UNIVERSITY OF 
 ILLINOIS LIBRARY 
 
 ijl urbana-cha.m?a:g^i
 
 /S4 
 
 OUTLINES 
 
 OF A 
 
 SYSTEM 
 
 POLITICAL ECONOMY ; 
 
 WRITTEN 
 
 WITH A VIEW TO PROVE TO GOVEIIN3IENT 
 AND THE COUNTRY, 
 
 THAT 
 
 THE CAUSE 
 
 OF THE 
 
 PRESENT AGRICULTURAL DISTRESS 
 
 IS 
 
 ENTIRELY ARTIFICIAL ; 
 
 AND TO 
 
 SUGGEST A PLAN 
 
 FOR THE 
 
 MANAGEMENT OF THE CURRENCY, 
 
 BY 
 
 WHICH IT MAY BE REMEDIED NOW, AND ANY RECURRENCE 
 OF SIMILAR EVILS BE PREVENTED IN FUTURE: 
 
 TOGETHER WITH THE 
 
 FOURTH EDITION 
 
 OF AN 
 
 ESSAY 
 
 ON THE 
 
 PRINCIPLES OF BANKING. 
 
 BY T. JOPLIN. 
 
 ILontion : 
 
 PUBLISHED BY BALDWIN, CRADOCK, AND JOY. 
 
 1823.
 
 EDWARD WALKER, PRINTER, PILGRIM-STEEKT, 
 NEWCASTLE UPON TYNE.
 
 v.ZZ. 
 
 PREFACE. 
 
 As its title imports, this Essay is but the Outlines of 
 the subject on which it treats. It has also been rather 
 hastily written, and is not so perfect as the Author 
 could have wished. As an apology for its imperfec- 
 tions, therefore some account of its origin may not be 
 unnecessary. 
 
 Most writers imagine that they add something to 
 the general stock of knowledge ; and the Author is not 
 without his hopes, that there are views in this Volume, 
 which may be useful. But it is the matter, and not 
 the manner in which they are conveyed, upon which 
 he founds any claim they may possess, to the reader's 
 attention. He is a man of business, to which he was 
 early brought up ; and he has not possessed those ad- 
 vantages which are usually considered necessary to 
 good writing ; nor is it probable, that in the present 
 stage of his life, he would have written at all, except 
 for a practical object. 
 
 a
 
 His motive for writing the Essay on the Principles 
 of Bankinjj, the fourth edition of which this Volume 
 contains, was entirely interested. If the charter of the 
 Bank of England is altered, and Joint Stock Com- 
 panies, on the principles he recommends, are establish- 
 ed, he proposes to take such a share in each of them 
 as individuals are allowed to hold ; and requests each 
 bank to open an account with him, hold his share as 
 security, and charge him interest upon the advance 
 required. He might open an account with some one 
 or more banks, and get them to take up the shares for 
 him, as they must upon the average be ample security 
 for their original value; but if the banks which maybe 
 established acknowledge auy obligation to him, he has 
 not any apprehension that this will be necessary. 
 
 Having thus, however, a practical object in view, 
 the Author did not allow his pamphlet to sleep in the 
 hands of the booksellers, but at once made a considerable 
 distribution of it in Newcastle, the towns comprised in 
 the plan, and in the counties of Durham and North- 
 umberland, and sent copies to leading persons in 
 other places. 
 
 It was quite clear from what had been said by 
 ministers upon the subject, that they only desired 
 some plain business view of the question, by any one 
 whose situation in life enabled him to give it, in order 
 to make some change in the present system of Bank- 
 ing. But the change recommended struck very deep at 
 the interests of a powerful body ; and it appeared ex- 
 tremely desirable, if it were pi'acticable, that the pub- 
 lic should express their wishes on the subject, in 
 order to shew ministers that if they did put their 
 shoulders to the work, and procure an alteration of
 
 the charter of the Bank of England, Public Banks 
 would actually be set up in consequence. 
 
 The pamphlet made as great an impression as could 
 have been wished, and the principal persons in New- 
 castle seemed disposed to meet and petition Parlia- 
 ment immediately; but a leader was wanting: no per- 
 son seemed willing to do any thing but second. It 
 was thought that some country gentleman ought to 
 take the chair. Parliament, however, had assem- 
 bled; most of the gentlemen were out of the county, 
 and none that remained seemed willing to do so except 
 one, and he afterwards declined. 
 
 The argument against moving in the business, ge- 
 nerally used by merchants is, that they are so intimate- 
 ly connected with the Banks, that they cannot be seen 
 in it, and that the subject ought to be taken up by 
 the country gentlemen ; and with the country gentle- 
 men, that it ought to be taken up by the mercantile 
 men, who have so much to do with Banks, and are 
 more innnediately interested in the question. 
 
 In the county of Durham, however, there was less 
 difficulty. Five Banks out of seven had failed within 
 a few years, and Lord Barrington, though he in 
 general declines to take any lead in public mat- 
 ters, thought the establishments recommended so ob- 
 viously desirable, and even so absolutely necessary in 
 that part of the country, that on being applied to, he 
 did not hesitate to take the chair at a meetintj of coun- 
 ty gentlemen held on the subject. At this meeting 
 a committee was appointed, and the resolutions were 
 passed, which will be found in the Appendix. 
 
 A few of the principal men in Liverpool were dis- 
 posed to take up the question. By the accounts of
 
 eentlemen from Northumberland who were in Liver- 
 pool after the pamphlet had been published there, it 
 appears that it had produced a great sensation. Some 
 meetings took place in consequence, and resolutions 
 were passed and published, and ministers memorialized 
 upon the subject. 
 
 A gentleman of talents and great perseverance, 
 though not of sufficient influence to take a lead, under- 
 took to establish the principles of the pamphlet 
 at Manchester. This he did so completely, that 
 it seems if the bank charter had been altered last 
 session, three Banks, by different classes of persons, 
 would have been started immediately. No expres- 
 sion of public opinion, however, took place. But were 
 it necessary, more reliance might perhaps be placed 
 on Manchester than any other town. The manufac- 
 turers are in general rich and independent; and it 
 has one of the best Chambers of Commerce in the 
 kingdom. During the session of Parliament, this cham- 
 ber meets regularly to discuss all questions relative 
 to trade and commerce, but more especially those 
 which relate to the trade of Manchester, and it takes 
 steps to carry the result of its deliberations into ef- 
 fect. A very important act of Parliament was obtain- 
 ed by it last session, for the registering of warrants 
 of attorney ; and the transactions of the Banks, 
 so important to commerce, receive its particular at- 
 tention. It resisted the issue of local notes, by calling 
 the meeting of the inhabitants of Manchester for that 
 purpose, mentioned in the Essay on Banking ; and it 
 makes other regulations respecting them whenever it 
 is necessary for the interests of commerce. A measure
 
 Vll 
 
 of this importance, therefore, could not consistently be 
 overlooked by it. Almost all of its members are 
 known to think well of the scheme, and some of them 
 to be very desirous of promoting it. It is therefore ex- 
 pected by the people of Manchester, of whom they 
 are the commercial representatives, that they will take 
 such steps as might be expected from the town of Man- 
 chester, in such a question. 
 
 Although there is no place where a public Bank is 
 more desired, yet this does not arise from any 
 dissatisfaction with the existing Banks. Messrs Jones, 
 Lloyd, and Co., and Messrs Heywood .and Co. are 
 both liberal and wealthy bankers ; but the principle 
 of the Scotch Banks is preferred by all commercial 
 men, as well in Manchester as in every other place. 
 
 The Author made some attempts to bring the sub- 
 ject into notice in other commercial towns, but his 
 endeavours were not successful. Banks, it was said, 
 would be set up when there was liberty to do so, but 
 no encouragement was held out that any public steps 
 would be taken in order to procure that liberty. 
 
 Ministers, however, soon rendered the exertions 
 of the Author perfectly unnecessary. They made 
 an arrangement with the Bank of England for an 
 alteration of its charter ; and there seemed no 
 doubt that it would be completed as a matter of 
 course. During the dependance of the question, the 
 Author was in London for a couple of months, and 
 after his return, addressed the following Letter to the 
 Editor of The Newcastle Courant, in order to ex- 
 plain how the matter stood : —
 
 VIU 
 
 THE PROPOSED PUBLIC BANK. 
 
 SIR, — As this has become a question of considerable local interest 
 with tliis part of the country, the following information respecting 
 it, may, perhaps, not be unacceptable to the public : — 
 
 Your readers, who have given attention to the matter, are, no 
 doubt aware, that two or three months after the publication of 
 the Essay on Banking, the question was taken up by government, 
 without any petitions to parliament, which that Pamphlet recom- 
 mended. It had been circulated yery freely in Lancashire, and had 
 produced a considerable sensation there, as weU as here ; of this, the 
 ministers were fully apprised, not only by communications constantly 
 forwarded to them, but by a deputation of bankers interested in the 
 matter, having waited upon the Chancellor of the Exchequer, to as- 
 certain the views of government upon the subject. 
 
 At the commencement of the session, ministers proposed, that four 
 millions should be advanced by government to the agriculturists, but 
 that plan was dropt, and the alteration of the bank charter, with a 
 view to the establishment of public banks, adopted, as a much more 
 eftectual application of that mode of relief, as well as being an im- 
 provement imperatively required in the banking system of the coun- 
 try. 
 
 A bargain was made with the Bank of England, by which, in con- 
 sequence of allowing the immediate establishment of public banks, in 
 the country, at a distance exceeding 65 mUes from London, its char- 
 ter was to be renewed for 10 years longer. This arrangement was 
 confirmed by a general meeting of proprietors, and a bill was to have 
 been submitted to parliament, by ministers, accordingly. 
 
 In the mean time, however, considerable difficulties arose. It was 
 contended, by the opposition, that the bargain with the bank was im. 
 provident. It ought to have given up its privilege for nothing ; what 
 was gamed by it was only worth having, but not worth paying for. 
 Lord Grey stated, that " as far as he could learn, there was no call 
 for the measure ; at least, in the part of the country with which he 
 was more immediately connected, there was no complaint respecting 
 the stability of banks, nor any distrust as to the property by which 
 their credit was sustained." Truth, however, requires it to be stated, 
 that, at this very time. Sir Francis Blake, Reeds, and Co.'s bank had 
 stopped payment, for nearly half a million of money, and their notes 
 were then at a discount of from 6s. to 7s. in the pound. There are, 
 however, so many bankers, and such banking interest in parliament, 
 that this doctrine went very well down with a great majority of both 
 sides of the house. And it is extremely probable, that had ministers
 
 IX 
 
 liTouglit the measure forward, they might have had some difficulty in 
 can-ying it ; more especially, as they themselves thought that the 
 bank ought to have consented to the alteration without purchase. 
 
 At the same time, the bank directors also had as little relish for 
 the matter, on theii* part, and would, by no means, consent that the 
 arrangement should be concluded on any thing like a sensible basis. 
 No public bank can be set up without a law to render it liable only 
 for the acts of its directors. As the law of partnership now stands, 
 any partner, if there were a thousand, could either raise money or in- 
 dorse bills, or do any act of that kind, in its name ; and if fraud could 
 not be legally proved and brought home to the holders of the bills or 
 other securities, the bank would be bound to pay them. That the 
 pri\alege, thus necessary, should be granted, however, the directors 
 would not consejit, Avhicli put an end to the business, and rendered 
 the meetmg of the bank proprietors and the whole proceedings, quite 
 a nullity. 
 
 A correspondence that took place m the Times paper, which exhi- 
 bits the peculiar views or the apology of the directors in this extraor- 
 dinary proceeding, you have I)elow ; and though long, it will probably 
 possess interest to those who feel an interest in the subject. 
 
 In consequence xif the representation of the merchants of Liver- 
 ])ool, who had stated tlieir views in a memorial to Lord Liverpool, 
 ministers thought it expedient that charters to a limited extent 
 should be granted, to which the bank had previously objected ; and 
 they proposed to the directors, tliat a more limited extension of their 
 charter, with the power of conferring charters where it appeared ne- 
 cessary, and the other regulations requii'ed, should be granted. This 
 also fell to the ground ; and the Chancellor of the Exchequer stated 
 in parliament, that when the bank applied for a renewal of its char- 
 ter, the proposed extension of it would be made. 
 
 That the bank directors should offer such opposition, seems almost 
 incredible, and yet it is at least tacitly avowed in the subjomed cor- 
 respondence. It is not unlikely, however, that finding the interested 
 feeling raid probable difficulty the measure would encounter in par- 
 liament, even amongst their own friends, ministers were disposed to 
 wait until public oi^inion was more decidedly expressed in its favour. 
 Besides the measure had assumed a new character, — merely throwing 
 open the charter, so that banks might have whatever number of part- 
 ners they thought proper, involved none of that time, attention, and 
 consideration, which would be necessarily required, if charters were 
 to be granted ; and at the late period of the session, when this altera- 
 
 b 2
 
 tion of the views of ministers took place, they probably could not, 
 with the business they had on hand, give that attention to the subject 
 it required. Hence any opposition or apology for putting it off would 
 perhaps be the more readily embraced. 
 
 Next session of parliament, it is probable that petitions from differ- 
 ent places, will be set on foot, and the measure will be again brought 
 forward by ministers, who are not only pledged to carry it, but have 
 an honest conviction of its utility, and a sincere wish to see it adopt- 
 ed, as friends to the true interests and welfare of their country. 
 
 Of its necessity and advantage, the pubHc are universally convinc- 
 ed ; and if Liord Grey will enquire, he wUl find that liis statement in 
 parliament was not at all correct. 
 
 It need not, howeA^er, be expected, that any petitions to parlia- 
 ment, will be very generally signed by that class of persons who, 
 having most to do with the banks, are most interested in the ques- 
 tion. This class will much more readily subscribe to a bank when 
 about to be set up, and they do not hesitate to say so, than do the 
 slightest act that might seem to imply dissatisfaction with those at 
 present established. But as this wUl be obvious to parliament, the 
 very deficiency of such signatures wUl prove the trammels of the 
 country, and be an argument for the alteration of the law which in- 
 flicts them. 
 
 There are some other circumstances also which render it extremely 
 probable that the opposition of the bank directors will be considerably 
 abated next session of parhament ; independent of which they wiU be 
 under the necessity of applying early for a renewal of their charter, 
 in order to keep up the value of the bank stock. Were any difficul- 
 ties to arise respecting the renewal of the charter, the stock would 
 necessarily fall. It is now at. 252, and its intrinsic value, were the 
 charter not to be renewed, including any reserved fund or savings 
 which the bank may possess, is not probably more than 110 or 120.* 
 It is the soundest policy, as well as the practice of the bank, to get 
 its charter renewed in good time. The present charter was granted 
 in 1000, 12 years before the last expired, and this has now not more 
 than 1 1 years to run. Any further delay in getting it renewed might 
 be dangerous, and, on the part of the directors, inexcusable. Public 
 opinion is making rapid inroads into the ten-itory of that prejudice, 
 which, as a national institution, has run rather high in favour of the 
 Bank of England ; and though the directors may be at the head of a 
 
 * This value, it appears, is too low by at least twenty or thirty per cent.
 
 XI 
 
 regiment of clerks, the nation would prove too strong for them, were 
 they to provoke an encounter, or injudiciously court it, by leaving 
 the poUcy of renewing their chai-ter open to that freedom of enquiry 
 wluch is taking place on the subject. T. 
 
 [The letters from The Times referred to, wiU be found in the Ap- 
 pendix to the Essay on Banking.] 
 
 The iiigli character of Lord Grey leaves no room 
 to doubt the purity of his motives ; or the truth of the 
 statement quoted from his speech in the above letter, 
 so far as his lordship's knowledge went. The proba- 
 bility is, that as Sir Francis Blake, Reeds and Co.'s 
 bank, which had not been in tlie best credit for some 
 time, had stopped payment, his lordship presumed 
 that all the rest were now good. This presumption 
 was perfectly correct. But when his lordship stated 
 that there was no distrust as to the property by which 
 their credit was sustained, he proved that he had not 
 a very accurate local knowledge on the subject. It is 
 one thijg to say that a bank has good credit, and 
 another to say that it has property enough to sustain 
 it. Its credit may depend upon the known prudence 
 with which it is managed, more than upon the proper- 
 ty with which it is sustained. It may be perfectly 
 safe to take a single voyage in a bad ship well navi- 
 gated, while it would be madness to engage to do so 
 annually for twenty years, whether it was well navi- 
 gated or not. The fair way to put the question is 
 this : would Lord Grey, or any other person, think it 
 prudent to guarantee the stability of all the present 
 banks in Northumberland and Durham, for that time, 
 re.spectable as they at present undoubtedly are ? 
 
 The Author does not mean to say, that so far as he 
 could learn, the opposition generally were against the 
 principle of the measure ; he believes, on the contrary,
 
 xu 
 
 that the majority were very decidedly in its favor. It 
 is probable that even Lord Grey merely thought that 
 the bank had too good a bargain ; but to contend that 
 the country ought to be afflicted with the present sys- 
 tem ten or twelve years longer, in order to punish the 
 bank, was evidently pushing the argument too far. 
 
 With respect however, to the present Essay : the 
 Author, when in London, had an interview with Mr 
 Huskisson, on the bank subject ; at which he ventured 
 to state, that he entertained some opinions on the cause 
 of the present agricultural distress, which he had ar- 
 ranged in the form of propositions ; and that if Mr 
 Huskisson wished it, he would leave them to be con- 
 sidered at his leisure, should he find them worth his 
 attention. He consequently left those which follow : — 
 
 A fevo consecutive Propositions in Political Economy, 
 'which are capable of Proof. 
 
 CONSUMPTION. 
 
 1. That the monied income of society is and must 
 annually be spent. 
 
 2. That all income is derived from the soil. 
 
 3. That the produce of the soil, and the demand 
 for it are upon the average equal. 
 
 4. That it is the supply which creates the demand, 
 and not the demand which creates the supply. 
 
 5. That the cost of all commodities, though it may 
 be nominally stated to consist of profits, taxes, &c. as 
 well as materials and labour, does consist of materials 
 and labour solely. 
 
 6. That the relative prices of the produce of the
 
 XIH 
 
 soil are determined by labour, and if the soil was 20 
 times more productive than it is, it would preserve the 
 same relative price to labour and other commodities 
 which it does at present. 
 
 From this chapter it ought to appear, as a matter 
 of course, that with respect to the national prosperity, 
 the taxes are neither an evil nor a good. 
 
 CURRENCY. 
 
 7. That every state of prices which is average and 
 general, is determined by the amount of currency in 
 circulation. 
 
 8. That it is thrown into or abstracted from circula- 
 tion throuoh the medium of an increased or diminished 
 consumption. 
 
 9. That the total value of currency in the world can- 
 not be altered by an alteration in its quantity. 
 
 10. That its value depends upon the exchanges it is 
 required to perform. 
 
 1 1 . That the same is the case with any particular 
 nation. By an importation or exportation of gold, the 
 price of it is altered, but no difference is made in the 
 total value of the money in the country. 
 
 FOREIGN TRADE. 
 
 12. That the foreign trade of a country consists in 
 an exchange of its commodities for those of other na- 
 tions. 
 
 13. That the value of such commodities is computed 
 in money.
 
 XIV 
 
 14. That if the commodities of any nation are supe- 
 rior to those of others, the demand of the other coun- 
 tries for its commodities will be superior to its demand 
 for theirs, and the balance will be paid in money. 
 That prices will in consequence be raised in the coun- 
 try to which the balance is paid, and reduced in the 
 countries by which it is paid, and by this means, the 
 demand for commodities will be reduced on the one 
 hand and increased on the other, until they are equal 
 in money, though more imequal in quantity.' — That 
 in proportion to this inequality in the amount of com- 
 modities exchanged will be the advantage of the nation 
 in which prices are high, over those with which it deals. 
 
 15. That if a country with great manufacturing su- 
 periority, were to prevent the importation of provi- 
 sions, and were to confine its foreign trade to the im- 
 portation of such commodities as it required for the 
 population which its own soil would support, the ex- 
 change might be conducted on very advantageous 
 principles. 
 
 16. That if the importation of foreign provisions 
 were freely admitted, the effect would be merely an 
 increase of manufacturing population. 
 
 17. That both an increase of population, and an ad- 
 vantageous exchange may be produced by a tax upon 
 foreign provisions judiciously imposed. 
 
 18. That the amount of this tax must be determined, 
 not by an enquiry into the cost of production by our 
 agriculturists, but into the extent of our manufacturing 
 superiority. 
 
 19. That a tax upon foreign provisions would not 
 in the least degree be a tax upon the people of this 
 country, nor upon the countries where they are pro- 
 duced, except to the extent of actual British labour or 
 produce received in return for them; but upon the fo-
 
 XV 
 
 reign consumers of the produce of British soil and la- 
 bour all over the world. 
 
 THE PRESENT SITUATION OF THIS COUNTRY. 
 
 20. That the corn bill alone would not have pro- 
 duced the effects to which it has led, unconnected with 
 other causes. 
 
 21. That the present state of the country is the effect 
 of the want of consumption, produced by the sudden 
 change in the value of property from the altered value 
 of the currency ; and by the reduction of the expendi- 
 ture of government. 
 
 22. That the reduction of the expenditure of go- 
 vernment creates the evil which it is intended to cure. 
 
 23. That the present situation of the country could 
 not have been brought about with a metallic currency, 
 or with a paper currency upon different principles. 
 
 24. That the economy of the nation and govern- 
 ment has no other effect at present than to contract the 
 circulation, and instead of reducing the interest of 
 money, to reduce the price of provisions. 
 
 25. That this might be prevented by such altera- 
 tions in the principles upon which paper was issued, as 
 would put it upon the footing of a metallic currency. 
 
 These propositions appear to have been thought by 
 Mr Huskisson to possess matter of some interest. He 
 returned them in a few days with a note, which the 
 author will crave his indulgence for inserting, as it will 
 serve for a warrant to the reader that the following at- 
 tempt to develope the principles they contain may be at 
 least worth examination : —
 
 XVI 
 
 *' Mr Huskisson presents his compliments to Mr 
 *' Joplin, and having had an opportunity of looking 
 " over the propositions on Political Economy, which 
 " he left w^ith him for perusal when he had the plea- 
 *' sure of seeing him a few days ago, now begs to re- 
 " turn the several papers herewith. 
 
 *' Mr H. is persuaded Mr Joplin must be aware 
 ** that the propositions in question comprehend a very 
 *' extensive and important range of subject, combined 
 " with matter of great general interest, and will re- 
 *' quire the utmost attention and consideration to 
 " their developement ; but he is not prepared at pre- 
 " sent to offer any conclusive opinion upon the points 
 *' adverted to. 
 
 « Whitehall Place, 6th July, 1822." 
 
 It was not until two months after this, that the Au- 
 thor determined upon undertaking the work at the 
 present moment. It will be afterwards seen by the 
 reader, that the arrangement of these propositions is 
 imperfect. The first and second form the subject of 
 the eighth and eleventh chapters of this work, and the 
 fifth proposition is erroneous. Consequently his views 
 were more obscure, and the undertaking more difficult, 
 and likely to require much more time and attention 
 than he could conveniently give to it. When, how- 
 ever, the arrangement which has been adopted occur- 
 red to him, and he discovered that deduction which 
 he has termed the Fulcrum of the Argument, the diffi- 
 culty seemed at once to vanish, and the undertaking 
 become more practicable. 
 
 In order to have it out before the ensuing session of 
 Parliament, if possible, as well as for the purpose of 
 forwarding it to Mr Huskisson, the chapters were
 
 xvu 
 
 sent to the printer as they were written ; but owing to 
 constant business interruptions, which tend to disturb 
 the current of thought, and of course to retard a work 
 of this description, at the end of two months not more 
 than a third of it was completed. 
 
 The Author, however, had, by this time, sent the 
 first eleven chapters to Mr Huskisson. His object 
 was to render his views, if they were true, as useful 
 as possible; and as ministers, he was aware, were 
 preparing some plans to submit to parliament the en- 
 suing session, any light that could be thrown upon 
 the subject would of course be desirable. Mr Hus- 
 kisson, he had no doubt, would at once see whether or 
 not his general principles were correct, and if so, de- 
 duce from them measures of practical utility, and if 
 not, no harm could arise from submitting them to his 
 considei"ation. 
 
 As, however, the Author got slowly on with his 
 work, which, if his views were correct, ought to be 
 out by the meeting of Parliament, he now absented 
 himself from business altogether for a short time, and 
 in six or seven weeks of perfect seclusion, was en- 
 abled to complete it. 
 
 The brevity with which he has discussed many of 
 the principles laid down, renders it necessary for him 
 to state, that he considers himself only addressing 
 such as possess some previous knowledge of the sub- 
 ject, or will take the trouble to understand him. The 
 multitude can never be political economists. But if 
 his general principles are approved by those who are 
 capable of appreciating them, he will probably at some 
 future period of leisure, endeavour to furnish a more 
 enlarged and elementary work on the subject. 
 
 This Essay, thereore, having been hastily written by 
 c 2
 
 XVllI 
 
 an unpractised writer, and sent to the press as the 
 chapters were completed, by which any corrections, 
 alterations, or improvement that must always suggest 
 themselves in the course of a work of this nature, were 
 prevented, considerable allowances ought to be made 
 by the critical reader. It is the author's object to 
 show, that the present agricultural distress might have 
 been prevented by a different system of currency, and 
 may now be cured ; and if he has done that, he has 
 done all he aimed to do ; though he may have deemed 
 it requisite to go through a wider range of subject 
 than might at first appear necessary. 
 
 Since this work was completed, and even printed, 
 all but three or four pages, the Author has read, for 
 the first time, Mr Ricardo's Pamphlet on Currency, 
 entitled " The high Price of Bullion, a Proof of the 
 Depreciation of Bank Notes." He was not before, 
 nor does he believe, that the world in general are suf- 
 ficiently aware of the obligation they are under to that 
 gentleman for this able little production. Treating 
 merely of general principles, it has been smothered in 
 the discussion to which it gave rise. He is anxious to 
 explain that he had not before seen it, perchance it 
 should be supposed that some of the ideas contained 
 in the following work, had been taken, without ac- 
 knowledgment, from that, so far as the subject is deve- 
 loped, perfect theory, of the currency.
 
 CONTENTS. 
 
 PAGE 
 
 Preface ------- in 
 
 Chap. I. Definition of a few Terms employed in 
 
 the following Essay - 1 
 
 Chap. II. Use of Money. - - - - 6 
 
 Chap. III. Balance of Trade - - - 15 
 
 Chap. IV. The Fidcrum of the Argument - 32 
 Chap. V. National Wealth not increased by Na- 
 
 tiojial Economy _ - - 34< 
 Chap. VI. National Wealth composed of Annual 
 
 Income - - - - 40 
 
 Chap. VII. Heal and Nominal Income of Society 42 
 
 Chap. VIII. The Income ofSociety'is consumed 4<4< 
 
 Chap. IX. Capital - • - ~ - - 46 
 Chap. X. Principles which regulate the Saving 
 
 of Money - - - - 57 
 
 Chap. XI. Corn creates its own Demand - 71 
 
 Chap. XII. Labour - - -^ - - 85 
 Chap. XIII. The Soil is the original Source of 
 
 Wealth - - - - 101 
 Chap. XIV. Cost of Commodities in Profits of 
 
 Capital - - - - 105 
 
 Chap. XV. Rent 113
 
 XX 
 
 PAGE 
 
 Chap. XVI. Taxes - - - - - 129 
 Chap. XVII. Taxes upon Foreign Corn - - 133 
 Chap. XVIII. Monei/ - - - - - 153 
 Chap. XIX. Paper Currency - - - 189 
 
 Chap. XX. The Price of Corn not subject to 
 material Fluctrmtions from tJie 
 Supply - - - - 216 
 
 Chap. XXI. Probable Causes 'which have pro- 
 duced the leading Changes in 
 the Prices of Corn, during the 
 last thirty Years - - _ 226 
 Chap. XXII. With a Paper Currency, Impu- 
 tations of Foreign Corn cannot 
 materially reduce Prices - 235 
 
 Chap. XXIII. The present Price of Stocks, a 
 Proof of a Contraction of Cur- 
 rency - - _ _ 243 
 Chap. XXIV. Sinking Fund - _ . 253 
 Chap. XXV. Plan for the Government of the 
 
 Currency - - - -258 
 Chap. XXVI. Bank of England - - - 278 
 
 Appendix - - - - - - - 1 
 
 No. I. An Account of the Quantity of British 
 Wheat and Wheat Flour, export- 
 ed from Fnglajid, and of Foreign 
 Wheat and Wheat Flour, imported 
 into England from 1697 to 1812 - 3 
 
 No. II. Prices of Wheat, per Quarter, at Wind- 
 sor Market, from 1646 to 1813 - 7 
 
 No. III. Yearly and Monthly Averages of Wheat 
 
 from 1792 to 1822 - - - 12
 
 XXI 
 
 PAGE 
 
 No. IV. Table of the Prices of three per cent. 
 
 Stock from 1731 ^o 1822 - - 17 
 
 No. V. Amount of the National Funded Debt at 
 the Revolution ,• and at the Com- 
 mencement and Termination of each 
 War, to 1812 - - - - 29 
 
 No. VI. Accou7it of the Amount of Bank of Eng- 
 land Notes in Circulation, from 1 792 
 to 1819 30 
 
 No. VII. Account of the Duties on Promissory 
 Notes re-issuable,from 1 805 to 1 808, 
 inclusive - - - - - 32 
 
 No. VIII. A Table of the Issues of the Country 
 Banks, calcidated from an Account 
 of Stamps for their Promissory 
 Notes, delivered from the Stamp 
 Office, from 1810 to 1818, inclusive 33 
 
 No. IX. The Amount of Advances made by the 
 Bank of England to Government, 
 from 1792 to 1819 - - - 36 
 
 No. X. An Account of the aggregate Value of all 
 Corn, Grain, Meal, and Flour, im- 
 ported from Foreign Parts into 
 Great Britain, from 1813 to 1818, 
 inclusive - - - - - 39 
 
 No. XI. Account of the Finances of the Bank of 
 
 England on the 26th Feb., 1797 - 40 
 
 No. XII. Ati Account of the total Amount of 
 
 Outstanding Demands on the Bank 
 
 of England, and likewise the Funds 
 
 for discharging the same, SOth Jan., 
 
 1819 41
 
 XXll 
 
 PAGE 
 
 No. XIII. Account of the Market Prices of 
 Standard Gold, and rate of Ex- 
 change xmth Hamburgh, from 1760 
 to 1809 42 
 
 No. XIV. Extract from the Evidence of David 
 Hodgson, Esq. before the Agricul- 
 tural Committee 0/^1821 - - 48 
 
 Essay on Banking. 
 
 Supplementary Observations. 
 
 Appendix to Essay on Banking.
 
 OUTLINES 
 
 t^oWtical ^tonomv^ 
 
 CHAPTER I. 
 
 Definition of a Jew Terms employed in the following 
 Essay. 
 
 It is generally admitted that political econo- 
 my is a science not yet fully understood. In 
 which case, nothing is more natural than to sup- 
 pose that terms may be required to express 
 discriminations of meaning, which, in fact, may 
 never before have been made. I trust, there- 
 fore, that there can be no objection to my 
 adopting language to express such distinctions, 
 as it may appear in the course of this Essay 
 either necessary or desirable to establish, or 
 even, for the sake of precision, to define for 
 myself the meaning in which I may employ 
 words already in use. The following are a few 
 terms that I shall take the liberty of using in 
 th6 sense which they are explained to convey : 
 
 B
 
 VALUE, in common language, has two 
 meanings : it either refers to the price of a 
 commodity, or its usefuhiess. Water, though 
 not worth money, is valuable ; such a person is 
 also a valuable man, &c. In this sense it has 
 no reference to price. On the other hand, it 
 is usually said, that the value of a thing is what 
 it will bring : we value our goods at the price 
 for which we think they will sell. In this case 
 it is synonymous with price. Value, in use, 
 however, is not a term required in political 
 economy, which treats only of the exchange- 
 able value of commodities, while price express- 
 es exchangeable value as well as any other 
 term. I shall, therefore, use the term value, 
 to express the cost of a commodity, in labour, 
 materials, profit of capital, &c. ; the price at 
 which it can be produced to indemnify the cul- 
 tivator or manufacturer, after paying for the 
 labour, rent, profit, and other charges incident 
 to it ; or in speaking of any thing not the pro- 
 duce of materials and labour — such as land, 
 I shall employ it, as it commonly is used, 
 to express its price at par, or its average va- 
 lue according to the interest of money, or by 
 whatever general principles its value is deter- 
 mined. A person will sometimes give more for 
 an estate than it is worth, or may sometimes 
 purchase it for less. Its value, however, by 
 judges, is estimated according to the current
 
 price of land. If a person choose to give more, 
 or take less for an estate than it is worth, that 
 does not alter its real value. Also in mentioning 
 money, value is used. We never speak of the 
 price, but always of the value of money. 
 
 PRICE. — Commodities are very seldom sold 
 for their precise value in the market, according 
 to the foregoing definition ; though they may 
 be so upon the average. They are continually 
 fluctuating, like the pendulum of a clock, on 
 one side of their value or the other, and yet 
 constantly gravitate towards it. The market 
 value of a commodity we shall, therefore, term 
 its price ; thus distinguishing it from value, 
 the cost of its production : the price and value 
 being the same only when the commodity is at 
 par, and sells for the fair remunerating price 
 necessary to pay its producer. By the same 
 rule, the price of an estate is what it sells for ; 
 its value, what it is worth j and only when it 
 sells at its value, is its price and value the 
 same. 
 
 COMMERCIAL CONSUMPTION.— It is 
 of no importance to the manufacturer or grow- 
 er of a commodity what becomes of it after he 
 sells it. It is, so far as regards the commodity 
 sold, as much consumed to him if put into a 
 warehouse as if it were put into the fire ; con- 
 sequently all commodities in the hands of mer- 
 chants, shopkeepers, &c. so far as he is affect- 
 
 B 2
 
 4 
 
 ed, are consumed. That demand which in- 
 fluences his production has taken place ; and to 
 distinguish this from actualy I have termed it 
 commercial consumption. 
 
 PRE-EXISTING MATERIAL PRO- 
 DUCE. — 'The materials of which the manufac- 
 tures and commodities that we consume are 
 composed, are of two descriptions : those which 
 are the produce of the soil, and those which 
 pre-exist in nature, and are abstracted from it 
 by labour or art. All experience points out 
 that the former is the basis of wealth, and the 
 latter its superstructure. The richest mineral 
 productions are of no value in a country with a 
 barren soil, except in so far as they will ex- 
 change for the productions of one more fruitful. 
 In political economy their value is of course 
 determined by different principles j hence it 
 will not be improper to give them separate de- 
 signations. Those materials, therefore, which 
 pre-exist in nature, and are by some mecha- 
 nical or chemical application of labour or art, 
 extracted from it, are termed pre-existing ma- 
 terials, or pre-e>risting material produce, 
 
 VICTUAL PRODUCE.— The produce of 
 the soil may be divided into two descriptions : 
 that which is used for food — such as corn, beef, 
 rice, coffee, sugar, fruit, &c. and those materi- 
 als which form the basis of manufactures, and 
 other articles of convenience — such as hemp,
 
 flax, cotton, wool, wood, &c. In speaking of 
 the former, it is not unusual for political eco- 
 nomists to express them under the general head 
 of corn. In doing this, however, a particular 
 explanation is always necessary, to avoid which, 
 the term victual produce is employed. 
 
 MATERIAL PRODUCE consists of those 
 materials, the produce of the soil, which form 
 the base of manufactures as above described, 
 and which are thus distinguished from victual 
 produce on the one hand, and pre-existing ma- 
 terial produce on the other. Material produce 
 also naturally divides itself into animal and ve- 
 getable. This distinction, however, is not ne- 
 cessary for the purpose of our argument.
 
 CHAPTER 11. 
 
 Use of Money. 
 
 Money is not wealth. It only conveys the 
 power of obtaining those things which compose 
 it. Wealth consists in the necessaries, com- 
 forts, conveniences, and enjoyments of life. 
 This nation is the richest in the world, yet the 
 principal part of its money consists of a paper 
 currency, which is intrinsically not worth the 
 ten-thousandth part of the value it represents. 
 When in its greatest prosperity, it had the least 
 amount of the precious metals in circulation. 
 Paper, however, answered the purpose quite as 
 well, and proves, if proofs were wanting, that 
 wealth does not consist in gold and silver. 
 This country was never more rich and flourish- 
 ing than a few years ago, when it had the least 
 of them. If wealth had consisted in gold and 
 silver, instead of the richest, we must then 
 have been one of the poorest nations in the 
 world. No nation, not entirely barbarous, had 
 at that time less of them than we had. We 
 still, however, have an itching palm for gold ; 
 we parted with what we had reluctantly, and
 
 are extremely desirous to have it back, though 
 we are certainly not the richer since it became 
 more plentiful. 
 
 The wealth of a country consists in the a- 
 bundance which it may possess, of those neces- 
 saries and conveniences, the produce of land 
 and labour, which furnish the support, and 
 contribute to the enjoyments of life. That 
 part of the aggregate wealth of a nation which 
 forms the wealth or income of each individual, 
 consists of some particular description of the la- 
 bour or produce, of which the whole is compos- 
 ed. The income of one person is derived from 
 land which produces corn, another from land 
 which produces cattle. One has a tin mine, 
 another a mine of coal, one man makes nails, 
 another shoes, &c. Thus the income of each 
 individual is generally derived from contribut- 
 ing to some particular want of a great many 
 different persons. On the other hand, the ne- 
 cessaries and luxuries which each individual 
 requires, take some portion of the labour and 
 produce of as great a variety of persons to sup- 
 ply. And it is necessary for him to exchange 
 that in which his income consists, with all 
 those who may desire a part of it, in order 
 that he may procure from them that portion 
 of each of their labour or produce which he 
 requires for himself. In order to facilitate 
 these exchanges, money is necessary. " When
 
 8 
 
 ** the division of labour" (says Smith, in his 
 Wealth of Nations) " has been once tho- 
 " roughly established, it is but a very small 
 •* part of a man's wants, which the produce of 
 ** his own labour can supply. He supplies the 
 ** far greater part of them by exchanging that 
 " surplus part of the produce of his own la- 
 " bour which is over and above his own con- 
 " sumption, for such parts of the produce of 
 " other men's labour as he has occasion for. 
 ** Every man thus lives by exchanging, or be- 
 " comes in some measure a merchant, and the 
 " society itself grows to be what is properly a 
 " commercial society. 
 
 " But when the division of labour first began 
 " to take place, the power of exchanging must 
 " frequently have been very much clogged and 
 " embarrassed in its operations. One man, we 
 ** shall suppose, has more of a certain commo- 
 " dity than he himself has occasion for, while 
 " another has less. The former consequently 
 " would be glad to dispose of^ and the latter 
 " to purchase a part of this superfluity. But 
 " if the latter should chance to have nothing 
 " that the former stands in need of, no ex- 
 ** change can be made between them. The 
 " butcher has more meat in his shop than he 
 " himself can consume, and the brewer and 
 " the baker would each of them be willing to 
 " purchase a part of it. But they have nothing
 
 " to offer in exchange except the diiFerent pro- 
 " ductions of their respective trades, and the 
 " butcher is ah'eady provided with all the bread 
 " and beer which he has immediate occasion 
 *' for. No exchange can in this case be made be- 
 " tweenthem. He cannot be their merchant, nor 
 " they his customers, and they are all of them 
 " thus mutually less serviceable to one another. 
 " In order to avoid the inconveniency of such 
 " situations, every prudent man, in every pe- 
 *' riod of society after the first establishment 
 " ol the division of labour, must naturally have 
 *' endeavoured to manage his affairs in such a 
 " manner as to have at all times by him, be- 
 " sides the peculiar produce of his own indus- 
 *' try, a certain quantity of some one commo- 
 *' dity or other, such as he imagined few peo- 
 " pie would be likely to refuse in exchange for 
 " the produce of their industry. 
 
 " Many different commodities, it is proba- 
 " ble, were successively both thought of and 
 *' employed for this purpose. In the rude 
 " ages of society, cattle are said to have been 
 " the common instrument of commerce ; and 
 " though they must have been a most inconve- 
 " nient one, yet, in old times, we find things 
 '* were frequently valued according to the 
 " number of cattle which had been given in 
 " exchange for them. 
 
 " The armour of Diomede, says Homer, 
 c
 
 10 
 
 cost only nine oxen ; but that of Glaucus 
 cost an hundred oxen. Salt is said to be the 
 common instrument of commerce and ex- 
 changes in Abyssinia — a species of shells in 
 some part of the coast of India — dried cod 
 at Newfoundland — tobacco in Virginia — su- 
 gar in some of the West India colonies — 
 hides, or dressed leather, in some other coun- 
 tries ; and there is at this day, a village in 
 Scotland, where it is not uncommon, I am 
 told, for a workman to carry nails instead of 
 money to the baker's shop, or the alehouse." 
 " In all countries, however, men seem at 
 last to have determined, by irresistible rea- 
 sons, to give the preference, for this employ- 
 ment, to metals, above every other commo- 
 dity. Metals can not only be kept with as 
 little loss as any other commodity, scarce 
 any thing being less perishable than they 
 are ; but they can likewise, without any loss, 
 be divided into any number of parts, or, by 
 fusion, those parts can easily be united again, 
 a quality which no other equally durable 
 commodities possess, and which, more than 
 any other quality, renders them fit to be the 
 instruments of commerce and circulation. 
 The man who wanted to buy salt, for exam- 
 ple, and had nothing but cattle to give in 
 exchange for it, must have been obliged to 
 buy salt to the value of a whole ox, or a
 
 11 
 
 ** whole sheep at a time. He could seldom 
 ** buy less than this, because, what he was to 
 " give for it, could seldom be divided without 
 ** loss ; and if he had a mind to buy more, he 
 ** must, for the same reasons, have been obli- 
 " ged to buy double or triple tlie quantity, the 
 ** value, to wit, of two or three oxen, or of two 
 ** or three sheep. 
 
 " li'y on the contrary, instead of sheep or 
 " oxen, he had only metals to give in ex- 
 ** change for it, he could easily proportion the 
 ** quantity of the metal to the precise quantity 
 " of the commodity, which he had immediate 
 ** occasion for. Different metals have been 
 " made use of by different nations for this pur- 
 " pose. Iron was the common instrument of 
 " commerce among the ancient Spartans — 
 " copper among the ancient Romans — and 
 " gold and silver among all rich and commer- 
 " cial nations." 
 
 By a modern improvement, however, in com- 
 merce, a paper currency, founded upon pub- 
 lic confidence, is found to answer the same 
 purpose as the precious metals, and in this and 
 other countries has been principally substitu- 
 ted for them. 
 
 The comparative value of commodities is de- 
 termined through the medium of money, on 
 the axiomatic principle, that things which are 
 equal to the same thing are equal to each 
 c 2
 
 12 
 
 other. Thus if my labour or commodity be 
 worth a pound, it is of equal value, and will, 
 through the medium of the pound for which 
 I sell it, exchange for any other commodity 
 worth a pound, which I may require. The 
 object of every individual, therefore, is to get 
 as much money for his labour or commodity as 
 he can, not that the money is of itself of any 
 value, but that the exchangeable value of his 
 commodity or labour is thereby determined. 
 If it is equal to, or worth, a given sum of mo- 
 ney, it is equal to, and will command any other 
 quantity of labour or commodities of the same 
 value in money, whether such quantity be great 
 or small. Hence, as most people have a gene- 
 ral idea of the present value in money, of such 
 commodities or luxuries as they require, by as- 
 certaining the value in money, of their own 
 produce or labour, they can form a tolerably 
 correct estimate of the share of the general 
 wealth of society which they possess. 
 
 Money is thus a scale by which wealth is es- 
 timated, and though it is not wealth, more 
 than a barometer is weather, yet it is cur only 
 mode of computing it, and nothing, perhaps, 
 is more natural than that the shadow should 
 sometimes have been over-valued, or even 
 taken for the substance.
 
 13 
 
 The Money in the World is always stifficient for 
 the Use of it. 
 
 If there were twice the quantity that there is 
 at present, it would not purchase more com- 
 modities than the amount now in circulation ; 
 or if tliere were but half the quantity, it would 
 not purchase less. No alteration in the amount 
 of money in the world, can alter its total value 
 in that which composes wealth, the necessaries, 
 comforts, and conveniences of life. If there 
 were twice the quantity, the nominal price of 
 commodities would be altered ; they would be 
 twice the price all over the world. It would 
 take double the sum of money to purchase the 
 same quantity of wealth ; but that being the 
 case, the whole money in circulation would 
 only then be worth the same commodities as 
 now. By the same rule, if there were but half 
 the present money in the world, commodities 
 would be half the price, and it would still com- 
 mand precisely the same amount of the enjoy- 
 ments of life. The world, in neither case, 
 would in the slightest degree be either richer 
 or poorer. 
 
 What is the case w^ith the world at large, is 
 also the case with any particular nation, in so far 
 as the commodities of that particular nation are
 
 14, 
 
 concerned. As the quantity of money in- 
 creases, the value of it depreciates, and the 
 prices of the national commodities rise -, the 
 additional quantity of money brought into 
 circulation, merely altering its nominal value. 
 In countries, also, where the quantity is re- 
 duced, its nominal value is increased, and its 
 total value, with respect to the commodities of 
 the country, is the same. 
 
 In neither case are the respective nations 
 richer or poorer by the stock of money increas- 
 ed or reduced, in so far as the value of the mo- 
 ney itself is concerned. 
 
 Such alterations, however, continually take 
 place. They are generally produced by the 
 foreign trade of nations, and though with re- 
 spect to the produce of the respective coun- 
 tries in which such changes take place, the 
 effect is a mere alteration of prices, yet it is 
 attended with important consequences, in re- 
 gulating the trade of nations with each other, 
 which will form the subject of the next chapter.
 
 15 
 
 CHAPTER III. 
 
 Balance of Trade. 
 
 The monied price of the produce of a nation 
 determined by the quantity of money in it, not 
 only affects the price of that which is consumed 
 at home, but that which is sent from home and 
 consumed by foreign nations. In trading with 
 each other, nations compute the value of their 
 respective commodities in money the same as 
 individuals. The commerce of nations is, in- 
 deed, merely a number of individual transac- 
 tions. In the international account, the value 
 of commodities, whatever the respective quan- 
 tities may be, is only known by their monied 
 price. 
 
 Dr Smith says, " though at distant places 
 " there is no regular proportion betwixt the 
 " real" (which he establishes to be their value 
 " computed in labour) " and the money price 
 " of commodities, yet the merchant who car- 
 " ries goods from one to the other has nothing 
 " to consider but the money price, or the dif- 
 " ference between the quantity of silver for 
 " which he buys them, and that for which he 
 " is likely to sell them. Half an ounce of sil-
 
 16 
 
 " ver at Canton, in China, may command a 
 ** greater quantity both of the labour and of 
 ** the necessaries and conveniences of life than 
 ** an ounce in London. A commodity, there- 
 " fore, which sells for half an ounce of silver at 
 " Canton, may there be realiy dearer, or of 
 " more real importance to the man who pos- 
 *' sesses it there, than a commodity which 
 " sells for an ounce at London, is to the man 
 " who possesses it at London. If a London 
 " merchant, however, can buy at Canton for 
 " half an ounce of silver a commodity which he 
 *' can afterwards sell at London for an ounce, 
 " he gains a hundred per cent, by the bargain, 
 " just as much as if an ounce of silver was at 
 '* London exactly of the same value as at Can- 
 " ton. It is of no importance to him that half 
 " an ounce of silver at Canton would have 
 ** given him the command of more labour, and 
 " of a greater quantity of the necessaries and 
 *' conveniences of life, than an ounce can do 
 " at London. An ounce at London will al- 
 " ways give him double the command of all 
 " these, which half an ounce would have done 
 " there, and this is precisely what he wants. 
 
 " It is the nominal or monied price, there- 
 " fore which finally determines the prudence 
 " or imprudence of all purchases and sales." 
 
 The profits of trade, however, are equal up- 
 on the average, and are determined by the
 
 17 
 
 capital employed, in importing the commodity, 
 which is again determined by its original cost 
 in money. If commodities, therefore, sell for 
 little money at home, they sell proportionably 
 low all over the world. 
 
 The Trade of Nations, upon the Average, 
 balances. 
 
 The commodities which go out of a coun- 
 try pay for those wliich come in. The value of 
 its exports and imports are equal ; when they 
 are not so, the balance is paid in money. By 
 this means, as we have already stated, the 
 price of commodities is raised in the country 
 by which the balance is received, and reduced 
 in that from which it is sent. 
 
 The prices of commodities influence their 
 consumption ; when they are high, their con- 
 sumption is reduced ; when low, increased. 
 Consequently by the diminished value of mo- 
 ney and increase of prices on the one hand, and 
 increased value of money and decrease of prices 
 on the other, the demand is reduced on one 
 hand, and increased on the other, until 
 computed in money, they become equal. To 
 illustrate this principle we shall imagine an ex- 
 treme case, by way of example. 
 
 Suppose a nation was to forbid, entirely, the 
 importation of foreign goods, but to allow the 
 
 D
 
 IS 
 
 exportation of its own, for payments in money ; 
 and the nations trading with it were still, un- 
 der these circumstances, to allow the trade, on 
 their parts, to be continued, the effect, it is 
 obvious, would be, that, in time, the prices of 
 all commodities would rise so high in the ex- 
 porting country, that the trade woidd be put a 
 stop to by their mere exorbitancy. 
 
 The policy or impolicy of admitting a trade 
 under such circumstances, would never enter 
 into the calculations of the merchant. So long 
 as the goods which could be bought in one 
 country for money, could be sold for money 
 in the other with a profit, he would continue the 
 trade. While he could gain money by any one 
 commodity, he would continue to export it 
 from one country to the other. 
 
 Such a trade, however, must come to an end 
 at last, or in time the whole money of the one 
 nation would be sent to the other. 
 
 By the operation of this principle, the trade 
 of all nations is brought to a balance. Should 
 a country possess manufacturing superiority, 
 and a greater demand exist for its commodities 
 than it has for those of other nations, it creates 
 a balance of trade in its favour. This balance 
 is paid in money, by which a rise is produced 
 in the price of its manufactures, and this rise 
 progressively continues until they are sufficient- 
 ly high to reduce the demand for them to a le-
 
 19 
 
 \nel with that demand, which it has for the 
 commodities of other nations. Thus the ma- 
 nufacturing superiority of this country elevates 
 its prices above those of every other. Our 
 consumption of foreign commodities is restrict- 
 ed to the wants of our own population, while 
 the demand of all the world for our manufac- 
 tures can hardly be said to have limits except 
 those which are imposed by price. 
 
