers would then carry on their 
 operations with confidence, which (after the experience of the many 
 panics since the war) they now cannot ; because they would not be 
 living under the constant apprehension of being suddenly deprived, 
 as in 1847 and other periods, of that medium of exchange without 
 which their transactions necessarily come to a stand ; with all the 
 fatal consequences of a rapid disemployment of labour. 
 
 This apprehension is shown by the existing low rate of interest of 
 money, which is caused by the prevalent conviction, founded upon 
 experience, that if money were extensively taken up, labour would be 
 more employed, — prices would rise, — bullion would be exported 
 instead of commodities — money would be withdrawn — and prices 
 would again suddenly fall, attended by the usual train of bankruptcy 
 and ruin. It is this vicious circle of alternate expansion and col- 
 lapse of its commerce — caused alone by our monetary system — 
 around which the country has been travelling ever since the Peace. 
 And the same results will again recur. Capitalists, wearied at 
 length with small returns, will, under promise of greater returns, 
 lend to less and less trustworthy individuals — schemes and specu- 
 lations will increase, which will employ labour, raise prices, encou- 
 rage imports ; gold, the price of which is fixed, will become again 
 the cheapest article of export — and then will follow the collapse. 
 
 The Sub-Committee have been obliged to extend their Report 
 to greater length than they could have wished, because the subject 
 hitherto has been so little understood in its relation to a just and 
 ample Protection to Native Industry. And they cannot conclude 
 without expressing their surprise at the provisions of the Act ensuing 
 upon the parliamentary inquiry of 1819 ; since on a careful perusal 
 it will be seen that the Report with which that important inquiry 
 closed, in no respect warranted, but ought rather to have prevented, 
 the pernicious enactment of that year ; — an enactment which, being 
 not only at variance with its conclusions, but totally contradictory 
 of the true science of money, has been productive of the most 
 destructive fluctuations and panics in commerce that history has to 
 record. Under the influence of “ free trade and a fettered currency,” 
 
 B 
 
18 
 
 a misguided and revolutionary political party has become ascendant ; 
 which, not content with prostrating, in their productive interests, all 
 that formed heretofore the glory of this great empire — her“ Ships, 
 Colonies, and Commerce,” — is now turning with the same blind 
 infatuation upon the loyal and confiding yeomanry of the land, and 
 their labourers. The onward course of this mischievous party points 
 as certainly next to the territorial aristocracy, as though it had seized 
 them with its destructive grasp ; and if not speedily arrested and 
 turned back by some determined effort, the present generation will 
 see the same reckless hands raised for the destruction of all that 
 Englishmen are wont to hold most precious ; — not sparing even the 
 Church and the Throne.