 The general state of prices at which the fo- 
 reign trade of a nation balances, we shall term 
 its National PriceSy in contradistinction to Mar- 
 ket Prices, The average market price of a com- 
 modity is of course its national price. But ac- 
 cording to the scarcity or abundance of the 
 supply, the market price continually diverges 
 from, and gravitates towards the national price, 
 which has reference to the quantity of money 
 in the country, and not to superabundance or 
 scarcity in the markets. 
 
 The Accounts of Nations^ and their National 
 PriceSy have only Reference to Metallic Mo- 
 ney. 
 
 When the trade between countries balances, 
 
 or those payments, when that is not the case, 
 
 which are not made with the precious metals, 
 
 are settled by means of bills of exchange, a 
 
 D 2
 
 20 
 
 merchant of one country, who ships goods to 
 his correspondent in another, if he does not or- 
 der his correspondent to ship for him goods to 
 as great an amount in return, draws a bill upon 
 him for the value of the commodities which he 
 ships. This is sometimes done by the mer- 
 chants of both nations. Bills are drawn indis- 
 criminately at both ends, as with this country 
 and Holland ; and sometimes it is the practice 
 to draw from one end only, as in the trade with 
 America. 
 
 In the former case, there are foreign bankers 
 or dealers in foreign bills, at both places, who 
 have correspondence with each other. To 
 these bankers the bills at both ends are sold, and 
 remitted by them to each other to be received. 
 If the bills drawn at both ends are of the same 
 amount, saving the banker's profit for his trou- 
 ble, they are worth the value in money for 
 which they are drawn, and the price of bills, or 
 exchange as it is called, is at par. But if the 
 bills drawn in one country are of greater 
 amount than those drawn in the other, the 
 banker who purchases them will have to receive 
 the balance in money. The expence of trans- 
 porting this money, however, will amount in 
 freight, insurance, &c. to 4, 5, 6, or 7 per 
 cent. Independent, therefore, of the regular 
 discount for liis trouble, he cannot purchase 
 the bills, without he has them for as much less
 
 21 
 
 as will cover the expence of importing the 
 money to be received for them. The variation 
 in the exchanges or price of bills can never, of 
 coarse, much exceed the expence of transport- 
 ing money from one country to the other. 
 When there are, to any extent, more goods 
 ordered of a nation than by it in return, bills 
 upon it usually attain this premium. The ex- 
 changes are stated to be in its favour, and 
 money is remitted in settlement of the national 
 balance, until from the increased price of com- 
 modities, a check is given to that demand for 
 them by which it was created, and bills fall be- 
 low that price at which money can be remitted. 
 When there are no regular bankers establish- 
 ed in countries trading with each other, the 
 bills are all drawn one way. In the trade be- 
 tween this country and America, bills are all 
 drawn upon Englaiid. In that case, one bill 
 settles two transactions* A. in New York, 
 ships a quantity of flour to A. in Liverpool, 
 without ordering goods in return. B. in 
 Liverpool, also, without receiving goods in 
 return, ships an equal value of British manu- 
 factures to B. in New York. The established 
 practice being for all bills to be drawn upon 
 England, A. in New York draws on Liverpool 
 for his flour, and sells the bill to his neighbour 
 B. who remits it to Liverpool, in payment for 
 his goods. If bills are scarce, B. in New York
 
 might have to remit money at a certain ex- 
 pence, in payment of his goods ; he will, there- 
 fore, rather give as much extra price for a bill 
 as this expence amounts to, than incur the 
 trouble of sending money. If they are plenti- 
 ful, and cannot be sold, A. may have to be at 
 the expence of transporting the money from 
 Liverpool to New York, for which his flour 
 sells. Rather than do this, he will also take as 
 much less for his bill, as the expence of trans- 
 porting the money amounts to. If, however, 
 the shippers at both ends were to draw bills, 
 and there were no bankers to buy them, neither 
 of the bills would sell. Wherever, therefore, 
 bankers are not regularly established, all bills 
 must necessarily be drawn only one way. 
 
 Thus the exchange is the price of bills, and, 
 the weight and fineness of the coins of different 
 countries being determined, it is at par when a 
 bill will sell in the country where it is drawn, 
 for as many pieces of money of whatever de- 
 nomination, as shall be equal or equivalent in 
 weight and fineness, to the number of pieces of 
 money for which it is payable in the country 
 upon which it is drawn. Thus we shall say, if 
 six silver rix dollars, current in St Petersburgh, 
 have as much value of silver in them as one 
 pound sterling, a bill drawn in St Petersburgh 
 upon England for a^lOO, will sell, when the ex- 
 change is at par, for 600 rix dollars. Should, 
 however, the coin of St Petersburgh become
 
 23 
 
 clipped or defaced, and reduced in weight by 
 wear, it may take 6f or 7 rix dollars to make 
 one pound sterling ; consequently, before a re- 
 mittance of such money could be made to Eng- 
 land, bills upon England must not only be at 
 such a price as would cover the expence of 
 transporting the money with a profit, but make 
 up this deficiency in the weight of the rix dol- 
 lar also. The real par of exchange would be 
 650 or 700 rix dollars for a^'lOO, as it would take 
 that quantity coined into English money to 
 make one hundred pounds sterling. The par 
 of the exchange, however, having been previ- 
 ously determined, before the rix dollars were 
 defaced, at six to the pound sterling, in all 
 tables of exchanges, the exchange would no- 
 minally appear to be in favour of England, by 
 the amount of this depreciated value of the 
 Russian currency. The same is the case when 
 the bills are drawn payable in a paper curren- 
 cy, which does not bear the value it represents. 
 During the existence of the bank of England 
 restriction act, bank notes, in which all pay- 
 ments were then made, became considerably de- 
 preciated in value, compared with metallic mo- 
 ney. The consequence of course was, that a 
 bill upon England, drawn in St Petersburgh, 
 would sell in St Petersburgh for as much less 
 in metallic money, as the paper currency, in 
 which it was payable, was depreciated below 
 the value of metallic money in England.
 
 S4 
 
 By these means, the original par, as deter- 
 mined in books, tables, &c. often ceases to be 
 any measure of the actual par of exchange, and 
 only serves to embarrass and confuse the sub- 
 ject. The proper way to come at the true state 
 of the exchange, is to ascertain what weight of 
 gold and silver a bill is really worth in the coun- 
 try where it is drawn, and the weight of gold 
 and silver it is worth where it is payable ; and 
 the comparison of its value will exhibit how the 
 exchange really stands. In determining also 
 the national prices, it is necessary to ascertain 
 whether the currency, if paper, is worth the 
 metallic money it represents, or if gold and sil- 
 ver, whether it contains its original weight in 
 bullion, and if not, to make an allowance ac- 
 cordingly. 
 
 The Effect of an Importation of Money into a 
 Nation being merely to raise the Price of 
 Commodities in that Nation^ until the De- 
 mand for them is checked^ and the Trade 
 brought to a Balance, this might be just as 
 'well done by the Price of Commodities being 
 raised in any other Way, 
 
 The Money of a country may altogether con- 
 sist of a paper currency, though convertible into 
 gold. As banks increase, the issue of their paper
 
 '25 
 
 they diminish the value of money generally. If 
 a guinea note will answer the purpose of one 
 guinea, two guinea notes will answer the pur- 
 pose of two ; and if t?iere are two guineas in 
 paper and gold in circulation before, by add- 
 ing another, tlie vahie of money would be 
 depreciated, and prices increased above the 
 national standard, just the same by the issue 
 being paper as if it were gold. A reduced 
 foreign demand for commodities would follow, 
 and the balance of payments would be deter- 
 mined against the country, which would conti- 
 nue until prices were again brought down to 
 the national level, by gold being sent out of the 
 country, equal to tlie increased issues of paper 
 that had taken place. This might continue 
 until almost all the gold was sent out of the na- 
 tion ; but when it had nearly disappeared, the 
 banks would be compelled to make their ad- 
 vances with o'reater caution. Any demand 
 which their issues might create for gold to be 
 sent abroad, for want of gold they would be 
 unable to supply. While there was plenty of 
 it in the country, they might increase them 
 with confidence. But when the principal part 
 of the gold had left it, any increase of issues, 
 which would elevate prices above the national 
 level, would create a demand for gold in ex- 
 change for their notes, which they could not 
 answer without loss, and which would render a 
 
 E
 
 26 
 
 contraction of their issues, so as to reduce the 
 prices to the national standard, necessary. 
 
 With such a tendency in the banks to in- 
 crease their issues as far as could be done 
 with safety, a balance of trade, in favour of the 
 country, would not be the means of bringing 
 much money into it. The effect would be to 
 allow the banks the opportunity of increasing 
 their issues without producing a balance the 
 other way. By elevating the standard of the 
 national prices, it would admit and produce an 
 increase of local currency. Prices would rise 
 more rapidly, and the trade would be brought 
 to a balance without any considerable, if any, 
 addition to the precious metals in circulation ; 
 or if such addition were made, in the first in- 
 stance, it would be forced out of the country 
 again, by a subsequent issue of bank paper, 
 which would raise prices still higher. The 
 same tendency in the banks to increase their 
 issues, which would render gold unnecessary to 
 the circulation of the country, would also ex- 
 pel it. 
 
 If in this manner the trade might be brought 
 to a balance without the aid of the precious 
 metals, or without their continuing in circu- 
 lation, it might be much more easily done 
 by the state of the exchanges. We will sup- 
 pose, for example, that with all nations, the 
 transit of money is so effectually prohibited.
 
 27 
 
 that it could not be exported from one country 
 to another. 
 
 This being the case, any balance of trade 
 would produce an excessive demand for bills. 
 No transportation of the metals being allowed, 
 the national prices would remain, in both na- 
 tions trading with each other, unaltered. The 
 respective demands, therefore, of the two coun- 
 tries for the goods of each other, so far as their 
 original cost determined it, would preponderate 
 as before. This preponderance, however, would 
 be checked, and the trade brought to a ba- 
 lance by the price which the bills would attain ; 
 and as any reduction in the price of bills, by 
 which this check was produced, would again 
 create the original preponderance of demand, 
 the bills would remain at the price to which 
 they had risen. 
 
 Thus if, in the trade between this country 
 and Russia, we suppose the demand for Bri- 
 tish manufactures to far exceed our demand 
 for Russian produce, instead of bills drawn in 
 St. Petersburgh upon England being worth, 
 upon the average, six silver roubles per pound 
 sterling, they might rise to perhaps twice 
 that, and remain at that price, so that a mer- 
 chant in St. Petersburgh, importing goods 
 which cost ^100 in England, would have to 
 sell them for twelve hundred silver roubles in 
 St. Petersburgh, independent of what would 
 E 2
 
 28 
 
 cover his profit and expences, in order to en- 
 able him to purchase a bill upon England with 
 which to pay for them. In this transaction 
 there would be nationally no more gain or loss 
 than with an interchange of payments in a me- 
 tallic money ; for, if the inhabitants of Russia, 
 or other parts of the world, would rather give 
 such prices for British goods, as this state of 
 the exchanges would bring tliem to, than want 
 them, the national prices in Great Britain, 
 from the balance of payments, produced by 
 such a demand, would necessarily rise to pre- 
 cisely a corresponding level. 
 
 While by this state of the exchanges British 
 goods would be double the price in St Peters- 
 burgh which they cost in England, Russian 
 produce would be half the price in England 
 which it cost in St Petersburgh. A merchant 
 shipping Russian produce to England, would 
 be enabled to sell the bill he drew for it, for 
 twice the money which the goods cost him. 
 Consequently, if he got half the price in Eng- 
 land which they cost in Russia, besides what 
 was necessary to cover his profit and expences, 
 it would pay him. 
 
 In the case thus supposed, the national prices 
 would not be altered, while the price of foreign 
 commodities would. Instead of the national 
 prices doubling in this country, the prices of 
 foreign commodities would be reduced one
 
 29 
 
 half. Whereas in Russia the consumers would, 
 perhaps, know no perceptible difference, and it 
 AYOuld be perfectly immaterial to them whether 
 the high price of British goods arose from the 
 price of bills upon England, or the general 
 state of prices in it. 
 
 When the national prices of any particular 
 country are raised by an importation of gold 
 and silver, they will be met by a corresponding 
 reduction in the price of commodities in the 
 countries trading with it. But, as with Eng- 
 land, which trades with all the world, its na- 
 tional prices might be raised very high, by the 
 importation of the precious metals, without any 
 perceptible reduction in the prices of all the 
 world. Hence, it is probable, that in the case 
 supposed, there would be no perceptible dif- 
 ference between the prices at which British 
 goods would be sold in Russia, whether they 
 arose from the metallic currency of the rest of 
 the world being poured into Great Britain, or 
 from the state of the exchanges. 
 
 If, by any improvement in the monied sys- 
 tems of Europe, paper currencies were alto- 
 gether substituted for metals, the commerce of 
 the respective countries would be brought to a 
 balance in the manner described. The nation- 
 al prices would remain steady, and the fluctua- 
 tions of foreign trade would merely affect the 
 prices of foreign commodities.
 
 so 
 
 By tlie foregoing, it at least clearly appears, 
 that the foreign trade of nations always, upon 
 the average, balances. The exports of every 
 country pay for its imports. 
 
 Now, if I were to make a piece of cloth, 
 which took me the labour of a month, and ex- 
 changed it with another person for any other 
 commodity, having made the best exchange I 
 could, it would be of no importance to me 
 whether the commodity I purchased took six 
 months, or six days labour, to produce it. Its 
 cost to me would be one month's labour. The 
 same with the produce of land. Were I to ex- 
 change a given quantity of the produce of my 
 land for a given quantity of any other produce 
 of land, the cost to me would not consist in 
 the land and labour which the commodities I 
 purchased took to produce them, but of the land 
 and labour which it cost me to produce those 
 commodities which I gave in exchange for 
 them. Did I make these exchanges through 
 the intervention of money, it would be the 
 same as if by direct barter of commodity for 
 commodity. 
 
 "What is the case with individuals is also the 
 case with nations. The original cost of foreign 
 commodities, in the land and labour which it 
 took to produce them, is no part of their cost 
 to the nation importing and consuming them. 
 Their cost, to it, is the produce of its own land
 
 •1 
 
 and labour, with which they have been pur- 
 chased. Consequently, in consuming foreign 
 commodities, a nation does but indirectly con- 
 sume its own. 
 
 The expenditure of a country is regulated by 
 its income in money, and every individual in 
 this country who consumes one pound's worth 
 of foreign commodities, consumes one pound's 
 worth of British land and labour, which was 
 given in exchange for them. 
 
 Hence, in the reasonings of political econo- 
 my, it is unnecessary, in computing the expen- 
 diture and consumption of the income of a na- 
 tion, to refer to its consumption of foreign pro- 
 duce, which is only an indirect consumption of 
 its own. In speaking, therefore, of the expen- 
 diture of British income, we speak of the con- 
 sumption of British produce, which, though in- 
 directly, is, in reality, as much consumed when 
 we consume foreign commodities as if we had 
 no foreign trade and foreign luxuries, but con- 
 sumed the produce of our own land and labour 
 at home.
 
 CHAPTER IV. 
 
 The Fulcrum of the Argument. 
 
 It is tbe produce of the land and labour of a 
 country, in which its wealth consists. 
 
 Dr Colquhoun sums up the annual income 
 of the nation, expressed in money, at a scale of 
 value corresponding to 70s. 6d. per quarter for 
 wheat, in the following table : — 
 
 Property created in Great Britain and Ireland, in 
 the Year 1812—13. 
 
 Agriculture, in all its branches - ^216,817,624 
 Mines and minerals, including coals - 9,000,000 
 Manufactures, in every branch - 1 14,230,000 
 Inland trade, in all its branches - 31,500,000 
 Foreign commerce and shipping - 46,373,748 
 Coasting trade - - - 2,000,000 
 Fisheries, exclusive of the Colonial Fish- 
 eries of Newfoundland - - 2,100,000 
 Chartered and private bankers - 3,500,000 
 Foreign income remitted - - 5,000,000 
 
 5^430,521,372 
 
 Without subscribing to the perfect correct- 
 ness of this estimate, as we cannot see how
 
 33 
 
 banking profits are a creation of national pro- 
 perty, whatever they may be of individual, we 
 shall, for the sake of argument, assume the 
 statement to be true. 
 
 Now, the first thing necessary to the an- 
 nual production of any commodity is, that there 
 should be an annual consumption and demand 
 for it. Its production is, in fact, a proof of 
 its consumption. Without consumption no 
 demand could exist, and no production would 
 take place. Demand, on the other hand, pro- 
 ceeds from income. Without income, the in- 
 clination to consume may be strong enough, 
 but not being accompanied with the power of 
 purchase, the inclination is not sufficient. It 
 is, therefore, from the expenditure of income 
 only, that this demand arises. 
 
 This conclusion is, therefore, obvious, — that 
 if to the existence of an annual income of 430 
 millions, an expenditure of 430 millions be ne- 
 cessary, in order to cause that demand which 
 gives rise to it, and there is no other source of 
 income from whence this consumption can pro- 
 ceed, every shilling of the 430 millions must be 
 annually spent.
 
 CHAPTER V. 
 
 National Wealth not increased by National 
 Economy. 
 
 If the whole income of society must be spent, 
 and if the whole annual produce must be con- 
 sumed, in order to its being produced, no in- 
 crease of national wealth by mere accumulation 
 can take place. There must, no doubt, at all 
 times, be a stock of commodities in the hands 
 of the merchant, manufacturer, and dealer, in or- 
 der that consumption may be regularly suppli- 
 ed. This stock, however, must have been accu- 
 mulated previous to the establishment of that 
 consumption to which it administers. Thus, cot- 
 ton, which comes from the East and West In- 
 dies, has to go through such various manufac- 
 turing processes, that with the voyage, and 
 the time occupied in preparing it for use, a se- 
 cond crop, in all probability, will be off the 
 ground before the first reaches the consu- 
 mer. Hence, of necessity, there must be gene- 
 rally a stock equal to one crop on hand, before 
 consumption can take place. This stock may 
 be sometimes larger, and sometimes less. But
 
 35 
 
 it must always be sufficient to supply consump- 
 tion, and can never, to any very great extent, 
 exceed the amount necessary for that purpose. 
 A merchant or manufacturer very soon disco- 
 vers when his stock is too large, by his being 
 unable to dispose of it. He consequently 
 ceases either to import, or to manufacture what 
 he cannot sell. It is the same with every other 
 commodity. A stock of it must exist previous 
 to consumption, and though it may vary in 
 amount, can never very far exceed the limits 
 that the object for which it exists prescribes to 
 it. Not only will it not pay to have capital 
 invested in an unsaleable stock, but most com- 
 modities are perishable, and if they do not en- 
 tirely spoil, lose their saleable value by keep- 
 ing. Thus there can be no great accumulation 
 of national wealth by the saving of stock on its 
 way to consumption. Neither can there be any 
 saving of buildings and machinery. They must 
 also exist previous to the consumption which 
 they aid in supplying. The manufacturing ma- 
 chinery at any one time in use, is generally 
 equal to supply the demand to which it admi- 
 nisters, and if no improvement take place in it, 
 no very considerable stock of machinery beyond 
 what is wanted can accumulate. By an im- 
 provement in machinery, an additional capital 
 is sometimes rendered necessary. This, how- 
 
 F 2
 
 36 
 
 ever, is not the result of an accumulation of 
 capital, but of ingenuity ; and sometimes by 
 simplifying machinery, less capital is rendered 
 necessary, as well as more. When, however, 
 an additional capital, in consequence of any 
 such improvements, is required, it must accu- 
 nndate before consumption through the medium 
 of the new machinery can be supplied, and 
 when a sufficient quantity of it for that purpose 
 is set agoing, no further increase can take place. 
 The same may be said of almost every other 
 description of what economists call productive 
 capital. Its wear and tear will require to be 
 kept up. This forms part of the annual expen- 
 diture of a nation, but it never can materially 
 increase beyond the demand for it. 
 
 That this is the case will be sufficiently evi- 
 dent upon an examination of the amount of 
 productive capital which this country is esti- 
 mated to possess. The following is from Dr 
 Colquhoun's Tables, and includes Great Britain 
 and Ireland : — 
 
 Mines and Minerals. This valuation, I 
 
 apprehend, not only includes the capital 
 which they cost, but their value, accord- 
 ing to the rent or profits which they yield, 
 which, with the best mines, must far ex- 
 ceed their cost, .... ^75,000,000 
 
 Carried forward - - ie75,000,000
 
 37 
 
 Brought over ^75,000,000 
 
 Canals, tolls, and timber, estimated probably 
 
 upon the same principles, ... 50,000,000 
 
 Dwelling-houses, including warehouses and 
 manufactories, je400,000,()00, one quarter 
 of which we shall suppose to constitute the 
 value of the warehouses and manufactories, 100,000,000 
 
 Manufactured goods in a finished state, depo- 
 sited in manufactories, warehouses, and 
 shops for sale, 140,000,000 
 
 Foreign merchandise, deposited in ware- 
 houses, shops, &c. either paid for, or vir- 
 tually paid by debts owing to this country 
 by foreigners, 40,000,000 
 
 British shipping of every description employ- 
 ed in trade, including vessels on the stocks, 27,000,000 
 
 Agricultural property, consisting of grain, 
 hay, straw, cheese, butter, and other pro- 
 ductions of farms, including implements 
 of husbandry, 45,000,000 
 
 Animals, viz. horses, horned cattle, sheep, 
 hogs, goats, asses, deer, wild animals, and 
 poultry, 183,000,000 
 
 ^660,000,000 
 
 This table contains all that description of ca- 
 pital, by the accumulation of which, according 
 to the theory of Dr Smith, the wealtli of society 
 is, and may be increased ; yet it is little more, 
 by Dr Colquhoun's calculation, than equal to 
 one year and a half's amount of property annu- 
 ally created, though it has been accumulating 
 from the first dawn of civilization. That such
 
 capital is necessary and essentially conducive 
 to national wealth, there can be no question. 
 A spade is necessary and essentially conducive 
 to the annual produce of the garden which 
 is dug with it. But, that public wealth can be 
 increased by any parsimonious savings of it, 
 is quite impossible. When you have spades 
 enough, and to spare, more would not be 
 wealth but waste. If you build a mill upon 
 your estate, it may improve its value. If 
 you build another, with only employment for 
 one, you throw away so much money. You 
 do not increase your wealth by it. The same 
 with a nation. A stock of goods, machin- 
 ery, &c. is necessary, in order to the produc- 
 tion and advantageous distribution of wealth, 
 but no merely parsimonious increase of it can 
 be of any service. This country has much 
 more rapidly improved, and increased its stock 
 of this description of wealth, during the last 
 thirty years, than at any former period of our 
 history ; yet during the principal part of that 
 time, we have been engaged in expensive wars, 
 which have drained the country of its surplus 
 capital. Little or none was left to accumulate 
 and spread over the land, to irrigate its agri- 
 culture and commerce, according to existing 
 theories. No deficiency of capital, however, has 
 been observed : it has always been found where 
 it has been wanted. And from this it may,
 
 39 
 
 perhaps, not be incorrect to infer, that where 
 the spirit of improvement and enterprise, 
 (which are the children of freedom and intelli- 
 gence,) exists, want of capital is seldom expe- 
 rienced. It may, at least, be very safely as- 
 sumed that it never can accumulate where it is 
 not wanted ; and that national parsimony, to 
 any extent, is neither particularly advantageous 
 nor possible.
 
 40 
 
 CHAPTER VI. 
 
 National Wealth comjiosed of Annual Income. 
 
 A FINE house, fine furniture, a good stock of 
 cloatlis, and other consumable commodities, 
 are the usual symptoms of wealth ; but we 
 should not consider an individual rich who had 
 no other property. We should think him, on 
 the contrary, excessively poor, for the show he 
 exhibited. He would only be rich in propor- 
 tion to this appearance, if his annual income 
 corresponded with it. A nobleman with a 
 splendid house and no estate, would be an 
 exceedingly poor nobleman. He would, in 
 fact, be only worth what his house would sell 
 for, and purchase him in annual income. II* 
 he could not seU it, and purchase annual in- 
 come with the produce, he would be worth 
 nothing. 
 
 What is the case with an individual, is the 
 case also with a nation. Its buildings, furni- 
 ture, stock in trade, manufactures, shipping, 
 &c. though important instruments and undoubt- 
 ed proofs of wealth, form but the surface of it. 
 It is the annual amount of commodities produ-
 
 41 
 
 ced for actual consumption in which the wealth 
 of a nation principally consists. Though stock, 
 manufactories, canals, &c. like a mill upon an 
 estate for grinding its produce into flour, ware- 
 houses for storing it, and conveyances for car- 
 rying it, are necessary for preparing and distri- 
 buting its w^ealth for consumption, yet as it is 
 the corn, and not the mill, ^varehouses, carts, 
 &c. which constitutes the value of the estate — 
 for without the estate they would be worth no- 
 tliing, — so is it the annual produce of a nation, 
 which forms its wealth, and not the instruments 
 by which that produce is fitted for consump- 
 tion.
 
 42 
 
 CHAPTER VII. 
 
 Real and Nominal Income of Society. 
 
 The income of society, as expressed in money, 
 may be divided into two descriptions, the no- 
 minal and the real. A person with an estate, 
 which will yield him ten thousand pounds per 
 annum, may have it mortgaged to half its va- 
 lue : his income, however, will still be ten 
 thousand pounds per annum, though the mort- 
 gagee may receive one half of the rental for the 
 interest of his mortgage. The two incomes 
 united, in that case, would amount to fifteen 
 thousand pounds per annum, while the income 
 from which they were derived would only be 
 ten thousand pounds. The proprietor might, 
 with the remainder of his income, and the mort- 
 gagee with his share of it, employ servants and 
 labourers, purchase commodities which repre- 
 sent labour, materials, and profits of manufactu- 
 rers and tradesmen, hire teachers, reward play- 
 ers, go journies, &;c. and those persons who 
 thus received the money might in their turn 
 do the same. By passing in this manner from 
 hand to hand, it might entirely compose the
 
 43 
 
 incomes of many, and form a part of the in- 
 comes of many more ; and were the whole add- 
 ed together, would present an enumeration of 
 income to many times its original amount. The 
 real income, however, from which the whole 
 proceeded, would be that which was, in the 
 first instance, derived by the owner of the 
 estate from the produce of the soil. 
 
 G^
 
 44 
 
 CHAPTER VIII. 
 
 The Income of Society is consumed. 
 
 In whatever way a person acquires the money 
 he receives, he must do one of three things 
 with it. He must either hoard it, lend it at 
 interest to others, or expend it himself. 
 
 If he hoard it, he contracts the amount of 
 currency in circulation, and reduces the prices 
 of commodities below the national standard. All 
 changes of price are produced by an increased 
 or diminished demand for commodities in the 
 market, and the effect of hoarding is in the first 
 instance to reduce the demand for commodities 
 to the extent of the money hoarded. By this 
 means their price is reduced ; and by this re- 
 duction the foreign demand for them is in- 
 creased, and the surplus quantity which the 
 money hoarded left without a demand, is car- 
 ried off. A balance of payments is thus cre- 
 ated in favour of the nation, and a quantity 
 of money brought into it equal to that which 
 by hoarding was abstracted from circulation. 
 When the money that has been hoarded is 
 brought into circulation again, precisely the
 
 45 
 
 opposite effects are produced. Hoarding mo- 
 ney, therefore, does not diminisli tlie ultimate 
 demand for commodities, it only alters the 
 channel of their consumption. 
 
 If he lend it to others at interest, they give 
 him interest for it, either to expend it com- 
 mercially or actually. They employ it either in 
 building houses or ships, or digging mines, &c. 
 from which an annual profit is expected, or in 
 the manufacture of goods, or in the purchase 
 and sale of them, or in some way in whicJi the 
 transit of commodities from their first produc- 
 tion to their final consumption is promoted, in 
 all of which commercial or actual consumption 
 is produced ; or otherwise they expend it in the 
 actual purchase, consumption, and enjoyment 
 of the necessaries, conveniences, and luxuries 
 of life. 
 
 If he expend it himself, it must either be in 
 actual or commercial consumption as above de- 
 scribed : so that whether he saves the money, 
 or whether he spends it, consumption is equally 
 produced.
 
 46 
 
 CHAPTER IX. 
 
 Capital, 
 
 Capital, in common language, is understood 
 to be money. By political economists it is 
 defined to be not only money but stock, 
 buildings, and machinery. Properly, however, 
 it is neither money nor stock, buildings and 
 machinery. 
 
 In speaking of capital, we say that it is in- 
 vested in stock, buildings, and machinery; 
 but we equally say that it is invested in land. 
 It would be evidently improper to say, of the 
 latter, that capital was land, or land capital — 
 and it is equally so with respect to the former. 
 
 Neither is it proper to term money capital. 
 We speak of a miser's money, but not of his 
 capital. It is only capital when it bears inte- 
 rest, or is otherwise profitably employed. Be- 
 fore it can be so designated it must be spent, 
 or lent to others who will spend and consume 
 its value either commercially or actually. 
 
 It is the power of acquiring the means of an- 
 nual consumption which gives value to proper- 
 ty, and money is the medium by which this
 
 47 
 
 power is conveyed. Hence the value of all 
 property is computed in money. If two persons 
 wish to exchange properties, they each esti- 
 mate how great a quantity of consumable com- 
 modities they will command, that is, how much 
 money they will sell for, and they regulate 
 their bargain accordingly. 
 
 The value of money varies both with respect 
 to the commodities it will command, and the 
 interest which is given for it ; the former being 
 determined by the quantity of money in circu- 
 lation, the latter by the demand- for it on the 
 part of those who wish to borrow, compared 
 with the supply by those who have it to lend. 
 
 If property were subject to no chaiiges of va- 
 lue, from alterations in its own powers of pro- 
 duction or means of administering to the en- 
 joyments of mankind, it v/ould be constantly 
 subject to fluctuations in value, as computed 
 in money from the variations in the value of 
 money itself. When money will only com- 
 mand 2 1 per cent, interest, an estate is worth 
 twice the sum that it is when money will com- 
 mand five ; and when money is depreciated in 
 value, the price of the annual produce of the 
 estate being increased, its total value in money 
 is increased with it, and vice versa. Hence 
 the value of money, and of property, the annual 
 value of which is not regulated by the value of 
 money, continually varies. Houses and pro-
 
 48 
 
 perty created by the expenditure of money, 
 progressively change tlieir vakie with it. 
 
 Many of those who save money have no de- 
 sire to purchase property ; partly because they 
 do not wish to incur the trouble of managing 
 propert}^ the nature of which they probably do 
 not understand, and partly because they think 
 they can get better interest for it than any pro- 
 perty that they can purchase will afford. They 
 prefer, therefore, lending their savings at a 
 given rate of interest to those who will engage 
 to repay them in money when it shall be re- 
 quired ; and as they, at all times know the va- 
 lue of money in property, by knowing the 
 amount of the obligations which others are un- 
 der to them, that is, the money which they 
 have out at interest, they know the property 
 they are worth. 
 
 On the other hand, men of landed property 
 are seldom willing to sell their estates until 
 they are so much in debt that they cannot 
 avoid it. They will rather pay a rate of inte- 
 rest for money somewhat higher than the in- 
 come of their estates will leave, compared with 
 their value in money. For the repayment of 
 this money when it is required, and the inte- 
 rest of it in the mean time, they pledge their 
 estates. By this means, though they have vir- 
 tually disposed of as much of them, as at their 
 value, would be required to discharge the mort-
 
 49 
 
 gage,' yet they still retain them in their own 
 hands, with the power of discharging it at their 
 pleasure, possess the entire management of 
 them, and lose or gain by any alteration which 
 may take place in their value. The lender has 
 no further concern with them than to know 
 that they are a sufficient security for the princi- 
 pal and interest of his loan. Dwelling-houses, 
 buildings of different kinds, mines, and pro- 
 perty of a commercial nature, generally possess 
 a greater annual value than the common rate of 
 interest ; and the owners of such property, 
 rather than sell it, will often prefer borrowing 
 money when in want of it, as they find it will 
 be more profitable to do so. 
 
 The money thus acquired amounts virtually, 
 on the part of the borrower, to a sale of proper- 
 ty to the value of the sum borrowed, and the 
 lender of the money, if his security be good, 
 is actual possessor of as much property as it 
 would take, computing its value in money, to 
 satisfy the debt. But it has no reference what- 
 ever to the particular nature of the property 
 pledged for its security. Mortgages are merely 
 a precaution to which creditors think it neces- 
 sary to resort, in order to prevent persons get- 
 ting into more debt than their property wdll re- 
 deem, or from the state of the laws, which 
 make it difficult to compel a person to sur- 
 render his estate for the payment of his debts, 
 
 H
 
 50 
 
 if he be not in trade, without he does so volun- 
 tarily. If the lender has no particular security, 
 the property of his debtor, to the value of his 
 debt, is still virtually his. 
 
 The debt which an individual contracts has 
 reference to his property generally ; and it is 
 not unfrequent in trade to credit individuals to 
 considerable amounts, without a guarantee of 
 any kind ; but it is always upon the presump- 
 tion that they have property sufficient to meet 
 their engagements. After the money is bor- 
 rowed, it is spent and disappears, and the 
 produce of it is either totally consumed, and 
 the property of the party, to the value of the 
 debt, is virtually sold to the lender, or an 
 accumulation of stock, buildings, machinery, 
 or some property of value takes place, which 
 is pledged, with the general property of the 
 borrower, for the repayment of the money 
 when it is called for. But whether the money 
 be spent in actual or commercial consumption, 
 is quite immaterial to the lender, if there be only 
 property of one kind or other to repay him. If 
 his security be good, it is the same to him whe- 
 ther the property of his creditor consists of 
 stock, of buildings, or of land. 
 
 Money thus lent, is, properly speaking, capi- 
 tal. Capital is to property what a pound ster- 
 ling is to money. Though there is no such 
 coin as a pound sterling, its value in money is
 
 51 
 
 clearly understood. An obligation to pay a 
 pound sterling, is an obligation to pay its 
 amount in British coin. In the same manner 
 there is no such identical property as capital. 
 It is the value of property expressed in money, 
 and a person with capital possesses either di- 
 rectly or indirectly property equal to its value. 
 
 Capital, no doubt, often exists without re- 
 presenting any property that is tangible, and 
 yet is still capital. Thus tradesmen often have 
 considerable sums in book debts, due by per- 
 sons who depend upon their labour, or life in- 
 comes alone, for the means of repaying them ; 
 yet if these debts are safe and will be repaid, 
 they are as much capital to the tradesman to 
 whom they are owing, as if the amount of them 
 were vested in lands, buildings, or stock, or 
 rested on the most unquestionable securities* 
 In this case, however, the laws give the trades- 
 man a mortgage upon the future labour or in- 
 comes of the persons thus credited. His capi- 
 tal becomes vested in the lives of the parties he 
 trusts ; the same as capital is vested in slaves, 
 who out of their labour repay the principle and 
 interest of their cost. He has a life interest 
 in the labour or income of his debtors, the 
 same as they may have in estates or other 
 property. 
 
 Money lent by banks in their own notes be- 
 comes capital on the same principles. It is 
 H 2
 
 employed in actual or commercial consumption 
 by those who borrow it, and their personal la- 
 bour, stock in trade, debts, or property of what- 
 ever description, is mortgaged for its repay- 
 ment, independent of any particular mortgage 
 or sureties which may be given. 
 
 Tradesmen, merchants, manufacturers, mi- 
 ners, &c. in estimating their capital, pay 
 no respect to whether it consists of book 
 debts, stock, buildings, machinery, money, or 
 land, if land be necessary to their business. 
 The value of each description of property in 
 money is estimated, the whole is summed up 
 together, and the total is the capital employed. 
 
 Nothing, perhaps, has contributed to greater 
 confusion of ideas, than the want of a proper 
 definition of capital. To common observation, it 
 appears to be a mixture of property and credit, 
 which eludes description. It is one thing to- 
 day, and another to-morrow. Its value is bet- 
 ter understood than its nature. Upon looking 
 into political economy, however, for an analysis, 
 it is found to be stock, buildings, and machine- 
 ry. Whereas it is very well known, that many 
 great capitalists have neither stock nor machi- 
 nery, nor even buildings. " It has been usual," 
 says a political economist of great celebrity, to 
 whom the world is under great obligations, 
 " in speaking of that portion of the national 
 " revenue which goes to the capitalist in re-
 
 53 
 
 " turn for the employment of his capital, to 
 " call it by the name of the profits of stock. 
 " But stock is not so appropriate an expression 
 " in this case as capital. Stock is a general 
 " term, and may be defined to be all the mate- 
 " rial possessions of a country, or all its actual 
 " wealth, whatever may be its destination ; 
 " while capital is that particular portion of 
 " these possessions, or of this accumulated 
 ** wealth, which is destined to be employed 
 " with a view to profit. They are often, how- 
 " ever, used indiscriminately ; and, perhaps, 
 " no great error may arise from it, but it may 
 " he useful to recollect that all stock is not, pro- 
 " perly speakings capital^ though all capital is 
 " stock:* 
 
 This is the generally received definition of 
 capital by political economists, and I only give 
 it in the language of the author I have quoted, 
 because it is briefly and clearly stated. No- 
 thing, however, can be more erroneous. Stock 
 is the particular, and capital the general term. 
 The stock of a tradesman is the commodities 
 he has for sale. The stock of a farmer is the 
 produce which either is ready, or is preparing 
 for sale. The stock of a manufacturer the 
 same. A stock of cattle must be kept up, in 
 order to consume the herbage of the land on 
 which they are fed ; so must a stock of raw 
 materials by the manufacturer, in order to keep
 
 54, 
 
 his men and machinery employed. In both 
 cases, however, they are a stock preparing 
 for consumption. When we speak of a per- 
 son's stock simply, we always mean the stock 
 which he has on hand, of the commodities he 
 deals in, or produces for sale. It is also ap- 
 plied to machinery, to implements of husband- 
 ry, &c. but, in that case, the particular articles 
 to which it refers, are mentioned. We thus say, 
 his stock of implements of husbandry, his stock 
 of machinery, his stock of carts and horses, &c. 
 We also, no doubt, speak of a person's stock in 
 trade, by which we mean his capital, or the va- 
 lue of his property in trade, but this is an 
 abuse of the term, which political economists 
 have aided to perpetuate. 
 
 Stock has reference to the quantity, capital 
 to the value of the commodities. A trades- 
 man's stock of commodities may be large, while 
 the capital, which his stock is worth, is small ; 
 whereas if a scarcity of the particular commo- 
 dity he deals in, were to occur, his capital 
 might be rendered comparatively large, while 
 his stock was small. Thus stock is the term 
 of particular application, while capital is the 
 general term ; and so far from their being in 
 the least degree synonymous, they are in di- 
 rect opposition to each other. There is no 
 manner in which the term capital is more cor- 
 rectly applied than to the capital of a public
 
 55 
 
 bank, while there is nothing unreasonable in 
 the supposition, that such capital might be 
 lent out altogether upon the security of land, 
 in which case it could have no reference to 
 stock of any description ; yet by an abuse of 
 language we call the capital of such banks their 
 capital stock, and instead of joint capital, we 
 call them joint stock companies. It might not 
 be improper to speak of the stock of capital 
 possessed by a bank, but in that case stock 
 would be synonymous with quantity. 
 
 Capital is not usually applied to land, except 
 it be to express the interest which the mort- 
 gagee may possess in it. That, however, per- 
 haps, principally arises from its not being so fre- 
 quently bought and sold for money, as the pro- 
 perty of tradesmen, and from the value of its 
 annual produce not depending upon the rate of 
 interest. But a person's capital in land, is the 
 value of his land in money, the same as a 
 tradesman's capital in stock is the value of his 
 stock in money. A person may employ a ca- 
 pital by speculating in land, the same as by spe- 
 culating in stock, and some do so. In which 
 case it is evident that the amount of their capi- 
 tals must be determined by the value of their 
 stock in land. 
 
 Hence capital is an abstract term. When we 
 speak of a person's capital, we speak of his pro- 
 perty, but it is his property valued or expressed
 
 56 
 
 in money. Money Itself is not capital until it 
 is converted into property, or exchanged for it, 
 by loans upon the security of annual income, 
 or by the purchase of it. 
 
 Neither is land, nor stock, buildings and 
 machinery, capital. Capital is their value in 
 money. It is merely the term by which their 
 value is expressed ; and when we speak of any 
 description of property, with respect to the 
 capital it contains, we say that we have invest- 
 ed so much capital in it.
 
 57 
 
 CHAPTER X. 
 
 Principles nsohich regulate the Saving of Money, 
 
 As all the income of society is, and must be, 
 annually consumed, all the money which is 
 borrowed, in order to be spent by one person, 
 class, or body of individuals, must be necessari- 
 ly saved by another. 
 
 If every person himself spent the share which 
 he received of the 430 millions of national 
 income, there would be no money to be lent. 
 Those who are enabled to lend money, or pur- 
 chase the property of others, are those who have 
 first saved it out of their incomes ; and if nobody 
 did save, to borrow would be impossible. 
 
 On the other hand, if no one consumed more 
 than his annual incom.e, to lend money, and 
 acquire property by saving it, would be equally 
 impossible. No person would dispose of his 
 property, either by borrowing money upon it, 
 or by selling it, if he did not want the money, 
 which he thus gave up his annual means of sub- 
 sistence to acquire ; and if he neither expend- 
 ed, nor wished to expend more than his annual 
 income, he could not want it. In this case, no 
 
 I
 
 58 
 
 person could acquire property by saving mo- 
 ney. He could only hoard the produce of his 
 economy. 
 
 In all countries, however, possessing good 
 laws ; where every person may do with his pro- 
 perty as he thinks proper ; and where the fruits 
 of every man's industry and economy are secur- 
 ed to him, there always is a demand for money, 
 more or less, and hoarding is very little prac- 
 tised. As the whole income of society must be 
 spent, it is, therefore, equally clear, that the 
 demand for money on the one hand, and supply 
 of it on the other, must be equal. The amount 
 of the savings by those who do not spend their 
 annual incomes, must be precisely equal to the 
 wants of those whose expenditure exceeds them. 
 
 A demand for money is produced by four 
 different causes. By the necessity which exists 
 in an improving country for an increased stock 
 of buildings, machinery, commodities, &c. in 
 order to supply the increased population and 
 consumption which its increased fertility cre- 
 ates. By losses in trade and commerce. By 
 the excess of expenditure of those whose ex- 
 pences exceed their incomes j and by the wants 
 of government. 
 
 .y,Jn the cases just supposed, in which we have 
 stated that no demand for money could exist, 
 we, of course, presume the fertility and popula- 
 tion of the country not to be advancing, but
 
 59 
 
 stationary. In an improving country, there al- 
 ways is, however, a demand for money, for the 
 purpose of increasing its stock of commodities, 
 &c. by which to supply the consumption of 
 its increasing population. But, comparatively 
 speaking, this demand can never be very con- 
 siderable. The productive capital, as it is 
 termed, of this country, does not exceed, by 
 Dr Colquhoun's calculation, six hundred and 
 sixty millions : little more, as we have before 
 stated, than a year and a half's income. When 
 we consider the immense time that this stock 
 has been in accumulating, we cannot suppose 
 the annual demand for it to have been very 
 considerable. Had this kingdom been a bar- 
 ren waste six hundred and sixty years ago, and 
 the whole had accumulated since then, it would 
 still only prove a demand for money of one 
 million per annum upon the average — equal to 
 the saving of one pound a year in an income of 
 four hundred and thirty. I apprehend, no in- 
 dividual, whose demand for capital did not in- 
 crease at a greater rate, would ever imagine 
 that any great effort of saving would be neces- 
 sary, in order to supply himself. Nor does it 
 seem possible, that with a nation, any very mate- 
 rial demand for capital can arise from this cause. 
 A demand for money is produced by losses 
 in trade. A stock of goods in the hands of the 
 merchant, manufacturer, &c. is necessary, in 
 I 2
 
 drder to supply consumption, and this stock 
 has its natural limits. If, however, a manufac- 
 turer produce and sell his goods to a loss, or a 
 merchant import and sell his commodities for 
 less than they cost him, he reduces his capi- 
 tal by increasing the consumption of the coun- 
 try, and a demand for the savings of others, to 
 make up his loss, is produced. If a person sell 
 his commodities for half what they cost, the 
 amount of his loss is saved by the purchaser, 
 whose general consumption is increased in that 
 proportion, or the saving is lent and consumed 
 by others. The commodity, however, still 
 costing the same to produce, requires twice the 
 money to replace it for which it sold. Hence 
 a demand arises for the savings of others equal 
 to this deficiency ; which the losing party must 
 either borrow, sell property to acquire, or other- 
 wise, by reducing his trade, allow other persons 
 who have saved money equal to his loss to step 
 in with it, supply his customers, and increase 
 their trade in proportion as he is compelled to 
 reduce his. Losses in trade, therefore, which 
 diminish the price of the commodity to the 
 consumer, are indirectly an expenditure beyond 
 income equal to the loss sustained, and a de- 
 mand for money continually arises from this 
 source. 
 
 In the third place, a demand for money is 
 produced by the expenditure of those, whose
 
 61 
 
 expences exceed their income, and who are 
 consequently compelled to borrow money, or 
 dispose of their property for money, in order to 
 supply this excess of expenditure ; and lastly, 
 by government, who often raise money by 
 loans, and pledge the property and annual in- 
 come of the nation for the payment of the in- 
 terest of them. 
 
 On the other hand, the supply of money 
 must arise from the inclination to save ; and the 
 power to save by those who have the inclina- 
 tion. 
 
 By far the greater part of the community 
 have no inclination to save. Those whose in- 
 comes are derived from labour, find them in ge- 
 neral too small to supply their customary wants j 
 and those whose incomes are derived from pro- 
 perty, being secure of the annual receipt of their 
 incomes, and in consequence removed from any 
 anxious cares respecting the future, live in ge- 
 neral to the full extent of them. The econo- 
 mists of society principally consist of the mer- 
 cantile classes, who, being dependant upon 
 trades of precarious profit for their support, 
 learn the inclination of acquiring money from 
 the habit of doing so. It is necessary for eveiy 
 tradesman who means to do well, to save mo- 
 ney, in order to provide against a future evil 
 day, which the uncertainty of trade often pro- 
 duces. This necessity, the desire of indepen-
 
 6f 
 
 dence, and the ambition to be rich, which the 
 pursuits of trade usually generate, render this 
 class, in general, economists, and the savingg 
 of society are principally made by them. 
 
 The amount of savings by this class must, 
 however, altogether depend upon their power 
 to save. When the interest of money, and pro- 
 fits of trade are large, their power of saving is 
 necessarily greater than when the profits of 
 trade, and interest of money are small. When 
 their income is great, they can of course save 
 more than when it is little. 
 
 Now, the profits of trade are regulated by the 
 interest of money, and the interest of money 
 by the demand for it. 
 
 When the supply of money is greater than 
 the demand, it falls in price ; and rises when it 
 is less. If a person have money, and he cannot 
 get five per cent, interest for it, he must take 
 four ; if not four, three, &c. Any rate of inte- 
 rest, with good security, will be better than 
 hoarding it. On the other hand, if an unusual 
 demand for money arises, the only way to pro- 
 cure it, by those who have the means of doing 
 so, is to give a higher rate for it ; and those 
 who are willing to give most will have the pre- 
 ference. Thus the rate of interest fluctuates 
 with the supply and demand, upon the same 
 principle as with other commodities. 
 
 The effects are also precisely similar. An 
 increased demand for other commodities pro-
 
 63 
 
 duces an increased supply, and a reduced de- 
 mand diminishes the supply. And with money, 
 when the demand is reduced, the power of pro- 
 duction, or of saving it, is also diminished ; and 
 when the demand is increased, the power of 
 production or of saving is increased with it. 
 The interest of money and profits of trade, by 
 which the power of saving is determined, rise 
 and fall accordingly. 
 
 '* As the market rate of interest varies in 
 any country,*' says Dr Smith, " we may be as- 
 " sured that the ordinary profits of stock must 
 " vary with it, must sink as it sinks, and rise 
 " as it rises." 
 
 He also says, " As capitals increase in any 
 " country, the profits which can be made by 
 " employing them necessarily diminish. It be- 
 " comes gradually more and more difficult to 
 " find within the country a profitable method 
 " of employing any new capital. There arises, 
 '* in consequence, a competition between diffe- 
 " rent capitals, the owner of one endeavouring 
 " to get possession of that employment which 
 " is occupied by another. But upon most oc- 
 " casions he can hope to justle that other out 
 " of his employment by no other means but 
 " by dealing upon more reasonable terms." 
 
 On the other hand, profits are raised with 
 the demand for money, by part of that money 
 being- lent for consumption, which would other-
 
 64 
 
 wise have gone to replace the stock of the deal- 
 er. By this means the consumptive demand 
 is increased, and the prices of commodities 
 raised ; while, by the diminished capital in trade, 
 stocks are kept low, and the prices kept up. 
 Much of the capital employed in trade is bor- 
 rowed of bankers, and others, by persons in 
 trade, at the market rate of interest ; and the 
 first effect of any increased demand for money, 
 is to induce these bankers to abstract it from 
 its ordinary channels, in order to lend to those 
 who offer better terms for it. 
 
 Thus, with the increase or decrease of the 
 demand for money, do interest and profits of 
 trade rise and fall, by which the power of eco- 
 nomizing, in order to supply the demand, is 
 exactly proportioned to it. 
 
 The savings of a nation, therefore, diminish 
 the power to save. The incomes of those being 
 reduced, who are the principal economists of 
 the country, their power of economizing is re- 
 duced with the excessive supply of money, by 
 which the value of it is diminished. 
 
 The Dutch are the most saving people in 
 Europe ; and with them the profits of trade, and 
 interest of money, are always at a very low ebb. 
 When the bulk of a nation are economists, the 
 difficulty of making money becomes excessive j 
 and the commercial part of it are ground down 
 to penuriousness by the national parsimony.
 
 e>5 
 
 Precisely opposite are the effects produced 
 by an increase of national expenditure. The 
 profits of trade are good, and a free stile of liv- 
 ing pervades the mercantile classes ; they not on- 
 ly save more money, but they also spend more. 
 ■ Such an unusual increase of expenditure as 
 to raise the interest of money, rarely, however, 
 perhaps never, happens from the expenditure 
 of individuals. It mostly, if not always, arises 
 from the demands of governments. 
 
 The government of this country has, during 
 war, not unfrequently borrowed thirty or 
 fojty millions of money, in one year j whereas 
 during peace, instead of borrowing, it has been 
 usual to discharge some part at least of the 
 debt, which during the war had been contract- 
 ed. The interest of money, and the profits of 
 trade, have, of course, corresponded with this 
 wide difference in the acts of government. 
 Interest of money has been double at one time 
 what it was at the other ; and the profits of 
 trade even more than double. It is not unusu- 
 al for 3 per cent, consols to be at from 95 to 
 100 during peace. They have been even at 
 106, as will be seen by a table in the Appendix ; 
 while during the war, when these great loans 
 were contracting, they have been at or under 
 50. That is, interest of money on the security 
 of government, is often 3 per cent, in peace, 
 and 6 per cent, in war. 
 
 K
 
 66 
 
 The average profits of trade are affected in 
 even a greater degree. The legal rate of inte- 
 rest in this country, is 5 per cent. ; above which 
 individuals are not allowed to receive. When 3 
 per cent, stock is, therefore, under 60, and go- 
 vernment pays more than the legal rate of inte- 
 rest, individuals cannot give equal terms. The 
 expectation of profit by the future rise in the 
 funds also holds out temptations so great, that 
 the country is almost drained of its capital, in 
 stock, to supply the demands and consumption 
 of government. When this is the case, trade is 
 greatly carried on upon credit, and its profits 
 far exceed that proportion to the interest of mo- 
 ney which they regularly preserve when inte- 
 rest is below the legal rate. Most persons who 
 liave been in trade within the last dozen years, 
 will be able to vouch for these facts. 
 
 Government securities are not now so high 
 as at any previous interval of peace of the same 
 duration ; but this has arisen from a cause which 
 we shall hereafter explain. 
 
 At the same time that the power of saving 
 is greater or less, the power of spending in 
 those who have the means and inclination, 
 will be affected in an inverse ratio. When 
 the interest of money rises, the value of land 
 falls. An estate which would be worth forty 
 years purchase with the interest of money at 
 ^1 per cent., would be worth only half that
 
 67 
 
 with the interest of money at five, and would 
 only have half the spending in it. For this 
 reason, as the demand for government increas- 
 ed, the power of spending by individuals would 
 be diminished. On the contrary, when there is 
 a superior tendency in a nation to save, either by 
 the economy of its government, or of individu- 
 als, temptations to expenditure are held out by 
 the increased value of landed property. If a 
 person will run through his estate, with money 
 at ^ per cent, when it is comparatively so easily 
 done, he will be much more disposed to do so 
 when there is so much more spending in it, and 
 his ruin is at so increased a distance : or if 
 living to a small extent above his income will 
 not materially affect it, many may be tempted 
 to exceed a little, who would be restrained 
 when the interest of money was high, and land 
 of comparatively small value. With small pro- 
 fits, the employment of a greater capital in trade 
 also becomes necessary, and leaves room for a 
 greater accumulation. When profits are high, 
 credit is very generally given and received, and 
 merchants are often enabled to make money on 
 transactions in which no capital is employed. 
 They will often be able to purchase on credit, 
 and effect sales of the commodity so purchased 
 in sufficient time to enable them to meet the 
 payment with the proceeds of their sales. This 
 credit, which is attended with jisk, must he 
 
 K 2
 
 '68 
 
 paid for, and must be recovered in the price 
 for which the commodity finally sells. By -a 
 general system of credit, which a universal 
 scarcity of money is the means of establishing, 
 a tradesman is thus enabled to conduct his bu^- 
 siness with less capital than would be otherwise 
 necessary. If he get four or six months credit 
 upon all his goods ; in some trades wherein the 
 sales are quick, and principally for moneys they 
 may be almost carried on without any capital'; 
 but in all trades less capital is necessary than 
 where payment must be made in money. ,,inni 
 
 When, however, capital becomes plentiful^ 
 credit is neither required, nor can be afforded-. 
 The profits are so small, that they will not co* 
 ver the risk attending it ; while, fro m> the su* 
 perabundance of capital in trade, which cannot 
 be better employed, credit is not required. , The 
 tradesman with capital finds it more to his inte- 
 rest, by way of employing it, to pay money for 
 his goods, which he gets cheaper in conse-. 
 quence. He is disposed also to hold larger 
 stocks. By these means he is able to undersell 
 his poorer competitor, and in every respect has 
 the advantage of him. Tradesmen without ca- 
 pital are, therefore, finally superseded by those 
 who have it. 
 
 Very little business is done in Holland, upon" 
 cf edit. Capitals are req uired iti every , trade ; ; 
 and the experience of most persons iioW in
 
 69 
 
 business will enable them to say, that, taking 
 trade in all its branches, there is a greater 
 quantity of capital employed for the value 
 turned over, than there was a few years ago — 
 larger stocks on hand, and less credit given, at 
 least among merchants and traders, with each 
 other. 
 
 It is very usual to consider, that when the pro- 
 fits of trade are good, the nation is flourishing ; 
 and it cannot be denied, that to the superior 
 education and intelligence which wealth has 
 disseminated, and the spirit of speculation and 
 improvement to which success in trade has giv- 
 en rise, the advancement of this country to its 
 recent state of commercial and agricultural 
 prosperity must be attributed. But, it is evi- 
 dent, that the profits of trade, which fall upon 
 the price of commodities, must be nothing 
 more than a tax paid by the ultimate consumers 
 of them, and that just in proportion as the 
 tradesman flourishes the consumer suflTers. If 
 the whole income of society must be consum- 
 ed, it is only a different mode of arranging 
 that consumption, and nationally there is no 
 greater prosperity with great profits than with 
 small ones. Capitalists, however, principally 
 reside in towns, and the profits of trade influ- 
 ence every department of business. The news- 
 papers, the organs of public opinion, feel the 
 goodness of the times as well as any otlier
 
 70 
 
 description of traders, and express them- 
 selves accordingly. Both feeling and seeing 
 the great difference which a change in the pro- 
 fits of trade produces, they are apt to imagine 
 that the nation is going to ruin when they 
 are small, and that it is prosperous when they 
 are high ; because, in the one case they, their 
 friends, and neighbours are making money ; and 
 in the other, a general depression exists, and 
 they and their neighbours are losing it, or 
 making less than before.
 
 71 
 
 CHAPTER XL 
 
 Corn creates its otvn Demand. 
 
 In well-populated countries, the earth is made 
 to produce to its utmost ability, by the best ma- 
 nagement, which, according to their skill in 
 agriculture, its inhabitants can apply to the 
 cultivation of the soil : yet, if we, at each re- 
 turning harvest, examine the barns, granaries, 
 and stack-yards throughout the country, we 
 shall generally find that the produce of the past 
 year has been consumed. After a year of more 
 than usual abundance, we may, no doubt, oc- 
 casionally see here and there wealthy farmers 
 holding their crops over to another season ; 
 but, by taking an average of two or three 
 years, we shall find that the annual produce is, 
 upon the average, annually disposed of. 
 
 When the harvest is an average one, this is 
 more particularly the case. Provisions are then 
 at an average price. There is no temptation 
 to hold, unless there is a prospect of the ensu- 
 ing harvest being particularly bad ; and as this 
 is happily not very frequent, the farmer gene- 
 rally disposes of one crop before the other is 
 fit for the market.
 
 72 
 
 In those seasons the prices of provisions are 
 at that level to which the means of expenditure 
 are accommodated. There is sufficient for all 
 who enjoy their accustomed means of paying 
 for it, according to the existing supply and 
 wages of labour ; and while there is nothing 
 deficient, there is nothing to spare. 
 
 Those countries which regularly export or 
 import corn may be said to afford an objection 
 to this rule. They, however, always import or 
 export a corresponding quantity of commo- 
 dities representing labour, by which, as we shall 
 hereafter more particularly show, the rule, as it 
 affects the internal production and consump- 
 tion of a country, is not infringed. But if we 
 take inland countries, where exportation or im- 
 portation is physically impossible, we shall find 
 this proportion of the consumption to the sup- 
 ply, with respect to the princijpal articles of 
 food, uniformly preseaved. 
 
 The provision of nature, by which this paral- 
 lel is maintained, might, at first sight, appear 
 wonderful. There are thousands and millions 
 of people in every country, many of whom are 
 not restrained by any pecuniary consideration 
 from consuming what they think proper. They 
 eat apd drink three or four times a day, with- 
 ottt practically, at least, taking any thought 
 whether the crop will last to the end of the 
 year or not; and yet, when an average one, it
 
 73 
 
 does last to the end of the year, without any 
 material surplus, at least, and without any de- 
 ficiency having been experienced. 
 
 There are very few families that could previ- 
 ously undertake to determine their consump- 
 tion for the ensuing year with any such exact- 
 ness ; yet if nature, in any country, were to 
 make a mistake in its calculation of but one 
 day's provision in twelve, that is, of one month 
 in the year, and the country were to run short, 
 the inconvenience that would result may be con- 
 ceived, when it is considered that the greatest 
 supply of provisions which was ever imported 
 into this country in years of the severest scar- 
 city, never exceeded a month's ordinary con- 
 sumption of its inhabitants. 
 
 With all commodities, however, the supply 
 and demand must, upon the average, be equal. 
 As we have already stated, production is a 
 proof of demand, and would not take place 
 without it. But between food and other com- 
 modities there is this difference, that with the 
 former the supply is produced without refer- 
 ence to the demand, and yet the demand is 
 exactly equal to it, while with the latter the 
 supply is regulated by the demand. 
 
 With all commodities, except food, great 
 fluctuations in the quantities cultivated or ma- 
 nufactured constantly take place. The sup- 
 ply produced is sometimes much larger, and
 
 74 
 
 sometimes much less than is required, and it is 
 from the alteration in prices produced by this 
 fluctuation that they are ultimately accommo- 
 dated to each other. 
 
 Of every article of general consumption 
 there are naturally a great many growers or 
 manufacturers, who have no connexion with 
 each other, and no knowledge of the quantities 
 which each intends to produce. Neither in 
 general liave they much knowledge of the con- 
 sumption ; their only mode of knowing the 
 state of either, with any degree of practical 
 certainty, being from the state of the market. 
 When the market is too full, sales cannot be 
 made, and when it is short in quantity, they 
 can. By this criterion the producers regulate 
 themselves. When there is a brisk demand, 
 prices get up, and more land or more labour is 
 turned to the production of the commodity, 
 until the demand is satisfied and the market 
 over-stocked. While this glut continues, that 
 which is grown or made cannot be sold, the 
 prices fall, and the quantity produced is again 
 diminished until it is reduced below the regu- 
 lar demand. The over stock is consequently 
 again taken out of the market, and a brisk de- 
 mand succeeds as before. 
 
 From these fluctuations, it will be obvious 
 that it is the supply which accommodates itself 
 to the demand. But this cannot be the case
 
 75 
 
 with corn, or similar effects would be observ- 
 able. Sometimes without a particularly favour- 
 able season, the supply would be too great, and 
 sometimes without a bad season, the supply 
 would be too small. Whereas we find the agri- 
 culturist applies his utmost art and labour to 
 the cultivation of the soil, which he renders as 
 productive as he possibly can, and he always 
 finds a demand equal to the supply which he 
 is enabled to produce. It is, therefore, the 
 supply which creates the demand, and not the 
 demand as with other commodities, which cre- 
 ates the supply. 
 
 The skill with which the soil may be cultiva- 
 ted in different countries, may not be the same, 
 and one country, without greater natural ad- 
 vantages, may be made to produce infinitely 
 more than another : but this equality of demand 
 with the supply, is the same, whatever the fruit- 
 fulness of the soil may arise from. 
 
 Any considerable variation from an average 
 crop, is also accompanied by a corresponding 
 alteration in the demand. When the crop is 
 great, the demand is greater ; when it is small, 
 the demand is less. This is produced by an 
 alteration in prices, which the alteration in 
 tlie supply creates. Wlien it is abundant, the 
 prices fall ; when deficient, they rise ; and in 
 every fully populated country, a corresponding 
 variation in consumption takes place, with the 
 L 2
 
 76 
 
 variations of price. High prices compel its po- 
 pulation to reduce their consumption, and low 
 prices enable them to increase it. Unless, 
 therefore, it is the pleasure of the growers or 
 speculators to hold their stocks over to another 
 season, it can always be consumed within the 
 year. This the experience of every farmer and 
 corn dealer will enable him to substantiate. 
 Whatever theories he may entertain upon the 
 subject, or however he may account for it, he 
 will be enabled to state, that there never was 
 a year in which he could not have sold at the 
 market price ; or that he could, from his own 
 observation, perceive any want of consumption, 
 however he may have lamented the lowness of 
 price. 
 
 That the consumption is always equal to the 
 supply, even when the demand for labour ap- 
 pears to be considerably reduced, is evident 
 from last year's experience. The necessities of 
 the farmers, and the little prospect of advan- 
 tage by holding, together with the prospect of 
 an early and abundant harvest, could not but 
 have the effect of inducing them to bring their 
 corn to market ; and this it appears they have 
 done. Messrs Cropper, Benson, and Co. of 
 Liverpool, who possess the only information 
 that can be relied upon respecting the crops, 
 and who may be considered perfect authority 
 upon the subject, in a most important circular
 
 77 
 
 which they have lately issued on the state of 
 the cotton trade, have stated with respect to 
 corn, as follows : — 
 
 *' Last year's crop of corn is generally esti- 
 " mated not to have supplied the country more 
 " than eleven months ; and though the present 
 " crop is less than the preceding, and the con- 
 " sumption going on at a greater rate than 
 " ever known, still the price is lower than ever 
 " remembered. If the present unmercantile 
 " feeling of holding no stocks is to continue to 
 ** prevail, we may be quite run out of all these 
 " important articles before people are general- 
 " ly aware.'* 
 
 The reason, no doubt, for the consumption 
 going on so rapidly, is, that the farmers cannot 
 hold, and are forcing their corn into the mar- 
 ket, and the consumption, on the principles 
 stated, keeps pace with the supply. I do not 
 mean from this to infer, that the present gene- 
 ral low state of prices arises from abundance of 
 supply : the above extract shews that not to be 
 the case, but merely that there is always a de- 
 mand equal to the supply at the existing prices, 
 even though some may for want of employment 
 be starving ; and if the prices are sufficiently 
 reduced, the supply will be taken of. 
 
 Thus while in average seasons the demand 
 and supply are equal, the fluctuations in de- 
 mand which abundance or scarcity produces,
 
 78 
 
 by which to accommodate it to the supply, sup- 
 port the general principle that it is the supply 
 which creates the demand. 
 
 This reasoning only applies of course to well 
 populated countries. In new countries, such 
 as the back settlements of America, where the 
 population is thin, the production of corn is 
 checked by the want of demand. But even 
 then the demand steadily increases. There is 
 no fluctuation similar to what is observed in 
 other commodities, and when the supply be- 
 comes stationary, the average demand will be- 
 come so too. 
 
 The agricultural committee of 1821, have 
 laid down a principle in their report to which 
 the above is in direct opposition, and proceed- 
 ing from such authority, some notice of it be- 
 comes necessary. The report says, — 
 
 " In the article of corn, however, there is 
 *' one consideration to be constantly borne in 
 " mind, most material to enable the house and 
 ** the country to arrive at a sound and safe 
 ** conclusion on this important subject, name- 
 " ly, that the price of corn fluctuates more 
 " than that of any other commodity of exten- 
 " sive consumption, in proportion to any ex- 
 " cess or deficiency in the supply. 
 
 " The cause which produces this greater 
 *' susceptibility in the corn market, cannot be 
 " better explained by your committee, than in
 
 79 
 
 " the following extract from the answers of 
 ** Mr Tooke, one of the witnesses who was 
 " particularly examined on this point. Why 
 " should a different principle apply to corn 
 •* than to any other general production ? Be- 
 " cause a fall in the price of any other commo- 
 " dity not of general necessity, brings the ar- 
 " tide within the reach of a greater number of 
 *' individuals ; whereas in the case of corn the 
 *' average quantity is sufficient for the supply 
 *' of every individual ; all beyond that is an 
 " absolute depression of the market, for a great 
 *' length of time, and a succession of either 
 " two or three abundant seasons, must evident- 
 " ly produce an enormously inconvenient ac- 
 " cumulation. Is there not a greater consump- 
 " tion of corn when it is dear than when it is 
 " clieap, as to quantity ? There may be, and 
 " possibly must be a greater consumption ; but 
 " it is very evident, that if the population was 
 *' adequately fed, the increased consumption 
 " from abundance, can amount to little more 
 " than waste ; and this would be in a very 
 " small proportion to the whole excess of a 
 " good harvest or two. The whole population 
 " of this country and others do not subsist up- 
 " on wheat, therefore when wheat becomes 
 ** cheap, those who were formerly fed upon 
 " other corn, may take to feeding upon wheat : 
 " my remark was general as applying to corn.
 
 80 
 
 " There is no doubt that if there is one de- 
 " scription of corn applicable to human food, 
 " which is abundant, and another that is defi- 
 ** cient, then the principle does not apply ; 
 " my principle applies to corn generally as ap- 
 " plicable to human food. It may be observ- 
 " ed, that abundant seasons generally extend 
 ** to the leading articles of consumption, and 
 ** that it seldom happens in what are common- 
 " ly called good years, there is a complete fail- 
 " ure in any one great article." 
 
 *' In the substance of this reasoning your 
 " committee entirely concur ; and it appears 
 " to them, that it cannot be called in question 
 " without denying either that corn is an arti- 
 ** cle of general necessity and universal con- 
 ** sumption amongst the population of this 
 '* country, or that the demand is materially 
 ** varied by the amount of the supply. This 
 " latter proposition, except within very narrow 
 ** limits, altogether disproportioned to the fluc- 
 " tuations in production, is not warranted by 
 *• experience. The general truth of the ob- 
 ** servation remains, therefore, unaltered by 
 " any small degree of waste on the one side, 
 ** or of economy on the other ; neither of 
 " which are sufficient to counteract the effect 
 ** which opinion and speculation must have 
 " upon price, when it is felt how little demand
 
 81 
 
 ** is increased by redundancy, or checked by 
 " scantiness of supply." 
 
 The first principle thus laid down is quite 
 erroneous. Precisely the reverse is the truth. 
 
 * Why should a different principle apply to 
 ' corn,*' says the report, " than to any other 
 
 * general production ? Because a fall in 
 ' the price of any other commodity, not of 
 
 * general necessity, brings the article within 
 ' the reach of a greater number of indivi- 
 
 * duals." 
 
 Now the fact is, that there is no such differ- 
 ence in the supply of other commodities, or the 
 fluctuations would be greater. Our merely ac- 
 quired habits of consumption do not so quickly 
 change. The demand for commodities gene- 
 rated by habit is pretty uniform, and the cost 
 of their production is known. When, there- 
 fore, the prices fall below it, it is common 
 sense that those will hold who can, it being 
 certain that a diminished supply must follow, 
 since the prices will not pay for the produc- 
 tion. If an increased quantity of some articles, 
 which must be sold, as is the case with corn, 
 were thrown into the market, they would sell 
 for hardly any thing. 
 
 " AVhereas in the case of corn," it is further 
 stated " the average quantity is sufficient for 
 " the supply of every individual." 
 
 Now this means nothing, if it does not mean 
 
 M
 
 8^ 
 
 that in average seasons every labourer has em- 
 ployment, and wages sufficient to purchase food 
 that will fully supply the wants of himself and 
 every individual of his family. As this, how- 
 ever, as much depends upon the supply of la- 
 bour as of corn, it cannot go thus far, and 
 therefore must go for nothing. 
 
 " All beyond that," the report goes on to 
 state, " is an absolute depression of the mar- 
 *' ket for a great length of time, and a succes- 
 " sion of even two or three abundant seasons 
 " must evidently produce an enormously in- 
 ** convenient accumulation." 
 
 On this principle, therefore, whether the ex- 
 isting low prices arose from excessive supply 
 might have been at once determined, by as- 
 certaining the fact of whether or not there 
 was an enormously inconvenient accumulation. 
 This, however, the committee neglected to 
 do, or, it is probable, they would have disco- 
 vered the error into which they and Mr Tooke 
 had fallen. 
 
 It next says, " Is there not a greater con- 
 " sumption of corn when it is cheap, than when 
 " it is dear, as to quantity ? There may be, 
 " and possibly must be a greater consumption 
 " of corn when it is cheap, than when it is 
 " dear, but it is very evident that if the popu- 
 " lation was before adequately fed, the increas- 
 " ed consumption from abundance, can a-
 
 83 
 
 *• mount to little more than waste ; and this 
 ** would be in a very small proportion to the 
 ** whole excess of a good harvest or two." 
 
 This last clause widens the principle of in- 
 convenient accumulation, by laying it down 
 as impossible, that the excess of a good harvest 
 or two, could be consumed. If Mr Tooke, 
 and the committee, would pardon an attempt 
 to smile at their expence, we have fairly a right 
 to assume, that they never rise from table, un- 
 til they are so satisfied that they can seldom 
 take another mouthful themselves, and being, 
 as they conceive, adequately fed, innocently 
 imagine that the rest of the population have as 
 iittle room left in their stomachs for more, as 
 they have. 
 
 Whether it might be waste or not, we shall 
 not pretend to say. But this I think we may 
 venture to state, that whatever may be the 
 case with the committee, the labouring classes, 
 including their families, can consume half as 
 much more, if not twice as much, as they have 
 the means of doing in average seasons, with the 
 present redundancy of our population. And 
 that in popidous countries, there never was a 
 harvest so abundant, that it was not very easily 
 consumed, without producing either surfeit or 
 apoplexy. 
 
 In the substance of Mr Tooke's reasoning, 
 the committee, it will be seen, entirely concur- 
 M 2
 
 84 
 
 red, denying that the proposition, that the de- 
 mand is materially varied by the amount of the 
 supply, except within narrow limits, altogether 
 disproportioned to the fluctuations in supply, is 
 warranted by experience. 
 
 What experience is here referred to, I am 
 unable to discover. It is from our every-day 
 experience, that we are compelled to draw the 
 opposite conclusion. 
 
 My object in making these observations is to 
 eradicate an erroneous opinion which has the 
 weight of authority with it ; not any wish ge- 
 nerally to find fault with the report, which al- 
 together is evidently far the most sensible and 
 able document which has appeared upon the 
 subject. 
 
 From the foregoing, it will at least appear, 
 that it is not the demand for food which creates 
 and regulates the supply as with other commo- 
 dities, but that it is the supply which creates 
 and regulates the demand. In every country 
 the supply has created an average demand 
 equal to itself, and when any temporary varia- 
 tion takes place in consequence of superabun- 
 dant or deficient crops, consumption is increas- 
 ed or diminished in equal proportion, by a rise 
 or fall in prices.
 
 85 
 
 CHAPTER XII. 
 
 Labour. 
 
 Com can only create its oxim Demand by fur- 
 nishing Months to conswne it. 
 
 Mr Malthus, in his admirable essay on the 
 principles of population, has shewn, that it al- 
 ways keeps pace with the means of subsistence. 
 When labour is scarce, wages high, and fami- 
 lies easily maintained, population increases ; 
 and when population is too great, and labour 
 too plentiful, wages fall below what is neces- 
 sary to support a family, and population de- 
 creases. 
 
 These principles are perfectly natural ; but 
 the genius of Mr Malthus has rendered them 
 obvious. Without this, indeed, the right ap- 
 plication of principles can seldom be either 
 seen or safely adopted. Men are animals, and 
 propagate their species in the same manner as 
 other animals. Were all to marry at the age 
 of puberty, each couple would, on the average, 
 it has been calculated, produce not less than 
 eight or ten children. If food and cloathing
 
 86 
 
 were as plentiful, and acquired with the same 
 ease at that age by men, as by other animals, it 
 is probable that we should act like other animals 
 in that respect. The feeling or sentiment of 
 love is, perhaps as strong, if not stronger, at 
 sixteen or seventeen, than at any other pe- 
 riod ; and if, at that age, persons could pro- 
 vide for themselves and families, plenty of 
 food, shelter, and cloathing, without care or 
 foresight, there can be little doubt but they 
 would marry, and multiply as other animals do, 
 under the same circumstances. At this rate, 
 population would necessarily increase four or 
 five fold, every twenty or thirty years. 
 
 Men, however, do not marry at this age ; 
 and for this very obvious reason, — they could 
 not provide for themselves and families if they 
 did. Though they are animals, they are en- 
 dowed with reason, which has rendered this 
 evident. In an advanced state of society, to 
 provide for a family requires in general all the 
 forecast and exertion of a mind and body at 
 full maturity. 
 
 In no state of society, however, could men 
 marry so early as at the age mentioned. If the 
 means of human subsistence were ever so plen- 
 tiful, it is never acquired, as by other animals, 
 without labour. Both labour, and the exercise of 
 knowledge and experience in its application, are 
 necessary to the production of the necessaries of
 
 87 
 
 life ; for which, the strength, neither bodily 
 nor mental, at the ages of sixteen or seventeen, 
 is sufficiently matured. As it is, population, 
 under favourable circumstances, will double it- 
 self in twenty-five years, as has been proved in 
 America, if not even in much less time. 
 
 When population has arrived at that point 
 beyond which it can advance no further, — when 
 the world, or any particular nation, has as many 
 people as it can produce food to support, more 
 children cannot be reared, than are necessary to 
 supply the waste of life among its existing in- 
 habitants. Instead of eight or ten to each cou- 
 ple, which mankind are capable of producing, 
 there cannot be more than two brought to ma- 
 turity, upon the average of the whole commu- 
 nity. This renders a prudent restraint with 
 respect to marriage absolutely necessary. 
 
 Mr Malthus has shewn, that when this pru- 
 dence is departed from, the children which are 
 brought into the world, perish for want of pro- 
 per nourishment. In many countries, where 
 such restraint is not practised, disease, pesti- 
 lence, and famine are the periodical consequen- 
 ces J and in all countries, its neglect is attended 
 with the most baneful effects. 
 
 Having, on the other hand, shewn the bene- 
 ficial results of a prudent restraint with respect 
 to marriage, he recommends the practice of it j 
 and condemns our present poor laws, the effects
 
 88 
 
 of which are to create the evils which they are 
 intended to cure. 
 
 As the law now stands, if a man cannot pro- 
 vide for his family, the parish must. This re- 
 moves the fear of starving, the only check to 
 early marriages which exists. The conse- 
 quences of this are, that more children are 
 brought into the world than can be supported — 
 a great part of the lower classes is reduced to a 
 state of pauperism — and the parishes are at a 
 great annual expence in dealing out a scanty 
 and insufficient support to those wretched be- 
 ings, who are rendered so, by the miserable and 
 mistaken system of laws, under which the cha- 
 rity they receive is granted. 
 
 " Poverty," Dr Smith states, " though it 
 " no doubt discourages, does not always pre- 
 " vent marriage. It seems even to be favour- 
 " able to generation. A half-starved High- 
 " land woman frequently bears more than 20 
 ** children, while a pampered fine lady is often 
 " incapable of bearing any, and is generally 
 " exhausted by two or three. Barrenness, so 
 " frequent among women of fashion, is very 
 " rare among those of inferior station. Lux- 
 " ury in the fair sex, while it inflames perhaps 
 " the passion for enjoyment, seems always to 
 " weaken, and frequently to destroy altogether 
 " the powers of generation. 
 ** But poverty, though it does not prevent
 
 89 
 
 " the generation, is extremely unfavourable to 
 " the rearing of children. The tender plant 
 " is produced, but in so cold a soil, and so se- 
 " vere a climate, that it soon withers and dies. 
 " It is not uncommon, I have been frequently 
 *' told, in the highlands of Scotland, for a mo- 
 " ther who has borne 20 children, not to have 
 " two alive. Several officers of great experi- 
 " ence liave assured me, that so far from re- 
 " cruiting their regiment, they have never 
 " been able to supply it with drummers and 
 " fifers from the soldiers* children that were 
 " born in it. A great number of finer chil- 
 " dren, however, is seldom seen any where 
 " than about a barrack of soldiers. Very few 
 ** of them, it seems, arrive at the age of 13 or 
 " 14. In some places, one half of the chil- 
 ** dren born die before they are four years of 
 ** age ; in many places before they are seven ; 
 ** and in almost all places before they are 9 or 
 " 10. This great mortality, however, will 
 ** everywhere be found chiefly among the 
 " children of the common people, who cannot 
 " afford to tend them with the same care as 
 " those of better station. Though their mar- 
 " riages are generally more fruitful than those 
 " of people of fashion, a smaller proportion 
 " of their children arrive at maturity. In 
 " foundling hospitals, and among the children 
 " brought up by parish charities, the mortality 
 
 N
 
 90 
 
 " is still greater than among those of the com- 
 " mon people. 
 
 " Every species of animals naturally multi- 
 " plies in proportion to the means of their sub- 
 " sistence, and no species can ever multiply 
 " beyond it. But in civilized society, it is 
 " only among the inferior ranks of people that 
 " the scantiness of subsistence can set limits to 
 " the further multiplication of the human spe- 
 *' cies ; and it can do so in no other way than 
 " by destroying a great part of the children 
 " which their fruitful marriages produce.'* 
 
 When Dr Smith made this last remark, Mr 
 Malthus had not written. By thus proving 
 that improvident marriages are, in fact, nothing 
 less than premeditated infanticide, such conse- 
 quences ought to induce mankind to think, 
 that prudence with respect to marriage, is as 
 necessary as with any other act of their lives ; 
 and that it is even in the highest degree crimi- 
 nal to bring children into the world, for any 
 personal gratification whatever, with the chance 
 of starving them to death. The poor laws, as 
 they now stand, in as much as they promote 
 these dreadful effects, are little better than le- 
 gal enactments for the encouragement of misery 
 and child murder. 
 
 In recommending restraint with respect to 
 marriage, Mr Malthus only recommends that 
 to be done a little longer from prudence, which
 
 91 
 
 almost every one does more or less from neces- 
 sity. It is not considered any hardship to exer- 
 cise restraint in this respect, when a departure 
 from it would not only be considered want of 
 prudence but want of sanity. This restraint is 
 exercised for 6 or 7 years, or longer, perhaps, 
 upon the average, by every man, without its 
 being thought any thing more than natural. If 
 mankind would voluntarily add 6 or 7 years 
 more to it, they would probably remove a great 
 part of that misery produced by abject poverty 
 at present in the world. This effect the laws 
 ought surely rather to encourage than destroy. 
 
 It is at least obvious, that there is a suffi- 
 cient tendency in mankind, to increase up to 
 the means of subsistence. This means, with 
 the mass of mankind, consists of the wages of 
 labour. " The liberal reward of labour" says 
 Smith, "by enabling them to provide better 
 " for their children, and consequently to bring 
 " up a greater number, naturally tends to 
 '• widen and extend those limits,'* that is, the 
 limits to which population is confined. 
 
 Now, it is the scarcity of labour which in- 
 creases the wages of it, the same as the price 
 of other commodities are enhanced by a dimi- 
 nished supply, or improved demand for them. 
 It is, likewise, the over supply by which its 
 wages are reduced. When, therefore, labour 
 is in demand, an additional supply is acquired, 
 
 N 2
 
 92 
 
 in the only way in which an additional supply 
 of men, or any other animals, can be obtained — 
 by more being produced and reared, from the 
 encouragement and support which the increas- 
 ed demand for labour gives. When, on the 
 other hand, there is mo/e labour than demand 
 for it, the supply is diminished in the only way 
 in which the supply of men can be diminished, 
 by fewer being born, or brought to maturity ; 
 as well as from, the ranks of mankind being 
 thinned by the diseases incident to poverty. 
 The supply of labour is therefore governed by 
 the demand, upon the same principles as every 
 other commodity except food ; the supply of 
 which, as it is our object to shew, creates 
 the demand. In the present case, they cannot 
 both be the cause, or both the effect. 
 
 " It deserves to be remarked," says Dr 
 Smith, " that it necessarily does this," that is, 
 the liberal reward of labour, enables the labour- 
 ers to provide better for their children, and bring 
 up a greater number, " as nearly as possible in 
 " the proportion which the demand for labour 
 " requires. If this demand is continually in- 
 " creasing, the reward of labour must necessari- 
 " ly encourage in such a manner the marriages 
 ** and multiplication of labourers, as may en- 
 " able them to supply that continually increas- 
 " ing demand by a continually increasing po- 
 " pulation. If the reward should at any time
 
 93 
 
 " be less than what was requisite for this pur- 
 ** pose, the deficiency of hands would soon 
 " raise it ; and if it should at any time be 
 " more, their excessive multiplication would 
 " soon restore it to this necessary rate. The 
 " market would be so much understocked with 
 " labour in the one case, and so much over- 
 " stocked in the other, as would soon force 
 " back its price to that proper rate which the 
 " circumstances of society required. It is in 
 " this manner that the demand for men, like 
 " that of any other commodity, necessarily re- 
 " gulates the production of men ; quickens it 
 " when it goes on too slowly, and stops it when 
 " it advances too fast." 
 
 This of course does not refer to the money 
 price, but to the wages of labour in the neces- 
 saries of life. " The power of the labourer," 
 says Mr Ricardo, " to support himself, and 
 " the family which may be necessary to keep 
 " up the number of labourers, does not depend 
 ** upon the quantity of money which he may 
 " receive for wages ; but on the quantity of 
 " food, necessaries, and conveniences, become 
 " essential to him from habit, which that mo- 
 " ney will purchase.** 
 
 Consequently, a reduction in the price of 
 provisions, or of the necessaries and conveni- 
 ences essential to him from habit, is as much
 
 94 
 
 an increase of the wages of a labourer as the 
 increase of his wages in money. 
 
 Any increase in the money price of labour, 
 which is accompanied with a corresponding in- 
 crease in the monied price of provisions, makes 
 no alteration in the real recompence of labour ; 
 nor does any reduction in the price of provi- 
 sions, which is accompanied by an equal reduc- 
 tion in the wages of labour, in the least improve 
 the situation of the working classes. It is on- 
 ly when the money price of labour rises, and 
 the necessaries of life remain the same, or do 
 not increase in the same proportion ; or when 
 the necessaries of life are reduced, and wages 
 either remain as before, or do not fall in a cor- 
 responding degree, that the wages of the la- 
 bourer are improved. But they are just as much 
 improved by the necessaries of life falling, and 
 wages remaining the same, as by wages rising, 
 while the necessaries of life continue unaltered. 
 These effects, however, are produced by very 
 different causes ; the one is the result of a di- 
 minished supply of labour ; the other of an in- 
 creased demand for it. 
 
 Mr Maltlms has shewn, that when the ranks 
 of mankind are thinned by war, pestilence, or 
 famine, it is followed by a rise in the price of 
 labour. This must necessarily be the case. 
 These causes, though they may reduce the po- 
 pulation, do not decrease the quantity of money
 
 £5 
 
 in a country ; and the money price of commo- 
 dities depends upon the quantity of it in circu- 
 lation. Neither do they, except in extreme 
 cases, reduce the demand for provisions. They 
 only increase the consumption of the existing 
 inhabitants. The money in circulation, there- 
 fore, being the same, a greater quantity of it 
 is applied to the purchase of a smaller quantity 
 of labour ; and this enables the labourer to pur- 
 chase a larger supply of the necessaries of 
 life. Thus the incomes of the proprietors of 
 the soil continue to be the same in money, but 
 become less in the produce of labour. The 
 first and immediate effect of a diminished sup- 
 ply of labour, therefore, is to increase the 
 price of it. 
 
 On the other hand, an increased demand for 
 labour is produced by an increased supply of 
 the means of subsistence. If the necessaries 
 of life, produced in any country, were to be 
 doubled, — if the soil was rendered twice as 
 productive as before, all experience points out 
 to us, that in time the population would double 
 itself also. Now this is always done through 
 the medium of a demand for labour, and it fol- 
 lows that such an increase of the produce of the 
 soil would produce this demand. 
 
 It would produce it, however, not by an in- 
 creased demand for the quantity of labour. 
 The income from the soil would command no
 
 96 
 
 more labour than before. But it would in- 
 crease the recompence of labour in the neces- 
 saries of life, and thereby increase the supply ; 
 and as the supply increased, the power of com- 
 manding it by means of the income from the 
 soil, would increase in proportion. Though 
 the money in the country would not command 
 more labour than before, the price of provisions 
 would be reduced one half at least, if not more, 
 by which the real recompence of labour would 
 be increased in nearly, though not quite the 
 same proportion. 
 
 Part of the necessaries required by every 
 person, consists in the produce of labour, capi- 
 tal, &c. not immediately dependant upon the 
 price of provisions. The wages of labour, 
 therefore, must not only be equal to the pur- 
 chase of provisions, but of other articles, 
 formed of materials which every individual con- 
 sumes. That part of those commodities, the 
 value of which was determined by labour and 
 profits, would continue at the same price as be- 
 fore. The recompence of labour would only 
 be increased in proportion to the reduced price 
 of provisions and commodities the produce of 
 the soil. 
 
 As the suppl)' of labour increased, the mo- 
 nied price of it would fall. By this means the 
 monied income from the soil would command a 
 larger quantity. In all cases, as we have shewn, 
 the whole income of society is spent j and it
 
 97 
 
 will command labour, not in proportion to the 
 supply of provisions, but in proportion to the 
 price of labour ; and this price is regulated by 
 the supply. If the produce of the soil was 
 doubled, and the quantity of labour in the first 
 instance was the same, as it commanded all 
 there was before, it could not command more 
 by this increase ; but there would be an in- 
 creased natural demand for labour, the real 
 wages of it would rise, and this would imme- 
 diately have the effect of promoting an increase 
 of supply. 
 
 Although in the event of a war, pestilence, or 
 famine thinning the ranks of mankind, the first 
 effect would be an increase in the monied price 
 of labour, this effect would be only temporary. 
 The causes which reduce the supply, and in- 
 crease the demand for labour, in any particular 
 nation, do not operate in the same manner with 
 the other nations that trade with it. It is of 
 no consequence to them what a change in the 
 price of labour arises from. If the wages of 
 labour are increased, the price of commodities 
 wiU rise with it, and their demand will be di- 
 minished in proportion. The balance of trade 
 will be determined against the country, and 
 money will be abstracted from it, uritil the 
 price of commodities fall so as to re.tore the 
 balance of trade to its equiUbrium. This re- 
 duced demand for commodities would reduce,
 
 98 
 
 in the first instance, the demand for labour ; and 
 this again would reduce the demand for pro- 
 visions. The price of labour and of provisions 
 would consequently both fall, but they would 
 fall parallel with each other, and the real 
 wages of labour, increased by the diminished 
 supply of it, would remain the same. The 
 same quantity of labour would still command 
 the increased quantity of the necessaries of life, 
 until an increase of population took place. As 
 this, however, occurred, the money price of la- 
 bour would fall, which would reduce, the price 
 of commodities, increase the foreign demand 
 for them, produce an influx of money into the 
 country, and gradually restore, with the increas- 
 ed^ supply of labour, the price of both in mo- 
 ney to what they were previous to the loss of 
 population which had been sustained. 
 
 An increased demand for labour by an in- 
 creased supply of provisions would, on the 
 other hand, have no immediate effect upon fo- 
 reign trade. The price of labour, and the price 
 of commodities, the produce of labour, would 
 remain as before. The foreign demand for 
 commodities, by which the national prices and 
 money in circulation are determined, would not 
 be altfei'ed. As, however, the supply of labour 
 increase'd, and the wages of it and the price of 
 commodities fell, the balance of trade would 
 be determined in favour of the country, and an
 
 99 
 
 increased supply of money would be brought 
 into it. This would continue until population 
 had increased to its natural standard, when in 
 the case supposed the monied income from the 
 soil would be doubled, and its real income in 
 the necessaries and luxuries of life would be 
 doubled also. 
 
 Thus corn creates its own demand. Popu- 
 lation is necessary to wealth. No country can 
 be rich until it is populous. When population 
 is thin, as in the back settlements of America, 
 the land is in reality not worth any thing. The 
 present price which it bears is a speculative 
 one, in anticipation of an increase of inhabi- 
 tants. On the contrary, countries which are 
 thickly populated are always rich. 
 
 The advantage of increased fertility, how- 
 ever, is always immediately felt. Population 
 keeps so close upon the means of subsistence, 
 that an increased demand for labour is very 
 soon supplied. 
 
 But individuals would, always immediately 
 gain by any improvement which they might 
 make in the fertility of their estates, even 
 were this not the case ; unless all improved 
 alike, which never happens. Suppose two per- 
 sons are each in the habit of bringing a bushel 
 of wheat to market, and selling it for one 
 pound per bushel. If one of them is enabled 
 to double his quantity, and the three bushels 
 o 2
 
 100 
 
 sell only for the same money that the two did 
 before, on the aggregate they are not richer, 
 but he who has the two bushels gains 6s. 8d. 
 out of his neighbour's income. The wheat 
 sells for 18s. 4d. per bushel, and the one is 6s, 
 8d. richer, and the other 6s. 8d. poorer by the 
 increased supply. The condition of the con- 
 sumer is, however, improved fifty per cent, in 
 the quantity of provisions which his money will 
 command. 
 
 The present agricultural distress has been at- 
 tributed to over production, while, at the same 
 time, in part of its progress at least, it has been 
 accompanied by a diminished demand for la- 
 bour. This circumstance alone proves it could 
 not have proceeded from that cause. Although 
 the increased foreign demand for commodities 
 has of late partly relieved the labouring classes 
 from the depression under which they in the 
 first instance suffered, yet still a reduced de- 
 mand for labour is the subject of complaint. 
 A general distress, in fact, such as the present, 
 from over production, could never happen. In 
 the case just supposed, where one party loses, 
 another gains. But now there is a universal 
 loss. It began, not by increasing the comforts 
 of the poor, but by starving them in the midst 
 of plenty, and ends in the ruin of the agricul- 
 turists, with a consumption greater than the 
 annual supply. That such are not the effects 
 of over production, may be very safely assumed.
 
 101 
 
 CHAPTER XIIL 
 
 The Soil is the original Source of Wealth. 
 
 If we admit the conclusions at which we at- 
 tempted to arrive in the last two chapters, they 
 will go far to establish the proposition which 
 forms the title of this. 
 
 Experience of itself, however, establishes it. 
 Where was there ever a rich country with a 
 barren soil ? Gold is valuable, but only in fer- 
 tile districts, where it will exchange for labour, 
 or commodities more useful. It is worth no- 
 thing in a desolate country. 
 
 Labour and art are necessary to wealth ; and 
 gold, the produce of labour and art, in general 
 forms part of it. But it possesses no inherent 
 value. Its value is entirely an exchangeable 
 one ; an alteration of fashion or opinion might 
 reduce it below that of iron. 
 
 The produce of the soil, on the contrary, 
 possesses an inherent value — a value derived 
 from itself. It produces men, and men pro- 
 duce gold. It creates its own demand, which 
 gold does not. Gold, no doubt, possesses in- 
 trinsic value. As a commodity, it is actually
 
 102 
 
 worth the value it represents ; which is not the 
 case with Bank paper, though it answers the 
 same purpose, and is, where it circulates, as va- 
 luable to those who possess it. But the value of 
 gold is not self derived. It is an exchangeable 
 value, and therefore, dependant upon a demand, 
 the result, not of necessity, but of fashion and 
 convenience. It will, perhaps, not be an inap- 
 propriate distinction to say, that gold possesses 
 an intrinsic, but not an inherent value ; whereas 
 the produce of the soil possesses both. If the 
 soil was a hundred times more productive, it 
 would be a hundred times more valuable to the 
 proprietors ; it would support a hundred times 
 the population, and command a hundred times 
 the labour, and commodities, the produce of 
 labour, which it did before. If gold mines 
 were a hundred times more productive, gold 
 would possess a hundred times less value in ex- 
 change ; and, as it is not probable that the de- 
 mand would increase in proportion, the mines 
 would be probably much less profitable to the 
 proprietors than they are at present. 
 
 Wealth may be said to resolve itself into the 
 produce of the soil, labour, and commodities 
 the produce of both. 
 
 Horses, dogs, and animals of every descrip-i 
 tion, which contribute to the luxuries, and form 
 part of the wealth of society, receive their sus- 
 tenance exclusively from, and are in fact- the
 
 103 
 
 produce of the soil. All persons who maintain 
 them, miM either possess land, or acquire suffi- 
 cient of its produce for that purpose. 
 
 On the same principle, labour is also the pro- 
 duce of the soil, which furnishes the necessaries 
 of life for its support. The necessaries of life 
 consist not only of food, but of cloathing, and 
 other articles which are composed of materials, 
 or pre-existing materials and labour. Now, ma- 
 terials are the produce of the soil, and pre- 
 existing materials are the produce of labour, 
 which is derived from the soil, so that ulti- 
 mately the wages of labour entirely resolve 
 themselves into the produce of the soil. If you 
 purchase the entire labour of one man, you 
 must pay him in the produce of the soil, or in 
 that which will command it, sufficient perhaps 
 for the support of two. One half he consumes 
 himself, and with the other half purchases such 
 other necessaries, the produce of the labour of 
 others, as he requires. The last half, though 
 distributed in the purchase, in more or less 
 minute proportions, of the labour of probably a 
 hundred others, united, will perhaps, amount 
 only to the labour of one ; and for the sake of 
 illustration, we may suppose he employs only 
 one individual. One man, therefore, by his 
 labour, may acquire, as we have stated, pos- 
 session of the produce of the soil, material, and 
 victual, equal to the support of two, which he
 
 104 
 
 divides with another, who, by his labour, ma- 
 nufactures the cloathing, and furnishes the 
 other necessaries required by both. 
 
 Besides labour, the cost of all commodities 
 is more or less composed of profits of capital, 
 taxes, &c. and with pre-existing materials, not 
 only of profits of capital and taxes, but pro- 
 fits which are termed rents. The value, how- 
 ever, which they thus acquire, may be consi- 
 dered artificial, and only a mode, as we shall 
 endeavour to explain in the next chapter, by 
 which the original income derived from the 
 soil is distributed amongst the class of persons 
 who receive these profits, and paid to govern- 
 ment, by whom the taxes are levied.
 
 105 
 
 CHAPTER XIV. 
 
 Cost of Commodities in Profits of Capital. 
 
 A GREAT part of the value of all manufactured 
 commodities, consists in the profits of capital, 
 employed in manufacturing, and transferring 
 them from the original producer, into the hands 
 of those who finally consume them. Though 
 this cost, for the sake of distinction, may be 
 called artificial ; yet, by this employment of 
 capital, the powers of labour are magnified, 
 the facilities of transportation increased, and 
 the price of such commodities reduced in a 
 very extraordinary degree. Capitalists in con- 
 sequence, however, acquire a very consider- 
 able share in the income derived from the soil. 
 We shall take the article of corn for example. 
 A capital is employed in its production by the 
 farmer; by the individual attention of whom, 
 and the skilful application of which, the soil is 
 rendered much more productive than it would 
 otherwise have been. His average profits 
 we shall state at 10 per cent, upon his capital. 
 He sells his corn, we shall say, direct to the 
 miller, whose profit, for the capital he has em- 
 
 p
 
 106 
 
 ployed in his mill and trade, we shall state at 
 7r per cent. Next it is sold to the baker, who 
 charges, say, 10 per cent. From him it comes 
 into the hands of the manufacturing labourer, 
 and is consumed, and the value of his labour is 
 added to the material which he is employed in 
 manufacturing. By this operation it preserves 
 the same value, but changes its nature, and is 
 now represented by labour, added to some ma- 
 terial which it is employed in manufacturing, 
 the value of which is increased by the labour 
 added to it. For the machinery and capital 
 employed in the various processes of manufac- 
 turing the commodity, of which the corn in 
 the shape of labour, now forms a part, we shall 
 say 25 per cent. The profit of the wholesale 
 dealer we shall state at 7t per cent. ; of the re- 
 tailer at 15 per cent. ; and it will stand thus : — 
 
 Capital _ - - - 
 Farmer's profit, 10 per cent. 
 
 Miller's 7i per cent. 
 
 Baker's 10 per cent. - ' 
 
 Manufacturer's 25 per cent. 
 Carried forward. 
 
 £. 
 
 s. 
 
 D. 
 
 100 
 
 
 
 
 
 10 
 
 
 
 
 
 110 
 
 
 
 
 
 8 
 
 5 
 
 
 
 118 
 
 5 
 
 
 
 11 
 
 16 
 
 6 
 
 130 
 
 1 
 
 6 
 
 32 
 
 10 
 
 4 
 
 162 
 
 11 
 
 10
 
 £. 
 
 S. D. 
 
 162 
 
 11 10 
 
 12 
 
 3 10 
 
 174 
 
 15 8 
 
 26 
 
 4 3 
 
 ;e200 
 
 19 11 
 
 107 
 
 Brought over. 
 Wholesale dealer 74 per cent. 
 
 Retailer 15 per cent. - 
 
 By processes similar to this, some longer and 
 some shorter, all commodities come into the 
 hands of the original proprietors, or those who 
 in some way acquire a share of the income de- 
 rived from the soil, surcharged with the profits 
 of capital employed in carrying them through 
 the different channels of trade, often times fully 
 equal to the value of the materials and labour 
 which the commodities contain, and when pro- 
 fits are high, sometimes far exceeding it. 
 
 In this country most commodities, in the 
 process of their manufacture, are subject to 
 taxation, which enhances their price, by in- 
 creasing their cost in the same manner. To 
 the consumer, therefore, there is no difference 
 between taxes and the profits of trade. The 
 profits of trade are just as much a tax upon 
 them, as the imposts of government. They 
 equally enhance the cost of the commodity, 
 and are equally paid by the purchasers of it. 
 
 The great amount of government imposts in 
 this country, levied by taxing consumable com- 
 p 2
 
 108 
 
 modfties, sufficiently proves that they ultimate- 
 ly fall upon the only source of income which 
 could bear them, the soil. This, in fact, as a 
 general principle, is hardly disputed. 
 
 Those whose incomes are derived from trade, 
 therefore, derive them from the soil also. In 
 order to shew more clearly the manner in which 
 this is done, we will suppose a case by way of 
 example. We will imagine the soil to be re- 
 presented by an income of 5^2000, the manu- 
 facturing labourers to be represented by 100 
 men, and the capitalists by ten, each of whom 
 has ten of the hundred men under him. That 
 the necessaries of life, independent of food, 
 consist of ten different articles, the produce 
 of labour alone, one of which each of these 
 capitalists manufactures. We shall suppose one 
 quarter of the income from the soil to be spent 
 in victualling the families of the proprietors, 
 supporting their establishments of horses, &c. 
 or in that part of the hire of personal labour or 
 services, which is consumed in provisions, and 
 immediately returned to the proprietor in a de- 
 mand for them ; and the other ^1,500 to be 
 spent either by the proprietors themselves, or 
 by those who receive their wages, or by such as 
 in some way come into possession of a share of 
 this income, in consumption of those articles 
 which these manufacturers produce. We 
 shall suppose that ^1000 represents the pro-
 
 109 
 
 visions necessary for the support of the 100 la- 
 bourers, and the profits of the capitalists to be 
 at least 100 per cent. That is, that their pro- 
 fits, or the artificial value of the commodities 
 manufactured to be equal, or more than equal, 
 to their value in the labour bestowed upon 
 them. 
 
 In addition to this, we shall suppose that one 
 third of these labourers were employed in ad- 
 ministering to the wants of the other two- 
 thirds ; or in other words, that they consumed 
 one-third of the produce of their own labour 
 themselves. Each man would therefore receive 
 for his wages, besides a sum equal to the pur- 
 chase of provisions for himself and family, a 
 sum sufficient to purchase that share in the ten 
 different commodities manufactured, which he 
 required. As this share would be charged to 
 him with the profits of capital upon it, we shall 
 suppose that it would take as much money to 
 purchase it as to buy provisions. Hence his 
 wages must be twice the sum his provisions 
 cost him. This would make the wages of the 
 whole in money a^2000. Now we shall sup- 
 pose that the commodities manufactured sold 
 in the gross for ^4,500, with the profits of 
 capital upon them. The ^^1,500 income from 
 the soil applied to their purchase, would there- 
 fore only command three-ninths of them ; two- 
 ninths would be consumed by the labourers.
 
 110 
 
 and the other five-ninths would be the profit of 
 the capitalists. They would unitedly have an 
 income of £'2,500, five hundred of which would 
 be made in the commodities sold to the manu- 
 facturino; labourers. Whatever share of income 
 the capitalists received, they would directly or 
 indirectly have to spend. The other j^SOOO of 
 profit, therefore, would be made upon the com- 
 modities sold to the proprietor of the soil and 
 to each other. This £2,500 would go in sup- 
 porting themselves and families ; in maintain- 
 ing what is called unproductive labour, and in 
 keeping horses, &c. Five hundred pounds of 
 it would be spent in provisions, and the other 
 two thousand in the consumption of the re- 
 maining produce of the manufacturing labour- 
 ers. The consumption of the produce of the 
 soil, and the labour of the 100 men would 
 therefore stand as follows : — 
 
 PRODUCK OF THE SOIL. 
 
 £. S. D. 
 
 Consumed directly or indirectly by the pro- 
 prietors themselves - - 500 
 By the manufacturing labourers - - 1,000 
 Direct or indirectly by the capitalists - 500 
 
 je2,000
 
 Ill 
 
 PRODUCE OF MANUFACIUIUKG LABOUR. 
 
 £. S. D. 
 
 Consumed by the labourers themselves - 1,000 
 Directly or indirectly by the proprietors of 
 
 the soil .... 1,500 
 
 Directly or indirectly by the capitalists 2,000 
 
 £^,500 
 
 Thus the proprietors of the soil would com- 
 paratively enjoy the consumption of but a small 
 part of the produce of manufacturing labour to 
 which it would give rise ; yet, nevertheless, its 
 produce would be the foundation of the whole, 
 and this accumulation of prices no more than 
 the manner in which it and the labour it com- 
 manded were distributed by nature amongst 
 the different orders of the community. 
 
 This case is a mere hypothesis for the sake 
 of illustration. The produce of the soil con- 
 sists of materials that are required to clothe 
 and support labour, as well as food, of which 
 every individual must either grow a portion 
 himself, or if he does not, must, indirectly at 
 least, exchange the produce of his estate, with 
 either some home or foreign proprietor who 
 does. This is generally effected through the 
 medium of manufactured commodities. I have 
 little doubt, however, that the proprietors of 
 the soil get but a small part of its produce back,
 
 112 
 
 in the labour which many of the commodities 
 they purchase contain. Labour is now so eco- 
 nomized, and machinery so much introduced 
 in every branch of manufacture, that a great 
 part of the cost of most commodities consists of 
 the profits of capital. That part of the income 
 of society which is gained by the capitalist in 
 trade, is spent in the luxuries of life, and gives 
 employment to what economists call unproduc- 
 tive labour, instead of manufacturing labour, 
 which this employment of capital has super- 
 seded. Hence the quantity of unproductive 
 labour in a country, is probably the best proof 
 of its improvement and prosperity.
 
 113 
 
 CHAPTER XV. 
 
 Rent. 
 
 The rent of land consists of that part of its pro- 
 duce which is received by the landlord, after 
 paying the expence of labour, materials, and 
 profits of capital employed in its cultivation. 
 The produce of the soil, as we have shewn, 
 creates population, which multiplies with the 
 increase of it. As the value of labour becomes 
 less, the surplus produce of the soil becomes 
 greater. 
 
 Rent from mines is also their surplus pro- 
 duce, after paying for the labour, materials, 
 and profits of capital employed in working 
 them. The principles, however, which govern 
 the demand, by which rent from mines is cre- 
 ated, are different from those which regulate 
 the rent of land. 
 
 There is always a given demand for every 
 commodity of necessary, luxury, or conveni- 
 ence, in use. This demand is regulated by its 
 price. If a carriage could be had for six-pence, 
 beggars would ride. It is only the high price 
 of the luxury which confines it to comparative- 
 ly so few. 
 
 Q
 
 Beneath the cost of its production in labour, 
 materials, profits of capital, &c. no commodity 
 can, for any length of time, fall. If it could 
 not be sold for what it cost, it would cease to 
 be produced altogether. But if, on the contrary, 
 the supply of any commodity is unlimited, ex- 
 cept by the cost of production, as salt for in- 
 stance from sea water, the price of it never 
 can exceed that cost upon the average, as an 
 increase of supply would always follow an in- 
 crease of demands 
 
 Should, however, the supply of any commo- 
 dity be limited, and there is a demand for much 
 more than can, by the application of labour and 
 capital, be produced; this demand must be 
 brought to an equality with the supply by an 
 increase of price, which will reduce either the 
 inclination, or confine the power of consuming 
 it to a less number of persons. The difference 
 between the cost of production, and this price, 
 constitutes rent. 
 
 Thus there is no limit to the rent of mines, 
 the quantity of whose produce is beneath the 
 demand at its cost price, but the inclination 
 and power of purchase by the consumers. On 
 the other hand, they may leave no rent at all, if 
 they are so extremely productive, as to yield 
 upon the application of materials, capital, and 
 labour, as great a supply of their produce at 
 their cost price, as there is a demand for. 
 But the rent of land, which derives its value
 
 115 
 
 from producing the necessaries of life, can 
 never, in an old country, be any length of time, 
 as we have shewn, below, nor yet above, its 
 natural value in commodities. 
 
 The rent of mines is also a consequence of 
 the rent of land. It is not until the soil will 
 command considerably more labour than is ne- 
 cessary for its own cultivation, that a great de- 
 mand arises for the luxuries of life ; and it is 
 probable there will be seldom much rent from 
 mines until there is a considerable rent from 
 land ; unless it be for the purpose of exporting 
 to richer countries, where rents are greater, 
 and its inhabitants consequently more wealthy. 
 
 Though the causes of the demand which 
 creates the rent of land and mines, be differ- 
 ent, the principles upon which the increase of 
 it takes place and is determined, are the same 
 with both. These principles, however, are so 
 very clearly explained by Mr Ricardo, that I 
 shall claim his indulgence for the liberty of co- 
 pying the principal part of his chapters on the 
 subject. 
 
 " Rent* is that portion of the produce of the 
 " earth, which is paid to the landlord for the 
 " use of the original and indestructible powers 
 " of the soil. It is often, however, confounded 
 ** with the interest and profit of capital, and in 
 " popular language the term is applied to what- 
 
 • Principles of Political Economy, Chap. 2, on Rent. 
 
 Q 2
 
 116 
 
 " ever is annually paid by a farmer to his land- 
 
 " lord. If, of two adjoining farms of the same 
 
 " extent, and of the same natural fertility, one 
 
 " had all the conveniences of farm buildings, 
 
 " were, besides, properly drained and manured, 
 
 " and advantageously divided by hedges, fences, 
 
 " and walls, while the other had none of these 
 
 " advantages, more remuneration would natu- 
 
 " rally be paid for the use of one, than for the 
 
 " use of the other ; yet in both cases this re- 
 
 " muneration would be called rent. But it 
 
 " is evident that a portion only of the mo- 
 
 " ney annually to be paid for the improved 
 
 " farm, would be given for the original and in- 
 
 " destructible powers of the soil ; the other 
 
 " portion would be paid for the use of the capi- 
 
 " tal which had been employed in ameliorating 
 
 " the quality of the land, and in erecting such 
 
 " buildings as were necessary to secure and 
 
 " preserve the produce. Adam Smith some- 
 
 " times speaks of rent, in the strict sense to 
 
 " which I am desirous of confining it, but more 
 
 " often in the popular sense, in which the term 
 
 " is usually employed. He tells us, that the 
 
 " demand for timber, and its consequent high 
 
 " price, in the more southern countries of Eu- 
 
 ** rope, caused a rent to be paid for forests in 
 
 **^ Norway, which could before afford no rent. 
 
 " Is it not however evident, that the person 
 
 ** who paid, what he thus calls rent, paid it in
 
 ** consideration of the valuable commodity 
 " which was then standing on the land, and 
 " that he actually repaid himself with a profit, 
 " by the sale of the timber ? If, indeed, after 
 " the timber was removed, any compensation 
 " were paid to the landlord for the use of the 
 " land, for the purpose of growing timber or 
 " any other produce, with a view to future de- 
 " mand, such compensation might justly be 
 " called rent, because it would be paid for the 
 " productive powers of the land j but in the 
 " case stated by Adam Smith, the compensa- 
 *' tion was paid for the liberty of removing and 
 " selling the timber, and not for the liberty of 
 " growing it. He speaks also of the rent of 
 " coal mines, and of stone quarries, to which 
 " the same observation applies — that the com- 
 " pensation given for the mine or quarry, is 
 " paid for the value of the coal or stone which 
 " can be removed from them, and has no con- 
 " nexion with the original and indestructible 
 " powers of the land. This is a distinction of 
 " great importance, in an inquiry concerning 
 " rent and profits ; for it is found, that the 
 '* laws which regulate the progress of rent, are 
 *' widely different from those which regulate 
 " the progress of profits, and seldom operate in 
 " the same direction. In all improved coun- 
 *' tries, that which is annually paid to the land- 
 " lord, partaking of both characters, rent and
 
 118 
 
 profit, is sometimes kept stationary by the 
 effects of opposing causes, at other times ad- 
 vances or recedes, as one or other of these 
 causes preponderates. In the future pages 
 of this work, then, whenever I speak of the 
 rent of land, I wish to be understood as 
 speaking of that compensation, which is paid 
 to the owner of land for the use of its origi- 
 nal and indestructible powers. 
 " On the first settling of a country, in which 
 there is an abundance of rich and fertile land, 
 a very small proportion of which is required 
 to be cultivated for the support of the actual 
 population, or indeed can be cultivated with 
 the capital which the population can com- 
 mand, there will be no rent ; for no one 
 would pay for the use of land,, when there 
 was an abundant quantity not yet appropri- 
 ated, and therefore at the disposal of who- 
 soever might choose to cultivate it. 
 " On the common principles of supply and 
 demand, no rent could be paid for such land, 
 for the reason stated why nothing is given 
 for the use of air and water, or for any other 
 of the gifts of nature which exist in boundless 
 quantity. With a given quantity of mate- 
 rials, and with the assistance of the pressure 
 of the asmosphere, and the elasticity of steam, 
 engines may perform work, and abridge hu- 
 man labour to a very great extent ; but no
 
 119 
 
 " charge is made for the use of these natural 
 " aids, because they are inexhaustible, and at 
 " every man's disposal. In the same manner 
 " the brewer, the distiller, the dyer, make in- 
 " cessant use of the air and water for the pro- 
 " duction of their commodities ; but as the 
 " supply is boundless, it bears no price. If 
 " all land had the same properties, if it were 
 " boundless in quantity, and uniform in qua- 
 *' lity, no charge could be made for its use, 
 " unless where it possessed peculiar advantages 
 ** of situation. It is only then because land is 
 " of different qualities with respect to its pro- 
 " ductive powers, and because in the progress 
 " of population, land of an inferior quality, or 
 " less advantageously situated, is called into 
 " cultivation, that rent is ever paid for the use 
 " of it. When, in the progress of society, land 
 " of the second degree of fertility is taken into 
 " cultivation, rent immediately commences on 
 " that of the first quality, and the amount of 
 " that rent will depend on the difference in the 
 " quality of these two portions of land. 
 
 " When land of the third quality is taken in- 
 '* to cultivation, rent immediately commences 
 " on the second, and it is regulated as before, 
 " by the difference in their productive powers. 
 *' At the same time, the rent of the first quality 
 " will rise, for that must always be above the 
 " rent of the second, by the difference between
 
 120 
 
 the produce which they yield with a given 
 quantity of capital and labour. With every 
 step in the progress of population, which 
 shall oblige a country to have recourse to 
 land of a worse quality, to enable it to raise 
 its supply of food, rent, on all the more fer- 
 tile land, will rise. 
 
 " Thus suppose land — No. 1, % 3, — to yield, 
 with an equal employment of capital and la- 
 bour, a net produce of 100, 90, and 80 quar- 
 ters of corn. In a new country, where there 
 is an abundance of fertile land compared with 
 the population, and where therefore it is only 
 necessary to cultivate No. 1, the whole net 
 produce will belong to the cultivator, and 
 will be the profits of the stock which he ad- 
 vances. As soon as population had so far 
 increased as to make it necessary to cultivate 
 No. 2, from which ninety quarters only can 
 be obtained after supporting the labourers, 
 rent would commence on No. 1 ; for either 
 there must be two rates of profit on agricul- 
 tural capital, or ten quarters, or the value of 
 ten quarters must be withdrawn from the 
 produce of No. 1, for some other purpose. 
 Whether the proprietor of the land, or any 
 other person, cultivated No. 1, these ten 
 quarters would equally constitute rent ; for 
 the cultivator of No. 2 would get the same 
 result with his capital, whether he cultivated
 
 121 
 
 No 1, paying ten quarters for rent, or conti- 
 nued to cultivate No. 2, paying no rent. In 
 the same manner it might be shewn, that 
 when No. 3 is brought into cultivation, the 
 rent of No. 2 must be ten quarters, or the 
 value of ten quarters, whilst the rent of No. 
 1 would rise to twenty quarters ; for the cul- 
 tivator of No. 3 would have the same profits 
 whether he paid twenty quarters for the rent 
 of No. 1 , ten quarters for the rent of No. 2, 
 or cultivated No. 3 free of all rent. 
 " It often, and indeed commonly happens, 
 that before No. 2, 3, 4, or 5, or the inferior 
 lands are cultivated, capital can be employed 
 more productively on those lands which are 
 already in cultivation. It may perhaps be 
 found, that by doubling the original capital 
 employed on No. 1, though the produce will 
 not be doubled, will not be increased by 100 
 quarters, it may be increased by 85 quarters, 
 and that this quantity exceeds what could be 
 obtained by employing the same capital on 
 land. No. 3. 
 
 " In such case, capital will be preferably em- 
 ployed on the old land, and will equally cre- 
 ate a rent ; for rent is always the difference 
 between the produce obtained by the em- 
 ployment of two equal quantities of capital 
 and labour. If with a capital of 1,000/. a 
 tenant obtain 100 quarters of wheat from his 
 
 R
 
 122 
 
 * land, and by the employment of a second 
 
 * capital of 1,000/., he obtain a further return 
 
 * of eighty-five, his landlord would have the 
 ' power at the expiration of his lease, of oblig- 
 
 * ing him to pay fifteen quarters, or an equiva- 
 
 * lent value, for additional rent ; for there 
 ' cannot be two rates of profit. If he is satis- 
 ' fied with a diminution of fifteen quarters in 
 ' the return for his second 1,000/., it is be- 
 ' cause no employment more profitable can be 
 ' found for it. The common rate of profit 
 ' would be in that proportion, and if the ori- 
 ' ginal tenant refused, some other person would 
 ' be found willing to give all which exceeded 
 ' that rate of profit to the owner of the land 
 ' from which he derived it. 
 
 *' In this case, as well as in the other, the 
 ' capital last employed pays no rent. For the 
 ' greater productive powers of the first 1,000/., 
 
 * fifteen quarters is paid for rent, for the em- 
 ' ployment of the second 1,000/. no rent what- 
 ' ever is paid. If a third 1,000/. be employed 
 
 on the same land, with a return of seventy- 
 five quarters, rent will then be paid for the 
 second 1,000/. and will be equal to the dif- 
 ference between the produce of these two, 
 or ten quarters ; and at the same time the 
 rent of the first 1,000/. will rise from fifteen 
 to twenty-five quarters j while the last J ,000/. 
 will pay no rent whatever.
 
 123 
 
 *' If then good land existed in a quantity 
 much more abundant than the production of 
 food for an increasing population required, 
 or if capital could be indefinitely employed 
 without a diminished return on the old land, 
 there could be no rise of rent ; for rent in- 
 variably proceeds from the employment of 
 an additional quantity of labour with a pro- 
 portionally less return. 
 
 *' The most fertile, and most favourably si- 
 tuated land will be first cultivated, and the 
 exchangeable value of its produce will be ad- 
 justed in the same manner as the exchange- 
 able value of all other commodities, by the 
 total quantity of labour necessary in various 
 forms, from first to last, to produce it, and 
 bring it to market. When land of an infe- 
 rior quality is taken into cultivation, the 
 exchangeable value of raw produce will rise, 
 because more labour is required to produce 
 it. 
 
 " The exchangeable value of all commodi- 
 ties, whether they be manufactured, or the 
 produce of the mines, or the produce of land, 
 is always regulated, not by the less quantity 
 of labour that will suffice for their produc- 
 tion under circumstances highly favourable, 
 and exclusively enjoyed by those who have 
 peculiar facilities of production ; but by the 
 greater quantity of labour necessarily bestow- 
 R 2
 
 1^4 
 
 " ed on their production by those who have no 
 " such facilities ; by those who continue to 
 " produce them under the most unfavourable 
 " circumstances ; meaning — ^by the most un- 
 " favourable circumstances, the most unfavour- 
 " able under which the quantity of produce re- 
 " quired renders it necessary to carry on the 
 " production. 
 
 '* Thus, in a charitable institution, where the 
 " poor are set to work with the funds of bene- 
 " factors, the general prices of the commodi- 
 " ties, which are the produce of such work, 
 ** will not be governed by the peculiar facilities 
 " afforded to these workmen, but by the com- 
 " mon, usual, and natural difficulties, which 
 " every other manufacturer will have to en- 
 " counter. The manufacturer enjoying none 
 " of these facilities might indeed be driven al- 
 " together from the market, if the supply af- 
 " folded by these favoured workmen were 
 " equal to all the wants of the community; 
 " but if he continued the trade, it would be 
 *' only on condition that he should derive from 
 " it the usual and general rate of profits on 
 " stock ; and that could only happen when his 
 " commodity sold for a price proportioned to 
 " the quantity of labour bestowed on its pro- 
 " duction. 
 
 " It is true, that on the best land, the same 
 ** produce would still be obtained with the
 
 U5 
 
 " same labour as before, but its value would 
 " be enhanced in consequence of the diminish- 
 " ed returns obtained by those who employed 
 " fresh labour and stock on the less fertile land. 
 *' Notwithstanding then, that the advantages of 
 " fertile over inferior lands are in no case lost, 
 '* but only transferred from the cultivator, or 
 *' consumer, to the landlord, yet since more 
 " labour is required on the inferior lands, and 
 " since it is from such land only that we are 
 " enabled to furnish ourselves with the addi- 
 " tional supply of raw produce, the compara- 
 " tive value of that produce will continue per- 
 " manently above its former level, and make 
 " it exchange for more hats, cloth, shoes, &c. 
 *' &c. in the production of which no such addi- 
 " tional quantity of labour is required. 
 
 " The reason then, why raw produce rises 
 " in comparative value, is because more labour 
 " is employed in the production of the last 
 " portion obtained, and not because a rent is 
 " paid to the landlord. The value of corn is 
 " regulated by the quantity of labour bestowed 
 " on its production on that quality of land, or 
 " with that portion of capital, which pays no 
 " rent. Corn is not high because a rent is 
 " paid, but a rent is paid because corn is high ; 
 " and it has been justly observed, that no re- 
 *' duction would take place in the price of corn, 
 " although landlords should forego the whole
 
 126 
 
 " of their rent. Such a measure would only 
 " enable some farmers to Jive like gentlemen, 
 " but would not diminish the quantity of la- 
 *' hour necessary to raise raw produce on the 
 " least productive land in cultivation." 
 
 *' The metals,* like other things, are obtain- 
 " ed by labour. Nature, indeed, produces 
 " them ; but it is the labour of man which ex- 
 " tracts them from the bowels of the earth, and 
 " prepares them for our service. 
 
 " Mines, as well as land, generally pay a 
 " rent to their owner ; and this rent, as well as 
 " the rent of land, is the effect, and never the 
 " c use of the high value of their produce. 
 
 *' If there were abundance of equally fertile 
 " mines, which any one might appropriate, 
 " they could yield no rent ; the value of their 
 " produce would depend on the quantity of 
 " labour necessary to extract the metal from 
 " the mine and bring it to market. 
 
 *' But there are mines of various qualities, 
 " affording very different results, with equal 
 " quantities of labour. The metal produced 
 *' from the poorest mine that is worked, must 
 " at least have an exchangeable value, not on- 
 ** ly sufficient to procure all the clothes, food, 
 " and other necessaries consumed by those em- 
 " ployed in working it, and bringing the pro- 
 
 * On the Rent of Mines, Chap. iii.
 
 127 
 
 duce to market, but also to afford the com- 
 mon and ordinary profits to him who ad- 
 vances the stock necessary to carry on the 
 undertaking. The return for capital from 
 the poorest mine paying no rent, would regu- 
 late the rent of all the other more productive 
 mines. This mine is supposed to yield the 
 usual profits of stock. All that the other 
 mines produce more than this, will necessa- 
 rily be paid to the owners for rent. Since 
 this principle is precisely the same as that 
 which we have already laid dowai respecting 
 land, it will not be necessary further to en- 
 large on it. 
 
 " It will be sufficient to remark, that the 
 same general rule which regulates the value 
 of raw produce and manufactured commodi- 
 ties, is applicable also to the metals ; their 
 value depending not on the rate of profits, 
 nor on the rate of wages, nor on the rent 
 paid for mines, but on the total quantity of 
 labour necessary to obtain the metal, and to 
 bring it to market. 
 
 " Like every other commodity, the value of 
 the metals is subject to variation. Improve- 
 ments may be made in the implements and 
 machinery used in mining, which may con- 
 siderably abridge labour ; new and more pro- 
 ductive mines may be discovered, in which, 
 with the same labour, more metal may be ob-
 
 128 
 
 tained ; or the facilities of bringing it to 
 market may be increased. In either of these 
 cases the metals would fall in value, and 
 would therefore exchange for a less quantity 
 of other things. On the other hand, from 
 the increasing difficulty of obtaining the me- 
 tal, occasioned by the greater depth at which 
 the mine must be worked, and the accumu- 
 lation of water, or any other contingency, its 
 value, compared with that of other things, 
 might be considerably increased. 
 " It has, therefore, been justly observed, that 
 however honestly the coin of a country may 
 conform to its standard, money made of gold 
 and silver is still liable to fluctuations in va- 
 lue, not only to accidental and temporary, 
 but to permanent and natural variations, in 
 the same manner as other commodities."
 
 129 
 
 CHAPTER XVI. 
 
 Taxes. 
 
 As the whole income of society must be spent, 
 taxes can be no evil to a nation, in a commer- 
 cial point of view. Those who supply the con- 
 sum])tion of the country, or the goods that are 
 exported in payment of those foreign commo- 
 dities which the nation consumes, can do no 
 more than supply it; and it has never been 
 contended that the receivers of the taxes were 
 in a different situation with respect to the ex- 
 penditure of them, than those who derived their 
 incomes from any other source. Both must 
 spend them in one way or other, and neither 
 can do more. 
 
 It may be a very annoying circumstance to 
 the ultimate payers of the taxes, to have their 
 property, when there is no danger at hand, en- 
 cumbered with the support of a great many 
 persons who are of no present use to them ; even 
 though these individuals may have spent the 
 prime of their days in their service, or may 
 have hazarded their lives in order to protect 
 them, their families, and those properties out 
 
 s
 
 ISO 
 
 of which the taxes are paid, from oppression, 
 spoliation, and plunder* It may be very pro- 
 voking also to pay the interest of the debts, 
 which they may have contracted, as without 
 these incumbrances they would have so much 
 more to spend in their own personal gratifica- 
 tions. But, to those who supply the articles 
 which are consumed, by means of the expendi- 
 ture of the collective income of the nation, it is 
 quite immaterial whether it is consumed by the 
 pensioners and national mortgagees, or by the 
 ultimate payers of the taxes, in administering 
 to their own gratifications. 
 
 To those who have the taxes ultimately to 
 pay, they are of course an evil ; as much as an 
 encumbered estate is worse than one which is 
 not so. But the labouring classes, who are of- 
 ten the most clamorous against taxes, have in 
 fact, the least to do with them. The wages of 
 labour are proportioned to the supply and de- 
 mand for it, and are not at all affected by the 
 average monied cost of commodities, whether 
 high or low, or whether it proceeds from taxes, 
 the balance of trade, profits of capital, or what- 
 ever cause. If taxes are an evil to the lower 
 classes, so are profits of trade. A certain de- 
 mand for labour must be requited by a certain 
 payment in commodities, by which it is sup- 
 ported ; and though changes of price, by good 
 or bad harvests, or other causes which often
 
 temporarily affect the price of every different 
 commodity, have the effect of injuring or* im- 
 proving for the moment the situation of the la- 
 bourer ; yet all permanent changes in the gene- 
 ral price of commodities, whether they proceed 
 from taxes or any oth^r cause, are ultimately 
 followed by a corresponding change in the 
 wages of labour, as, we trust, has been already 
 established. 
 
 Taxes, in whatever manner they may be le- 
 vied, fall ultimately upon real property; and 
 when they are laid on gradually, in the manner 
 in which they are generally imposed, they fall 
 so imperceptibly and equally upon every one, 
 that probably no ill effects are experienced from 
 them. After absolute necessaries, the gratifi- 
 cati-on derived from expenditure is the result of 
 habit and ambition. The former may gradual- 
 ly be changed without much violence, when the 
 latter is not affected. There is no great diffi- 
 culty in laying down a carriage, dispensing with 
 a servant, &c. if every person in similar circum- 
 stances does the same. It is the rank which for- 
 tune gives that constitutes a great part of its 
 value ; and as the imposts of government fall 
 equally upon all, according to their incomes, 
 though they may be the means of curtailing 
 the gratification of some artificial wants, they 
 leave the gradations of rank and fortune undis- 
 turbed. 
 
 s S
 
 132 
 
 With respect to taxation on articles of foreign 
 trade. The first effect of a tax upon a commodity, 
 is to increase the price of it ; and the next, to 
 reduce the consumption in a proportionate de- 
 gree, of both the home and foreign consumer. 
 This is intended by it ; it is an indirect way 
 of taxing income, which thereby cannot com- 
 mand the same quantity of consumable commo- 
 dities as before. But it does not in the least di- 
 minish the general demand for labour and com- 
 modities. The object of the tax is to acquire 
 income with a view to expenditure ; and if the 
 foreign consumer, from having to pay more in 
 price, consumes less in quantity, the power of 
 consuming the difference is acquired by govern- 
 ment, and the foreign consumer thus contri- 
 butes his share to the expences of the state.
 
 133 
 
 CHAPTER XVII. 
 
 Tax upon Foreign Corn. 
 
 When the foreign demand, for the commo- 
 dities of this, or any other country, determines 
 the balance of payments in its favour, there are 
 two ways in which the trade may be brought 
 to a balance : either by a general elevation of 
 prices sufficient to curtail the demand ; or by 
 an elevation sufficient to create an importation 
 of the produce of the soil that will command 
 labour and commodities enough to supply it. 
 
 In the latter case, no great rise of the na- 
 tional prices beyond those of the neighbouring 
 countries trading with it would take place. In- 
 stead of the increased demand for commodities 
 being paid for in money, it would be paid for 
 with food and materials, by which an additional 
 quantity of commodities, corresponding to the 
 increased demand, would be produced. It is 
 of no importance to a British manufacturer, 
 for instance, from whence the demand comes 
 which he supplies ; or where the food is grown 
 which he eats. If his bread be good, it is im- 
 material to him, whether it is the produce of 
 Yorkshire, or of Poland,
 
 134> 
 
 The advantages which Great Britain would 
 gain by such an additional trade, would consist 
 in the increased manufacturing population it 
 would support, and the profits of capital which 
 its merchants and manufacturers would gain. 
 Not half, it is probable, of the food and mate- 
 rials would be embodied in, and represented 
 by the materials and labour which the commo- 
 dities that were returned in payment for them 
 contained. The rest would be retained as pro- 
 fits of capital, &c. and be consumed by the 
 merchant, manufacturer, and capitalist, in the 
 necessaries, conveniences, and luxuries of life. 
 
 In this case, however, no great advantage 
 would be gained by the proprietors of British 
 soil. The incomes from their estates would not, 
 as with an elevated standard of prices, command 
 a greater quantity of foreign commodities than 
 before. The trade would be little more than a 
 commercial extension of territory. A greater 
 surface of soil would, in the support of labour 
 and profits of capital, pay tribute to our manu- 
 facturing superiority. If another county was 
 added to Great Britain, it would confer no par- 
 ticular advantage on the rest of the kingdom, 
 so far as the interest of the landed proprietors 
 were concerned ; neither by the same rule, does 
 bringing the general produce of other soils to 
 this country do so. Geographical situation is 
 nothing in the eye of commerce. J. ConoUy,
 
 135 
 
 Esq. one of the witnesses before the agricultu- 
 ral committee of 1821, stated, that flour could 
 be sent cheaper to Liverpool from America, 
 than he could send it from his mills to Dub- 
 lin, by only 44 miles of canal navigation. The 
 American proprietor in the neighbourhood of a 
 convenient place of shipment, is of course in 
 that case as well situated for the trade of this 
 country as the Irish proprietors in the neigh- 
 bourhood of Mr Conolly's mills ; nor could 
 the Irish proprietors gain any advantage by such 
 trade.*" 
 
 Very different, however, would be the case, 
 were the importation of victual produce not al- 
 lowed. Our demand for materials would then 
 
 * *' James ConoUy, Esq. again called in and examined." 
 " You were asked on your examination, respecting the 
 " power of this country to compete with America in the 
 " article of flour, in the general markets of the world ; have 
 " you any thing to add to your answer upon that subject ? 
 " My object is to shew the effect of the importations of 
 " American flout" upon these countries ; America possesses 
 " a prodigious advantage over us in respect of freight, so 
 " much so, that at my mills, 44 miles from Dublin, which 
 " are very extensive, and from which there is a water car- 
 " riage the whole of the way from the mill door to Dublin, 
 " and which water carriage, has cost at least 400,0001. (the 
 " grand canal goes about 33 miles, and there is a barrow 
 " navigation which takes up the remainder of it) notwith- 
 " standing that, flour comes from America to Liverpool, at 
 " a lower freight than it can be put on board ship (from 
 " that mill) in DuhVm."— Report, page 319.
 
 136 
 
 be necessarily confined to the consumption of 
 that population which our own soil would sup- 
 port ; the balance of trade in our favour would 
 elevate the national prices; a less quantity, 
 though an equal value of, British goods would 
 be exported, and the rest would be consumed 
 at home ; foreign commodities would become 
 comparatively cheap, and the incomes of pro- 
 prietors would go further, in commanding all 
 the kixuries of life. The higher the national 
 prices, the richer of course a nation becomes ; 
 its income will command a greater quantity of 
 foreign commodities. Almost all our luxuries 
 are of foreign production, and would rather be 
 reduced than increased in price, by any balance 
 of payments which raised the general prices of 
 the country. 
 
 The situation of the labourer, v/ith a high 
 state of national prices, would also be improved. 
 Dearness and cheapness are relative terms, and 
 only applicable to prices, which are raised above 
 the national level, by scarcity, or reduced be- 
 low it by abundance. When the average wages 
 of labour, and prices of the necessaries of life, 
 are rightly apportioned to each other, accord- 
 ing to the existing supply of labour, the la- 
 bourer is enabled to say when necessaries are 
 dear and when they are cheap. But it is by 
 comparison with a standard, determined by the 
 quantity of money in circulation, that he is
 
 137 
 
 enabled to make this deduction. This stand- 
 ard is of course quite arbitrary, so far as the 
 supply and demand for necessaries are concern- 
 ed, and his wages, according to the supply of 
 labour, are always accommodated to it, A la- 
 bourer considers only those prices dear, and 
 those cheap, which are above or below the 
 national level, whatever that level may be. 
 A state of prices which may mark scarcity 
 in one country, may denominate plenty in an- 
 other. If the inhabitant of a country with a 
 low standard of prices, comes to spend his in- 
 come in a country with the reverse, he consi- 
 ders all the necessaries of life dear, because 
 they are at prices which would betoken scar- 
 city at home. On the other hand the inhabit- 
 ant of a rich country, spending his income in 
 a poor one, considers the necessaries of life 
 cheap, because they are what he would consi- 
 der cheap at home ; on the same principles that 
 Gulhver found himself a giant in Lilliput and a 
 dwarf in Brobdingnag. In neither case, however, 
 would they be either dear or cheap, but only 
 in both cases be measured by a wrong scale. 
 Gulliver was neither a dwarf nor a giant in his 
 own country ; and it would have been absurd 
 to have considered him either the one or the 
 other, because he was thought so in countries 
 to which his natural standard of admeasure- 
 ment did not apply. 
 
 T
 
 138 
 
 In countries with high national prices, it i^ 
 found, in general, by experience, that the 
 lower classes are in better circumstances than 
 in countries where the national prices are low. 
 Now the necessaries of life must always be the 
 first and principal object with every labourer, 
 and luxuries and conveniences only a matter of 
 secondary consideration. When, however, the 
 latter are easily acquired, and it takes no great 
 quantity of labour, or sacrifice of articles of 
 more absolute necessity, to purchase them, it is 
 natural to suppose that more will be consumed 
 than if they were of more difficult attainment. 
 In a high state of national prices, therefore, 
 to which wages are accommodated : when mo- 
 ney will command a much greater proportion 
 of luxuries than of food j or where luxuries are 
 comparatively low, while the money price of 
 food is high, — the lower classes will be able to 
 increase their comforts by the comparative ease 
 with which they can be procured. 
 
 In countries, on the other hand, with a low 
 state of national prices : where foreign luxuries 
 are comparatively dear ; to acquire them will 
 take a greater sacrifice of labour and the more 
 absolute necessaries of life, than the working 
 classes probably would make if they could, or 
 could make if they would. They, therefore, 
 learn to dispense with those articles of comfor^ 
 which are common to the poor in richer coun-
 
 139^ 
 
 tries, or rather never acquire a taste for them, 
 and often live in a miserable and degraded state 
 of abject poverty. 
 
 A high state of national prices, so far, in 
 fact, from denominating dearness or scarcity, 
 is the means and proof of abundance. A mere 
 extension of trade, by the importation of corn, 
 may increase the numbers, but high national 
 prices increase the comforts of the poor, and 
 are as much to be desired by them as by any 
 class of the community. 
 
 If, however, a great manufacturing country 
 were entirely to prevent the importation of corn, 
 prices would probably rise so high as to foster 
 a competition by other countries, which, in the 
 end, might rival and reduce its manufacturing 
 superiority beneath what, by the exercise of 
 better policy, it might continue to uninterrupt- 
 edly maintain. By a total exclusion of victual 
 produce it might have a greater advantage for 
 a time, but in the end gain less than by pre- 
 serving its national prices at a more moderate 
 standard. 
 
 That a country, however, should throw away 
 its manufacturing superiority altogether, and 
 by unlimitedly permitting the importation of 
 corn, render itself dependant upon other na- 
 tions for this principal necessary of life, merely 
 for the sake of increasing its manufacturing po- 
 pulation, will never, I should think, be con- 
 
 T 2
 
 140 
 
 tended. That it is entitled to make a fair ad- 
 vantage of its manufacturing superiority, is too, 
 reasonable a proposition to be denied. 
 
 This may be done in a most advantageous 
 manner, without going to either extremes, of a 
 free importation, or an entire exclusion. A 
 tax upon foreign corn, and other victual pro- 
 duce, would have the effect of maintaining the 
 national prices at any level that might be de- 
 sired, beneath what would be attained by com- 
 plete prohibition. If a tax were laid upon fo- 
 reign corn in this country, our national prices 
 must attain an elevation above those of the 
 country from whence the corn came, sufficient 
 to cover the tax upon it, before it could be im- 
 ported. The tax would amount to prohibition un- 
 til this were the case. But this level we should 
 be certain to attain ultimately, if our manufac- 
 turing superiority would command a favourable 
 balance of trade at the elevation ; while at the 
 same time the tax would possess the advantage 
 of being no burden on this country, but exclu- 
 sively a tax upon foreign nations : — To illus- 
 trate this principle. 
 
 If, for instance, corn imported from the 
 Baltic, the prime cost of which, to the import- 
 er, was one million, were subject to a tax of 
 another, its selling price in this country must, 
 at least, be two millions. The price of British
 
 141 
 
 labour and commodities would consequently 
 have to bear a price in proportion. 
 
 It is unnecessary, perhaps, to remark, after 
 what we have before said, that the price of 
 corn governs the price of labour, and lice ver- 
 sa ; and that the prices of corn and labour go- 
 vern the price of every thing else. If they 
 are doubled, the amount of capital in trade is 
 doubled, and the profits expressed in money 
 are necessaril}' twice as great as before, &c. ; 
 although the merchants and manufacturers may 
 be no richer, except in the additional command 
 of foreign luxuries, which, by the altered state 
 of the national prices, they acquire; and that con- 
 sequently doubling the price of corn, doubles 
 the price of all commodities so far as they re- 
 present British labour and British produce. 
 
 The prime cost, therefore, of this corn, would 
 only command half the quantity of British la- 
 bour and produce in return, that it would have 
 done without the tax ; v/hile the million levied 
 by government would command the other half, 
 which would, either directly or indirectly, be 
 consumed by those to whom the money thus 
 levied was paid. 
 
 Neither is it probable that the tax would fall 
 in any great degree upon the nation from 
 whence the corn came. The returns which are 
 usually made to the Baltic for goods imported 
 from thence, consist principally of tea, coffee,
 
 14S 
 
 sugar, cotton, and generally the produce of the 
 East or West Indies, and of wines, gold, silver, 
 &c. in the price of which there is but little Bri- 
 tish labour or produce represented. The value 
 of these commodities is only affected by the 
 state of national prices in the countries from 
 whence they come ; they are as cheap as they 
 would be with any state of prices in England. 
 The national prices in England, however high, 
 have no other effect than to lower those of 
 every other country. In the purchase of these 
 commodities, British labour or produce, how- 
 ever, has been exchanged ; and it is the con- 
 sumers in those countries, or deriving their in- 
 comes from those countries where these com- 
 modities are produced, who pay the tax levied 
 upon the corn, in the payment of which they 
 are returned. 
 
 By brandies imported into the Baltic direct 
 from France, or tobacco from America, or tea 
 from China, corn imported into England may 
 also be paid for, the same as if they came 
 through England. Goods, we shall say, are 
 imported into France or America from Britain ; 
 and France and America having exported goods 
 to the Baltic, for which we shall suppose they 
 do not import an equal value in return, draw 
 bills upon the Baltic for the balance. In Eng- 
 land, in consequence of the importation of 
 corn, there is a demand for bills upon the Bal-
 
 us 
 
 tic. America and France, therefore, pay their 
 debts to Great Britain with the bills they have 
 drawn upon the Baltic, and these again are re- 
 mitted to the Baltic in payment of the corn. 
 The result consequently is, that the tax up- 
 on the corn is paid in the increased price of 
 the goods sent to France and America, while 
 the corn sent to England is paid for by the 
 brandies and tobacco imported into the Baltic 
 direct from those countries. 
 
 Teas imported into the Baltic from China, 
 are often paid for in gold and silver, to pur- 
 chase which England ships goods to South 
 America. The gold and silver thus received, 
 may be sent to the Baltic in payment of the corn, 
 and from thence to China, or be shipped to 
 the order of Baltic merchants direct for China. 
 By these means the South American consumer 
 of British labour and produce pays the tax up- 
 on the corn ; while the corn itself is paid for 
 by the teas imported into the Baltic direct from 
 China. If imported by way of America, or any 
 other channel not British, the American mer- 
 chant who imports the teas from China, and 
 ships them to the Baltic, draws upon the Baltic 
 for them, and sells his bills in England for gold 
 and silver brought from South America. Thus 
 British goods are sent to pay for the gold and 
 silver, it is remitted to pay for the tea, and the 
 bills are sent to pay for the corn.
 
 144 
 
 The amount of the tax proper to be imposed 
 upon corn, is altogether a question of mercan- 
 tile superiority, and ought to be determined on 
 precisely the same principles as would govern 
 a prudent manufacturer in similar circumstances. 
 It can never be correctly determined by en- 
 quiries addressed to agriculturists. If it was 
 too heavy, it would defeat its object as a tax 
 by which to raise money. Were it to elevate 
 the national prices so high as to enable other 
 nations to undersell us, it would drive off into 
 other channels that demand for commodities by 
 which the demand for foreign corn was created. 
 It must always be sufficiently low to preserve 
 the demand for our labour and produce beyond 
 what our own soil can support and furnish. 
 Were the duty too high, as we have before 
 stated, it would merely operate as a prohibi- 
 tion. 
 
 If a manufacturer could make so good and 
 cheap a commodity as to prevent all competi- 
 tion, he would be anxious to make as much of 
 his manufacturing skill as possible, and yet not 
 raise his prices so high as to foster competition. 
 In determining the price which he would set 
 upon his commodity, his first point would be 
 to ascertain the extent in lowness of price, and 
 goodness of quality, in which he could exceed 
 his neighbours, in any attempt which they 
 might make to rival him. Having done this.
 
 145 
 
 he would next ascertain how much of this arose 
 from local circumstances, in which they could 
 not compete with him, such as in cheapness of 
 coal, facilities of carriage, &c. A price ade- 
 quate to this he would lay on without any hesi- 
 tation, as he never could be rivalled in these 
 advantages. That superiority, however, which 
 merely depended upon skill and capital, he 
 woukl perhaps not be disposed to build upon 
 too far ; as if he did encourage his neigh- 
 bours, by his high prices, to establish similar 
 manufactures, practice might give them skill, 
 and success might give them capital. 
 
 Upon principles similar to these, ought a na- 
 tion to determine the amount of the tax it im- 
 poses upon foreign corn, if it be desirous to make 
 the most of its manufacturing superiority ; and 
 that this or any other country should not be so 
 desirous, it is impossible to conceive. 
 
 Although the parliamentary enquiries upon 
 this subject have been upon the whole unsatis- 
 factory, so far as they have gone they are ex- 
 tremely useful. It is evident that with a high 
 state of national prices, land can be cultivated 
 which would have to be thrown into pasture 
 were those prices not maintained ; and it is im- 
 portant to ascertain the prices at which inferior 
 land can be preserved in tillage. As nature has 
 made us equally carnivorous as well as herbivo- 
 rous animals, it is perhaps intended that a great 
 
 u
 
 146 
 
 part of the soil should be devoted to the rear- 
 ing of cattle, in order to keep down its price 
 to a level with that of grain, so that the labour- 
 ing classes might be able to command a pro- 
 portion of both. It is probably designed, there- 
 fore, that a considerable part of the soil should 
 not pay for cultivation, in order to secure this. 
 We might at the same time remark, that as the 
 improved system of farming consists in rearing 
 turnips and green crops for cattle, where they 
 had not been reared before, the proportion of 
 each, which it is the design of nature to preserve 
 between animal and vegetable produce, is pro- 
 bably not at all altered by these improvements. 
 There can perhaps be little doubt, that in 
 order to maintain all that land in cultivation 
 which had been brought into tillage during the 
 war, 80s. per quarter would be necessary. But, 
 in order more clearly to show how this effect is 
 produced, let us, for example, assume that the 
 price of one half of the materials employed in 
 working the land, and one half the wages of the 
 labouring population of this country are deter- 
 mined by the price of foreign commodities. 
 Let us also, in the first place, suppose, that 
 foreign commodities are in all respects on a par 
 with our own ; that in our trade with foreign 
 countries, the exchanges are equal in quantity 
 as well as price ; so that an acre of produce in 
 Great Britain is only of equal value with an
 
 147 
 
 acre of foreign produce. We should then hav6 
 no manufacturing superiority. In this state of 
 prices, there would of course be land which 
 would just clear the expence of its cultivation, 
 and nothing more. We shall suppose the pro- 
 duce of 50 acres of this to sell for £125, and 
 the account of its produce and expence of cul- 
 tivation to stand thus : — 
 
 Rent, by rearing 
 cattle £25 
 
 To the expence of 
 its cultivation, de- 
 termined by the 
 price of British 
 produce - 50 
 
 To ditto by the pri- 
 ces of foreign pro- 
 duce - 50 
 
 £125 
 
 By produce sold 
 for 
 
 jC125 
 
 £125 
 
 Gain for the trouble of tillage, nothing. 
 
 But were our prices to rise to double those 
 of our neighbours, the produce of an acre of 
 land, would through the medium of our manu- 
 facturing labour, by this means, command the 
 produce of two acres of any other nation, and 
 that land which would pay no additional rent 
 in tillage before, would now leave a rent of 
 £50. The account would stand thus : — 
 u 2
 
 148 
 
 To rent by rear- 
 ing cattle, which 
 would be dou- 
 bled with the va- 
 lue of cattle and 
 other things £50 
 
 To expence of cul- 
 tivation deter- 
 mined by the 
 price of British 
 produce doubled 
 also 
 
 To ditto by the 
 prices of foreign 
 produce, redu- 
 ced if any thing, 
 but supposed to 
 be the same 
 To additional rent 
 cleared 
 
 By value of pro- 
 duce doubled £250 
 
 
 
 100 
 
 50 
 
 50 
 
 £250 
 
 £250 
 
 Gained for the trouble of tillage, £50. 
 
 It is upon this principle that land must be 
 thrown out of cultivation, with a low state of 
 national prices, which would leave a rent when 
 prices were high. Our national prices were very 
 much elevated during the late war, and land 
 was brought into tillage which will not now pay 
 for cultivation. The prices, however, at which 
 the land in tillage would pay for cultivation, it
 
 149 
 
 was important to ascertain. This has been 
 done by the agricultural committee, and fixed 
 at 80s. per quarter, and I have no doubt with 
 great truth. But how far it may be proper to 
 maintain the national prices at that standard, is 
 another branch of inquiry. The particular 
 cause of the high prices during the war, and 
 the present low prices, we shall hereafter con- 
 sider. 
 
 Although we should thus gain such consi- 
 derable advantages by our foreign trade, it 
 would still be the interest of foreign nations to 
 trade with us. The cold regions of the north 
 of Europe, and British America, can never be- 
 come manufacturing countries. The extreme 
 of cold, and even of heat, to which they are 
 subject, forbid it j while their climate is very 
 favorable to the growth of corn. On the other 
 hand, the excessive heat of the tropical cli- 
 mates equally renders them unfavorable to ma- 
 nufacturing industry, but superabundantly fer- 
 tile in all the vegetable luxuries of life. The 
 temperate regions less favoured with natural 
 fertility, but infinitely more so in the manual 
 energy of their inhabitants, seem destined by 
 nature to supply the rest of the world with the 
 produce of art and labour, and be the con- 
 necting link by which the extremes of climate 
 administer to the comforts of the population 
 of each other.
 
 150 
 
 The other nations of Europe, with climates 
 equally temperate, and circumstances equally 
 favourable for manufac^iring industry, may 
 perhaps object to take our manufactures were 
 a tax thus to be levied upon them, and endea- 
 vour to improve their own ; at least to the ex- 
 tent of supplying their own consumption. Any 
 laws to this effect, however, it is extremely 
 probable, if not certain, would be laws which 
 would rather retard than promote this object. 
 The first thing to stimulate a nation to indus- 
 try, is to create a demand for its labour. The 
 only way to do this is to provoke expenditure 
 by the introduction of foreign luxuries. By 
 this means a demand for commodities in order 
 to pay for them is produced. The money made 
 by the trade, and the knowledge gained of the 
 demand, cost, and quality, of the foreign arti- 
 cles consumed, foster attempts to produce 
 them ; to which attempts, however, an exist- 
 ing demand is necessary. Manufactures will 
 seldom to any great extent, be set on foot, if 
 the parties have not only to make the commo- 
 dity, but create a market for it ; and this would 
 have to be done if the habit of consumption be 
 prevented by restrictions upon import. All 
 experience has in fact shewn that foreign trade 
 has proved the best mode of giving a taste for, 
 and introducing domestic manufactures. It 
 introduces both knowledge and enterprise.
 
 151 
 
 When an individual has made money by the 
 importation of any commodities, he is apt to 
 acquire some knowledge respecting its manu- 
 facture ; from this he is induced to attempt to 
 manufacture it, and if the country is in that state 
 to render the attempt practicable, he succeeds. 
 In the mean time there is a demand for pro- 
 duce in order to pay for these manufactures, 
 until the nation is fit for producing them itself, 
 which would otherwise not exist. 
 
 All decrees to prevent the importation of fo- 
 reign manufactures may be considered decrees 
 of present poverty by the nation which en- 
 forces them. They destroy the existing de- 
 mand for those commodities that have been sent 
 in exchange for the prohibited manufactures, as 
 well as deprive the country of the power of con- 
 suming the manufactures thus prohibited. They 
 thus begin by paralizing the whole system ; and 
 it is extremely probable that they retard rather 
 than encourage the growth of that domestic in- 
 dustry which they are intended to promote. If 
 a nation possesses natural facilities for manu- 
 facturing, with good laws and a free constitu- 
 tion, by which a stimulus is given to industry 
 and enterprise, it will become a manufacturing 
 country in time. It seems, however, most 
 probable, that prohibitory laws will not acce- 
 lerate that time, while they are certain to 
 involve the nation in poverty, if not distress.
 
 152 
 
 No judicious government would therefore hasti- 
 ly pass any laws of this kind. This, however, 
 ought, I think, to be a matter of perfect indif- 
 ference to the British nation. By properly en- 
 couraging a trade with her own colonies, and 
 those countries and nations who are her natural 
 customers, and will at all times be glad to 
 trade with her, she may be sufficiently inde- 
 pendent to be entirely indifferent to the po- 
 licy by which those nations may govern them- 
 selves, who wish to be rich before their time.
 
 153 
 
 CHAPTER XVIII. 
 
 Money, 
 
 There are two things necessary to the price of 
 commodities, viz. money, and the commodities 
 the value of which it expresses. Price knows 
 no distinction of persons, but is formed by 
 their conjunction alone. In the market, the 
 demand is represented by money, the supply 
 by commodities. If there is a smaller quantity 
 of any particular commodity brought into the 
 market for sale, but the same quantity of mo- 
 ney brought to purchase it, its price rises ; the 
 demand is greater than the supply. On the 
 other hand, if with the same supply of the com- 
 modity, a greater quantity of money is brought 
 in demand for it, a rise in price takes place pre- 
 cisely on the same principles ; except that in 
 the one case, it is produced by a reduced quan- 
 tity of commodities, in the other by an increas- 
 ed quantity of money. Just, the reverse is the 
 case when the supply of commodities is enlarg- 
 ed, or the quantity of money in the market di- 
 minished; in both instances, a declension of 
 price is the consequence.
 
 154, 
 
 What is the case with any particular com- 
 modity, is also the case with commodities gene- 
 rally. Any alteration of prices that is universal, 
 must be the result either of an alteration of the 
 supply of commodities, or an alteration in the 
 supply of money ; but it may equally result 
 from either. 
 
 Now, the supply of money may be perfectly 
 arbitrary, and is at least as much determined 
 by chance as rule ; whereas the supply of com- 
 modities is not. Paper money may be created 
 to any extent ; and the value of gold is acci- 
 dental. Had the mines been twenty times 
 more productive, the supply would have been 
 twenty times greater ; and that commodity 
 which is now worth a shilling would then have 
 been worth a pound. The supply of commodi- 
 ties, however, is less arbitrary. The soil will 
 yield, upon the average, a given produce, and 
 support a given quantity of labour, and united 
 they will supply a given quantity of consuma- 
 ble commodities. But as neither population 
 nor the produce of the soil can be created like 
 paper money, nor yet depend upon the acci- 
 dental productiveness of mines, general varia- 
 tions of price, resulting from variations in the 
 supply of commodities are not so likely to hap- 
 pen. 
 
 Sudden general alterations in prices are there- 
 fore more likely to proceed from an alteration
 
 155 
 
 in the supply of money, at least when that 
 money is paper, than by an alteration in the 
 supply of commodities. But at the same time, 
 if a nation is commercial, and in the habit of 
 supplying its consumption by exchanging its 
 commodities with those of other nations, great 
 alterations in the supply cf commodities may 
 be suddenly caused by political events. 
 
 A great and general reduction of prices has 
 of late taken place in this country, which must 
 either be the consequence of an increased sup- 
 ply of commodities, or a reduced supply of 
 money. That this reduction is not a fall in our 
 national prices resulting from a diminished fo- 
 reign demand for our manufactures, is proved 
 by the fact, that the foreign demand for our ma- 
 nufactures has and is continually increasing, 
 and at this moment the balance of trade and 
 payments in our favour, and the influx of money 
 into the country, are greater than perhaps were 
 ever known. Nevertheless, prices, instead of 
 rising above, have fallen below the national 
 level, determined by the present corn law, and 
 are not now more than half the amount at 
 which that law has fixed them. i 
 
 That this reduction does not proceed from 
 the supply of foreign corn, is also evident from 
 the simple fact, that though the prices are now 
 lower than ever, there is no foreign corn in 
 the market. Foreign corn might affect the 
 X 2
 
 156 
 
 market while it was in it, but after it was con- 
 sumed, unless there was a reduced quantity of 
 money in the market, as well as corn, the price 
 of it must rise again. 
 
 The present prices might also proceed, as 
 some have supposed, from over-production ; but 
 as we have already seen, it would in that case 
 reduce the price of corn, but not the price of 
 labour ; whereas the price of labour has been 
 reduced as well as the price of corn. Hence we 
 are brought to the inference that it must be a 
 question of currency. 
 
 This again presents considerable difficulties. 
 Great fluctuations in prices have been known 
 to take place without any, at least, apparently 
 adequate alteration either in the quantity of 
 money in circulation, or in the supply of corn 
 by which to account for it ; and at present 
 there does not seem a reduction in the circula- 
 tion of London at least, that will at all explain 
 the low prices to which agricultural produce 
 has fallen. A proper acquaintance, there- 
 fore, with the principles which govern the con- 
 nection of money with commodities, and the 
 laws which regulate its motions, and determine 
 and restrain the issues of bank paper, become 
 absolutely necessary to any sound conclusions 
 on the subject ; and this and the following chap- 
 ter contain what I am afraid is but a very im-
 
 157 
 
 perfect attempt to develope those laws and prin- 
 ciples. 
 
 The money in circulation may be divided in- 
 to two descriptions ; that which is employed in 
 exchanges of consumable articles, and that 
 which is employed in making transfers of capi- 
 tal and property. The first may be termed its 
 consumptive, the last its abstract circulation. 
 
 Money in Consumptive Circulation composed 
 oj Individual Currents, 
 
 From that great lake, if it may be so termed, 
 or mass of money in consumptive circulation, 
 each individual has a stream of his own, that 
 continually flows in to him, and from him. The 
 magnitude of this stream is proportioned to his 
 income and expenditure, which it forms. The 
 stream that flows in is his income, the stream 
 which flows out his expenditure ; or if he does 
 not expend it himself, he lends it, which is the 
 same, to others who do. 
 
 This mass, or lake, is entirely formed of 
 these streams, which are in continual motion. 
 It is not all the money that passes through the 
 hands of a merchant or trader, however, which 
 forms his own particular stream of circulation. 
 In general, only a very small part of it does so. 
 That part alone which becomes his, in the
 
 158 
 
 shape of profit, belongs to his own current. 
 With the rest, he is only an agent, by which it 
 is advanced forward in the respective streams 
 to which it belongs. Thus, a manufacturer, 
 who employs workmen, is the approximate me- 
 dium between the ultimate consumer of the 
 manufactured commodity, and his men, by 
 which the money that composes their income 
 comes into their hands. The manufacturer 
 again receives the money I'rom the wholesale 
 dealer, who is also his agent, as well ^s those 
 of his men, to the amount of the profits that 
 the goods sold contain, and which form part of 
 his income. They are again sold to the retail- 
 er, who, in his turn, becomes an agent in trans- 
 mitting the money forward that forms the pro- 
 fits and income of both wholesale dealer and 
 manufacturer, as well as the workmen ; and he 
 again sells them to the consumer, from whom 
 he receives the profits which form his own 
 stream of circulation as well as the rest. 
 
 The streams of circulation may also be di- 
 vided into superior and subordinate. A person 
 of large property expends a great part of his 
 income, not only in purchasing necessaries, 
 but in commanding a higher description of la- 
 bour, such as that of stewards, teachers, paint- 
 ers, musicians, and in those innumerable modes 
 of enjoying the superior elegancies of life, in 
 which large fortunes are generally spent. This,
 
 159 
 
 which forms the out-lay of one party, forms the 
 income of another ; is again spent, and again 
 forms part at least of the income of a third, who 
 administers to those superior luxuries, &c. 
 Thus it descends down, step by step, in the 
 great channel of consumption, forming nume- 
 rous subordinate currents, until it perhaps 
 returns to the original proprietor at last, in the 
 purchase of that produce from whence it was 
 first derived. 
 
 Money in consumptive Circulation the actual 
 Representative of Commodities, 
 
 Now the great and important feature of money 
 in the channel of consumptive circulation is, 
 that it must necessarily, and always does, re- 
 present an equal value with itself of uncon- 
 sumed commodities in the market. Every 
 guinea or pound note which a person receives 
 in the channel of consumptive circulation, may 
 be said to be the shadow of an actual substance, 
 or the representative of a constituent value, at 
 the moment remaining in some shop or ware- 
 house unconsumed. It is a check upon the 
 storehouse of society for a particular value of 
 goods, the possessor of which is virtually the 
 owner of the goods it represents. 
 
 " When the division of labour,*' says Smith,
 
 160 
 
 as we have before quoted, " has been once 
 " thoroughly established, it is but a very small 
 " part of a man's wants which the produce of 
 " his own labour can supply. He supplies the 
 " far greater part of them by exchanging that 
 " surplus produce of his own labour, which is 
 " over and above his own consumption, for 
 " such parts of the produce of other men's la- 
 " hour as he has occasion for. Every man 
 " thus lives by exchanging, or becomes in some 
 " measure a merchant, and the society itself 
 " grows to be what is properly termed a com- 
 " mercial society." 
 
 That part, we have also stated, of the aggre- 
 gate wealth of a nation, which forms the wealth 
 or income of each individual, consists of 
 some particular description of labour or pro- 
 duce of which the whole is composed. The 
 income of one person is derived from land 
 which produces corn, another from land which 
 produces cattle ; one has a tin mine, another 
 a mine of coal ; one man makes nails, ano- 
 ther shoes, &c. Thus the income of each 
 individual is generally derived from contribu- 
 ting to some particular want of a great many 
 different persons. On the other hand, the 
 necessaries and luxuries which each individual 
 requires, take some portion of the labour and 
 produce of as great a variety of persons to sup- 
 ply ; and it is necessary for him to exchange
 
 161 
 
 that in which his income consists, with all those 
 who may desire a part of it, in order that he 
 may procure from them that portion of each of 
 their labour or produce, which he requires for 
 himself. In order to facilitate these exchanges 
 money is necessary, &;c. 
 
 Now, it is evident, that a person must actu- 
 ally, before he can acquire the money necessary 
 to enable him to command that portion of the 
 produce or labour of others which he requires, 
 dispose of his own labour or commodities for it. 
 As every individual must do this before he can 
 gain possession of money in the channel of con- 
 sumptive circulation, it equally follows that 
 every pound so acquired, represents the value 
 which was given for it. This value is placed 
 in the hands of the merchants, traders, &c. of 
 society, who have furnished this money ; and, 
 as this must have been done with every com- 
 modity in the market, they cannot be con- 
 sumed until the money returns in purchase of 
 them. The original intention in selling them 
 for money is merely to facilitate the exchange 
 of one commodity for another ; the money, 
 therefore, naturally must represent the commo- 
 dities to be thus exchanged ; nor will the deal- 
 er, who conducts these exchanges, dispose of 
 them again without such money. Whenever 
 that ^consumptive demand comes round, how- 
 ever, which places the money again in the 
 
 Y
 
 16€ 
 
 hands of the dealer, his stock l)eing reduced, he 
 purchases more to supply its place. The mo- 
 ney, therefore, goes again into the hands of the 
 original producer, to replace the commodity 
 consumed. It again becomes income ; again 
 represents the commodity purchased by the 
 dealer ; and is again returned in promoting a 
 consumptive demand for those which are in the 
 market. The money may not, perhaps seldom 
 does, return in demand for the particular com- 
 modity it represents 5 that is not the original 
 intention. It goes in purchase of other commo- 
 dities of equal value, and the money which re- 
 presents them, comes in purchase of the com- 
 modity which is represented by it. Thus, there 
 must necessarily be, at all times, a stock on 
 hand, of goods, equal to the value of the mo- 
 ney in consumptive circulation. It never is 
 spent in a consumptive demand, without repro- 
 ducing in the market a commodity of equal 
 value to what has been consumed. 
 
 To make the explanation more clear, we 
 shall suppose society to consist of ten persons^ 
 besides merchants and dealers ; that the money 
 in consumptive circulation be represented by 
 5^1,000; that each of these pei'sons furnish one 
 hundred pounds worth of different commodi- 
 ties for general consumption, and that the 
 wants of society are confined to the commodi- 
 ties thus furnished. The object of each indi-
 
 16S 
 
 vidual, of course, is to exchange his commodi- 
 ties for those of his neighbours. In order to 
 effect this, he first sells them to the dealer for 
 a hundred pounds, and each individual does 
 the same ; this absorbs the a^l,000 in circula- 
 tion. The money thus received, therefore, re- 
 presents the commodities sold to the dealer ; 
 and as the wants of each individual, or those 
 to whom he pays or lends the money, arise, they 
 come to the dealer with it, and receive for it 
 that portion of the commodities originally sold 
 to him, which it will command. 
 
 When the dealer receives the money in pur- 
 chase of any particular commodity for con- 
 sumption, he of course returns with it to the 
 original producer of that commodity, purchases 
 an equal quantity in order to replace it ; and 
 the producer again puts forth the money into 
 the market, either by lending or paying it to 
 others, or in order to supply his own consump- 
 tion. By these means, the supply in the market 
 is always equal at least to the value of the mo- 
 ney in consumptive circulation, and the money 
 is an order upon this stock for the value it ex- 
 presses. 
 
 It is of no consequence what description of 
 money it is ; its intrinsic value is totally unim- 
 portant ; its value to those who receive it con- 
 sists in its being the actual representative of a 
 given quantity of consumable commodities.
 
 164 
 
 Merchant Stock, 
 
 If the whole income of society had always 
 been spent in actual consumption, the stock of 
 goods in the market could never have exceeded 
 in amount the value of money in circulation, 
 though it never could have been less. But 
 shopkeepers, manufacturers, and others, find it 
 convenient to keep larger stocks on hand than 
 this would amount to. In order to increase 
 ■them, therefore, instead of spending their pro- 
 fits in actual, they usually spend a part of them 
 in commercial consumption. They purchase 
 the particular commodities in which they deal, 
 with their profits or income, instead of purchas- 
 ing commodities for their own consumption. 
 By this, production is equally promoted, though 
 consumption does not actually take place. The 
 commodities thus laid up, however, cease to be 
 represented by the money in consumptive cir- 
 culation : so far as regards it, they appear to 
 have been consumed ; the producer has placed 
 a commodity in the market, and though that 
 may not be consumed, money has been return- 
 ed upon him for a fresh supply, to be placed 
 there the same as if it had. 
 
 For the sake of distinction, we have termed 
 that stock which is represented by the money
 
 165 
 
 in actual circulation, market stock ; and the 
 stock which exceeds this, we have termed mer- 
 chant stock. Commercial stock might at first, 
 as it is an old term, appear the most proper to 
 mark this distinction ; but, correctly speaking, 
 commercial applies as much to one stock as the 
 other. 
 
 The object of the dealer in thus accumula- 
 ting a merchant stock, is to provide against any 
 falling off in the regular supply, or market 
 stock of the commodity in which he deals. The 
 production of all commodities, except victual 
 produce, is regulated by the supply and the de- 
 mand. When the original producer brings to 
 market more goods than the community wants, 
 the dealer will not give him the money for them 
 which they are actually worth, and he ceases 
 to produce so much as before. One extreme 
 begets the other, and the supply then falls be- 
 neath the regular demand. When this occurs, 
 the dealer brings into the market his merchant 
 stock, puts himself in the situation of the pro- 
 ducer for the time being, and provides for the 
 regular consumption, without any inconvenience 
 having been suffered by society from th<5 want 
 of supply, which would otherwise have been 
 felt. 
 
 This is the legitimate object of all stocks of 
 commodities which are held by dealers. Be- 
 yond what is sufficient for the attainment of
 
 166 
 
 this purpose, they can never accumulate to any 
 amount. In those commodities, the supply of 
 which is certain and regular, and easily attain- 
 ed, the stocks held are comparatively small. 
 In foreign commodities, the supply of which is 
 received from distant countries, or cannot be 
 calculated upon with certainty, the stocks are 
 generally large. With all foreign trade this 
 must necessarily be the case. The foreign com- 
 modities consumed, as we have before shewn, 
 merely represent home commodities exchanged 
 for them. When brought into the market, 
 therefore, they are sold for money, which re- 
 presents home commodities. As a foreign com- 
 modity is placed in the market, a home commo- 
 dity of equal value is taken out of it. The 
 market stock is not increased in value by the 
 exchange. The foreign commodity only re- 
 presents the home commodity purchased for 
 exportation with the money, or with an equal 
 sum with that for which it sold. Both the fo- 
 reign and the home market, however, must be 
 regularly supplied with the respective commo- 
 dities exchanged. In order to this, a very large 
 merchant stock both in ships conveying the 
 commodities between the two countries, and in 
 warehouses and shops, at both ends, must be at 
 all times on hand. 
 
 The consumers know nothing of the com- 
 mercial operations by which they are supplied ;
 
 167 
 
 but in the price of the commodity, pay a profit 
 to the dealers for their trouble, and the stocks 
 which they thus continually hold. 
 
 Effects of an increased Supply of Commodities, 
 
 Should a producer bring an additional sup- 
 ply of his particular commodity to market, 
 when both the market stocks and merchant 
 stocks, which the dealers think proper to hold, 
 are full, if he is determined to sell, he must re- 
 duce the price of the commodity in order to pro- 
 cure a demand for it. In this way, he brings it 
 within the reach or attraction of the m.oney in 
 consumptive circulation, which has one of two 
 effects, or perhaps both : it either increases the 
 consumption of the commodity, or diminishes 
 the supply of it by others. If it is an article of 
 first necessity, such as food, it increases the 
 consumption j if an article of less, but still of 
 great necessity, such as cloathing, it may do so, 
 but in a less degree. With most articles, how- 
 ever, except food, its principal eifect is to di- 
 minish the supply by others ; and, at the same 
 time, induce the dealers, if they can command 
 money, to increase their merchant stocks. They 
 buy up the commodity sold beneath the cost 
 price. Their stocks, however, being much 
 larger than usual, they will not purchase more,
 
 168 
 
 except upon the same or lower terms. The 
 richer producers, in consequence, being unable 
 to get the market price, or what they can sell 
 their commodities at with a profit, hold back 
 their supplies until the additional quantity is 
 carried off by the regular demand, and the 
 usual supply is again required. The same is 
 the case when any particular dealer brings his 
 •merchant stock into the market, by selling it 
 off beneath its value ; other dealers cannot ef- 
 fect sales, and therefore will not purchase of 
 the producer until the stock thus sold is con- 
 sumed. By this diminished market price of 
 any particular commodity, the money in con- 
 sumptive circulation will go further in the pur- 
 chase of commodities generally, and the con- 
 sumption will of course be increased ; but it is 
 probable, that a principal share of the increased 
 consumption will fall upon other commodities, 
 and not altogether, as has been supposed, upon 
 the particular commodity whose price is dimi- 
 nished. 
 
 Quantity of Commodities of which the Market 
 Stock is composed. 
 
 Now, the market stock of commodities must 
 always be equal in quantity to supply consump- 
 tion, during one revolution of the currency in
 
 169 
 
 consumptive circulation. The ten persons, in 
 the imaginary case stated, would furnish a stock 
 sufficient to supply the consumption, until the 
 money they received and expended came round 
 to them again, in a demand for more. Had the 
 ^100 of each individual been the representa- 
 tive of double the quantity of goods, there 
 would have been double the consumption, be- 
 fore this revolution was performed ; or had it 
 represented half the commodities, the consump- 
 tion of them could not have exceeded that 
 amount. 
 
 The annual produce of a nation, however, 
 and the annual consumption are equal. A per- 
 son does not take his commodities to market be- 
 fore they are wanted ; and as soon as he does 
 so, his demand, directly or indirectly, for the 
 commodities of others, becomes equal to their 
 demand for his. Upon receiving the money for 
 his goods, he sends it forth in a consumptive 
 demand, by himself or those to whom he pays 
 or lends it, to the extent of its value. 
 
 Consumption is also regular. The consump- 
 tion of one month is, on the average, equal to 
 the consumption of another. A spendthrift 
 may get rid of his fortune in a very short time, 
 but he can only do so by purchasing the savings 
 of others. He may waste his property by losing 
 it at play, or by squandering it in different 
 ways. But, in this manner, it only changes 
 
 z
 
 170 
 
 hands ; he cannot force consumption much be- 
 yond its ordinary pace ; what he himself eats 
 and drinks, forms but a small part of his expen- 
 diture. Other people, though they may acquire 
 his money, will not forget, if he has done it, 
 that they have to live through the year, as well 
 as at present ; or should they, they can only 
 throw it away as he has done : it will come in- 
 to the hands of more prudent people at last. 
 
 The consumption being regular, the revolu- 
 tions of the currency, on the average, must be 
 equally so: thus if we take the income of the 
 society, for the sake of example, at 432 mil- 
 lions, and the currency at 7^, it must necessari- 
 ly perform six revolutions in the year, or one 
 every two months ; and the market stock of 
 commodities would in that case always be equal 
 to two months consumption. 
 
 The Money in consumptive Circulation must aU 
 'ways be equal to the Value of the Market Stock 
 of Commodities. 
 
 Whatever be the quantity of money in con- 
 sumptive circulation, it must always be equal 
 to the value of the market stock of commodi- 
 ties, let that stock be great or small. The ten 
 persons in the supposed case, who sold their 
 commodities, would acquire in the money they 
 received*, the power of consumption equal to
 
 171 
 
 the commodities placed in the market ; and by 
 the expenditure of this money, the whole in 
 the regular time would be consumed : and this 
 is the case with society at large. But when 
 money comes into a country by the balance of 
 trade, it comes in a demand for commodities 
 which their cheapness has caused, while the 
 money previously in circulation, furnishes a 
 demand equal to the supply. The foreign mo- 
 ney thus introduced is not the representative 
 of any commodities in the market. Hence a 
 demand is created greater than the supply. 
 This being the case, commodities must rise in 
 price equivalent to this increased demand. The 
 foreign money introduced has the same affinity 
 for the commodities in the market, as that 
 which was in previous circulation. But the 
 supply of commodities being less than the de- 
 mand, an elevation of prices must take place 
 in order to bring them to a parallel ; and the con- 
 sumption of the producers, or those who pos- 
 sess the money in previous circulation, is of 
 course proportionately reduced. Every rise in 
 price is the consequence of increased demand 
 by those who are willing to pay more, and the 
 immediate effect is a reduced consumption on 
 the part of those who are unable or unwilling 
 to give the increased price. When, however, 
 the money makes one revolution, the producers 
 are placed on the same footing as before. The 
 z 2
 
 172 
 
 increased price of commodities has increased 
 their incomes ; and the power of consumption 
 derived from their income becomes equal to 
 what it was previous to the foreign money 
 coming into the market. A general rise in 
 prices has taken place, by which room is made 
 for the additional money introduced into the 
 country, to circulate. It still therefore repre- 
 sents the market stock of commodities, or two 
 months consumptionn ; an alteration in the va- 
 lue of money alone has taken place. Just the 
 reverse is the case when money is exported. It 
 is originally acquired by a quantity of commo- 
 dities for consumption being placed in the 
 market, which waits the return of it, or an 
 equivalent value, in order to be consumed. The 
 possessor of the money, however, either from 
 inclination or cheapness, increases his con- 
 sumption of foreign commodities; and this deter- 
 mines the balance of trade against the country : 
 by which means the money instead of pro- 
 ducing the consumption of an equivalent value 
 of commodities in that market where its con- 
 stituent value is deposited, is transported to a 
 foreign market, in order to replace those fo- 
 reign commodities, the increased consumption of 
 which has taken place; or, which is, in effect, the 
 same, the dealer in consequence of a diminished 
 foreign consumption, instead of purchasing as 
 usual, home produce with the money he re-
 
 173 
 
 ceives, with which to pay for the foreign com- 
 modities imported, sends the money out of the 
 country for that purpose. In this case, the 
 demand for home commodities is reduced ; the 
 dealers are under the necessity of selling them 
 at a lower rate ; and the consumption of those 
 who possess the money left in circulation is in- 
 creased. But after one revolution, the income 
 of the producers begins to fall in equal propor- 
 tion, and a general reduction puts income and 
 expenditure upon a par again ; and the chasm 
 thus caused by the money exported is filled 
 up. Hence the money in the world, or any 
 particular nation, is always rendered sufficient 
 for the use of it. 
 
 Precisely the same are the effects produced 
 by money which is issued by banks. It is ad- 
 vanced upon the security of property or person- 
 al sureties, and represents property or capital, 
 but possesses, in the first instance, no constitu- 
 ent value of commodities in the market. Those 
 who borrow it, however, for consumptive circu- 
 lation, expend it in consumption, and by a 
 consequent increase of prices it makes way for 
 itself. A contraction of currency produces the 
 opposite effect : it leaves in the market commo- 
 dities of equal value to itself, without the means 
 of consumption at existing prices ; and it is only 
 by a reduction of prices adequate to the de-
 
 174 
 
 mand thus reduced, that the market stock can 
 be carried off. 
 
 Abstract Circulation, 
 
 The abstract circulation of a country is that 
 part of its money which is employed in making 
 transfers of merchant stock, capital, and proper- 
 ty. In every country the sales of property, 
 transfers of capital, and transactions in merchant 
 stock, must bear some proportion to the quan- 
 tity of its consumable produce, in the power of 
 commanding which their value consists ; and 
 money is equally required to conduct them. 
 In this use of it, however, it is an abstract mea- 
 sure of value ; it represents no constituent com- 
 modities in the market. Upon the average, a 
 given quantity of the money in circulation must 
 be thus required, and it must have been first 
 taken out of consumptive circulation, in order 
 to be so employed ; a reduction of prices must 
 have consequently taken place. This, however, 
 would only have the effect of determining the 
 balance of trade in favour of the country j and 
 the money thus absorbed, would be replaced by 
 a foreign importation. If at any time the aver- 
 age transactions in capital should be diminish- 
 ed, or an economy in the use of money thus 
 employed be introdiired, it would again descend
 
 175 
 
 into consumptive circulation, increase prices, 
 and determine the balance of trade the other 
 way. 
 
 Any variation in the quantity of money in 
 consumptive circulation, must also vary the 
 quantity in abstract circulation. It must draw it 
 down as it diminishes, raise it up as it increases. 
 As the value of money increases by the quanti- 
 ty in circulation being reduced, the value of 
 property must sooner or later fall likewise ; and 
 less money be required to conduct the ex- 
 changes of it ; it is the quantity of consumable 
 commodities it will command that ultimately 
 determines the value of all property. On the 
 other hand, as the quantity of money in con- 
 sumptive circulation increases, the value of 
 property in money, for the same reason, must 
 re-increase with it. 
 
 With bank notes the difference is, that the 
 money in abstract does not descend down into 
 consumptive circulation, whereas with metallic 
 money it is taken up from it. 
 
 With the same State ofFriceSy the Quantity oj 
 Money required 'varies. 
 
 The quantity of money required to conduct 
 the circulation of a country, even with the same 
 level of national prices, is not always equal.
 
 176 
 
 When there is a demand for money, and it 
 becomes scarce, or when the interest of money 
 and profits of trade rise, an economy in the 
 use of it begins to take place. If a person can- 
 not raise money, he will purchase goods upon 
 credit ; by which they are taken out, as it were, 
 from under the money which represents them. 
 This has the effect of raising prices, the same 
 as if an additional quantity of money had been 
 brought into circulation. The diminished quan- 
 tity of commodities which the money in circu- 
 lation will command, raises the price of them, 
 determines the balance of trade against tlie 
 country, and part of it is remitted abroad, until 
 the prices resume their usual level. Tradesmen, 
 under these circumstances, often make large 
 profits, and, instead of receiving payment in 
 cash, not unfrequently take a mortgage, or 
 other securities, for their debts. Being also in 
 the habit of selling for credit, they are obliged, 
 on the other hand, to require it. This leads to 
 bill transactions, by which, knowing the day 
 that their payments are to be made, they are 
 satisfied if they can acquire the money neces- 
 sary for the purpose, by the time it is wanted, 
 and keep none idly by them. As money be- 
 comes scarce and valuable, people are thus 
 more economical in the use of it. If a profit is 
 sure to be made, by turning it over, none of it 
 is allowed to be unemployed. It, consequently,
 
 177 
 
 performs its revolutions quicker, and a less 
 quantity is necessary. Instead of performing 
 six revolutions in the year, it may perform se- 
 ven. In order, therefore, to represent a value 
 of 432 millions, it would require, in that case, 
 not quite 62 millions, instead of 72, which with 
 only six revolutions, would be necessary. 
 
 Whether the currency moves quickly or slow- 
 ly, however, is of no importance to tlie foreign 
 consumer ; therefore as soon as prices, by an ac- 
 celerated motion, began to rise, the foreign de- 
 mand would diminish, if prices were previously 
 at the national level, until by an unfavourable 
 balance of payments, the quantity of money in 
 circulation was reduced, and prices resumed 
 their former state. The only difference in this 
 case would be, that the market stock on hand 
 would be reduced in proportion as the motion 
 increased : if it was increased one seventh, the 
 market stock would be reduced in that amount : 
 a greater market stock would not be necessary 
 than what was equal to the consumption of be- 
 tween six and seven weeks. A still greater differ- 
 ence, however, would perhaps take place in the 
 amount of money in abstract circulation. Bills 
 of exchange, in the transactions of merchant 
 stock, are very much substituted for money when 
 it is scarce. I have heard that in Lancashire, 
 during the war, there were five bills for one in 
 2 A
 
 178 
 
 circulation at present ; and I have no doubt this 
 was also very much the case in other places. 
 
 On the other hand, property is also much 
 more valuable, and there is a greater quantity 
 of capital, when the interest of money is low ; 
 and more exchanges of it are made, at least in 
 this country : for when government securities 
 pay the legal rate of interest, there is compara- 
 tively very little borrowing and lending by in- 
 dividuals : government itself borrows the bulk 
 of what there is to lend. Thus both the number 
 and value of such transactions being greater, a 
 larger quantity of money in abstract circulation 
 is required. 
 
 When there is a difficulty of finding employ- 
 ment for money, profits of trade also fall, and 
 credits are neither given nor received as before ; 
 the market stock becomes larger, and more 
 money is required to represent it at the national 
 standard ; there are not so many bills in circu- 
 lation, and generally there is less economy in 
 the use of money, for which it is difficult to 
 find a profitable employment. Thus in times 
 of peace, when the interest of money is low, 
 much more money is required than in times of 
 war, when the demands of government increase 
 its value. 
 
 With the increase of machinery and capital, a 
 greater quantity of money in circulation will also 
 become necessary. Suppose for instance, that by
 
 179 
 
 the aid of capital and machinery, labour is ten 
 times more productive than it used to be, and 
 that for the use of this machinery and capital 
 100 per cent, profit is charged ; the produce of 
 labour will be now one-fifth as cheap as it was 
 before, but upon the aggregate, it will be worth 
 twice the money, and will take twice the mo- 
 ney to represent it in the market. The same 
 with commodities which are taxed ; taxes in- 
 crease their monied price, and render a greater 
 quantity necessary to promote their consump- 
 tion. 
 
 When the foreign trade of a country is ex- 
 tended or curtailed, a larger or a less supply of 
 money also becomes necessary. At the time 
 that we were shut out from all legitimate trade 
 with Europe and the United States, and our 
 supplies of foreign commodities were compara- 
 tively small, less money must have been re- 
 -quired, and, a smaller amount would then of 
 course, express a higher state of prices than at 
 present. 
 
 The effect of good and had Seasoiis upon the 
 Circulation of Money. 
 
 " A French author," says Dr Smith, " of 
 " great knowledge and ingenuity, Mr Mess- 
 2 A 2
 
 180 
 
 " ance, receiver of the taillies in the election 
 " of St Etienne, endeavours to shew that the 
 " poor do more work in cheap than in dear 
 *' years, by comparing the quantity and value 
 '* of the goods made upon those different occa- 
 " sions, in three different manufactures ; one 
 " of coarse woollens, carried on at Elbeuf ; 
 " one of linen, and another of silk, both of 
 " which extend through the whole generality 
 " of Rouen. It appears from his account,. 
 " which is copied from the registers of the 
 " public offices, that the quantity and value of 
 " the goods made in those three manufactures, 
 " has generally been greater in cheap than in 
 " dear years ; and that it has always been 
 " greatest in the cheapest, and least in the 
 " dearest years. All the three seem to be sta- 
 " tionary manufactures, or which, though their 
 " produce may vary somewhat from year to 
 " year, are upon the whole neither going back- 
 " wards nor forwards. 
 
 " It is because," observes Dr Smith, " the 
 " demand for labour increases in years of sud- 
 " den and extraordinary plenty, and diminishes 
 " in those of sudden and extraordinary scarci- 
 " ty, that the money price of labour sometimes 
 " rises in the one and sinks in the other. 
 
 ** In a year of sudden and extraordinary plen- 
 " ty, there are funds in the hands of many of the 
 " employers of industry, sufficient to employ
 
 181 
 
 * and maintain a greater number of industrious 
 
 * people then had been employed the year be- 
 ' fore ; and this extraordinary number cannot 
 
 * always be had. Those masters, therefore, 
 ' who want more workmen, bid against one 
 ' another in order to get them, which some- 
 ' times raises both the real and the money 
 
 * price of their labour. 
 
 " The contrary of this happens in a year of 
 
 * sudden and extraordinary scarcity. The 
 ' funds destined for employing industry are 
 
 * less than they had been the year before. A 
 
 * considerable number of people are thrown out 
 
 * of employment, who bid one against another 
 ' in order to get it, which sometimes lowers 
 
 * both the real and the money price of labour. 
 ' In 1740, a year of extraordinary scarcity, 
 
 * many people were willing to work for bare 
 ' subsistence. In the succeeding years of 
 
 * plenty, it was more difficult to get labourers 
 ' and servants." 
 
 Men may and will no doubt be excited to 
 additional labour with the hope of making more 
 money ; but not by the mere effect of cheap 
 provisions. If at their ordinary rate of wages 
 they can live better, and do not work less, they 
 will not be induced, for the same money, to 
 work more. They might be induced to work 
 more, did wages fall with the price of provi- 
 sions ; but it appears on the contrary that they
 
 182 
 
 rise — that the fund for the employment of la- 
 bour or the monied demand for it increases. 
 A fall in the wages of labour, however, is the 
 result of an additional supply of labour itself, 
 and though it may be the ultimate, is never 
 the immediate effect of abundance. The diffi- 
 culty of procuring provisions, as Dr Smith 
 states, may induce men to bid against each 
 other, and lower their wages for the sake of 
 additional employment, but abundance never 
 produces that effect. 
 
 At the time that Mr Messance wrote, 
 as well as now, the currency of France was 
 metallic, and as a good harvest does not grow 
 money as well as provisions, the increased 
 monied demand for labour must have been the 
 result of an alteration in the movements of the 
 currency. Were this not the case — did there 
 not exist a greater monied demand for labour, 
 there could only be the same monied demand for 
 provisions : the increased supply would conse- 
 quently have to be sold at a proportion ably less 
 price, and the farmer would gain nothing by the 
 quantity exceeding the average supply which he 
 brought into market j while it is not improba- 
 ble that the low prices of the necessaries of life 
 would induce men to work less instead of more. 
 This would probably convert a year of abun- 
 dance, which is considered a blessing, into a 
 curse : it would become a year of riot to the
 
 183 
 
 poor, and of loss to the farmer : instead of be- 
 ing an advantage to both, it might prove a 
 moral evil to the one, and a pecuniary disad- 
 vantasre to the other. 
 
 Money, as we have already stated, in its pro- 
 gress to consumption, has in general to pass 
 through many hands. The proprietor, we shall 
 say for example, pays it to his mortgagee ; his 
 mortjrasee to his bookseller ; his bookseller to 
 his shopman ; his shopman to his landlord ; his 
 landlord to his house-painter j his house-painter 
 to his colour-man ; his colour-man to a foreign 
 merchant ; the foreign merchant to a British 
 manufacturer ; the British manufacturer to his 
 workmen ; from the w^orkmen, through the 
 miller, baker, &c. it will come into the hands 
 of the farmer j and from him again be paid to 
 the proprietor. It may also be observed, that 
 it would move much more quickly after it came 
 into the hands of men of business ; and while it 
 would not stop a day witli the labourer, it would, 
 from the quick nature of their returns, proba- 
 bly rest a shorter time with the baker and mil- 
 ler, than in any part of its progress previous to 
 its coming into the labourer's hands. Had this 
 money, however, been lodged in a bank, in- 
 stead of making the circuit through which we 
 have traced it, it would have most likely been 
 at once lent out to the manufacturer, and would 
 have returned in demand for the commodities
 
 184 
 
 placed in the market, in a tenth of the time. 
 Now in a year of extraordinary abundance, this 
 is the progress of that part which exceeds the 
 farmer's average gains : — The price of corn 
 does not fall in proportion to the increased sup- 
 ply ; and the surplus above what is necessary 
 for his rent is placed in banks, or lent to those 
 who immediately expend it in the employment 
 of labour ; by which means it makes shorter cir- 
 cuits, more labour is employed, and a greater 
 consumption is created. The poor thus enjoy 
 all the advantages of the abundant season ; but 
 it is in that way best suited to them, in a moral 
 as well as in a physical pohit of view. Money 
 being more abundant, creates itself employment, 
 either by the increased facilities with which it 
 is lent out, or by the reduced interest which is 
 charged for it ; by which means traders are in- 
 duced to increase their merchant stocks, and peo- 
 ple in general to enter into undertakings in 
 which the employment of labour is involved ; 
 but which, with a greater scarcity of money, 
 they would not have attempted. 
 
 In years of scarcity, on the other hand, the 
 very opposite effects are produced. As with 
 an increased supply of food, nature thus pro- 
 vides an increased demand for labour, so with 
 a scarcity of food, the demand for labour is re- 
 duced. By these means, when there is less food, 
 less is required. A man with little work can
 
 185 
 
 be supported upon a smaller quantity of provi- 
 sions than with full employment. If there was 
 the same employment for labour, and the same 
 money brought into the market in demand for 
 provisions, the consumption would have to be 
 kept down to the supply by their excessive 
 price, while the farmer would hardly be a suf- 
 ferer ; his loss in quantity would be made up in 
 price. 
 
 In bad years, however, the farmer cannot 
 get a price at all proportioned to the deficiency 
 of his crop, and is unable to pay his rent in 
 consequence. He is under the necessity, there- 
 fore, of withdrawing money from bankers or 
 others, which he has saved in better seasons, 
 or his landlord is obliged to give him credit to 
 another year, and borrow money to meet his 
 expenditure until his rents can be paid him. 
 Thus a demand for money is created, and 
 bankers are obliged to reduce their accommo- 
 dations to trade, in order to meet it. It can 
 only, however, be acquired by placing commo- 
 dities in the market. This renders it necessary 
 for traders to reduce their merchant stocks, in 
 order to be able to meet their engagements. 
 The money, therefore, called in by the banks, 
 and paid to the farmers, or lent on better 
 terms to their landlords, now represents not 
 the immediate productions of labour, but the 
 merchant stocks of tradesmen, the production 
 2 B
 
 186 
 
 of previous years. This necessity of reducing 
 their stocks prevents them from purchasing 
 their usual supplies, and labour is thrown out 
 of employment adequate to the demand for 
 money thus created and supplied. That money 
 which represents previous labour will not create 
 a fresh demand. It is only the money in cir- 
 culation which represents food that can ever do 
 so ; and there would only be a demand for la- 
 bour in proportion to the food in the market 
 for its support. Should the cheapness of la- 
 bour in any particular trade induce wealthy in- 
 dividuals to increase their stocks rather than 
 diminish them, they can only do so by acqui- 
 ring possession of that money which represents 
 the market stock of provisions. Hence their 
 demand for labour must reduce the demand for 
 some other description, the employment of 
 which does not hold out equal temptations. 
 Individuals may alter the channel, but cannot 
 increase that general demand for provisions 
 which the failing crop has curtailed. Were 
 this principle perfect in practice, there would 
 be no rise in the price of provisions whatever. 
 A portion of the wages of labour, however, 
 and of income generally, which had hitherto 
 been spent in other commodities, is in a scar- 
 city exclusively appropriated to the purchase of 
 food. Provisions consequently rise, and other 
 commodities, the produce of previous labour.
 
 187 
 
 fall ; but more present labour is in consequence 
 turned out of employment. 
 
 A failing crop, it is thus probable, has not 
 so much the effect of raising prices, as of re- 
 ducing employment ; and this seems a wise dis- 
 position of Providence. If men are to have 
 little food, it is evidently better that they should 
 also have little work. Had they the same em- 
 ployment, it would not increase the supply of 
 provisions, while it would increase the necessity 
 for them, and add to the evils of scarcity. 
 That the demand for provisions is thus curtail- 
 ed with the supply, and prices prevented from 
 rising, is consistent with experience. In 174^0, 
 which Dr Smith speaks of as a year of great 
 scarcity, there was very little demand for la- 
 bour, but the price of wheat does not appear 
 to have risen above 30 per cent. : viz. from 84s. 
 to 45s. per quarter ; and as it was then much 
 more exclusively the food of the rich than now, 
 other grain perhaps might not have risen in 
 equal proportion. 
 
 At that time the circulation of the country 
 was principally metallic. With the power 
 which the banks possess of making money or 
 destroying it at pleasure, very different effects 
 might be produced ; but this falls more proper- 
 ly to be considered in the next chapter. 
 
 2 B 2
 
 188 
 
 A small Addition to the Currency may 'produce 
 a great Effect upon Prices. 
 
 If the currency makes six revolutions in the 
 year, it is evident that the addition of one mil- 
 lion must make six in the annual income. But 
 should it make on the average twelve, which I 
 think is at least as probable, then an addition 
 of one million would make a difference of twelve. 
 The very great difference in prices which occa- 
 sionally does take place, without any compara- 
 tively great alteration in the amount of money 
 in circulation, seems to warrant the inference, 
 that the proportion of money in consumptive 
 circulation is less, and the number of revolu- 
 tions which it performs in the year greater, than 
 might be at first supposed. But I am not aware 
 of any correct data by which to come at certain 
 conclusions on this subject.
 
 189 
 
 CHAPTER XIX. 
 
 Pajoer Currency. 
 
 1 HE principal circulation of this country is 
 composed of the promissory notes, payable in 
 metallic money on demand, of public and pri- 
 vate banks. In England, this money is issued 
 by one public bank, the Bank of England, and 
 by several hundred private banks. In Ireland, 
 it is also issued by one public bank, the Bank 
 of Ireland, and a number of private banks ; and 
 in Scotland, it is almost totally issued by pub- 
 lic banks, or joint stock companies, constituted 
 on the same principles, though not equal in 
 magnitude to the public banks of Ireland and 
 England. 
 
 For a more particular inquiry with respect to 
 the advantage which joint stock companies 
 possess ov^er private banks, we must refer the 
 reader to the Essay which he will find at the 
 end of this treatise ; and as a proper under- 
 standing of the present system of banking seems 
 connected with, if not necessary to, the consi- 
 deration of the branch of the subject at which 
 we have arrived, we shall recommend the at-
 
 190 
 
 tention of the reader to that Essay, before he 
 proceeds further. 
 
 It may not be improper, however, as an ad- 
 ditional argument, to remark that the charters 
 of the Banks of England and Ireland, by pre- 
 venting more than six partners from entering 
 into any banking concern, have the effect of still 
 further contracting the number even below that 
 amount. The business of banks, as we have 
 shewn, is to deal in money, and they do not 
 require capital for that purpose, but credit ; 
 though capital is necessary, in order to give 
 credit. The capital of private banks, however, 
 not being known to the public, does not con- 
 fer credit, and private bankers have no induce- 
 ment to advance money. Private banks are in 
 general, therefore, set up by men of property 
 or credit, who join their respective credits to 
 establish the concern, without any advance of 
 capital. If we suppose, therefore, a private bank 
 to commence with six partners, the full number 
 allowed, it must either do well or ill, or neither 
 well nor ill. If it is not doing well, however, 
 it may be said to be doing ill ; for in that case 
 it leaves no adequate compensation for the risk 
 which a private banker runs. If it is doing 
 well, it has probably got into good business and 
 credit. In this case, should a partner die, the 
 credit of the bank would be such as to render 
 one to supply his place unnecessary 5 and
 
 191 
 
 another would not be taken in, merely for the 
 sake of receiving one-sixth of the profits of a 
 flourishing business. The remaining partners 
 would divide the share amongst them ; and this 
 they would continue to do as the partners drop- 
 ped off, until the number was as few as the 
 credit of the bank (considered to be firmly 
 established) could be supported with. If the 
 bank was a bad concern, no new partner would 
 join it. If it was neither good nor bad, there 
 would be no temptation to do so. Hence with 
 private banks, the number of partners under the 
 present law gravitates downwards, until each 
 bank presents the least security to the public 
 with which it can possibly exist. Consequently, 
 though six is allowed, there are not more than 
 three partners to each bank on the average of 
 the kingdom ; and as at least one of these is an 
 acting partner, there does not appear to be 
 more than two persons of property to support 
 the credit of each concern, even presuming 
 every partner in a bank but the acting partner 
 to possess the fortune requisite for such an 
 establishment. The effect of the present law, 
 therefore, is to give each bank as little credit, 
 instead of as much, as possible. 
 
 Paper, as Moneys of the same Value as Gold. 
 The. notes of these banks are issued in dis-
 
 192 
 
 count of commercial bills, in loans upon per- 
 sonal and other securities to individuals, and by 
 the Bank of England, partly in discount of 
 commercial bills, but principally upon bullion, 
 and in advances to government. 
 
 This paper, in its character of money, is of 
 the same value as gold. Gold, as a commo- 
 dity, possesses intrinsic value, which bank- 
 notes do not ; it represents a value in materials, 
 laboiu', and capital, which has been expended 
 in procuring it ; but as money, it is only worth 
 the commodities in the market that it repre- 
 sents, whatever it may have cost ; and paper 
 money is the same. Each individual who ori- 
 ginally acquires paper in consumptive circula- 
 tion, does so by placing commodities in the 
 market. 
 
 Paper and Metallic Money are introduced into 
 Circulation in the first Instance upon different 
 Principles^ but the Effect upon Prices is the 
 same. 
 
 Metallic money is introduced into circulation 
 by a foreign demand for commodities, in con- 
 sequence of their cheapness ; whereas paper 
 money is introduced by the demand of indivi- 
 duals for money itself. The metallic money 
 which comes into a country, has been the re-
 
 ' 193 
 
 presentative of income in the country from 
 whence it canie ; whereas paper money is made 
 for the purpose of the demand which it sup- 
 plies. 
 
 Paper money, therefore, when first issued, 
 represents no constituent vahie in the market: 
 property, or personal sureties which are indi- 
 rectly the same, have been j^ledged for its re- 
 payment : the person who receives it, has depo- 
 sited with the bank of which it is borrowed, a 
 value of inconsumable property, equal to what 
 he has received ; but he has placed no commo- 
 dity which it represents, in the market, and a 
 demand in the market is, therefore, created be- 
 yond the supply. By this means, an elevation of 
 prices takes place ; and the paper makes way for 
 itself, in the same manner as metallic money in- 
 troduced by a foreign demand, as previously 
 described. Precisely the reverse is the case 
 when notes are taken out of circulation. A 
 certain value of commodities is left in the mar- 
 ket, without the money which represents them, 
 and prices, consequently, fall to a parallel with 
 the quantity of money which remains.
 
 194 
 
 The Effect upon Prices produced hy an Altera- 
 tion in the Issues of Bank Notes, sufficiently 
 proX)ed by Experience. 
 
 The effect in elevating and depressing prices, 
 produced by any alteration in the circulation of 
 banks, is a fact now perfectly notorious, and to 
 prove it, by a reference to particular instances, 
 unnecessary. I shall, however, mention one, 
 which occurred with the Bank of France. Mr 
 Haldiman, in his evidence before the commit- 
 tee of the House of Commons, appointed in 
 1819, to consider the expediency of the Bank 
 of England resuming cash payments, gives the 
 following particulars : — 
 
 " I think there would be great distress occa- 
 " sioned in the commercial world by the forced 
 " reduction to which I have alluded. Prices 
 " cannot be forcibly lowered without producing 
 " very great mischief in trade ; we should all 
 " feel the effects of it, some directly and some 
 " indirectly. I express myself rather strongly 
 " upon this point, because I happened to be in 
 " Paris, in October last, when the bank reduced 
 " its issues upon discounts very considerably 
 " and suddenly ; the distress and failures which 
 " took place, in consequence of this measure, 
 " went much beyond what any merchant could
 
 1^5 
 
 ** have anticipated. The issues of the Bank of 
 " France upon discounts, at that period, were 
 *' 130 miUions of francs, which was more than 
 " double the highest amount that was ever 
 " previously known. I believe the discounts 
 ** usually were from ^5 to 35 and 40 millions.'* 
 
 It must be observed, that a contraction of is- 
 sues, by curtailing advances to trade, has a dou- 
 ble eftect ; it not only reduces the demand for 
 commodities, but it increases the supply of them. 
 The merchants, by the liberal accommodations 
 of the bank, had no doubt been induced to in- 
 crease their merchant stocks, and- extend their 
 transactions ; and when suddenly called upon to 
 repay the money borrowed, their only mode of 
 doing so would be, to force their stocks into the 
 market. This, at any time, would be a great loss ; 
 but as the money was not lent out again by the 
 bank in promoting consumption, and did not 
 return into the market, the demand would be 
 reduced in equal proportion. Thus, therefore, 
 in the same degree that the commodities in the 
 market exceeded the average supply, the money 
 in the market would present less than the aver- 
 age demand. 
 
 " This step on the part of the directors of 
 " the Bank of France, was occasioned by the 
 " following circumstances : — The metallic cur- 
 *' rency was leaving the country in every direc- 
 ** tion, owing, in all probability, in some trifling 
 2 c ^
 
 196 
 
 " degree, to the over issue of paper ; partly to 
 " some large financial operations in Russia, and 
 " partly to the enormous payments that France 
 " had engaged to make to foreign powers, 
 *' which amounted nearly to 20 millions ster- 
 " ling. The Paris bankers, therefore, antici- 
 *' pating a great demand for bills upon all fo- 
 " reign countries, were remitting specie to meet 
 " the drafts, which they intended to negociate 
 " to the agents of all those foreign powers, with 
 " a small advance upon their remittance. The 
 " sudden diminution, however, of the discounts 
 " of the bank, caused the exchange to turn in 
 " favor of France, and immediately paralized all 
 " their operations ; the metallic currency made 
 " a retrograde movement, and was restored 
 " to Paris and to those parts where the greatest 
 " distress had been felt. I have stated these 
 " circumstances thus minutely, because I think 
 " them perfectly applicable in reasoning, though 
 " not in extent, to the case of the Bank of 
 " England." 
 
 It appears also that the extension of issues 
 was sudden as well as the contraction. Mr 
 Haldiman states, that the great increase took 
 place he believed in June, July, August, and 
 September ; while the reduction took place in 
 October. There is little doubt that the effect 
 of the payments made by France to foreign 
 powers, would have been to have determined
 
 197 
 
 the balance of trade against the nation ; but as 
 these payments were made gradually, and prin- 
 cipally by loans contracted in other countries, 
 we should hardly think that they were the cause. 
 It is much more probable that the extent and 
 suddenness of the issues made by the bank, 
 had produced that effect which was so immedi- 
 ately counteracted, but with such ruinous con- 
 sequence to individuals, by its retracing the 
 steps that had caused it. 
 
 With a Metallic Cu7Tency, sudden Fluctuations in 
 Prices coidd not liap2)en. 
 
 As the philosopher's stone has not yet been 
 discovered, neither individuals nor bodies have 
 the power of making gold at pleasure, and we 
 are pretty well assured that it is never their 
 pleasure to destroy it. The directors of the 
 Bank of France might desire to circulate its 
 notes, but it is quite clear that they wished to 
 keep the gold in the country also. No increase 
 or reduction therefore in the amount of money in 
 circulation could be made with a metallic curren- 
 cy, except through the medium of trade : there 
 would be no acquiring it except in the regular 
 channel of circulation. If a person saved money, 
 he would lend it out at one rate of interest or 
 other ; and if he placed it in the hands of
 
 198 
 
 bankers, they would do the same. A banker 
 does not receive deposits to let them lie idle : 
 whether he pays interest for them or not, he 
 lends them out on the best terms he can get. 
 A banker who issues his own notes, may, for dif- 
 ferent reasons, be unwilling, or unable, to lend 
 them at less than a given rate of interest ; but 
 did he deal in metallic money the case would 
 be different. If he paid nothing for his deposits, 
 he would consider that no reason why he should 
 get nothing for them ; and if he could not get 
 a high rate of interest, however low it might 
 be, he would take the highest he could get. 
 If he paid interest for them, he could not af- 
 ford to keep the money in his coffers ; but the less 
 he could get, of course, the less he would give. 
 Thus metallic money is always kept in circula- 
 tion. 
 
 Hoarding to a small extent perhaps is gene- 
 rally practised, but not to be worth notice ; and 
 there is perhaps upon the average an equal 
 sum applied in that way: as one hoard accu- 
 mulates, another is brought into circulation, 
 from one cause or other. 
 
 Principles which govern the Demand for Bank 
 Paper, 
 
 There are two principles which govern the
 
 199 
 
 demand for bank paper : the value of money 
 compared with the interest which banks charge, 
 and the internal balance of trade. 
 
 The Value of Money compared mth the Interest 
 which Banks charge. 
 
 There can be no question that if the banks 
 at this moment were to lower the interest of 
 money to one per cent, there would be a very 
 extensive demand for bank paper upon the most 
 unexceptionable securities. On the other hand, 
 if they were to raise the rate of interest they 
 charge to 10 or 15 per cent, there is as little 
 doubt that all their creditors would pay off their 
 debts as soon as possible, and they would find 
 but very few new customers upon such terms. 
 
 The legal rate of interest, however, in this 
 country, is 5 per cent, above which banks are not 
 allowed to take; while they perhaps cannot afford 
 to charge less than four. Bank notes are sub- 
 ject to a stamp duty which diminishes the profit 
 of issuing them ; and it is found indeed by ex- 
 perience, that private banks would rather con- 
 tract their issues, than take even less than five. 
 
 Now when money is worth more than 5 per 
 cent, there is a great demand upon the banks 
 for their notes, and when it is worth less, the 
 demand declines ; in the first case they are
 
 200 
 
 enabled to extend their issues ; in the last they 
 contract of themselves. 
 
 We have seen in a former chapter, that the 
 value of money is determined by the demand 
 for it, and that with the demand the rate of in- 
 terest rises or falls. Previous to any general 
 extension of bank issues, therefore, it will al- 
 ways be found that a demand for money has 
 arisen which has increased the value of it ; on 
 the contrary, when the value of money has 
 fallen below 5 per cent, we shall find that a con- 
 traction of bank issues has been the conse- 
 quence. 
 
 Between the rate of interest paid by govern- 
 ment and the value of money to individuals, 
 there is probably about one per cent, difference : 
 at least when government securities are above 
 60, and the usury law does not increase the 
 distance : when they are beneath 60, the dif- 
 ference may be 3 or 4 per cent. At present, 
 individuals, however, give 5 per cent, and the 
 funds pay four. 
 
 Since 1793, until within these five years, mo- 
 ney has always been worth 5 per cent, and up- 
 wards to individuals ; and no involuntary con- 
 traction of bank-issues has taken place : the 
 banks have had as great a demand for their notes 
 as they thought proper to supply, under the 
 checks from other causes to which they were 
 subject. 
 
 The circulation of the Bank of England is
 
 201 
 
 not so liable to contraction from an alteration in 
 the value of money. It is principally issued, 
 not in loans to individuals, but to government 
 upon exchequer bills. The interest of these 
 bills, by a bargain with the bank, government 
 may reduce, but they are not paid off in conse- 
 quence of a fall in the value of money, as is 
 the case with debts due by individuals. 
 
 Internal Balance of Trade. 
 
 Each district has its balance of trade, as well 
 as each nation : it is as necessary between two 
 counties as two kingdoms : it is of no import- 
 ance in what its circulating medium consists, 
 whether in metallic money. Bank of England 
 paper, or local notes, the principle is the same. 
 A person whose property is in Northumber- 
 land, may live and spend his income in Lon- 
 don. But in this case, a quantity of raw or 
 manufactured produce must, directly or indi- 
 rectly, be remitted from Northumberland to 
 him : the balance of payments must upon the 
 average be equal. This, however, can only be 
 preserved by an equality of prices. If the pri- 
 ces of a district are above the general level, the 
 balance of payments must be against it ; if be- 
 low, in its favor. 
 
 When banks first began to issue notes, the 
 « D
 
 202 
 
 money in circulation must have been entirely 
 metallic, and sufficient to maintain the level of 
 the national prices. The only check, which, at 
 that time, existed to the issues of banks, consist- 
 ed in their obligation to pay their notes with 
 gold on demand. As, however, gold must then 
 have been very plentiful, if the credit of a bank 
 was good, this could be hardly considered a 
 check of a very positive nature ; the principal 
 would perhaps arise from the doubts which, at 
 least private bankers might then feel in the 
 prudence of rendering their issues too extensive. 
 But each banker would be governed by his 
 own ideas on that point. 
 
 The first effect produced by the increased 
 circulation of any particular bank, would be, of 
 course, an elevation of prices in its own district; 
 and this would determine the balance of trade 
 against it. The consequence would, therefore, 
 be, that metallic money equal ta such increase, 
 would be remitted to other parts of the country* 
 This would elevate the prices of those districts, 
 render the elevation more general, and money 
 would be ultimately sent out of the kingdom 
 equal to the issue which had taken place. 
 
 The limits, to which each bank would in the 
 end be obliged to confine itself, would be the 
 circulation, at the national prices, of that part 
 •of the country in which its notes would pass* 
 If it exceeded this, and still determined the ba-
 
 203 
 
 lance of trade against its own district, being 
 obliged to pay its notes in metallic money, it 
 would be called upon for gold, in order to 
 make the necessary remittances. But the gold 
 having previously disappeared, it would be 
 obliged to import it from other parts of tlie 
 country to meet this demand. This importation 
 of gold on the one hand, would neutralize the 
 remittance of it on the other, and the balance 
 of trade would continue just as unfavourable. 
 The bank would consequently be put to an end- 
 less expence until it reduced its circulation, and 
 restored prices to the national level. 
 
 The superior credit o£ the Scotch Banks 
 enabled them to issue their notes with confi- 
 dence, and very early to occupy the principal 
 circulation of Scotland. The theory of money 
 and banking being at that time very little un- 
 derstood, they were not, at first, sufficiently 
 •cautious in keeping their issues within the ne- 
 cessary limits. The result was, that they had to 
 purchase gold in London, and bring it to Scot- 
 land at a great expence, from whence it disap- 
 peared as soon as it was issued. They at last, 
 however, discovered their mistake, and correct- 
 ed it. Very interesting particulars, on this 
 subject, will be found in Dr Smithes Chapter on 
 Money* 
 
 London is the bullion market of the king- 
 doaip where the exports and imports of it are 
 2 D 2
 
 204 
 
 made ; . iarid the Bank of England the mart of 
 these transactions. When a demand for bullion 
 to be sent abroad exists, the Bank of England 
 is obliged to supply it; and when gold comes 
 into the country, the bank generally replenishes 
 its coffers for that purpose. By keeping its 
 circulation, however, within the amount re- 
 quired to sustain the national prices, it can al- 
 ways prevent a demand which it is inconveni- 
 ent to supply. ' 
 
 When paper money came to completely oc- 
 cupy the circulation of the kingdom, the issues 
 of the Bank of England would govern those of 
 the country banks. All the country banks have 
 agents in London, and if a remittance is made 
 from one part of the kingdom to the other, it 
 is made by their drafts upon their London 
 agents. When gold had disappeared from cir- 
 culation, as the notes of each bank will only 
 pass in its own district, there would be no 
 other mode of remittance. The party wishing 
 to remit, would take into a bank the notes cur- 
 rent where he resided, and procure a bill upon 
 London for them, which he would send to his 
 correspondent. The bank would be obliged to 
 furnish him this bill, or Bank of England notes. 
 If it famished him with the latter, it would have 
 to procure them from London, so that thei'e 
 would be no advantage in refusing bitii a bill, 
 were it so inclined. . .;.
 
 205 
 
 The trade, however, between any particular 
 district and London must balance. This ba- 
 lance, as we have before stated, can be pre- 
 served only by an equality of prices ; and this 
 equality can only exist by the circulation of 
 the district preserving a just proportion with 
 that of the Bank of England. When the bills 
 upon London received by a banker, and the 
 demand for them are equal, he advances as many 
 notes upon such bills on the one hand as he re- 
 ceives in demand for them on the other ; but 
 if the demand exceeds the supply, he receives 
 more notes than he advances ; while if the sup- 
 ply exceeds the demand, he advances more 
 notes than he receives. When the balance of 
 trade is therefore in favour of a district, the 
 natural consequence is an extension of issues 
 by the number of London bills presented for 
 discount ; when against a district, a contraction 
 of issues by the superior demand for London 
 bills which the banks experience. 
 
 Bankers never have any hesitation in advan- 
 cing their notes upon London bills. They are 
 enabled, with the proceeds of them, to pur- 
 chase into the funds, or increase their deposits 
 at interest in their London agents* hands ; 
 and though they may get less interest for their 
 advances, and make less in this case by the cir- 
 culation of their paper than if it were lent 
 upon home securities at d per cent, yet the 
 money is ready to meet the payment of their
 
 206 
 
 notes whenever they are returned, in demand 
 either for those of the Bank of England, or 
 London bills, without their suffering any ma- 
 terial inconvenience. 
 
 If by a reduced home demand for money, in 
 consequence of a reduction in its value, the circu- 
 lation of country banks should continue to con- 
 tract, keep down prices, and thus determine the 
 balance of trade in favour of their respective 
 districts, they would in time be enabled to re- 
 advance their whole circulation upon deposits 
 in London. 
 
 When, on the contrary, an excessive demand 
 for London bills exists, a bank may have funds 
 in London, from a previous favourable balance, 
 or otherwise, with which to meet it, and if the 
 demand for money at home is great, may re- 
 advance its notes, and thus keep up the exces- 
 sive circulation. In this case, the balance of 
 trade would continue unfavourable, and fresh 
 demands for bills on London would arise, and 
 would continue until its funds in London were 
 exhausted. It would then be obliged to allow 
 its circulation to contract, or even to contract 
 it forcibly, in order to reduce the demand for 
 London bills upon it. This contraction would 
 lower prices, restore the trade of the district to 
 a balance, or probably determine the balance 
 in its favour. 
 
 A banker's deposits in London, more parti- 
 cularly in his agent's hands, are usually termed
 
 207 
 
 cash. They do not, however, consist of cash, 
 but of capital or credits. The money is lent 
 out by his agents, and exists only in the shape 
 of debts, the value of which has been consumed 
 either actually or commercially. Or otherwise 
 it rests on government securities, either in his 
 own name or that of his agents, and govern- 
 ment or the parties from whom the securities 
 were purchased have done the same. The de- 
 posits which country banks have in London are 
 considered money, because they can at any 
 time be turned into it, not that they in reality 
 consist of money, more than mortgages or any 
 other description of capital. 
 
 When the bankers increase or withdraw their 
 deposits from London, no permanent increase or 
 diminution of property takes place. Each bill 
 they remit is drawn for money purchased with 
 commodities deposited, or to be deposited in 
 the London market. That reduction of prices 
 in the country which has determined the balance 
 of trade in favour of London, has produced an 
 actual exportation of consumable commodities 
 to the London market, for the proceeds of 
 which the bill is drawn. Or should a person 
 go from the country to London, and purchase 
 a bill upon London with which to pay his ex- 
 pences, by so doing he contracts the circulation 
 of the district, reduces the prices below those 
 of London, and an exportation of commodi-
 
 208 
 
 ties to London is the consequence. Thus com- 
 modities always follow, if they do not precede, 
 every bill upon London which is drawn. Ac- 
 commodation bills, or bills not founded upon 
 real transactions, must be met by other bills to 
 the same amount, so that they never affect the 
 real balance of payments. 
 
 Now when the balance of trade is in favour 
 of the country, and bankers increase their de- 
 posits in London, these effects are produced by 
 it : the prices of commodities are reduced in 
 London ; and so are the value of money and pro- 
 fits of trade ; while the consumption is increas- 
 ed. In the country, on the other hand, the pri- 
 ces of commodities may have fallen, but the 
 profits of trade and interest of money are kept 
 
 up- 
 
 ' The prices of commodities in London, are 
 
 not determined by the circulation of London, 
 but by the circulation of the district from 
 whence they come, upon the same principle 
 that foreign commodities are not determined 
 by the state of prices in this country, but in 
 the country where they are produced. If the 
 foreign trade in corn was thrown open, the 
 prices of corn in this would be reduced to near- 
 ly a level with that of other countries, not by a 
 reduced demand on our part, but by the redu- 
 ced prices of the supply ; and the principle is 
 the same with our internal trade.
 
 209 
 
 The commodities sent to London, therefore, 
 in consequence of a contraction of currency» 
 which enabled the country banker to increase 
 his deposits, would merely reduce the prices in 
 London, and increase its consumption. It would 
 be a ffain to London in consumable commodi- 
 ties, and a loss to the country. The money 
 which the banker drew in London, by holding 
 the bill, would represent a certain quantity of 
 consumable commodities in the London mar- 
 ket. It would not, hovvcver, be spent by him 
 or his agent, but would be thrown into the mo- 
 ney market. This would reduce the interest of 
 money and profits of trade in London, and keep 
 down its general economy, in order to make 
 room for the expenditure of the money thus 
 saved. But no immediate loss would result to 
 those whose incomes were thus forcibly dimi- 
 nished ; from the reduced price of commodities 
 they would command as great a quantity as be- 
 fore. 
 
 In the country, the value of money and pro- 
 fits of trade would be kept up. If money was 
 previously scarce, and the fall of prices pro- 
 ceeded from a forced contraction, on the part 
 of the banks, the value of money would, of 
 course, become greater. If it proceeded from 
 the interest charged by the banks, being too 
 high, the economy of the country, instead of 
 reducing the interest of money and profits of 
 
 2 E
 
 210 
 
 trade, in order to reduce itself, would find vent 
 in discharging the debts due to the banks, at 
 the high rate of interest they imposed 5 and the 
 value of money and profits of trade would thus 
 be kept up to that level which rendered the ge- 
 neral economy greater than the general expen- 
 diture. 
 
 Another effect, however, would also be pro- 
 duced. The principle laid down by bankers in 
 the conduct of their business, and it is a very 
 safe principle for themselves, is not to advance 
 money on any other than mercantile bills, at 
 least to any extent. I^' a person wished for 
 money on an estate, though the security would 
 be better, they would not, for they could not, 
 prudently lend it him. The effect, however, 
 of their lodging their money in London, by 
 means of the balance of trade, would be to 
 raise the price of the funds ; whereas the effect 
 of the contraction of their currency, would be to 
 keep up the interest of money in the country. 
 This would operate in two ways : while it 
 raised the price of the funds on the one hand, it 
 would on the other tempt the London capital- 
 ist, by keeping up the interest of money in the 
 country, to lend his money in the country up- 
 on mortgage at this higher rate. The landed 
 proprietor instead of borrowing of the banks, 
 would therefore borrow of the London capital- 
 ist. So far as this effect was produced, the
 
 211 
 
 payments would balance. The notes of the 
 banks wonld be virtually advanced to the land- 
 ed proprietor, but it would be through the me- 
 dium of the funds. A change of securities 
 would take place between the banker and some 
 fundholder. The banker would buy his stock, 
 and he would advance the money to the coun- 
 try proprietor, who, could the bank have ad- 
 vanced it, would not have gone further. 
 
 Any contraction of currency, however local, 
 would have the general effect of determining 
 the balance of -foreign trade in favour of the 
 country. A contraction in one district would 
 determine the balance of payments from other 
 parts as well as London, in its favour. This 
 would create in those places a demand for Lon- 
 don bills to remit, which would curtail their 
 respective circulations. Thus a general reduc- 
 tion of prices below the national standard 
 would take place, and a balance of foreign 
 trade and an influx of the precious metals 
 would consequently follow. 
 
 This influx of ])recious metals would, how- 
 ever, very materially contribute to restore the 
 circulation of the country banks to its proper 
 level again. 
 
 All gold is either imported directly to Lon- 
 don, or sent thither as soon as it is imported. A. 
 country bank can only receive gold in one of 
 three ways : in payment of a debt ; in exchange 
 2 E 2
 
 212 
 
 for its notes ; or by way of deposit. If in pay- 
 ment of a debt, the debt has been created by 
 an advance of notes, and being repaid in gold, 
 the notes extant represent the gold with which 
 the debt is discharged. If in exchange for 
 notes, the notes advanced represent the gold 
 received ; or if by way of deposit, the deposit 
 will be discharged with notes when it is with- 
 drawn. Consequently gold cannot be received 
 by a bank without giving currency to its value 
 in paper. When received, it is not re-issued at 
 home : the business of a bank is to issue its own 
 notes. It is therefore sent to London, and 
 purchases made with it into the funds. Or 
 through the medium of the bank's agents it is 
 advanced upon other securities, and the interest 
 received in London ; and as with deposits by 
 remittances of London bills, the gain of the 
 bank by the notes put in circulation is the 
 interest thus made. The gold thus sent to 
 London is put in currency by means of these 
 purchases or advances, or if it is sent to the 
 Bank of England, it is in exchange for its 
 notes to be so applied. In either case, cir- 
 culation is extended, and prices increased in 
 the London district. If it is imported by a 
 country merchant, and sent to his own agents 
 in London, in order to be coined or sold to the 
 bank, he draws a bill upon his agent for the 
 amount, and receives notes for the bill at a
 
 213 
 
 bank where he resides ; which is the same to 
 such bank as if the gold had passed through its 
 hands. If, however, the gold is imported di- 
 rectly to London, it gives no immediate increase 
 of country circulation, but in the first place 
 swells that of the metropolis. This has the im- 
 mediate effect of still further increasing the 
 balance of trade in favour of the country ; 
 and of more speedily, in consequence, pro- 
 ducing the re-issue of local paper to the extent 
 necessary for restoring prices to their former 
 level again. 
 
 A contraction of local currency must conse- 
 quently be followed by these effects : the ba- 
 lance of foreign trade will be in our favour; the 
 interest of money in London will be lower than 
 in the country, and there will be more difficul- 
 ty in finding employment for it ; the consump- 
 tion of London will be increased ; and the 
 quantity of money in circulation will be greater 
 than usual ; it will no doubt be found that the 
 country banks have increased their deposits : at 
 the same time, the circulation in the manufac- 
 turing districts will be less diminished, if it is 
 not considerably extended ; the quantity of 
 goods manufactured for exportation will be 
 greater than usual ; while the consumption of 
 those districts will be increased. If the present 
 agricultural distress is the result of a contrac- 
 tion of country bank circulation, these effects
 
 214 
 
 will be, and I have no doubt are, experienced 
 at the present moment. That some of them 
 are, is a matter of perfect notoriety. 
 
 The Effects, in good and bad Harvests, of our 
 present System of Currency. 
 
 As we have before shewn, in a good harvest 
 money is plentiful, in a bad one it is scarce ; 
 and that this is a wise disposition of Provi- 
 dence, by which additional employment to la- 
 bour is given in the one case, and less in the 
 other. Now the effect of the present mode of 
 issuing the currency, obviously is to entirely 
 counteract this order of nature. 
 
 The additional demand for money in a scar- 
 city, only creates an extension of bank issues. 
 Instead of merchants and manufacturers being 
 prevented from giving employment to labour, 
 by a contraction of bank accommodation, they 
 are induced by the cheapness of labour, and 
 the facility of raising money from the banks, 
 to give increased employment to it. 
 
 This additional employment of labour does 
 not increase the supply of provisions, it only 
 renders a greater quantity necessary ; while the 
 demand must still be kept down to the reduced 
 proportion there is for each individual, by an 
 excess of price. The dearness of provisions,
 
 215 
 
 by inducing men to work double work in order 
 to acquire even the limited proportion there is 
 for them, cheapens labour. Thus misery meets 
 the labouring classes in a two-fold shape, — they 
 are worked to death on the one hand, and 
 starved to death on the other. 
 
 In a plentiful season, on the contrary, unless 
 the demand for money at the time exceed the 
 supply, the effect is a contraction of currency, 
 instead of a reduction of interest. The banks 
 have already as much money lent as at the rate 
 of interest they charge will be borrowed of 
 them. The additional supply therefore will 
 only contract their issues ; and instead of the 
 farmer gaining by a good harvest, he stands a 
 fair chance of losing by it. He places his corn 
 in the market, and destroys its means of con- 
 sumption by placing the money in a bank 
 where it will be cancelled. By this means the 
 party to whom it is sold loses by it, while from 
 the reduced quantity of money in circulation, 
 corn will not rise again, and the next he brings 
 to market he must sell at a less price.
 
 21G 
 
 CHAPTER XX. 
 
 The Price of Corn not subject to material Fluctuations 
 from the Supply. 
 
 I THINK this proposition will, without hesita- 
 tion, be granted, — that if the price of corn de- 
 pended upon the supply, it would be governed 
 by it ; with an average crop it would be at an 
 average price ; and as the crop was above or be- 
 low the average, the price would fall or rise. 
 
 By the evidence of Mr Hodgson, of the 
 house of Cropper, Benson, and Co. of Liver- 
 pool, before the agricultural committee of 1821, 
 (an extract of which will be found in the Ap- 
 pendix) it appears that crops are subject in 
 quantity to considerable variations. That house 
 is in the habit of taking an annual survey of the 
 principal corn districts of the kingdom, at an 
 expence, and with a pains and accuracy which 
 leave the truth of their results perfectly un- 
 questionable ; and these, for six years, have 
 been as follows : —
 
 217 
 
 1815, 37 Winchester bushels per acre, quality good. 
 
 1816, 25 ditto, very bad in quality, nearly rotten. 
 
 1817, 33 ditto, the quality not very good. 
 
 1818, S2 ditto, quality very good. 
 
 1819, 27 ditto, quality very good, but not so good as 
 
 the year before. 
 
 1820, 37 ditto, sound and dry, but not so good as the 
 
 two preceding years. 
 
 6)191 
 
 • 32 Average say of the 6 years. 
 It is also understood that 1821 was an average crop, and 
 this year rather less. 
 
 It must, however, be observed, that their ob- 
 ject being merely to obtain a comparative esti- 
 mate for commercial purposes, they appear 
 only to take the most productive districts — 
 those which are most likely to affect the 
 market ; while they make no allowance for 
 furrows, hedges, loss by vermin, waste in har- 
 vesting, &c. They compute that in order to 
 get the real produce, one-sixth at least ought 
 to be deducted from their calculations. This 
 however, would be no average for the king- 
 dom, as they do not take the hilly and poorer 
 districts. The average actual produce of the 
 whole kingdom is supposed to be about 20 
 bushels per acre ; and their surveys seem to 
 support this supposition. Intelligent agricul- 
 turalists, I find, generally concur in thinking 
 2 F
 
 218 
 
 that the crops must at least be as variable in 
 quantity as these surveys make them. I am 
 further informed, that the variations must have 
 been greater previous to the improvements 
 which have taken place in agriculture : that 
 gi'eat crops are now yielded upon soils which 
 did not produce wheat before ; and that a year 
 which produces a good crop on these soils, is 
 not favourable to those upon which, alone, above 
 thirty or forty years ago, corn was grown, and 
 vice versa : so that a failure on one description 
 of soil is in some measure balanced by the pro- 
 ductiveness of the other ; and that there can- 
 not be now such deficiencies as the crops must 
 have been subject to in former times. 
 
 Now the average price of wheat during the 
 last century, appears to have been about 40s. 
 per quarter. Had the variations of price in 
 that time therefore corresponded to the varia- 
 tions in supply, and had the difference in the 
 crops only been equal to that exhibited by 
 Messrs Cropper, Benson, and Co.'s surveys, 
 taking 32 to be the average, the prices of that 
 period must have presented fluctuations similar 
 to the following : —
 
 219 
 
 Price per qr. Ann. variaAont. 
 
 ». d *. d. t. d. 
 
 1815, 37 Winchester bushels 34- 7 *34. 7 
 
 1816,25 ditto 51 2 a rise of 16 7 
 
 1817,33 ditto 38 9 a fall of 12 5 
 
 1818,32 ditto 40 a rise of 1 3 
 
 1819,27 ditto 47 4 a rise of 7 4 
 
 1820,37 ditto 34 7 a fall of 12 9*34 7 
 
 1821, 32 said to be an aver- 1 .„ ^„ •„„ ^r c > 
 
 }■ 40 a rise or 5 4 
 age crop. j 
 
 This presumes that the crop each season 
 yielded alike. The quantity of flour however, 
 would be greater per quarter in good seasons 
 than in bad. 
 
 Now if we refer to the prices of the last cen- 
 tury (see Appendix) we shall find that there are 
 no fluctuations at all corresponding to this. 
 
 In ] 709, wheat was 69s. 9d. from whence it 
 gradually declined with trifling exceptions un- 
 til 1724, when it was 3'2s. lOd. then rose at 
 once to 43s. Id. and then gradually declined 
 again to 23s. 8d.. and 25s. 2d. in 1732 and 3. 
 It then suddenly rose again to 34s. 6d. ; but 
 ultimately fell, with the exception of a tempo- 
 rary rise produced by the scarcity of 1740, to 
 about the same prices in 17^3, 4, and 5, as in 
 1732 and 3 ; after which, in 1746, it expe- 
 rienced another sudden elevation. The prices 
 of this period are as follow : — 
 
 * The 1st and 6th year, had the price been determined by 
 the supply, must have agreed in price as well as in quantity. 
 
 2 F 2
 
 220 
 
 
 
 
 Faria^tona ccery 5 Years, 
 
 
 
 
 being 6, inclusive of the 2 
 
 
 
 
 ^ears enumerated. 
 
 Price 
 
 per qr. Ann. variations. 
 
 s. 
 
 d. 
 
 s. 
 
 d. a. d. 
 
 1709, 69 
 
 9 
 
 
 
 1710, 69 
 
 4 a fall of 
 
 
 
 5 
 
 1711, 48 
 
 4 a fall of 1 1 
 
 
 
 1712, 41 
 
 2 a fall of 
 
 7 
 
 2 
 
 1713, 45 
 
 4 a rise of 
 
 4 
 
 2 
 
 1714, 44 
 
 9 a fall of 
 
 
 
 7 a fall of 25 
 
 1715, 38 
 
 2 a fall of 
 
 6 
 
 7 
 
 1716, 42 
 
 8 a rise of 
 
 4 
 
 6 
 
 1717, 40 
 
 7 a fall of 
 
 2 
 
 1 
 
 1718, 34 
 
 6 a fall of 
 
 6 
 
 1 
 
 1719, 31 
 
 1 a fall of 
 
 3 
 
 5 a fall of 13 8 
 
 1720, 32 
 
 10 a rise of 
 
 1 
 
 9 
 
 1721, 33 
 
 4 a rise of 
 
 
 
 6 
 
 1722, 32 
 
 a fall of 
 
 1 
 
 4 
 
 1723, 30 
 
 10 a fall of 
 
 1 
 
 2 
 
 1724, 32 
 
 10 a rise of 
 
 2 
 
 a rise of 19 
 
 1725, 43 
 
 1 a rise of 10 
 
 3 
 
 After this rise in 1725, prices continued high for a few 
 years and then declined again : 
 
 1726, 40 10 a fall of 2 3 
 
 1727, 37 4 a fall of 3 6 
 
 1728, 48 5 a rise of 11 1 
 
 1729, 41 7 a fall of 6 10 a rise of 8 9 
 
 1730, 32 5 a fall of 9 2 
 
 1731, 29 2 a fall of 3 3 
 
 1732, 23 8 a fall of 5 4 
 
 1733, 25 2 a rise of 1 6 
 
 They now experienced another considerable rise :
 
 221 
 
 Variations every 5 yeart^ 
 being 6, inclusive of the 2 
 years enumerated. 
 
 Prices per qr. Ann. variations. 
 
 
 
 s. d. s 
 
 d. 
 
 ». 
 
 d. 
 
 1734., 3i 6 a rise of 9 
 
 4 a fall of 
 
 7 
 
 1 
 
 1735, 38 2 a rise of 3 
 
 8 
 
 
 
 1736, 35 10 a fall of 2 
 
 4. 
 
 
 
 1737, 33 9 a fall of 2 
 
 1 
 
 
 
 1738, 316 a fall of 2 
 
 3 
 
 
 
 1739, 34 2 a rise of 2 
 
 8 a fall of 
 
 
 
 4 
 
 1740 is the year of scarcity spoken of by Dr Smith, prices 
 therefore now rose, but fell immediately after. 
 
 1740, 45 1 a rise of 10 11 
 
 1741, 41 5 a fall of 3 8 
 
 1742, 30 2 a fall of 11 3 
 
 1743, 22 1 a fall of 8 1 
 
 1744, 22 1 the same, a fall of 12 1 
 
 1745, 24 5 a rise of 2 4 
 
 They now suddenly rose again : 
 
 1746, 38 4 a rise of 10 3 
 
 1747, 30 11 a fall of 3 9 
 
 1748, 32 10 a rise of 1 11 
 
 1749, 32 10 the same, a rise of 10 9 
 
 1750, 28 10 a fall of 2 
 
 I need not go through the whole table, 
 which the reader can refer to in the Appendix. 
 I take the early part of the century, more par- 
 ticularly, as there was then probably very little 
 paper in circulation. Here may be said to be 
 four periods, each of which commenced with a
 
 sudden rise, followed with trifling exceptions, by 
 a gradual decline ; and it thus clearly appears, 
 that though there were great changes in price, 
 there were no such variations as would have 
 been produced by prices depending upon the 
 state of the crops, admitting them to be then 
 as variable as now. Neither is it possible to 
 account for these changes, on the theory of 
 cycles of seasons referred to in the report of the 
 agricultural committee of 1821. The changes 
 are not sufficiently regular and periodical for 
 the work of nature : Besides the principle of 
 population would equally tend to destroy their 
 effect upon prices; and as the crops of 1815 
 and 1820, were just of the same amount in 
 quantity, those six years of accurate admea- 
 surement upset the hypothesis. 
 
 During the last century, there appears to 
 have been two years which were years of scar- 
 city, 1740 and 1767. The first is spoken of by 
 Dr Smith, and is proved by the table of ex- 
 ports and imports. The last is proved by the 
 table of exports and imports, and by the fact 
 that the expedient of suspending distillation 
 from corn was resorted to that year for the first 
 time. The stoppage of distillation has been 
 repeatedly resorted to since when prices were 
 high ; but under the presumption that high 
 prices were always a proof of scarcity. That 
 these were scarce years is also proved by the
 
 223 
 
 fact, that in both instances the rise was tem- 
 porary. The prices from I766 to I769, were 
 as follow : — 
 
 Prioe per Qr- Ann. Variatiofi. 
 
 I. d ». d. 
 
 1766, 43 1 
 
 1767, 57 4 a rise of 14 3 
 
 1768, 53 9 a fall of 3 7 
 
 1769, 40 7 a fall of 13 2 
 
 I do not doubt, however, that this rise was 
 aggravated by the present system of currency 
 having become more general. 
 
 In 1740, the rise was lis. per quarter; and 
 in 1767 it appears to have been 14s. 9d. Now, 
 if every rise in price during the last century 
 had proceeded from want of suppily, every rise 
 to an equal extent must have been the result 
 of scarcity. That this was not the case, how- 
 ever, is proved by the table of exports and im- 
 ports. A rise, no doubt, in the countries to 
 which our corn was exported, would have the 
 effect of increasing both our prices and exports 
 at the same time. But when it appears that a 
 rise took place, and our exports continued to a 
 limited extent, or suffered no material increase, 
 it is a proof that such rise was neither the result 
 of scarcity in other countries, nor in our own ; 
 for in the first case, our exports would have 
 been increased, in the last entirely suspended.
 
 224 
 
 In 1702, 3, and 4, and also 1745, and subse- 
 quent years, rises as great as in these years of 
 scarcity took place, without our exports being 
 materially affected. Sudden elevations of price, 
 produced by an alteration in the value of money, 
 may take place, however, with a metallic cur- 
 rency, from increased demands for money by 
 government, quickening its motions ; but all de- 
 clensions of price must be gradual, produced 
 through the medium of the balance of trade, 
 unless government weie to take money out of 
 circulation, and remit it abroad. The latter 
 rises in price to which we have referred, were 
 sudden, and just after the commencement, or 
 during war ; whereas the reductions which 
 followed were gradual. We may consequently 
 infer, that these alterations in price were 
 changes in the value of the currency, produced 
 by the sudden demands of government for mo- 
 ney J that they were not fluctuations from vari- 
 ations in supply must be evident. 
 
 I shall not attempt, however, to account for 
 changes in price at so remote a distance, and 
 with a metallic currency. The precious metals 
 are regardless of lines of demarcation j and a 
 change in the value of money in one country 
 will equally affect its value in all those which 
 trade with it. In order to account for such 
 changes, it would be necessary to know the 
 economical history of other countries as well as
 
 225 
 
 our own ; while a correct knowledge, at this 
 distance, is hardly possible of either. But with- 
 in the last 30 years our currency has been prin- 
 cipally paper, consequently the causes of the 
 leading changes which have taken place in that 
 time, may perhaps, in some measure at least, be 
 accounted for. 
 
 2 G
 
 226 
 
 CHAPTER XXI. 
 
 Probable Causes tsohich have produced the leading Changes 
 in the Prices of Corn^ during the last 30 Years. 
 
 At the commencement of the late war, in 1793, 
 there was a considerable quantity of metallic 
 money in the country. The banks, however, 
 had absorbed a considerable share of the circu- 
 lation, and were very ready to occupy the re- 
 mainder as soon as a sufficiently extensive de- 
 mand for their notes should arise. 
 
 At this period, the economy and expenditure 
 of the country would of course be equal, and 
 the loans which were contracted would create a 
 demand in the money market, that would fall 
 upon trade, and compel merchants, traders, and 
 others to reduce their stocks. Thus, though 
 by the increased value of money, an accele- 
 rated motion would be given to the currency, 
 yet a greater supply of commodities would be 
 brought into the market, and until they were 
 consumed, the more rapid movement of the 
 money in circulation would not affect prices. 
 
 In 1795, however, the price of corn began 
 to rise, and became very high. This might
 
 227 
 
 have happened from the increased motion of the 
 currency alone, but to what extent, it would be 
 difficult to say. The interest of money, how- 
 ever, had risen, and an increased demand upon 
 bankers would be the natural result. In the 
 early part of the year, the Bank of England had 
 in consequence extended its issues very consi- 
 derably, and the country banks had no doubt 
 done the same. 
 
 As prices rose, the balance of trade would 
 be determined against the country, and this 
 would create a demand upon the Bank of 
 England for gold, by which its notes would be 
 run in upon it. Towards the end of the year, 
 therefore, its issues appear to have been consi- 
 derably contracted. This would not, perhaps, 
 produce an equal contraction on the part of the 
 country banks, as the balance of payments in 
 favour of London would be met by remittances 
 of gold then in circulation. The Bank of Eng- 
 land, however, still continued to contract its 
 issues, and this, together with the quantity of 
 gold taken out of the circulation of London, in 
 order to send abroad, or to supply the demands 
 of the bank for the same purpose, would perhaps 
 in the end check those of the country banks 
 also. Towards the end of the following year, 
 consequently, prices fell again to nearly their 
 previous level, and the exchanges recovered. 
 2 G 2
 
 228 
 
 It was thought at the time, that this rise was 
 produced by a failing crop, as people were not 
 then in the habit of thinking that money had 
 any thing to do with price ; and perhaps the 
 crop was worse than usual ; but as the exchanges 
 fell immediately as the rise took place, this, to 
 any extent at least, could not be the case. In 
 a scarcity, the value of commodities, the pro- 
 duce of labour, is rather reduced than increased, 
 and the foreign demand for them more likely to 
 improve than decline. In I667, as will be ob- 
 served in the table of exchanges from the En- 
 cyclopedia Britannica, in the Appendix, which 
 it is probable was a year of scarcity, the ex- 
 changes continued 8 per cent, in favour of 
 London through the whole of it. 
 
 In 1799, the price of corn again began to 
 rise. It is probable the crop of this year was a 
 very bad one. The Bank of England, how- 
 ever, in 1797» had suspended cash payments, 
 and was not now compelled to curtail its issues 
 by any fear of demands upon it for gold ; and it 
 had begun to increase them very considerably, 
 in which it had no doubt been followed by the 
 country banks. The price of wheat, which was 
 49s. in the beginning of 1799, rose in 1800 to 
 121s. and as the bank still continued to increase 
 its issues, in April 1801 it had reached 156s. 
 
 The scarcity of 1799 might probably have 
 raised the price of wheat in 1800 ten or fifteen
 
 S^9 
 
 shillings per quarter upon the average, as in 
 former years of scarcity. But that these very 
 high prices Were the mere result of the extended 
 circulation of the banks, is proved by the fact 
 that prices were higher in 1801, after a good 
 harvest, than they were in 1800, after a bad 
 one. 
 
 Towards the end of 1801, however, prices 
 began to fall, and. in the following year nearly 
 reached their former level. This does not seem 
 to have been produced by any contraction of 
 the bank issues. But peace with France took 
 place the latter end of 1801 ; money became 
 less valuable, and the funds rose. This would re- 
 tard the motions of the currency, which would 
 produce a reduction of prices. Perhaps the 
 country banks might also have contracted their 
 issues, from the sudden reduction in the value 
 of money ; for it is the issues of country banks 
 that regulate the price of corn. A principal 
 cause, however, was no doubt an extension of 
 trade, and an increase of commodities in circu- 
 lation, which would just have the same effect in 
 reducing prices as a diminished quantity of cur- 
 rency would have. A great extension of til- 
 lage, in consequence of the late rise, had also 
 probably taken place. It must likewise be ob- 
 served, that a considerable quantity of gold 
 had no doubt been exported, for there was still 
 a large amount in circulation.
 
 230 
 
 War commenced again in the latter end of 
 1803, and about a year afterwards corn again 
 began to rise. This rise woukl not take place 
 until the stocks of commodities which had ac- 
 cumulated in consequence of the diminished 
 value of money during the peace, had been con- 
 siderably reduced. When this happened, the 
 increased motion of the currency, from the high 
 rate of interest and profits, . together with the 
 reduced demand for currency by the curtail- 
 ment of our foreign trade, would be felt. At 
 the same time, the issues of the bank had been 
 rather increased. In August, 1805, wheat had 
 therefore reached 100s. which was nearly dou- 
 ble what it had been the August before. It 
 after that declined to below 80s., and continued 
 at and about that price the whole of the next 
 year. 
 
 In 1807, a contraction of country circulation 
 seems to have taken place (see table in the Ap- 
 pendix, of stamps issued to country banks, 
 commencing the year 1805) and wheat declined 
 to 73s. upon the average. 
 
 At the peace of Tilsit, in the latter end of 
 1807, Bonaparte succeeded in shutting us out 
 of all direct trade with the continent of Europe, 
 which would curtail our demand for currency ; 
 but the issues of the banks were not reduced, 
 and prices towards the end of the year 1808 
 began to rise considerably.
 
 231 
 
 They continued high from 1808 to 1812, va- 
 rying with the circumstances of our trade, and 
 the extent of the circulation. 
 
 In 1813, a free trade took place with the 
 north of Europe, and as no corresponding ex- 
 tension of Bank issues were made, corn began 
 to decline : wheat fell from 122s. in March to 
 73s. in December, and continued at that ave- 
 rage throughout the following year. 
 
 In 1815, a contraction of the circulation of 
 the country banks took place, and wheat fell to 
 an average of 64s. It continued low till the 
 latter end of 1816, when probably the very bad 
 harvest of that year had increased the demand 
 for money in the country, as an extension of 
 issues took place, and prices began to rise again. 
 No extension of issues in the latter end of 1816 
 appears by the account of stamps j but it must 
 be presumed, from the previous contraction, 
 that there was a balance of notes on hand, 
 which would be first issued before that increased 
 demand for stamps, which appears in 1817, 
 would occur. 
 
 In 1817, the issues of the Bank of England 
 were considerably extended, and the average 
 price of wheat was Ql'S. 
 
 In 1818, the Bank of England circulation ap- 
 pears to have been curtailed. Money had be- 
 come plentiful in London, and the 3 per cents, 
 had rapidly risen to 80. This, however, had
 
 232 
 
 not been the case in the country, for the banks 
 increased their issues ; and if we allow that 
 prices were affected 20s. per quarter by the very 
 bad harvest of 1816, which on 94s. is perhaps a 
 fair estimate, — as the prices this year were 84s, 
 it ^ill make a national rise from the bank issues 
 of 10s. per quarter. 
 
 The rise in the funds, however, induced 
 many to sell out, and transfer their money to 
 the country, which would create a demand for 
 London bills, and curtail the issues of the 
 country banks. Prices would consequently fall. 
 In 1819, therefore, wheat fell to the average of 
 73s. Since then, the diminished value of 
 money has continued, no doubt, to contract the 
 country bank circulation, upon which the price 
 of agricultural produce depends, and it has 
 continued falling until it has reached its present 
 depression. 
 
 For four or five years, commencing with 
 1809, the bullion and paper prices of corn were 
 not the same. When gold had entirely disap- 
 peared from circulation, the issues of paper not 
 being regulated by the state of the exchanges 
 as before, prices rose above that level at which 
 our foreign trade balanced j and the price of 
 bills upon England, or the exchanges, conse- 
 quently fell to the extent of this difference. 
 Corn may be said then to have had two prices 
 governed by different principles : its price in
 
 Q33 
 
 paper governed by the quantity of it compared 
 with the quantity of commodities in circulation ; 
 and its price in gold, governed entirely by the 
 circumstances of our trade at the moment. 
 
 Daring the operation of Bonaparte's conti- 
 nental system, it was much more easy to smug- 
 gle our lighter and more valuable goods to the 
 continent, than to receive those bulky commo- 
 dities of which our imports generally consist in 
 return. A cargo of our exports to the north of 
 Europe is worth twenty or thirty of the imports 
 with which we are paid. This trade, therefore, 
 could only be brought to a balance by the ex- 
 cessive price of our commodities. At the same 
 time, as a very small quantity of gold would 
 reduce its price where there was no demand for 
 it, its price would be merely nominal, and 
 would be determined by the demand for bills 
 upon England, or the state of the Exchanges ; as 
 this demand and the exchanges rose, the price 
 of gold in bank paper would fall, and rice 
 versa. At this time, therefore, the bullion 
 price, as well as the paper price of corn was 
 high. The following is a statement of the 
 prices in both bullion and in paper, from 1809 
 to 181.5 inclusive: — 
 
 H
 
 234 
 
 Paper Price 
 
 per 
 
 Quarter. 
 
 Bullion Price ptr i 
 
 Quarter 
 
 1809, 
 
 - 
 
 95s. 
 
 1809, 
 
 - 
 
 82s. 
 
 1810, 
 
 - 
 
 106s. 
 
 1810, 
 
 - 
 
 95s. 
 
 1811, 
 
 - 
 
 94s. 
 
 1811, 
 
 - 
 
 83s. 
 
 1812, 
 
 . 
 
 125s. 
 
 1812, 
 
 - 
 
 97s. 
 
 1813, 
 
 - 
 
 108s. 
 
 1813, 
 
 - 
 
 808. 
 
 1814, 
 
 - 
 
 74s. 
 
 1814, 
 
 - 
 
 59s. 
 
 1815, 
 
 - 
 
 64s. 
 
 1815, 
 
 - 
 
 53s. 
 
 That these prices were entirely governed by 
 different principles, is proved by the fluctuations 
 not being parallel. For instance in 1814, the 
 price of wheat in paper fell from 78s. to 70s. ; 
 whereas the price in bullion rose from 56s. 6d. 
 to 65s., and in 1815, the price of wheat in 
 
 January was 60s. in paper, and 54s. in bullion. 
 May, 70s. ditto 52s. ditto. 
 
 December, 55s. ditto 52s. ditto. 
 
 So that while the price in bullion remained 
 nearly stationary, the price in paper within the 
 year fluctuated considerably. 
 
 At that period of the war, when our foreign 
 trade was so variable and uncertain, the bank 
 restriction act would have been a great advan- 
 tage, had the paper circulation been governed 
 by any kind of principle.
 
 235 
 
 CHAPTER XXn. 
 
 With a Paper Currency, Importations of Foreign Corn 
 cannot materially reditce Prices, 
 
 During the high prices which have occurred 
 in the last 30 years, great importations of corn 
 have always taken place when the ports of Eu- 
 rope were open to us, and as they always di- 
 minished when corn fell, it has been supposed 
 that these importations reduced its price. 
 Great, however, as they may appear at differ- 
 ent times to have been, they never could at 
 any time have had any very material effect upon 
 the market ; and that in fact they had no such 
 effect, was proved in 1801, when, after a good 
 harvest, and in the teeth of the greatest impor- 
 tations at that time ever known, wheat rose to 
 a higher price than it ever was before, or has 
 been since. The principle however, will ap- 
 pear more evident upon further examination. 
 
 Dr Colquhoun, in 1812, estimates the quan- 
 tity of grain produced in this kingdom as fol- 
 lows : — 
 
 2 H 2
 
 ^36 
 
 Quarters. 
 
 Wheat, 9,170,000, at 70s. 6d £32,324,250 
 
 Barley, 6,335,000, at 37s. 6d..... 11,719,750 
 
 Oats, 16,950,000, at 29s. Od 24,577,500 
 
 Rye, 685,000, at 43s. lOd 1,501,291 
 
 Beans and Peas, 1,860,000, at 38s. lOd 3,611,500 
 
 5e73,734,291 
 
 Now the total imports from foreign ports 
 from 1813 to 1818 inclusive, after which the 
 ports were finally shut, are as follows : — 
 
 1813. At prices corresponding 
 
 to 108s. per quarter for wheat, 5^2,192,592 
 
 In order to put it upon a par. , ^^ 
 with Dr Colquhoun's calcula- 
 tion at 70s. 6d. deduct say 
 one third ... 730,864 
 
 £1,461,728 
 
 1814. At prices corresponding 
 to 73s. lid. for wheat, from 
 which we shall make no de- 
 duction - - 2,815,319 
 
 1815. At prices corresponding 
 
 to 64s. 4d. for wheat . 793,245 
 
 To which add one-tenth - 79,324 
 
 872,569 
 
 1816. At prices corresponding 
 to 75s. lOd. for wheat, from 
 which we shall make no de- 
 duction . - - 942,497 
 
 Carried over £6,092,113
 
 237 
 
 Brought forvrard i£ 6,092,1 13 
 
 1817. At prices corresponding 
 to 94s. 9d. for wheat 6,403,893 
 
 From which deduct say two- 
 ninths . - - . 1,423,086 
 
 4,980,807 
 
 1818. At prices corresponding 
 
 to 84s. Id. for wheat - 10,908,140 
 
 From which deduct say one- 
 eighth - - - 1,363,517 
 
 9,544,623 
 
 ^£20,617,543 
 
 Now the proportions which the imports each 
 year bore to our average produce, are about as 
 follows : — 
 
 1813 equal say to -~ 
 
 1814 ditto ^V 
 
 1815 ditto ^V 
 
 1816 ditto ^V 
 
 1817 ditto Vt or say -j\ 
 
 1818 ditto I or say -f^ 
 
 And the whole together equal to about ^t* 
 
 By comparing these importations with the dif- 
 ference in quantity there is betw^een the crops of 
 ordinary seasons, it will be seen how perfectly 
 inadequate they are to produce any material 
 effect upon prices. Altogether they do not 
 amount to the difference between the harvests 
 of 1819 and 1820, and these harvests were not,
 
 ^S8 
 
 we should imagine, either so remarkably defec- 
 tive or abundant as naturally to produce any 
 great effect upon prices. Presuming last year 
 an average crop, the following gives the scale 
 of produce and of prices since 1815. The 
 crop of each year is of course sold the year 
 after. 
 
 1815, Average price of wheat 64s. 
 
 1815, 37 quality good 1816 ditto 75s. 
 
 1816, 25 very bad in quality, near- 
 ly rotten 1817 ditto 94s. 
 
 1817, 33 quality not very good 1818 ditto 83s. 
 
 1818, 32 quality very good 1819 ditto 72s. 
 
 1819, 27 quality very good, but 
 
 not so good as the year before 1820 ditto 65s. 
 
 1820, 37 sound and dry, but not 
 
 so good as the two preceding 
 
 years 1821 ditto 54s. 
 
 1821, 32 1'822 ditto 43s. 
 
 It will be observed that from 1817 to 1822, 
 there has been an averge reduction of about 
 ten shillings per quarter. Now adding the re- 
 duction from 1819 to 1820, and from 1820 to 
 1821 together, it amounts to 18s. per quarter 
 which is 9s. per year. The crop of 1819, how- 
 ever, was -3^ below an average, and the fall only 
 7s. It appears therefore, to have been check- 
 ed about two shillings per quarter ; while the 
 crop of 1820 being ^ above an average crop, 
 and the fall lis. per quarter, it appears to have
 
 239 
 
 been increased in the same proportion. An 
 increase of -3^ therefore seems to have reduced 
 prices 2s. a decrease of ^ to have increased them 
 to the same extent, making a difference between 
 the two harvests of 4s. per quarter. Assuming, 
 therefore, the fall to be a question of currency, 
 and this variation to be produced by the differ- 
 ence of the crops, we are led to conclude, that 
 if all the importations for the six years enume- 
 rated, had taken place in one, they would have 
 reduced wheat about 4s. per quarter. But if 
 we say that they could not have produced an 
 effect exceeding twice that, the correctness of 
 the position will hardly be doubted. 
 
 We are willing, however, to allow it to be ex- 
 tremely possible that sudden importations to a 
 great extent might w^ith a metallic currency, 
 have a considerable effect upon prices. It 
 might determine the balance of trade against 
 the country ; and as the corn came into the 
 market, the money which represented it might 
 go out : as the supply increased, the consump- 
 tion might be diminished ; by which not 
 only an immediate, but a permanent fall of 
 prices would be the result. But in this case it 
 would not be the importations of corn, but the 
 exportation of money, that would produce the 
 material effect. The depression of the markets 
 would still be more a question of currency than 
 supply. It is impossible, indeed, unless we sup-
 
 240 
 
 pose that a supply of foreign corn will frighten 
 a market out of its wits, that with a pa- 
 per currency it can either affect the market 
 after it is consumed and out of it, or can have 
 a greater effect in reducing prices when in it, 
 than a corresponding increase of supply by a 
 good harvest. 
 
 It is even very possible that importations of 
 foreign corn may have the effect of raising its 
 price, by giving rise to a demand for bank ac- 
 commodation. If a merchant imports a thou- 
 sand pounds worth of corn, and borrows a thou- 
 sand pounds worth of notes in consequence, 
 he puts as much money into circulation as per- 
 haps would promote the consumption of ten 
 times the quantity ; and I have no doubt that 
 the late rise was at the moment rather increased 
 than diminished by the importations which took 
 place. This to a certain extent, at least, has 
 evidently been the case with foreign corn in 
 bond. The banks in Newcastle are at this 
 time under considerable advances upon security 
 of this description of corn ; and to the extent of 
 that advance the currency must have been ex- 
 tended, or prevented from contracting. If this 
 corn was brought into the market, or all the 
 bonded corn in the kingdom, it is hardly pro- 
 bable that, so far as the additional supply opera- 
 ted, it would affect prices one shilling per 
 quarter. But if the money which it produced.
 
 241 
 
 was taken out of consumptive circulation, and 
 paid to the banks, or placed in their hands, 
 which would probably be done, and the con- 
 sumption in consequence diminished as the sup- 
 ply was increased, a great reduction of price 
 would no doubt be the result. 
 
 The ports were closed against further impor- 
 tations in February, 1819. Since then, of 
 course, no more supplies of foreign corn have 
 been brought into the market. Now admitting 
 that one half of the foreign corn imported in 
 1818 was unconsumed when the harvest of that 
 year was gathered, it would make the total 
 supply for 1819, 34 by Messrs Cropper, Benson, 
 and Co.'s scale. If we further assume 72s. the 
 price of that year, to be proportioned to the 
 supply and state of the currency at the time, 
 had the prices since then been governed by the 
 state of the crops alone, they must have been 
 as follows : — 
 
 Average of Wheat 
 
 1818. 34 bushels per acre. 1819, ... 72s. 
 
 1819. 27 ditto 1820, ... 90s. 
 
 1820. 37 ditto 1821, ... 66s. 
 
 1821. 32 ditto 1822, ... 76s. 
 
 Whereas the actual prices were : — 
 
 1819, 73s. 
 
 1820, 65s. 7d. 
 
 1821, 54s. 
 
 1822, 44s. 
 ^ I
 
 242 
 
 Nothing can be more clear from the above 
 statement, than that the present low prices 
 are produced by alterations in the currency. 
 I'he reduction never could proceed from the 
 supply, when the supply within this year or 
 two has fallen ofFj nor yet from importations 
 of foreign corn, for there has been none. 
 
 A good deal has been said about the effect 
 produced by the large supplies of corn from 
 Ireland ; but I do not see how an increase of 
 growth in Ireland is to have a different effect 
 from an increase of growth in Yorkshire or 
 Northumberland. The reasoning which applies 
 to the one applies to the other. If it is wished 
 to lay an exclusive tax upon Ireland, tax her 
 produce imported into tliis country, and keep 
 down her national prices below the level of ours ; 
 but if not, and she is to enjoy all the advantages 
 of our manufacturing superiority, having a sea to 
 cross does not affect the principles we have en- 
 deavoured to establish. It is a shorter carriage, 
 and less expensive, to send corn from Ireland 
 to Liverpool, than from Berwick to London.
 
 243 
 
 CHAPTER XXIII. 
 
 The present Price of Stocks a Proof of a Contraction 
 of Currency. 
 
 That the present agricultural distress must be 
 caused by a contraction of the circulation of 
 the country banks, is a proposition which, I 
 trust, is now almost self-evident ; but a further 
 proof of it is afforded by the present low price 
 of the funds. 
 
 If we examine the stock table, in the Appen- 
 dix, and compare it with the table of the rise of 
 the national debt, since the revolution, from Dr 
 Hamilton's Inquiry, we shall have sufficient 
 reason to conclude that, without some particu- 
 lar cause, the 3 per cents, ought, by this time, 
 to have been far above 80. 
 
 At the commencement of the war, in 174«0» 
 they were about 100. The stock table com- 
 mences 1731, and gives, up to that period, the 
 following yearly averages:— 
 
 2 I 2
 
 ^244 
 
 « 
 
 1731, 95 
 
 1732, 98 
 
 1733, 98 
 
 1734, 92 
 
 1735, 94 
 
 1736, 105 
 
 1737, 106 
 
 1738, 105 
 
 1739, 100 
 
 1740, 99 
 
 At the commencement of the war, in the 
 year 174-0, the national debt appears to have 
 been ^47,954,6 23, and at the peace of Aix- 
 la-Chapelle, eight years afterwards, it had in- 
 creased to ^79,193,313, that is about twenty-' 
 one millions ; in which time, the prices of stock 
 were as follow : — 
 
 1741, 97 
 
 1742, 100 
 
 1743, 101 
 
 1744, 94 
 
 1745, 89 
 
 1746, 83 
 
 1747, 84 
 
 1748, 86 
 
 It is not improbable that government had 
 not begun to borrow until 174<4, as the funds 
 did not fall until then. They were at the low- 
 est, at the commencement of 1746, and, in that 
 year, as we have before stated, wheat, without
 
 245 
 
 any scarcity, rose veiy considerably. In the 
 eight years of peace which followed, the debt 
 was reduced between five and six millions, and 
 the prices of stock were— 
 
 
 1749, 98 
 
 
 1750, 99 
 
 
 1751, 100 
 
 
 1752, 104 
 
 
 1753, 104 
 
 
 1754, 103 
 
 
 1755, 95 
 
 
 1756, 88 
 
 cUu 
 
 /IV/ .(K- 
 
 In the latter year, war commenced again, 
 and, probably, preparations for it had begun 
 the year before. It continued seven years, du- 
 ring which the debt was increased sixty mil- 
 lions. In this period, the prices of stock were — 
 
 1757, 89 
 
 1758, 93 
 
 1759, 82 
 
 1760, 81 
 
 1761, 77 
 
 1762, 75 
 
 1763, 89 
 
 From this time to the American war in 1775, 
 a space of ttti years, ten millions of debt were 
 discharged, in which interval stocks were,—
 
 246 
 
 1764, 82 
 
 1765, 88 
 
 1766, 88 
 
 1767, 89 
 
 1768, 90 
 
 1769, 87 
 
 1770, 84. 
 
 1771, 85 
 
 1772, 89 
 
 1773, 86 
 
 1774, 87 
 
 1775, 88 
 
 The American war lasted eight years, and 
 an addition of e^l 15,000,000. was made to the 
 debt. In this war stocks were,^ — 
 
 1776, 85 
 
 1777, 78 
 
 1778, 64 
 
 1779, 60 
 
 1780, 61 
 
 1781, 57 
 
 1782, 57 
 
 1783, 53 
 
 Peace now continued to 1793, in which ten 
 years the debt was reduced ten millions, and 
 stocks were, — 
 
 1784, S5 ' 
 
 1785, 62 
 
 1786, 72 
 
 1787, 72
 
 247 
 
 1788, 75 
 
 1789, 76 
 
 1790, 77 
 
 1791, 84 
 
 1792, 90 
 
 1793, 75 
 
 In 1792, they had attained 96, but fell in 
 contemplation of the war which broke out the 
 year following. 
 
 Since the termination of the late war, the 
 three per cents, have never risen except in a 
 trifling degree above 80 ; yet from this brief 
 review, it must be evident that with the im- 
 mense reduction of expenditure by govern- 
 ment which has taken place, stocks by this 
 time ought to have been at much higher prices. 
 It is not at all probable, that as government 
 reduced its expenditure, individuals would in- 
 crease theirs in exactly the same proportion, 
 even keeping the sinking fund out of view. The 
 consequence in that case would have been, that 
 the economy of government would have re- 
 duced the interest of money and profits of 
 trade, and have raised the price of the funds, 
 had it not contracted the currency. 
 
 While the interest of money to individuals 
 is kept up to five per cent, it is certain that the 
 value of government securities will bear a de- 
 terminate proportion to it : in the money mar- 
 ket, the respective securities must, like other
 
 S48 
 
 commodities, the quality of which are known, 
 have their relative prices ; and government 
 securities, according to the present state of opi- 
 nion, appear to be worth one per cent, per an- 
 num more than those of individuals. It is pro- 
 bable, therefore, that until the currency is 
 principally re-issued upon deposits in London, 
 the three per cents, will not rise much above 
 80. 
 
 Up to this price, however, they have risen 
 without difficulty, Even in 1809 and 1810, 
 during the war, they were at 70. In 1817, 
 eighteen months after the termination of hosti- 
 lities, they were 80, and occasionally 1 or 2 per 
 cent, above it ; from whence they declined in 
 the latter part of 1818, probably in conse- 
 quence of the foreign loans, until 1820, when 
 they began to rise again ; and in Oct. 1821 
 they were at 78 ; between which and 80, or a 
 trifle above it, they have continued ever since. 
 
 By the contraction of the currency the value 
 of money is kept up, while the prices of com- 
 modities are reduced, and the balance of trade 
 determined in favour of the country ; by which 
 an importation of the precious metals to sup- 
 ply the deficiency is caused. But though by this 
 importation the currency will be re-extended, 
 and the prices of commodities ultimately raised 
 to what they were before, the value of money 
 wiU not, of course, be reduced by the same
 
 249 
 
 means. The money which comes into the 
 country is received in payment for commodi- 
 ties, and will be spent in consumption by those 
 who receive it, the same as if it had been in pre- 
 vious circulation. It will only be that propor- 
 tion which is saved out of the incomes of those 
 who receive it, that will tend to reduce the inte- 
 rest of money, and that must be but a trifling 
 part of the whole. If, therefore, the currency 
 were to annually contract four or five millions, 
 and four or five millions were received by the 
 balance of trade, whatever the immediate effect 
 upon prices might be, which we shall again 
 speak of hereafter, the interest of money would 
 still be kept up, and the contraction would 
 still go on. 
 
 Opinion, we have no doubt, has some effect 
 in keeping the stocks at their present prices. I 
 remember hearing that the Scotch banks sold 
 out of the funds very largely when the 3 per 
 cents, were at 80, in I8I7 and 1818, and it 
 was thought a wonderful instance of financial 
 sagacity; and it seems now a pretty general 
 opinion that 80 is about their maximum. If 
 they were expected to be higher, capitalists 
 would not be desirous to place their money on 
 mortgage, until they had attained the expect- 
 ed price, and this would cause them to rise 
 to it. 
 
 What prices stocks might by this time have 
 2 K
 
 ^250 
 
 attained, with a metallic or an incontraetable 
 paper currency, it js impossible to say with 
 certainty. The value of money is different in 
 different countries ; but it appears to be al- 
 ways the lowest in the most commercial na- 
 tions, and in the most advanced state of socie- 
 ty. In Dr Smith's time, the government of 
 Holland borrowed at 2 per cent.* I should 
 imagine, however, that three per cent, was 
 about the natural rate for this country, the 
 rate which may be termed its par. Money 
 never seems to have been worth much more 
 than three per cent., whereas during peace, 
 the funds have been oftener at or above 
 100, than below it. In the ten years of peace 
 which preceded the American war, they did 
 not indeed rise much above 90, and were often- 
 er below than above that price ; but the high 
 prices of corn in I767, and those which follow- 
 ed in 1771, 2, 3, 4f, and 5, appear to have 
 given a great stimulus to agriculture, which 
 would absorb capital, and keep the funds from 
 attaining that price to which they would other- 
 wise have probably arrived. In 179% just be- 
 fore the war broke out, they had very nearly 
 reached 100 : they were at 96, when they be- 
 gan to decline, in prospect of the war, which 
 was declared the year following. 
 
 * Wealth of Nations, Book I. Chap. 9.
 
 S51 
 
 If the capitalists of society are a counti'y's 
 greatest economists, it must necessarily follow 
 that the more society advances, and the greater 
 is the proportion ofits income which capitalists 
 enjoy, the greater will be the number of its 
 economists, and the lower the interest of money. 
 In Russia, where society is considerably behind, 
 at least the commercial part of Europe, interest 
 of money is high. The Commercial Bank of 
 St. Petersburgh, I understand, gives 5 per 
 cent, for deposits made with it, and discounts at 
 from 6 to 10, according to the supply and de- 
 mand for money at the time. This bank only 
 deals in money ; it does not make it. It there- 
 fore necessarily regulates its charge for dis- 
 counts according to the state of its funds, and 
 the demand for money at the moment ; which 
 from some peculiarity in the trade of St Peters- 
 burgh (if there is so great a difference in the 
 interest charged at different times) is perhaps 
 very variable. 
 
 There is, however, no reason why money 
 should be worth less in this country now than 
 it was 100 years ago. The capitalists, in pro- 
 portion, are more numerous than they were 
 then, and our agricultural improvements are at 
 a stand ; and when we take into account the 
 forced economy produced by the sudden and 
 enormous reduction of government expendi- 
 ture, there seems little reason to doubt, that 
 i^ K 2
 
 252 
 
 with a different system of currency, the 3 per 
 cents, must have been at 100 by this time ; even 
 though they should have subsided after the 
 effects of the economy of government had 
 ceased to be felt in the market. Their present 
 price is, however, a sufficient proof of a con- 
 traction of currency, as without that they 
 must at least before this have risen above 80.
 
 253 
 
 CHAPTER XXIV. 
 
 Sinking Tiind. 
 
 It is not, I believe, until within these twelve 
 months, or two years at most, that the actual 
 receipts of government, since the return of 
 peace, have exceeded its expenditure, that is, 
 since the sinking fund began to operate. We 
 now, however, have a sinking fund, and I 
 have no doubt it has proved one to the agricul- 
 turists. They were sunk low enough before, 
 but since it was added to the general excess of 
 economy, many of them I dare say, have found 
 themselves entirely ruined. 
 
 The fall was greater last year than in any year 
 since the last declension of prices began. It was 
 lis. upon 54>. A contraction numerically as 
 great with wheat at 54 as at 84, must throw up- 
 wards of half as much more in quantity into the 
 market without its means of consumption, and 
 in a similar proportion with any other price : 
 so that there must have been a greater quantity 
 of corn thrown into the market last year, with- 
 out its means of consumption, than any year 
 before. 
 
 There can be little doubt indeed, that the
 
 254 
 
 economy of the last session of parliament was 
 most unfortunate for those it was intended to 
 serve. It is not an impossible supposition that 
 they might lose ten millions for every one add- 
 ed to the sinking fund. 
 
 But independent of the effects upon the cur- 
 rency, under the present system, produced by 
 government contracting large loans, and after- 
 wards attempting to discharge them, the prin- 
 ciples of which have been sufficiently illustrat- 
 ed, the policy of this plan of finance is in 
 other respects extremely questionable. It is, 
 in fact, absurd on the one hand, and unjust on 
 the other. 
 
 More than the income of society cannot be 
 spent, and a loan is nothing but a tax through 
 the interest of money and profits of trade. It 
 is even more — it is a double tax. For every mil- 
 lion saved by the economist out of their increas- 
 ed profit, it is probable that another, at least, 
 is spent. When people make money with more 
 ease, they naturally spend it with more free- 
 dom; and the additional interests and profits 
 created must not only be equal to furnish the 
 loan, but^to cover this additional expenditure 
 also. Consequently the borrowers furnish out 
 of their own pockets, probably, twice the 
 amount of the sum they borrow, and saddle 
 themselves with an annual charge besides. It 
 may be almost laid down as a principle, that a
 
 255 
 
 nation which can regularly supply its govern- 
 ment with loans, to any particular extent, 
 could with half the ease pay, within the year, 
 direct taxes to the same amount. 
 
 On the other hand, with a proper currency, 
 a sinking fund would be no loss but a gain to 
 the ultimate payers of the taxes. If the whole 
 inco/ne of society must be spent, the sinking 
 fund cannot be saved, but must necessarily 
 curtail the incomes of the economists. If not 
 more than a certain amount of money is 
 wanted, both the economists and government 
 cannot save it. Indeed the idea of saving corn, 
 cabbages, and other consumable commodities 
 which the income of the sinking fund repre- 
 sents, appears quite ridiculous, and would be 
 nonsense were it possible. It may be good 
 housewifery to economise by hoarding commo- 
 dities for any thing I know, more especially 
 if there be plenty of pigs and ducks to gobble 
 up the victuals that spoil, and other equally 
 thrifty means of disposing of the other descrip- 
 tions of commodities that may be wasted ; but 
 a nation cannot economise in this manner : the 
 savings of one class or body must curtail those 
 of another. 
 
 Nothing indeed could be a finer speculation 
 to the ultimate payers of taxes with a proper 
 currency, than a sinking fund. It would not* 
 merely curtail the interest of money and profits
 
 256 
 
 of trade to the amount of itself, but probably to 
 many times that amount. It would reduce, in 
 fact, in an equal degree, all income throughout 
 the kingdom, the value of which depended up- 
 on that of capital : buildings, ships, mines, and 
 every description of created property would be 
 affected by it. So that every million thrown into 
 the market would be felt from one end of the 
 nation to the other. 
 
 All those whose incomes depend upon the 
 value of money, ought to resist by every means 
 in their power the continuance of this fund, 
 properly called sinking, so far as they are affect- 
 ed. To continue it would be nothing but a 
 a very ingenious method of taking so much 
 money out of their pockets, by robbing them 
 of that due share of the national income to 
 which they are naturally entitled. 
 
 Perhaps it may be said that they have had 
 great gains during the war, and a sinking fund 
 would now be but a fair retaliation. Would it, 
 however, be fair to feed a servant on very 
 rich food until he could not live without it, 
 and then say. Now, Sir, you have for a long 
 time been fed too well, and in order to balance 
 accounts, you must be fed on turnips and car- 
 rots ? No — the reply would naturally be, — You 
 have given me habits which I cannot easily 
 change, and if that is not an argument why the 
 style of living is to be continued, it is none why
 
 257 
 
 I should be starved to death. The great pro- 
 fits enjoyed by the mercantile classes for so long 
 a period during the war, is the very reason why 
 they should not be artificially reduced now. 
 The mercantile classes have acquired habits of 
 expenditure which they cannot easily alter, and 
 they will no doubt find them sufficiently low 
 without the expedient of a sinking fund. And 
 as to the debt, unless the mortgagees can be 
 put in possession of that part of the property of 
 the nation to which they are entitled, nothing 
 can with justice to all parties be done, but al- 
 low it to remain as it is. 
 
 2 L
 
 CHAPTER XXV. 
 
 Plan for the Government of the Currency. 
 
 It is at present a general opinion with all our 
 political economists and statesmen, that there 
 is a demand for money by the country, which 
 as regularly presents itself to the banks in dis- 
 count of good commercial bills, as the demand 
 for any other commodity presents itself in 
 the market, and is determined by the con- 
 sumption of it ; and that the issues of bank 
 paper are the consequence of high prices and 
 not the cause. The fallacy of this opinion, 
 it is, we trust, unnecessary further to illustrate. 
 Money comes into the market by the balance 
 of foreign trade, not in consequence of the 
 high, but in consequence of the low price of 
 commodities ; and from the banks, either from 
 the same cause producing a balance of pay- 
 ment in London bills to their respective dis- 
 tricts, or in consequence not of a demand for 
 currency, but of a demand for capital, deter- 
 mined by the interest which the banks charge 
 proportioned to the market rate. And in all 
 cases the influx of money into the market,^ 
 whether it proceed from the balance of fb-
 
 259 
 
 reign trade, or the issues of banks, is not the 
 effect, but the cause of high prices. 
 
 It is also the general opinion, that the circu- 
 lation of the bank of England controuls that of 
 the country banks ; and it no doubt did so du- 
 ring the war, when the issues of the country 
 banks were made upon home bills, and they 
 had no means of providing against an unfa- 
 vourable balance of payments. But when their 
 issues come to be founded upon deposits in 
 London, at a low rate of interest, they will be 
 glad to avail themselves of any demand for 
 money, either from a bad harvest or otherwise, 
 to withdraw their deposits from London and 
 lend them out on better interest at home. It 
 may consequently be two or three years or 
 more before the balance of payments in favour 
 of London, after a demand for money has ari- 
 sen, exhausts their deposits. In the mean 
 time an artificial scarcity might be caused, or a 
 real one aggravated ; while probably before 
 their deposits were exhausted, the sudden de- 
 mand for money might cease ; a contraction of 
 currency follow ; and prices fall as much below 
 the national level until the deposits in Lon- 
 don were restored, as they had been above it. 
 Thus prices might be kept in a state of great 
 vacillation without the issues of the country 
 banks ever coming within the controul of the 
 Bank of England's circulation* 
 2 L 2
 
 ^60 
 
 Independent of this, every contraction of 
 bank issues necessarily determines the balance 
 of foreign payments in favour of the nation, and 
 a spring tide of metallic currency, if we may 
 so term it, flows to the metropolis. This the 
 more eifectually of course determines the ba- 
 lance of payments in favour of the country, 
 and enables the country banks the more speedily 
 to re-issue their notes upon deposits in London. 
 But the balance of payments will continue in 
 favour of the country until its circulation is 
 upon a level with that of London, however 
 much it may have been increased above the 
 amount necessary, with its ordinary consump- 
 tion, to maintain the national prices. Thus 
 every low state of prices will be as necessarily 
 followed by a state of prices proportionately 
 high. Prices will rise as much above the na- 
 tional level as they were previously below it, 
 until the metallic money which has come into 
 the country has again disappeared, and the cir- 
 culation of London is brought to its proper 
 level. The gold which is now flowing into 
 the country in such abundance, is only a 
 teniporary visitor : it will be ultimately re-ex- 
 pelled, if the present system of currency con- 
 tinues, by prices as high as they are now low ; 
 and without some change, the lovers of gold 
 and cheap corn will find themselves most sadly 
 deceived.
 
 261 
 
 With a metallic or a paper currency, which 
 could not be issued by country banks at plea- 
 sure, these effects would not be produced. 
 When the circulation of London exceeded that 
 of the country, and determined the balance of 
 payments in its favour, if the country banks 
 could not increase their issues, money, with 
 which to pay the balance, would have to be sent 
 from the metropolis, and its circulation would be 
 diminished as that of the country increased. No 
 mountain of currency would therefore rise in 
 London to be re-expelled by excessive prices ; 
 but by the internal balance of payments, the 
 circulation would equalize itself, and when 
 prices came to the national level, they would 
 not rise above it. 
 
 Now to put the currency on this footing, 
 seems absolutely necessary, unless we wish corn 
 to continue subject to those fluctuations in price 
 which we have experienced during the last 30 
 years. 
 
 It is perhaps unnecessary to contend that 
 paper is a better circulating medium than gold. 
 It is determined by practice, which at least in 
 practical matters, is the only correct mode of 
 coming at the truth. People in this country 
 who have no theories upon the subject, univer- 
 sally prefer paper. It is more portable, for- 
 geries are more easily detected, at least with 
 the notes of country banks, and it is in all re-
 
 ^62 
 
 spects more convenient ; while every plain man 
 sees that bank notes answer the purpose of 
 money just as well as a metallic currency. In 
 Russia also, I understand, paper is preferred. 
 Before it was issued in excess, and the precious 
 metals were still in circulation, it bore a premi- 
 um or agio of one per cent, and in this country 
 I am persuaded that merchants would on the 
 average rather give 5 or 10 shillings per cent, 
 for paper, than submit to the inconvenience of 
 receiving their payments in metallic money. 
 
 Presuming, therefore, that the present notes 
 of the country banks are found to be as good a 
 description of money as need, for any useful 
 purpose, to be invented, I venture to submit 
 the following Plan for the government of the 
 currency : — 
 
 1st. Let an enquiry be made by a committee 
 of parliament into the circulation of all the 
 banks in the kingdom, at different periods, in 
 order to ascertain, as far as possible, the a- 
 mount of currency necessary in different dis- 
 tricts, to maintain any given level of prices. 
 
 2nd. Let public banks be established in dif- 
 ferent parts of the country, with proper capi- 
 tals, and to each bank a certain amount of cir- 
 culation be assigned ; for which, let both the 
 bank and the state be security to the public. 
 
 3rd. Let each bank pay government for this
 
 263 
 
 currency, a per centage, say S per cent., 
 lend it out in the manner most agreeable to its 
 interests, and keep it in circulation or not at 
 its own pleasure. 
 
 4th. Let a board of commissioners be esta- 
 blished in London, under whose management 
 the currency may be placed ; and to this board 
 let every bank send weekly or monthly returns 
 of the state of the circulation, the supply and 
 demand for London bills, and such other infor- 
 mation as the commissioners deem necessary 
 for their government. 
 
 5th. Let these commissioners have an office 
 for the deposit of bullion, and purchase all that 
 comes into the country, at the mint price, or 
 a little above the mint price. Let them pay 
 for it by receipts or notes of not less, say, than a 
 j^lOO each ; and let any bank, either in London 
 or any other part of the country, to which these 
 notes or bullion receipts may be presented, be 
 obliged to discount them, not with old notes, 
 but by an issue of new notes over and above 
 their stated circulation, and then return them 
 to the board of commissioners. 
 
 6th. When a demand for bills upon London, 
 exceeding the supply, occurs in any dis- 
 trict, let the demand be met by the drafts of 
 its bank upon the commissioners for bullion, 
 and let the notes received in demand for these 
 bills be cancelled. If these drafts are present-
 
 264 
 
 ed for payment in bullion to be exported, or 
 for any other purpose, let them be paid ; but 
 if they are remitted to any other part of the 
 kingdom, let the banks, to whom they are pre- 
 sented for discount, issue fresh notes to their 
 amount. In the same manner, let the Bank of 
 England, or such banks of circulation as may be 
 established in London, pay their notes by drafts 
 upon the commissioners for bullion when re- 
 quired, and also issue fresh notes in discount 
 of such drafts when presented, the same as the 
 country establishments. 
 
 Now by this plan, while banks could not 
 manufacture money at pleasure, the currency 
 would dilate and contract in the same manner 
 as with a metallic circulation. But, however, 
 we shall take the liberty of considering it more 
 in detail. 
 
 1. Let an Enquiry be made hy a Committee of 
 Parliament, into the Circulation, at different 
 Periods, of all the Banks in the Kingdom, in 
 order to ascertain, as far as possible, the 
 Amount of Currency necessary in different 
 Districts to maintain any given Level of 
 Prices, 
 
 The obvious necessity of some such preli- 
 minary investigation by a committee of parlia-
 
 365 
 
 ment, or by the commissioners intended to 
 cany the measure into effect, renders any ar- 
 gument on the subject superfluous. The pub- 
 lic welfare requires that private banks should 
 be called upon for the information necessary ; 
 though justice will of course require that the 
 information thus obtained, be kept secret, and 
 only the general results be published. 
 
 ^}id. Let Public Banks be established in different 
 Parts of the Country, with proper Capitals, 
 and to each Bank a certain Amount qfCircula' 
 tion be assigned, for xchich let both the State 
 and the Bank be Security to the Public, 
 
 Public banks,- with proper encouragement, 
 might be established in six months, in every 
 part of the kingdom ; and that is as soon as 
 any great national change could be expected 
 to be made. National affairs, like great bodies, 
 must necessarily move slowly. In the great com- 
 mercial towns, such as Liverpool, it might be 
 necessary to grant charters ; as in the minds of 
 some there are prejudices against entering into 
 banks, which charters would obviate. But go- 
 vernment cannot possibly have any objection to 
 meet a little prejudice with a little parchment : 
 in fact it is understood that ministers have 
 no such objection. The charters might be 
 2 M
 
 2<56 
 
 granted for 21 years, and a fine levied upon 
 their renewal. Let those banks that wish for 
 the bauble pay for it. There never was a spe- 
 culation proposed more to the public taste than 
 these joint stock companies ; and I am enabled 
 to say, that there will be no wanjt of subscrip- 
 tions to them when they are allowed to be set 
 up, even though charters should not be grant- 
 ed. 
 
 The currency should also be put upon the 
 most stable footing, so that no demand for gold 
 should ever arise from want of confidence. 
 
 This would be most effectually done by both 
 the bank and government being pledged to the 
 public ; and as government would have an in- 
 spection of the bank affairs, no possible loss 
 could ever arise to the state from it ; while the 
 bank being also pledged, no want of confidence 
 in the faith of government could ever materially 
 influence the credit of the currency. 
 
 3rd. Let the Bank pay Go'vernmentjor this Cur- 
 rency a per Centage, say 3 per Cent, and lend 
 it out in the Manner most agreeable to its In- 
 terestSy and keep it in Circulation or not, at its 
 own Pleasure. 
 
 The currency belongs to no individual, and 
 is therefore the property of the state. Go-
 
 267 
 
 vernment ought to receive the profits deri- 
 ved from that which is so properly its own. 
 It is the object to make the taxes as little ob- 
 jectionable to individuals as possible, and no 
 tax could fall more imperceptibly upon the 
 public than this would do. The proper busi- 
 ness of banks is not to manufacture, but to 
 trade in money. To take from banks, there- 
 fore, either private or public, the precarious 
 source of profit which they derive from the cir- 
 culation of notes, and oblige them to charge a 
 commission upon their discounts instead, would 
 be doing them good and not harm. Experience 
 has proved that those private banks have made 
 the most money upon the average, that have had 
 nothing to do with the circulation at all. I 
 should imagine, that if the banks in Newcastle 
 did not issue notes, but conducted their pre- 
 sent business upon the same principles as the 
 banks in Manchester, Livei'pool, or London, 
 they would make twice the money. 
 
 The per centage which government will be 
 enabled to charge, will depend, in the first 
 place, upon whether they allow more than one 
 public bank in each place or not. If banks are 
 allowed to be set up unlimitedly, of course the 
 bank which conducts the circulation cannot 
 afford to do it for nothing ; and the interest 
 must be sufficiently below the common rate 
 to pay with a profit, for the expence and trou- 
 2 M 2
 
 ^6S 
 
 ble incurred. In the next place, the per 
 centage they can afford will in some mea- 
 sure depend upon the size of the banks. If 
 banks are of sufficiently moderate size to be en- 
 abled to make their profits by the business of 
 banking alone, they can pay more for the cur- 
 rency. But if any magnificent scheme is enter- 
 ed into of making wonderful grand banks, on 
 the principle of the Bank of England, which 
 shall perhaps embrace the circulation of a large 
 county, government will have to support them, 
 more or less, by charging them a lower rate of 
 interest. The success and usefulness of a bank 
 to commerce and agriculture, is determined by 
 the knowledge which its directors may possess 
 of the individuals who trade with it; and the 
 more limited the business the more intimate 
 that knowledge. As a bank increases in mag- 
 nificence, therefore, it diminishes in utility. 
 Two small banks in a county will be both more 
 useful to the public, and profitable to their 
 stock-holders, than one large one ; and the more 
 profitable they are, the more interest they will 
 be enabled to pay government. 
 
 I do not mean to say, however, that there 
 ought to be more than one bank in each town, 
 even though it should be a large one. The 
 greatest possible frauds are often committed 
 upon the public, to which banks are sometimes 
 the unconscious, and generally the unwilling
 
 269 
 
 instruments, which I see no mode of prevent- 
 ing, except by the existence of one bank only. 
 Merchants are very often tempted to speculate 
 beyond their depth by the facilities of raising 
 money which too great banking competition 
 generates ; while with more banks than one 
 they are enabled to cloak their transactions. 
 AVhen they get wTong, therefore, instead of 
 stopping at once, which they seldom have 
 courage to do, they by means of accommoda- 
 tion bills, which carry fraud upon the face of 
 them, are enabled through the banks, to support 
 their credit and involve themselves deeper and 
 deeper, until their debts become very large, 
 while their means of paying them become very 
 small ; and the public are dreadful sufferers. 
 If there was, however, but one public bank, 
 towards which all bills w^ould naturally gravi- 
 tate, and where every merchant might be sure 
 his transactions would be seen through, a sa- 
 lutary check would be thus imposed, which 
 would improve the general character of mercan- 
 tile transactions, and prevent many a fraud of 
 this description from even taking root. 
 
 The banks ought also to be allowed to lend 
 the money as they thought proper, the same as 
 if it were the deposits of individuals. If they 
 paid interest to government for the circulation, 
 they would not let it lie idle, for their own 
 sakes. If they could not lend it at one rate of 
 interest, they would take another, and would
 
 270 
 
 lend it upon any description of sufficient secu- 
 rities that offered, rather than suffer the loss of 
 keeping it unemployed. Money would some- 
 times be plentiful, at other times scarce. At 
 one period, they would be able to accommo- 
 date all their friends, at another, would be ob- 
 liged to curtail their accommodations. If they 
 chose to purchase into the funds, they would 
 do so. Their transactions in that respect would 
 only produce the same effect as those of other 
 individuals. But to compel them to invest their 
 stock or money in the funds, on the same prin- 
 ciples as the Bank of England, which I think 
 has been suggested, it is evident would be of 
 no advantage to government, would only dis- 
 turb unnecessarily the internal balance of trade, 
 and would be meddling to no good purpose. 
 
 4. Let a Board of Commissioners be established 
 in London, under whose Management let the 
 Currency be placed , and to this Board let 
 every Bank send Weekly or Monthly Returns 
 of the state of the Circulation, the Supply and 
 Demand for London Bills, and such other In- 
 formation as the Commissioners deem necessary 
 for their Government. 
 
 Little need be said in advocation of this mea- 
 sure -, it is involved in the principle that an in-
 
 $71 
 
 terference on the part of government is neces- 
 sary. Circulation is a science yet to be under- 
 stood ; and no proper management could be 
 exercised, except by proper persons devoted to 
 the subject, who shall have proper accounts re- 
 gularly sent them. They ought also to have 
 the power of determining the amount of capital 
 required for each bank ; to regulate their re- 
 spective boundaries ; and be in fact a kind of 
 board of controul, without whose approbation 
 no vital changes at least, in any of the banks 
 ought to be made. The proper duties of this 
 board, however, it would be extremely difficult 
 at once fully to determine ; but a principal 
 duty, though it will be merely a mechanical 
 one, is involved in the next proposition. 
 
 5. Let the Commissioners have an Office for the 
 Deposit of Bullion^ and purchase all that comes 
 into the Country at the Mint Price, or a little 
 above the Mint Price. Let them pay for it by 
 Receipts or Notes of not less, say, than 5^100 
 each ; and let any Bank either in London or any 
 other Part of the Country, to 'which these Notes 
 or Bullion Receipts may be presented, be ob- 
 liged to discount them, by an Issue of Notes 
 over and above their stated Circulation, and re- 
 turn them to the Board of Commissioners, 
 
 Gold ought not to be allowed to circulate j
 
 272 
 
 though the best way to prevent it would be by 
 giving for it the Mint price, or perhaps a tri- 
 fle more than that price. It would always be 
 put into circulation first in London, where it is 
 coined, and under any system of currency would 
 produce a considerable derangement of the ba- 
 lance of trade. These bullion receipts, how- 
 ever, making a convenient remittance, would 
 at once be sent to those parts of the country 
 where the circulation was most deficient, and 
 discharge as it were an additional quantity of 
 notes from the banks of those districts. If a 
 merchant, for instance, with a metallic curren- 
 cy, sent bullion up to London to be coined, he 
 would draw a bill against it, and the gold would 
 be put into circulation in payment of this bill. 
 A temporary rise of prices would in consequence 
 be produced, until the exchange with the coun- 
 ty fell sufficiently to pay for the exporting this 
 gold back to the country. But, by the present 
 plan, a bullion receipt would be sent him at 
 once, and the circulation would be increased 
 only where it was wanted. Besides which, with 
 a mixed currency of gold and paper, the com- 
 missioners would not have that perfect know- 
 ledge of the circulation which would be desi- 
 rable.
 
 @73 
 
 6. When a Demand J or Bills upon London hy 
 any of the Banks arises, exceeding the Supply , 
 let the Demand he met hy Drafts upon the 
 Commissioners for Bullion, and the Notes re- 
 ceived in Demand for these Bills he cancelled. 
 If these Drafts are presented for Payment in 
 Bullion, for Ea:portation or any other Pur- 
 pose, let them he paid ; but if they are remitted 
 to any other Part of the Kingdom, let the 
 Banks to xvhom they are presented for Dis- 
 count, issue fresh Notes to their Amount. In 
 the same Manner let the Bank of England, or 
 such Banks of Circidation as may be establish- 
 ed in Lo7idon, pay their Notes hy Drafts up- 
 on the Commissioners for Bidlion *when re- 
 quired, and also issue fresh Notes in Discount 
 of such Drafts xvhen presented, the same as the 
 Country Establishments, 
 
 As long as the banks had bills on London, 
 or funds in their agents' hands to meet the drafts 
 for which there was a demand, they would, for 
 the sake of their own interests, supply such 
 demand by drafts upon their own agents. But 
 when the demand for London bills in any dis- 
 trict exceeded the supply, it would be a proof 
 that its circulation to the extent of this de- 
 mand was excessive. 
 
 By the bank, therefore, drawing a bullion 
 draft (at the same date, we shall say, as their 
 
 S N
 
 274 
 
 drafts upon their agents, by which they would 
 make nothing, and would not in consequence 
 be tempted to draw unnecessarily,) the circula- 
 tion would be contracted to the extent required. 
 If these drafts, instead of being sent to London, 
 were sent to any other part of the country, it 
 would be in consequence of a deficient circula- 
 tion in the part to which they were sent, and an 
 extension would immediately take place. If, 
 however, they were presented for payment in 
 bullion, and that bullion was exported, it would 
 be in consequence of prices being above the 
 national level, and they would be reduced ac- 
 cordingly. 
 
 In the chances of trade it would probably 
 happen that a bank might have an excess of 
 bills on London without any bullion drafts 
 amongst them. Nevertheless, however, a quan- 
 tity of bullion drafts equal to this excess m-ust 
 have been drawn in that district from whence 
 this balance of payment would have come. 
 
 We shall suppose, therefore, that these drafts 
 were sent to another part of the country where 
 the balance of trade was equal, and where they 
 were of course not wanted, but that they were 
 presented for payment, and fresh issues took 
 place upon them. There would, in conse- 
 quence, immediately be a deficiency of London 
 bills to their extent, and notes would necessa- 
 rily be taken in again to purchase fresh drafts of 
 equal value. These would be sent to London
 
 275 
 
 as an ordinary remittance, and be discounted 
 there, and fresh issues would be made upon 
 them. But in the mean time, the country bank 
 which had an excess of London bills, without 
 any bullion drafts among them, must have sent 
 these bills to its London agents for payment, 
 but not wanting the money in London, would ne- 
 cessarily order its agents to return the balance 
 in bullion drafts, the same as it would have or- 
 dered them to remit gold, had the circulation 
 been metallic. Its agents would, therefore, 
 take an equal amount of notes into the Bank of 
 England to procure such drafts, and remit them 
 accordingly. Thus with the Bank of England, 
 the discount of bullion drafts on the one hand, 
 and demand for them on the other, would ba- 
 lance ; while the country district in whose fa- 
 vour the balance of payment had been deter- 
 mined, would experience an increase of circu- 
 lation by the fresh issues which would be made 
 upon the bullion drafts received from London 
 in return for the other bills sent thither for pay- 
 ment. 
 
 To the extent that the balance of payments 
 was in favour of London, the circulation of 
 London would be increased in the same man- 
 ner as other districts ; and when the circulation 
 of London was excessive, the balance of pay- 
 ments against it would create a demand for 
 bullion drafts, which would be sent into the 
 country, or be presented for payment in bulli- 
 on to be sent out of it, according as the ba-
 
 276 
 
 lance of payments was against the country ge- 
 nerally, or against London, in favour of some 
 particular district. 
 
 The various bullion drafts thus drawn would 
 never be presented in demand for bullion until 
 it was wanted to be remitted abroad, and it 
 would be hardly necessary for the commissioners 
 to be put to the trouble of accepting them. 
 They need know nothing of them except by the 
 accounts remitted from the different banks, un- 
 less presented for actual payment. 
 
 Now this plan is the essence of simplicity ; and 
 if it has any merit it is that of being strictly a co- 
 py of nature. A paper circulation, by this system, 
 would dilate and contract precisely in the same 
 manner as a metallic currency. The demand 
 for currency in different places is continually 
 varying. We shall suppose for instance, that 
 a gentleman who has been living in Northum- 
 berland, goes to reside in London. His in- 
 come would in consequence have to be remit- 
 ted hira by his agent in London bills. This 
 would determine the balance of payments in 
 favour of London, and with a metallic circula- 
 tion the balance would be settled by a remit- 
 tance of money. The circulation of Northum- 
 berland would be thereby contracted, while 
 that of London would be increased to the same 
 extent. The effect upon the price of commo- 
 dities would be that they would be lowered in 
 Northumberland and increased in London suffi-
 
 ciently to induce an exportation to London 
 from Northumberland, equal to the consump- 
 tion of the individual who had changed his re- 
 sidence. A certain amount of currency would 
 be transported to London first, and the pro- 
 duce of his estate, or an equal value in other 
 commodities the produce of Northumberland, 
 would follow it. Now just the same effects 
 would be produced by this plan. The balance 
 of payments in favour of London, which with 
 a metallic currency, would be followed by a 
 remittance of money, would be met by a 
 contraction of currency in Northumberland, 
 and a remittance of bullion bills, upon which 
 a corresponding issue would be made in 
 London. As the currency contracted in the 
 one place, it would be dilated in the other. 
 At present whether these effects were pro- 
 duced or not would be a mere chance. The 
 currency might contract in Northumberland 
 * without being at all extended in London. The 
 tendency, in this case, would be to produce a 
 balance of foreign payments, in favour of the 
 country by lowering prices generally, and thus 
 increase the circulation of London, by an im- 
 portation of the precious metals. But this would 
 be effecting, in an indirect and disadvantageous 
 manner, what nature intended should be done 
 in the simplest manner that can be conceived : 
 viz. — By merely sending the money from where 
 it was not wanted, to where it was.
 
 S78 
 
 CHAPTER XXVI. 
 
 Bank of England. 
 
 The charter of the Bank of England has to be 
 altered before any steps can be taken either to 
 improve our banks, as commercial business es- 
 tablishments, or to adopt a new system, for the 
 management of the currency, the necessity for 
 which, at least, has been, we trust, sufficiently 
 established. 
 
 During the last session of parliament, the di- 
 rectors gave considerable opposition to the views 
 of government. They conceived that the alter- 
 ation of the charter was a measure vitally inju- 
 rious to the interests of the bank ; and that 
 being the case, it was proper for them so to 
 do. 
 
 Any scheme, however, which diminishes the 
 importance of the bank, in the monied system 
 of the country, is injurious to its interests; and 
 whatever may be the individual wishes of the 
 bank directors, must officially be opposed by 
 them, in discharge of their duty to their consti- 
 tuents, unless an opposite conduct would be 
 more advantageous.
 
 279 
 
 But a person, with firm standing, may be confi- 
 dent and at ease in his position, while if, when he 
 conceives himself upon solid ground, you are 
 enabled to shew him that he is upon very thin 
 ice, you may be certain that at least he will 
 cease to cut capers. 
 
 I cannot help thinking that the Bank of Eng- 
 land stands upon very thin ice, and that it 
 would, therefore, be exceeding dangerous for 
 the directors to caper. Perhaps, the follow- 
 ing reasons, for this opinion, may not appear al- 
 together absurd : — 
 
 In the first place, the bank is too large for a 
 commercial institution, and too expensive for a 
 government establishment ; and, in the next, its 
 charter is not, for the purpose of securing its 
 monopoly, worth the parchment it is written 
 upon. 
 
 The proper use of a bank to trade, we have 
 sufficiently pointed out in the Essay on the 
 Principles of Banking, to which we have before 
 referred, and which forms part of this volume. 
 Human institutions must have their limits. One 
 bank could not undertake the business of the 
 world ; nor yet of a nation ; nor yet it appears 
 of London. Experience proves that the Bank 
 of England is too large for commercial purpo- 
 ses. The only service which it is of to com- 
 merce, is in discounting commercial bills. But 
 a very small part of its issues are so applied, ex-
 
 280 
 
 cept when money is very much in demand. 
 Nor is it, probably, at any time, of much use in 
 checking accommodation paper. Its observa- 
 tion must necessarily be confined to a few lead- 
 ing houses. The trade of London is too exten- 
 sive for that kind of knowledge of the transac- 
 tions of individuals, which country banks pos- 
 sess. Besides in London, merchants receive less 
 accommodation from banks. Their credit, in a 
 great measure, depends upon their having capi- 
 tal to spare, in their banker's hands. Their 
 bankers are more obliged to them, than they 
 are to their bankers. Therefore the Bank of 
 England can, in no respect, be of the same use 
 to commerce, as a similar establishment would 
 be in a smaller place. 
 
 The bank, properly, is a government esta- 
 blishment, for the management of the national 
 debt, keeping its cash accounts, and conducting 
 the circulation of London. It is the bank of 
 the state. Much has been said about the traf- 
 ficking of government with the bank, as if it 
 were criminal. It would, however, just be as 
 proper to blame the trafficking of government 
 with the exchequer, or the traffic of a person's 
 hand with his pocket, or to blame a merchant 
 for trafficking with his banker. If a merchant 
 had business to require nearly a bank to him- 
 self, he must have transactions with it daily. 
 But it would never occur to him as a necessary
 
 281 
 
 consequence, that if he only wanted one bank, 
 there should be no more than one. No mer- 
 chant would surely be so unwise, though he did 
 transact with one bank alone, as to prevent, if 
 he had the power, any other competitor, and 
 render himseli' dependent upon it, both as to 
 the amount of its charges, and the accommoda- 
 tion it gave him. Butler, in his Hudibras, 
 somewhere speaks of a man, who " catched the 
 itch, on purpose to be scratched," and this con- 
 duct would certainly be something like it, only 
 we may add — and skinned into the bargain. 
 This, however, is just what is done with respect 
 to the Bank of England. A commercial monopo- 
 ly is given to it, of which it can make no adequate 
 use ; which is the cause of immense loss and 
 inconvenience to the country ; and by which 
 government is rendered dependent upon it, 
 without either government or the country gain- 
 ing any one advantage therefrom, that, at least 
 with my limited perceptions, I can make out. 
 
 The usual result of want of competition is 
 dearness, and this the government feels in its 
 transactions with the bank in no small degree. 
 When interest of money in government secu- 
 rities was at 5 per cent, by lending its capital 
 of ^14,686,800 to the state at three, the bank 
 may be said to have paid annually about 
 5^300,000 per annum for its monopoly and the 
 business of the state. Now that interest is 
 
 ^2 o
 
 282 
 
 at 4 per cent, it does not pay more than half 
 that sum. For this it enjoyed the circulation of 
 London, which would amount since the present 
 charter to, say ^25,000,000 upon the average, 
 and this at 5 per cent, would leave j^*!, 250, 000 
 per annum. I have no means at this moment of 
 estimating what it may have realized from the 
 balances of government in its hands, or have 
 cleared by the management of the national 
 debt ; but if we state this at j€300,000 a year, 
 it would leave a gain of ^1,250,000 from the 
 circulation. 
 
 Now, if instead of one public bank in Lon- 
 don, there had been half a dozen, of size suffi- 
 ciently extensive for security, but sufficiently 
 limited for commercial business, and the go- 
 vernment account had been subject to a fair 
 competition, while the circulation had been di- 
 vided amongst them, or given to those only 
 who would give the most for it, there is no 
 man of business can entertain a doubt, that 
 when money was so scarce, 3f or 4> per cent, 
 would have been given for both the circulation 
 and the balances of government. I have no 
 doubt also, that the national debt would have 
 been managed for less money ; but as it is a 
 mere matter of accounting, it would perhaps 
 have been both better and cheaper to have put 
 it at once into the hands of commissioners. If 
 we, therefore, say that government must have
 
 283 
 
 lost one million per annum for want of compe- 
 tition, we shall not, perhaps, be far from the 
 truth. 
 
 Now, in addition to this, when we consider 
 all the inconveniences to commerce and agri- 
 culture that have resulted from the rickety sys- 
 tem of banking to which the monopoly has 
 given rise, and the number of failures that have 
 been the consequence, we shall be surprised 
 that in the present century any thing so ab- 
 surd could have existed. 
 
 The ingenuity of man may be defied to point 
 out any peculiar advantage which is derived 
 from the bank. Indeed the ingenuity of man 
 has been most sadly puzzled upon the subject. 
 
 Mr Mc'Cay, who has lately published a ge- 
 neral view of the history and object of the bank 
 of England, which is a very sensible publication, 
 and who, as is perfectly natural, is very much 
 disposed to say all that can be said for it ; after 
 stating that it is a most valuable institution to 
 commerce, thinks it necessary, for want of better 
 arguments, to support his opinion by a reference 
 to authorities. ** Many great authorities upon 
 " the subject might," he says, *' be adduced in 
 " support of this opinion ; among many, I shall 
 " produce two writers of considerable cele- 
 ** brity, Mr Rolt, in his Dictionary of Trade 
 " and Commerce, under the head of Bank of 
 *' England, finishes that article in these words : 
 2 o 2
 
 ^84 
 
 " * Thus firmly established is this glorf- 
 ** * ous superstructure of the national cre- 
 " ' dit of Great Britain, having the legislative 
 ** * power of the kingdom for its foundation ; 
 " ' a security sufficient for so noble, so exten- 
 " * sive a fund ; a security coeval with the li- 
 *' * berties of the people, that cannot perish 
 " * without the extinction of freedom, and 
 " * which has so closely riveted the constitu- 
 " ' tion of the bank with the common interests 
 " ' of the country, that they should now co-ope- 
 " ' rate against the extended arm of ambition, 
 " * — the designing eye of avarice, — the envy 
 *' * of surrounding enemies, — and the force of 
 " * fiiture invasions/ " 
 
 This, I dare say, may be depended upon as 
 a very clear account of the matter, the whole 
 of which is, no doubt, implicitly believed by 
 the directors ; for I myself heard one of them, 
 in his place in parliament, either quote some 
 other great authority, or from himself gravely 
 compare it to the sun in the hemisphere. 
 
 But " Dr Adam Smith, in his Wealth of 
 " Nations," alluding to the bank, " says, with 
 " greater sobriety, that 
 
 " The stability of the bank of England is 
 " equal to that of the British government. ^ All 
 ** that it has advanced to the public must be 
 *' lost before its creditors can sustain any loss." 
 
 This is certainly sober enough for a choice 
 eulogium, out of so many great authorities j but
 
 285 
 
 it is unfortunately not true. It is quite possible 
 that the directors might ruin the bank, and 
 the British government remain just as stable as 
 ever. The eulogy, at the same time, is rather 
 a doubtful one ; it amounts to this : — that the 
 capital of the bank is lent to one creditor, with 
 whom it consequently must either stand or fall ; 
 and the sponge that wipes off the national debt, 
 makes a clean sweep in Threadneedle-street. 
 The quotation, however, shows that Dr Smith 
 would have said something in favour of the 
 bank, had it been possible. 
 
 But the charter of the bank does not secure 
 it the circulation of London : there is no law to 
 prevent other banks competing with it ; and 
 when I found the directors opposing the views 
 of government, (see letters from the Times, in 
 the Appendix to the Pamphlet on Banking,) it 
 occurred to me that they might be brought to 
 their senses in another way. T immediately 
 drew out a plan for the establishment of a pri- 
 vate bank, for the circulation of notes, in com- 
 petition with the Bank of England ; and through 
 a channel which gave it weight, submitted it to 
 some of the leading monied men in London. 
 They were unanimous in thinking that it would 
 be a most advantageous speculation, as w^ell as 
 a measure of public utility. The plan, or at 
 least that which was thought practicable, was 
 simply this : that five or six individuals should
 
 286 
 
 subscribe a million of capital, establish a bank, 
 and issue notes, in discount of commercial bills, 
 &c. *, and that the affairs of the concern should 
 be examined every six or twelve months, by 
 gentlemen of known character and respectabili- 
 ty, and published to the world. By these means, 
 the credit of the bank would never be question- 
 ed, and considerable profit would be realised, 
 without any considerable risk. Its merits in 
 the public estimation would be, that it possess- 
 ed an actual subscribed capital, and publicity 
 was given to its affairs. The above plan was 
 thought the most simple and practicable. Mine, 
 however, was originally much more involved. 
 It was to form the outlines of a public bank, 
 which was to be carried on as a private con- 
 cern, until the bank charter was altered, and 
 then resolve itself into a public establishment. 
 I had proposed only half a million, but it was 
 thought that if the plan was approved, there 
 would be no difficulty whatever with respect to 
 the amount of capital. 
 
 As this would at once have brought the bank 
 directors to reason, and have induced them to 
 apply for an alteration of their charter, with a 
 view to secure their monopoly, which would, I 
 have no doubt, have been granted, the defect of 
 the plan was, that after the expence of fitting up 
 an office, preparing the establishment, &c. had 
 been incurred, it might be rendered useless.
 
 287 
 
 This, however, I proposed to obviate, by sug- 
 gesting that when this happened, which would 
 of course be immediately followed by the esta- 
 blishment of joint stock companies in different 
 parts of the country, the concern should im- 
 mediately offer itself to undertake exclusively, 
 without doing any other business, the agencies 
 of these banks, and propose to submit annually to 
 their directors, a statement of its affairs, inspected 
 and verified by deputies from a few of them, annu- 
 ally sent to London for the purpose, in the event 
 of their not having a public bank to draw up- 
 on. This I was aware would fall in with the ideas 
 of the stock holders and directors of the proposed 
 companies, and I even thought that as I should 
 probably have some interest in the concern, the 
 new banks might have pleasure on that account 
 in giving it a preference, as they would perhaps 
 readily acknowledge that they were under more 
 obligations to me than to any person connected 
 with any other establishment. Consequently 
 there seemed little reason to doubt that these 
 agencies, if gone properly about, might be se- 
 cured ; and as I understand that the agencies 
 of considerable banks are worth from one to 
 three or four thousand pounds each, supposing 
 tliem not to be worth more than a thousand up- 
 on the average, forty or fifty of such, or even 
 half the number, would form a valuable busi- 
 ness to any concern, and would be unattended
 
 288 
 
 with the usual risk and trouble of banking. I 
 further would have proposed, that the capital of 
 the bank should, as far as possible, be vested in 
 country bank stock, by which 50 or even a 100 
 per cent, would, in all probability, be made. 
 
 These plans and views, however, did not 
 occur until other duties rendered my longer 
 stay in London impossible, and as the gentle- 
 man to whom I originally communicated them 
 was about to leave it for six months, the matter 
 was left to a future opportunity. I, however, 
 was satisfied that proper people might be very 
 easily found in London to enter into such an 
 establishment, and this was what I was in the 
 first instance desirous to ascertain. 
 
 I had not long left London, however, until 
 a still better idea presented itself. I saw that 
 it would be perfect nonsense for such a bank to 
 trouble itself with discounting commercial bills, 
 with stocks at their present price. Its best plan 
 would evidently be to purchase into the funds 
 at once, by which as much interest might be 
 made as by discounting bills, without any risk 
 or trouble. 
 
 Notes issued in purchase of stock could never 
 be returned upon the bank, if it maintained its 
 credit, until the balance of foreign trade was 
 turned against the country. No payments, 
 either in its own notes or any other, would be 
 made to it. It would hold stock equal to the 
 amount of its notes in circulation j and they
 
 2S9 
 
 would never, be presented in a demand for gold 
 until it was wanted to send out of the country ; 
 by which time it was evident, at least to me, 
 that the 3 per cents, would probably be a 100, 
 or 90 at all events ; while as the stocks could 
 not be lower than they are at present, the spe- 
 culation would be perfectly safe. 
 
 My views upon the subject generally, how- 
 ever, had now so much improved, at least I 
 could not help supposing so, that after some 
 little hesitation, I determined to give them to 
 the public. But as it will help to strengthen 
 my argument, that the present charter is but a 
 very slippery dependance for the bank, and the 
 plan may not be in itself, perhaps, an entirely 
 uninteresting speculation to men of business, I 
 shall take the liberty of detailing the steps which 
 it appears to me it would have been proper to 
 have taken, and the measures which it would 
 have been the best, with such a speculation, 
 to have pursued. 
 
 In order to prove, to a few individuals, the 
 advantage of a private speculation, it would 
 not have been necessary to have gone through 
 the whole range of subject contained in this 
 Essay. After the fourth chapter it might have 
 been proved by a much shorter process of rea- 
 soning, that the contraction of the currency 
 kept down the funds, and that the exchanges 
 must continue favourable until corn attained 
 
 2 p
 
 290 
 
 the average of 80s. per quarter ; and that an 
 issue of currency would produce this efFect» 
 Only a very small pamphlet would have been 
 necessary for the purpose. 
 
 Having first proved the plan to be both ad- 
 vantageous to the individuals who might engage 
 in it, and the public, the following might have 
 been submitted as the most judicious mode of 
 carrying it into effect : — 
 
 1st. That the bank should commence with 
 declaring, that it was the opinion of those who 
 established it, that the present distress arose 
 from the contraction of the issues of the bank 
 of England and country banks, which they ex- 
 pected in some measure to relieve. That it was 
 not the intention to interfere with the business 
 of the existing private banks ; and that in con- 
 sequence no bills would be discounted except 
 through them j and that whenever it appeared 
 that the public good required it, this bank would 
 at any time make arrangements for withdraw- 
 ing its circulation and close its doors. That a 
 million of capital had been subscribed, and that 
 its affairs should be annually submitted to the 
 inspection of proper persons chosen for that 
 purpose. 
 
 By these means, the other bankers would be 
 conciliated, and this pledge to the public would 
 inspire confidence, while it would be no loss to 
 the concern. For the public good could not
 
 291 
 
 require the bank to withdraw its notes, until it 
 would be the interest of the establishment to 
 realize its profits, and withdraw from the spe- 
 culation. 
 
 2nd. That it should confine itself principally 
 to the issue of ^100 notes, and to none less 
 than £20. 
 
 This would have several important advan- 
 tages. First, it would keep the circulation in 
 the hands of respectable people, put the bank 
 out of all danger of a run, and enable it to issue 
 ten millions with much more confidence than it 
 could issue one in small notes. The large notes 
 of the bank of England would in consequence 
 be changed for small ones, the consumptive cir- 
 culation would thus be occupied by the Bank 
 of England, and the abstract circulation by the 
 notes of this bank. In the second place, they 
 would make a good remittance to the country, 
 whither, in consequence, they would with great- 
 er readiness be sent ; and in the third place, they 
 would be both much cheaper and issued with 
 less trouble. It would take 200,000 five pound 
 notes to make a million of money, and the 
 stamps would cost ^12,500, whereas it would 
 take only 10,000 one hundred pound notes, and 
 the stamps would cost only ^^4,2,50 j with twen- 
 ty, thirty, and fifty pound notes, the stamps 
 would cost £5,000. ; so that if upon the aver- 
 age, including other expences, which would be 
 2 p 2
 
 292 
 
 comparatively trifling, we say 5^,5000 per mil- 
 lion, we should perhaps exceed the actual cost. 
 A hundred pound note is as easily made as one 
 of one pound ; consequently the trouble of 
 keeping ten millions in circulation could not 
 exceed that of a country bank with an issue of 
 a hundred, or a hundred and twenty, thousand 
 pounds in one pound notes, and might be done 
 with the most perfect ease with two or three 
 clerks. Six weeks interest in the funds, at 4 
 per cent, would pay the whole expence, while 
 the trouble wxuld not be worth the naming. 
 
 3rd. That accounts should be opened with 
 ten or a dozen principal banks, more or less, 
 as it might be deemed expedient, in whose 
 hands the notes should be placed, with which 
 the stock was to be purchased, and checks 
 given upon these banks for the purchases when 
 they were made ; different brokers on the stock 
 exchange should also be employed. By these 
 means the extent of the purchases would not 
 be discovered, and any expedient by which 
 this could be prevented, as a matter of pru- 
 dence ought to be adopted, to prevent any 
 speculative rise founded upon a knowledge of 
 the intentions of the concern. 
 
 4th. Having made these preparations, it 
 would then be proper to purchase as largely as 
 could be done, without affecting the funds 
 more than three or four per cent. But whether
 
 293 
 
 this would take one million, five millions, or 
 ten, my practical knowledge does not enable 
 me to surmise. 
 
 AVe shall suppose, however, that the partners 
 are fully possessed with both the safety and 
 goodness of the speculation, are men of firm- 
 ness of purpose, and clearness of head, and 
 have made up their minds to purchase ten mil- 
 lions of stock, if they find the scheme work 
 well. 
 
 We must also presume they have made up 
 their minds that an addition of ten millions to 
 the circulation of London, would have a very 
 rapid effect in extending the circulation of the 
 country banks, by determining the balance of 
 payments against London, producing remit- 
 tances of these notes into the country, upon 
 which issues would be immediately made, and 
 that they would then be returned to the Lon- 
 don money market again, \vould further increase 
 the price of the funds, would again travel down 
 into the country, perform the same operation, 
 and again return to London as before, that 
 therefore, if ten millions of stock could be pur- 
 chased under we shall say 85, it would be desira- 
 ble to purchase at once to that extent, and put 
 that quantity of notes in circulation. 
 
 We shall therefore suppose that purchases of 
 stock to the extent of ten millions, without 
 raisinsf tlie funds above 85, could be and was
 
 294 
 
 made. All that the partners would then have to 
 do, would be to remain quiet until agricultural 
 produce had nearly attained the national level, 
 when the bank ought to sell out and realize at 
 such price as the funds had attained, whatever 
 that might be, before the demand for gold for 
 exportation arose. If, however, the funds by 
 this time had risen 20 per cent, the concern 
 would have made 2 millions ; if 10 per cent. one. 
 
 But we shall suppose that not more than a 
 million could be thrown into the market with- 
 out raising the funds to 85. In that case, they 
 might conclude that if the funds, from such a 
 supply of money, would quickly rise, they 
 would quickly fall. It cannot be supposed that 
 one million could raise the value of capital 5 
 per cent, throughout the whole country. After, 
 therefore, purchasing a million, the bank would 
 wait until the funds fell again, then purchase 
 another million, &c. until they had permanent- 
 ly risen as high as the partners chose to speculate 
 further at. All these purchases, however, 
 would be made at the lowest rates ; the funds 
 w^ould rise in consequence of them ; not before, 
 but after. When they had thus extended their 
 purchases as far as they thought proper, they 
 might then wait until the tim.e for selling out 
 arrived. 
 
 It must be observed, that the effect upon 
 the funds by the issues of the Bank of England
 
 295 
 
 form no criterion by which to judge of the 
 effect which would be produced by the issues 
 of this bank. When the bank of England ex- 
 tends its circulation, it is in consequence of an 
 increasing demand for money, and though it 
 equally raises prices of agricultural produce, 
 its effect upon the funds is to keep them from 
 falling. But these issues would not be the 
 result of an increased demand for money, and 
 would therefore have the effect of raising the 
 funds. The effect would also be infinitely 
 greater than during the war, when the demand 
 and supplyof money was so much more extensive. 
 In a market with an actual demand for ten thou- 
 sand bushels of wheat, an additional supply of 
 one thousand must have less effect upon prices 
 than if the demand and supply in that market 
 were not more than three thousand j and upon 
 the same principles, a greater effect would be 
 produced in the stock market now, than would be 
 produced by the same supply of money during 
 the war, when the demands of government 
 were great, and the annual economy, and supply 
 of money in the market, so much greater than 
 at present. 
 
 Should the partners, however, think that wait- 
 ing until the country circulation was extended, 
 too slow an operation, they might quicken it in 
 this manner : Having made all the purchases of 
 stock they were disposed to do, they might then
 
 296 
 
 throw as much money into the market as 
 they could, by increasing their deposits with 
 their bankers, and by discounting at a low rate 
 of interest. They need have no hesitation as 
 to the quantity of money they thus lent out 
 upon good bills. The amount of interest they 
 got would be of no importance. Their profit 
 would arise from the speculation in the funds, 
 and the lower the interest the better : it would 
 have a greater effect in raising them. The se- 
 curities, however, would have to be at short 
 dates, and of course perfectly good. In this 
 case they would perhaps have to employ bill 
 brokers to purchase bills, as the bankers, from 
 the previous issues in purchase of stock, would 
 be overflowing with money, and would not dis- 
 count with them. Tf they were to lower the 
 rate of discount, say, to ^^ per cent, and glut 
 the market with money, on these terras the 3 
 per cents must necessarily rise to a hundred. 
 They might then sell out, taking care to push 
 the money they received from the sale of the 
 stock into the market again, by which to keep it 
 up until they had sold out the whole. 
 
 If they did not wish to speculate on so 
 great a scale, and instead of making millions, 
 they were willing to be content with hundreds 
 of thousands, they might, we shall say, pur- 
 chase, one, two, or three millions of stock, as 
 they thought proper, then throw an equal
 
 297 
 
 quantity of money, as already described, by 
 way of discount, into the market, &c. They 
 would have always to keep in mind, of course, 
 that when they sold out, they would have still 
 to keep the money in the market, if they even 
 lent it without interest ; or by withdrawing it, 
 they would both lower the price of the funds, 
 and agricultural produce also. If they did 
 good to themselves, they should take care to 
 do as little harm to others as possible. 
 
 If, however, they were not influenced by 
 quite such liberal principles, they might play 
 upon the market by taking all the money at 
 once out of circulation after they had got rid 
 of their stock. This would produce a corres- 
 ponding reduction in the funds ; when they 
 might buy in again, and do the same as before. 
 In order to this it would not be necessary for 
 them to withdraw their own notes ; the bills 
 discounted, would be paid them perhaps 
 principally in those of the bank of England, as 
 it would have the greatest circulation. But if 
 they locked up Bank of England notes, it 
 would be just the same ; and by their own 
 notes continuing in circulation, these opera- 
 tions upon the market would not be so fully 
 seen through ; which, with such Machiavelian 
 policy, would at least be prudent. Without, 
 however, losing sight of the interest of the 
 country, (for to raise the funds quickly to what 
 
 2 Q
 
 298 
 
 they will ultimately attain, could be no evil,) 
 a considerable sum, there is no doubt, might 
 have been made, even if the plan did not work 
 so smoothly as we have laid down, and the 
 bank was sometimes obliged to sell out against 
 its inclination. It must be kept in view, that 
 its selling out would always produce the fall, its 
 buying in the rise in the funds that xvould foU 
 low : as it would therefore come into the market 
 before both the fall and the rise, it would al- 
 ways have the advantage ; while at the same 
 time, the extended circulation would produce 
 a gradual permanent rise, and they would al- 
 ways sell out more or less to a profit. In 
 any case, therefore, the speculation must have 
 been attended with gain, and that not incon- 
 siderable. 
 
 The whole of their circulation would be 
 either in stock or short dated bills, and they 
 consequently never could have been placed in 
 any very auk ward situation. No run upon 
 them could have taken place without actual 
 fears of security, which at any moment might 
 have been dissipated j while they would know 
 and feel their credit as they went along, and 
 govern themselves accordingly. 
 
 It is probable, however, that two consequences 
 would have resulted from such a speculation. 
 First, that other banks would follow its exam- 
 ple, and begin to issue large notes also ; and
 
 299 
 
 next, that government would interfere. If 
 other banks began to make issues, it would be 
 done blindly, and without measure, by which 
 the price of stock would be more rapidly in- 
 creased ; and as upon the stability of their 
 operations no reliance could be placed, it 
 would be prudent to sell out, and realize as 
 their issues increased, and terminate the spe- 
 culation. Or, if government interfered, it 
 would not be for the purpose of contracting 
 the circulation. In this case, they ought to be 
 ready and willing, conformably to their first 
 declaration, to turn their issues over to the 
 Bank of England, if required. The bank 
 taking their stock at its existing value, or hold- 
 ing it as security, and bringing it into the mar- 
 ket at such periods, and in such a manner as, 
 for making the most of the speculation, might 
 be agreed upon. 
 
 Both the principle and the plan of this spe- 
 culation are sufficiently simple. There can be 
 no doubt that the power of making money at 
 pleasure, would give any house of sufficient 
 credit the power of lowering its value by in- 
 creasing the supply ; and as the supply in the 
 country is now less than is wanted, they could 
 with confidence for a limited time make issues 
 to almost any extent. 
 
 The trouble would be quite trivial, so far as 
 making and issuing the notes, &c. went. The
 
 300 
 
 principal management would lie in the opera- 
 tions of the stock market. Tliat it is a specu- 
 lation which would very much suit the tastes of 
 many of the monied men in London, there can- 
 not perhaps be a doubt ; and that consequently 
 if it had been properly gone about, such a plan 
 might have been carried into effect, I think ex- 
 tremely possible, and by those also who would 
 have carried it through to any extent practica- 
 ble, great as the scheme is, without the vibra- 
 tion of a nerve. 
 
 That the plan is possible, however, is a 
 sufficient argument both with the bank and go- 
 vernment, for an immediate alteration of the 
 present charter. If the law is left as it now 
 stands, government cannot expect that indivi- 
 duals will lose any fair opportunity of making 
 money by establishing paper mints of this de- 
 scription in London, as well as in other places. 
 
 THE END.
 
 ZpptnUp.
 
 APPENDIX, No. I. 
 
 An ACCOUNT of the Quantity of British Wheat and 
 Wheat Flour, exported from England, and of Foreign 
 Wheat and "Wheat Flour imported into England, in the 
 following Years. 
 
 (From Mr Hose's Pamphlet.) 
 
 
 British 
 
 ] Foreign 
 
 YEARS. 
 
 AMieat and Flour 
 
 AVheat and Flour 
 
 
 exported. 
 
 imported. 
 
 
 Quarters. Bushels. 
 
 Quarters. Bushels. 
 
 1697 . . 
 
 14',698 6 
 
 400 
 
 1698 . . 
 
 6,857 1 
 
 845 
 
 1699 . . 
 
 557 2 
 
 486 3 
 
 1700 . . 
 
 49,056 5 
 
 4 6 
 
 1701 . . 
 
 98,323 7 
 
 1 1 
 
 1702 . . 
 
 90,230 4 
 
 
 
 1703 . . 
 
 106,615 4 
 
 50 
 
 1704 . . 
 
 90,313 5 
 
 1 6 
 
 1705 . . 
 
 96,185 1 
 
 
 
 1706 . . 
 
 188,332 3 
 
 77 1 
 
 1707 . . 
 
 74,155 1 
 
 
 
 1708 . . 
 
 85,406 3 
 
 86 4 
 
 1709 . . 
 
 169,679 7 
 
 1,552 3 
 
 1710 . . 
 
 13,924 1 
 
 400 
 
 1711 . . 
 
 76,949 
 
 
 
 1712 . . 
 
 145,191 
 
 
 
 1713 . . 
 
 176,227 
 
 
 
 1714 . . 
 
 174,821 1 
 
 15 7 
 
 1715 . . 
 
 166,490 2 
 
 4 
 
 1716 . . 
 
 74,926 1 
 
 
 
 1717 . . 
 
 22,953 7 
 
 
 
 1718 . . 
 
 71,800 
 
 
 
 1719 . . 
 
 127,762 4 
 
 20 1 
 
 1720 . . 
 
 83,084 2 
 
 
 
 1721 . . 
 
 " 81,632 6 
 
 
 
 A 2
 
 4 
 
 
 British 
 
 1 
 
 Foreign 
 
 
 YEARS. 
 
 Wheat and Flour | 
 
 Wheat and Flour 
 
 
 exported. 
 
 
 imported. 
 
 
 
 Quarters. Bushels. | 
 
 Quarters. Bushels. 
 
 1722 . . 
 
 178,880 
 
 1 
 
 
 
 
 
 1723 . . 
 
 157,719 
 
 6 
 
 
 
 
 
 1724 . . 
 
 245,864 
 
 6 
 
 148 
 
 2 
 
 1725 , . 
 
 204,413 
 
 3 
 
 12 
 
 2 
 
 1726 . . 
 
 142,183 
 
 3 
 
 
 
 
 
 1727 . . 
 
 30,315 
 
 3 
 
 
 
 
 
 1728 . . 
 
 3,817 
 
 
 
 74,574 
 
 2 
 
 1729 . . 
 
 18,993 
 
 3 
 
 40,315 
 
 2 
 
 1730 . . 
 
 93,970 
 
 7 
 
 75 
 
 7 
 
 1731 . . 
 
 130,025 
 
 2 
 
 4 
 
 
 
 1732 . . 
 
 202,058 
 
 4 
 
 
 
 
 
 1733 . . 
 
 427,199 
 
 
 
 7 
 
 4 
 
 1734 . . 
 
 498,196 
 
 4 
 
 6 
 
 5 
 
 1735 . . 
 
 153,343 
 
 5 
 
 9 
 
 1 
 
 1736 . . 
 
 118,170 
 
 
 
 16 
 
 S 
 
 1737 . . 
 
 461,602 
 
 
 
 32 
 
 4> 
 
 1738 . . 
 
 580,596 
 
 4 
 
 2 
 
 5 
 
 1739 . . 
 
 279,542 
 
 4 
 
 22 
 
 7 
 
 1740 . . 
 
 54,390 
 
 4 
 
 5,468 
 
 5 
 
 1741 . . 
 
 45,416 
 
 7 
 
 7,540 
 
 2 
 
 1742 . . 
 
 293,259 
 
 6 
 
 
 
 7 
 
 1743 . . 
 
 371,431 
 
 3 
 
 2 
 
 5 
 
 1744 . . 
 
 231,984 
 
 5 
 
 2 
 
 
 
 1745 . . 
 
 324,839 
 
 5 
 
 5 
 
 6 
 
 1746 . . 
 
 130,646 
 
 2 
 
 
 
 
 
 . 1747 . . 
 
 266,906 
 
 7 
 
 
 
 
 
 1748 . . 
 
 543,387 
 
 5 
 
 385 
 
 
 
 1749 . . 
 
 629,049 
 
 
 
 382 
 
 
 
 1750 . . 
 
 947,602 
 
 1 
 
 279 
 
 5 
 
 1751 . . 
 
 661,416 
 
 4 
 
 3 
 
 
 
 1752 . . 
 
 429,279 
 
 4 
 
 
 
 
 
 1753 . . 
 
 299,608 
 
 7 
 
 
 
 
 
 1754 . . 
 
 356,270 
 
 1 
 
 201 
 
 
 
 1755 . . 
 
 237,459 
 
 2 
 
 
 
 
 
 1756 . . 
 
 101,936 
 
 4 
 
 5 
 
 
 
 1757 . . 
 
 11,226 
 
 
 
 130,343 
 
 2 
 
 1758 . . 
 
 9,233 
 
 6 
 
 19,039 
 
 7 
 
 1759 . . 
 
 226,426 
 
 
 
 82 
 
 1 
 
 1760 . . 
 
 390,710 
 
 4 
 
 
 
 
 
 1761 • . 
 
 440,746 
 
 2 
 
 
 
 
 
 ' 1762 . . 
 
 294,500 
 
 
 
 56 
 
 2
 
 
 British 
 
 
 Foreign 
 
 1 
 
 YEARS. 
 
 "SVTieat and Flour 
 
 AVheat and Flour | 
 
 
 exported. 
 
 
 imported. 
 
 
 
 Quarters. Bushels. 
 
 Quarters. Bushels.| 
 
 1763 . . 
 
 427,074 
 
 3 
 
 8 
 
 1 
 
 1764 . . 
 
 396,537 
 
 5 
 
 1 
 
 1 
 
 1765 . . 
 
 167,030 
 
 
 
 89,642 
 
 5 
 
 1766 . . 
 
 165,953 
 
 1 
 
 9,387 
 
 
 
 1767 . . 
 
 5,071 
 
 
 
 444,029 
 
 
 
 1768 . . 
 
 7,433 
 
 1 
 
 272,307 
 
 6 
 
 1769 . . 
 
 49,892 
 
 1 
 
 2,903 
 
 1 
 
 1770 . . 
 
 75,400 
 
 5 
 
 15 
 
 2 
 
 1771 . . 
 
 10,477 
 
 
 
 2,509 
 
 
 
 1772 . . 
 
 6,974 
 
 
 
 27,114 
 
 
 
 1773 . . 
 
 7,802 
 
 
 
 57,786 
 
 
 
 1774 . . 
 
 16,731 
 
 
 
 278,039 
 
 
 
 1775 . . 
 
 90,413 
 
 
 
 575,250 
 
 
 
 1776 . . 
 
 220,210 
 
 
 
 21,568 
 
 
 
 1777 . . 
 
 90,932 
 
 
 
 233,905 
 
 
 
 1778 . . 
 
 146,637 
 
 
 
 106,616 
 
 
 
 1779 . . 
 
 232,925 
 
 
 
 5,254 
 
 
 
 1780 . . 
 
 250,434 
 
 
 
 4,242 
 
 
 
 1781 . . 
 
 117,247 
 
 
 
 162,278 
 
 
 
 1782 . . 
 
 163,579 
 
 
 
 81,259 
 
 
 
 1783 . . 
 
 56,502 
 
 
 
 584,041 
 
 
 
 1784 . . 
 
 99,039 
 
 
 
 215,817 
 
 
 
 1785 . . 
 
 141,394 
 
 
 
 107,968 
 
 
 
 1786 . . 
 
 215,102 
 
 
 
 50,999 
 
 
 
 1787 . . 
 
 126,960 
 
 
 
 60,245 
 
 
 
 1788 . . 
 
 89,731 
 
 
 
 149,667 
 
 
 
 1789 . . 
 
 146,951 
 
 
 
 109,762 
 
 
 
 1790 . . 
 
 33,822 
 
 
 
 219,351 
 
 
 
 1791 . . 
 
 74,968 
 
 
 
 463,591 
 
 
 
 1792 . . 
 
 300,278 
 
 
 
 22,417 
 
 
 
 1793 . . 
 
 76,869 
 
 
 
 490,398 
 
 
 
 1794 . . 
 
 155,048 
 
 
 
 327,902 
 
 
 
 1795 . . 
 
 18,839 
 
 
 
 313,793 
 
 
 
 1796 . . 
 
 24,679 
 
 
 
 879,200 
 
 
 
 1797 . . 
 
 54,522 
 
 
 
 461,767 
 
 
 
 1798 . . 
 
 59,782 
 
 
 
 396,721 
 
 
 
 1799 . . 
 
 39,362 
 
 
 
 463,185 
 
 
 
 1800 . . 
 
 22,013 
 
 
 
 1,264,520 
 
 
 
 1801 . . 
 
 28,406 
 
 
 
 1,424,766 
 
 
 
 1802 . . 
 
 149,304 
 
 
 
 647,664 
 

 
 
 British 
 
 Foreign 
 
 YEARS. 
 
 Wheat and Flour 
 
 \^1ieat and Flour 
 
 
 exported. 
 
 imported. 
 
 
 Quarters. Bushels. 
 
 Quarters. Bushels. 
 
 1803 . . 
 
 76,580 
 
 373,725 
 
 1804 . . 
 
 63,073 
 
 461,140 
 
 1805 . . 
 
 77,959 
 
 920,834 
 
 1806 , . 
 
 29,566 
 
 310,342 
 
 1807 . . 
 
 24,365 
 
 400,759 
 
 1808 . . 
 
 77,567 
 
 81,466 
 
 1809 . . 
 
 31,278 
 
 448,487 
 
 1810 . . 
 
 75,785 
 
 1,530,691 
 
 1811 . . 
 
 97,765 
 
 292,038 
 
 1812 . . 
 
 46,325 
 
 129,866
 
 No. 11. PRICES of WHEAT, per Quarter, at Windsor 
 Market.* 
 
 (From Mr Rosens Pamphlet.) 
 
 
 
 Prices of Wheat! Average of 10 
 
 
 Prices ofWheat 
 
 reduced to the 
 
 Years, accord- 
 
 YEARS. 
 
 at Windsor, 
 
 Winchester 
 
 ing to the Win- 
 
 
 9 Gallons to 
 
 Bushel of 8 
 
 chester Bushel 
 
 
 the Bushel. 
 
 Gallons. 
 
 of 8 GaUons. 
 
 
 £. s. d. 
 
 £. s. d. 
 
 £. s. d. 
 
 1646 . . 
 
 2 8 
 
 2 2 8 
 
 
 1647 . . 
 
 3 13 8 
 
 3 5 5-J- 
 
 
 164-8 . . 
 
 4 5 
 
 3 15 6i 
 
 
 1649 . . 
 
 4 
 
 3 11 H 
 
 
 1650 . . 
 
 3 16 8 
 
 3 8 H 
 
 
 1651 . . 
 
 3 1'^ 4 
 
 3 5 2i 
 
 
 1652 . . 
 
 2 9 6 
 
 2 4 
 
 
 1653 . . 
 
 1 15 6 
 
 1 11 6\ 
 
 
 1654 . . 
 
 1 
 
 1 3 U 
 
 
 1655 . . 
 
 1 13 4 
 
 1 9 7r 
 
 2 11 7i 
 
 1656 . . 
 
 2 3 
 
 1 18 2J: 
 
 
 1657 . . 
 
 2 6 8 
 
 2 1 5i 
 
 
 1658 . . 
 
 3 5 
 
 2 17 9i 
 
 
 1659 . . 
 
 3 6 
 
 2 18 8 
 
 
 1660 . . 
 
 2 16 6 
 
 2 10 2?: 
 
 
 1661 . . 
 
 3 10 
 
 3 2 2i 
 
 
 1662 . . 
 
 3 14 
 
 3 5 9i 
 
 
 1663 . . 
 
 2 17 
 
 2 10 8 
 
 
 1664 . . 
 
 2 6 
 
 1 16 
 
 
 1665 . , 
 
 2 9 4 
 
 2 3 10| 
 
 2 10 5| 
 
 1666 . . 
 
 1 iQ 
 
 1 12 
 
 
 1667 . . 
 
 1 16 
 
 1 12 
 
 
 1668 . . 
 
 2 
 
 1 15 6i 
 
 
 1669 . . 
 
 2 4 4 
 
 1 19 5 
 
 
 " These are the prices of ^Mealing A\Tieat \ which is understood, 
 at Eton College, to be of a middling quality.
 
 
 
 Prices oi'Wheat 
 
 Average of 10 
 
 
 Prices onVheat' reduced to the 
 
 Years, accord- 
 
 YEARS. 
 
 at Windsor, 
 
 AVinchester 
 
 ing to the Win- 
 
 
 9 Gallons to 
 
 Bushel of 8 
 
 Chester Bushel 
 
 
 the BusheL 
 
 Gallons. 
 
 of 8 Gallons. 
 
 
 £. s. d. 
 
 £. s. d. 
 
 £. s. d. 
 
 1670 . . 
 
 2 1 8 
 
 1 17 0| 
 
 
 1671 . . 
 
 2 2 
 
 1 17 4 
 
 
 1672 . . 
 
 2 10 
 
 1 16 5^ 
 
 
 1673 . . 
 
 2 6 8 
 
 2 1 5i- 
 
 
 1674 . . 
 
 3 8 8 
 
 3 1 Oi 
 
 
 1675 . . 
 
 3 4 8 
 
 2 17 5^ 
 
 2 Hi 
 
 1676 . . 
 
 1 18 
 
 1 13 9| 
 
 
 1677 . . 
 
 2 2 
 
 1 17 4 
 
 
 1678 . . 
 
 2 19 
 
 2 12 5^ 
 
 
 1679 . . 
 
 3 
 
 2 13 4 
 
 
 1680 . . 
 
 2 5 
 
 2 
 
 
 1681 . . 
 
 2 6 8 
 
 2 1 51 
 
 
 1682 . . 
 
 2 4 
 
 1 19 U 
 
 
 1683 . . 
 
 2 
 
 1 15 61 
 
 
 1684 . . 
 
 2 4 
 
 1 19 li 
 
 
 1685 . . 
 
 2 6 8 
 
 2 1 5\ 
 
 2 1 4| 
 
 1686 . . 
 
 1 14 
 
 1 10 21 
 
 
 1687 . . 
 
 1 5 2 
 
 1 2 44 
 
 
 1688 . . 
 
 2 6 
 
 2 101 
 
 
 1689 . . 
 
 1 10 
 
 1 6 8 
 
 
 1690 . . 
 
 1 14 8 
 
 1 10 91 
 
 
 1691 . . 
 
 1 14 
 
 1 10 21 
 
 
 1692 . . 
 
 2 6 8 
 
 2 1 5| 
 
 
 1693 . . 
 
 3 7 8 
 
 3 li 
 
 
 1694 . . 
 
 3 4 
 
 2 16 101: 
 
 
 1695 . . 
 
 2 13 
 
 2 7 H 
 
 1 19 61: 
 
 1696 . . 
 
 3 11 
 
 3 3 H 
 
 
 1697 . . 
 
 3 
 
 2 13 4 
 
 
 1698 . . 
 
 3 8 4 
 
 3 9 
 
 
 1699 . . 
 
 3 4 
 
 2 16 101 
 
 
 1700 . . 
 
 2 
 
 1 15 Q\ 
 
 
 1701 . . 
 
 1 17 8 
 
 1 13 .51 
 
 
 1702 . . 
 
 1 9 6 
 
 1 6 2| 
 
 
 1703 . . 
 
 1 16 
 
 1 12 
 
 
 1704 . . 
 
 2 6 6 
 
 2 1 4 
 
 
 1705 . . 
 
 1 10 
 
 1 6 8 
 
 2 2 11 
 
 1706 . . 
 
 1 6 
 
 1 3 1^ 
 
 
 1707 . . 
 
 1 8 6 
 
 1 5 4 
 
 
 1708 . . 
 
 2 1 6 
 
 1 16 10| 

 
 9' 
 
 
 Prices of "N^Hieat 
 
 Prices of Wheat 
 
 Average of 10 
 
 
 at Windsor, 
 
 reduced to the 
 
 Years, accord- 
 
 YEARS. 
 
 !) Gallons to the 
 
 Winchester 
 
 ing to the Win- 
 
 
 Bushel. 
 
 Bushel of « 
 
 chester Bushel 
 
 
 
 Gallons. 
 
 of a Gallons. 
 
 
 £, s. d. 
 
 £. s. d. 
 
 £. s. d. 
 
 1709 . . 
 
 3 18 6 
 
 3 9 9^ 
 
 
 1710 . . 
 
 3 18 
 
 3 9 4 
 
 
 1711 . . 
 
 2 14 
 
 2 8 
 
 
 1712 . . 
 
 2 6 4 
 
 2 1 2| 
 
 
 1713 . . 
 
 2 11 
 
 2 5 4 
 
 
 1714 . . 
 
 2 10 4 
 
 2 4 9 
 
 
 1715 . . 
 
 2 3 
 
 1 18 21 
 
 2 4 21 
 
 1716 . . 
 
 2 8 
 
 2 2 8 
 
 
 1717 . . 
 
 2 5 8 
 
 2 7^ 
 
 
 1718 . . 
 
 1 18 10 
 
 1 14 6i 
 
 
 1719 . . 
 
 1 15 
 
 1 11 U 
 
 
 1720 . . 
 
 1 17 
 
 1 12 \0\ 
 
 
 1721 . . 
 
 1 17 6 
 
 1 J3 4 
 
 
 1722 . . 
 
 1 16 
 
 1 12 
 
 
 1723 . . 
 
 1 14 8 
 
 1 10 \0\ 
 
 
 1724 . . 
 
 1 17 
 
 1 12 \0\ 
 
 
 1725 . . 
 
 2 8 6 
 
 2 3 U 
 
 1 15 4| 
 
 1726 . . 
 
 2 6 
 
 2 lOi 
 
 
 1727 . . 
 
 2 2 
 
 1 17 4 
 
 
 1728 . . 
 
 2 14 6 
 
 2 8 51 
 
 
 1729 . . 
 
 2 6 10 
 
 2 1 71 
 
 
 1730 , . 
 
 1 16 6 
 
 1 12 5i 
 
 
 1731 . . 
 
 1 12 10 
 
 1 9 21 
 
 
 1732 . . 
 
 1 6 8 
 
 1 3 81: 
 
 
 1733 . . 
 
 18 4 
 
 1 5 2i 
 
 
 1734 . . 
 
 1 18 10 
 
 1 14 6i 
 
 
 1735 . . 
 
 2 3 
 
 1 18 2\ 
 
 1 15 2 
 
 1736 . . 
 
 2 4 
 
 1 \5 IOt 
 
 
 1737 . . 
 
 1 18 
 
 1 13 9i 
 
 
 1738 . . 
 
 1 15 6 
 
 1 11 6\ 
 
 
 1739 . . 
 
 1 18 6 
 
 1 14 21 
 
 
 1740 . . 
 
 2 10 8 
 
 2 5 U 
 
 
 1741 . . 
 
 2 6 8 
 
 2 1 5\ 
 
 
 1742 . . 
 
 1 14 
 
 1 10 21 
 
 
 1743 . . 
 
 1 4 10 
 
 1 2 1 
 
 
 1744 . . 
 
 1 4 10 
 
 1 2 1 
 
 
 1745 . . 
 
 1 7 6 
 
 1 4 51 
 
 1 12 1 
 
 1746 . . 
 
 1 19 
 
 1 14 8 
 
 
 1747 . . 
 
 1 14 10 
 
 1 10 111 

 
 10 
 
 
 
 Prices of Wheat 
 
 Average of 10 
 
 
 Prices ofWheat 
 
 reduced to the 
 
 Years, accord- 
 
 YEARS. 
 
 at Windsor, 
 
 Winchester 
 
 ng to the Win- 
 
 
 9 Gallons to 
 
 Bushel of 8 
 
 chester Bushel 
 
 
 the Bushel. 
 
 Gallons. 
 
 of Gallons. 
 
 
 £. s. d. 
 
 £. s. d. 
 
 £. s. d. 
 
 1748 . . 
 
 1 17 
 
 1 12 101 
 
 
 1749 . . 
 
 1 17 
 
 1 12 lOi 
 
 
 1750 . . 
 
 1 12 6 
 
 1 8 101 
 
 
 1751 . . 
 
 1 18 6 
 
 1 14 21 
 
 
 1752 . . 
 
 2 1 10 
 
 1 17 2i 
 
 
 1753 . . 
 
 2 4 8 
 
 1 19 84^ 
 
 
 1754 . . 
 
 1 14 8 
 
 1 10 9l- 
 
 
 1755 . . 
 
 1 13 10 
 
 1 10 1 
 
 1 13 21: 
 
 1756 . . 
 
 2 5 2 
 
 2 H 
 
 
 1757 . . 
 
 3 
 
 2 13 4 
 
 
 1758 . . 
 
 2 10 
 
 2 4 5i 
 
 
 1759 . . 
 
 1 19 8 
 
 1 15 3 
 
 
 1760 . . 
 
 1 16 6 
 
 1 12 5t 
 
 
 1761 . . 
 
 1 10 2 
 
 1 6 9i 
 
 
 1762 . . 
 
 1 19 
 
 1 14 8 
 
 
 1763 . • 
 
 2 8 
 
 I 16 li 
 
 
 1764 . . 
 
 2 6 8 
 
 2 1 5i 
 
 
 1765 . . 
 
 2 14 
 
 2 8 
 
 1 19 3i 
 
 1766 . . 
 
 2 8 6 
 
 2 3 li 
 
 
 1767 . • 
 
 3 4 6 
 
 2 17 4 
 
 
 1768 . . 
 
 3 6 
 
 2 13 9i 
 
 
 1769 . • 
 
 2 5 8 
 
 2 7 
 
 
 1770 . . 
 
 2 9 
 
 2 3 61 
 
 
 1771 . . 
 
 2 17 
 
 2 10 8 
 
 
 1772 . . 
 
 3 6 
 
 2 18 8 
 
 
 1773 . . 
 
 3 6 6 
 
 2 19 H 
 
 
 1774 . . 
 
 3 2 
 
 2 15 H 
 
 
 1775 . . 
 
 2 17 8 
 
 2 11 3i 
 
 2 11 3|: 
 
 1776 . . 
 
 2 8 
 
 2 2 8 
 
 
 1777 . . 
 
 2 15 
 
 2 8 lOi 
 
 
 1778 . . 
 
 2 9 6 
 
 2 4 
 
 
 1779 . . 
 
 2 8 
 
 1 16 1| 
 
 
 1780 . . 
 
 2 8 6 
 
 2 3 li 
 
 
 1781 . . 
 
 2 19 
 
 2 12 5i 
 
 
 1782 . . 
 
 3 6 
 
 2 13 9i 
 
 
 1783 . . 
 
 3 10 
 
 2 14 21: 
 
 
 1784 . . 
 
 3 6 
 
 2 13 9i 
 
 
 1785 . . 
 
 2 14 
 
 2 8 
 
 2 7 84 
 
 1786 . . 
 
 2 7 6 
 
 2 2 2i 

 
 11 
 
 
 ^ 
 
 5*rices of Wheat! 
 
 Average of 10 
 
 
 Prices ofWheat reduced to the | 
 
 Years, accord- 
 
 YEARS. 
 
 at Windsor, 
 
 Wincliester i 
 
 ng to the Win- 
 
 
 9 Gallons to 
 
 Bushel of 8 
 
 chester Bushel 
 
 
 the Bushel. 
 
 Gallons. 
 
 of 8 Gallons. 
 
 
 £, s. d. 
 
 £. s. d. 
 
 £. s. d. 
 
 1787 . . 
 
 2 11 6 
 
 2 5 9i 
 
 
 1788 . . 
 
 2 15 6 
 
 2 9 4 
 
 
 1789 . . 
 
 3 3 2 
 
 2 16 1| 
 
 
 1790 . . 
 
 3 3 2 
 
 2 16 li 
 
 
 1791 . . 
 
 2 15 6 
 
 2 9 4 
 
 ' 
 
 1792* . . 
 
 
 2 13 
 
 
 1793 . . 
 
 
 2 15 8 
 
 
 1794. . . 
 
 
 2 14 
 
 
 1795 . . 
 
 
 4 1 6 
 
 2 14 31 
 
 1796 . . 
 
 
 4 2 
 
 
 1797 . . 
 
 
 3 2 
 
 
 1798 . . 
 
 
 2 14 
 
 
 1799 . . 
 
 
 3 15 8 
 
 
 1800 . . 
 
 
 6 7 
 
 
 1801 . . 
 
 
 6 8 6 
 
 
 1802 . . 
 
 
 3 7 2 
 
 
 1803 . . 
 
 
 3 
 
 
 1804- . . 
 
 
 3 9 6 
 
 
 1805 . . 
 
 
 4 8 
 
 4 1 21 
 
 1806 . . 
 
 
 4 3 
 
 
 1807 . . 
 
 
 3 18 
 
 
 1808 . . 
 
 
 3 19 2 
 
 
 1809 . . 
 
 
 5 6 
 
 
 1810 . . 
 
 
 5 12 
 
 
 1811 . . 
 
 
 5 8 
 
 
 1812 . . 
 
 
 6 8 
 
 Aver, of 8 years 
 
 1813 . . 
 
 
 6 
 
 5 1 '^\ 
 
 " From this year, inclusive, the account at Eton College has been 
 kept according to the bushel of eight gallons, under the provision of 
 the act of 31 G. 3. c. 30. sect. 82. 
 
 B 2
 
 Ig 
 
 No. III. TABLE of the YEARLY and MONTHLY 
 AVERAGE PRICES of Corn in England and Wales, 
 from 1792 to 1822 inclusive. 
 
 YEARLY AVERAGES. 
 
 1792 
 
 43s. 
 
 1808 
 
 79s. 
 
 1793 
 
 49s. 
 
 1809 
 
 94s. 
 
 1794 
 
 51s. 
 
 1810 
 
 - 105s. 
 
 1795 
 
 71s. 
 
 1811 
 
 9Ss. 
 
 1796 
 
 76s. 
 
 1812 
 
 - 125s. 
 
 1797 
 
 52s. 
 
 1813 
 
 - 107s. 
 
 1798 
 
 50s, 
 
 1814 
 
 74s. 
 
 1799 
 
 69s. 
 
 1815 
 
 64s. 
 
 1800 
 
 105s. 
 
 1816 
 
 75s. 
 
 1801 
 
 120s. 
 
 1817 
 
 94s. 
 
 1802 
 
 67s. 
 
 1818 
 
 83s. 
 
 1803 
 
 56s 
 
 1819 
 
 72s. 
 
 1804 
 
 59s. 
 
 1820 
 
 65s, 
 
 1805 
 
 87s. 
 
 1821 
 
 54s. 
 
 1806 
 
 77s. 
 
 1822 
 
 43s. 
 
 1807 
 
 73s. 
 

 
 IS 
 
 MONTHI-Y AVERAGES. 
 
 
 1792. 
 
 1793. 
 
 1794. 
 
 1795. 
 
 January 
 
 42s. 
 
 46s. 
 
 50s. 
 
 57s. 
 
 February 
 
 41s. 
 
 46s. 
 
 50s. 
 
 58s. 
 
 March 
 
 41s. 
 
 • •■ 
 
 50s. 
 
 59s. 
 
 April 
 
 39s. 
 
 50s. 
 
 51s. 
 
 62s. 
 
 May 
 
 38s. 
 
 ... 
 
 51s, 
 
 64s. 
 
 June 
 
 39s. 
 
 51s. 
 
 51s. 
 
 67s. 
 
 July - 
 
 39s. 
 
 51s. 
 
 51s. 
 
 81&. 
 
 August 
 
 42s. 
 
 50s. 
 
 52s. 
 
 103s. 
 
 September 
 
 44s. 
 
 49s. 
 
 51s. 
 
 75s. 
 
 October 
 
 49s. 
 
 ... 
 
 51s. 
 
 76s. 
 
 November 
 
 49s. 
 
 ... 
 
 52s. 
 
 73s. 
 
 December 
 
 49s. 
 
 ... 
 
 55s. 
 
 86s. 
 
 
 1706. 
 
 1797. 
 
 1798. 
 
 1799. 
 
 January 
 
 92s. 
 
 54s. 
 
 51s. 
 
 49s. 
 
 February 
 
 93s. 
 
 52s. 
 
 49s. 
 
 50s. 
 
 March 
 
 101s. 
 
 49s. 
 
 50s. 
 
 50s. 
 
 April - 
 
 ... 
 
 49s. 
 
 51s. 
 
 ... 
 
 May 
 
 75s. 
 
 49s. 
 
 51s. 
 
 61s. 
 
 June 
 
 80s. 
 
 50s. 
 
 50s. 
 
 64s. 
 
 July 
 
 81s. 
 
 51s. 
 
 51s. 
 
 67s. 
 
 August 
 
 75s. 
 
 52s. 
 
 51s. 
 
 73s, 
 
 September 
 
 64s. 
 
 58s. 
 
 50s. 
 
 74s. 
 
 October 
 
 61s. 
 
 59s. 
 
 48s. 
 
 86s. 
 
 November 
 
 59s. 
 
 56s. 
 
 47s. 
 
 89s. 
 
 December 
 
 57s. 
 
 52s. 
 
 ... 
 
 93s.
 
 14 
 
 
 1800. 
 
 1801. 
 
 1802. 
 
 1803. 
 
 January 
 
 94s. 
 
 133s. 
 
 76s. 
 
 56s. 
 
 February 
 
 95s. 
 
 lS6s. 
 
 75s. 
 
 56s. 
 
 March 
 
 103s. 
 
 145s. 
 
 72s. 
 
 56s. 
 
 April - 
 
 108s. 
 
 156s. 
 
 68s. 
 
 56s. 
 
 May 
 
 118s. 
 
 150s. 
 
 64s. 
 
 57s. 
 
 June 
 
 121s. 
 
 91s. 
 
 67s. 
 
 64s. 
 
 July - 
 
 121s. 
 
 129s. 
 
 67s. 
 
 59s. 
 
 August - 
 
 76s. 
 
 136s. 
 
 69s. 
 
 55s. 
 
 September 
 
 96s. 
 
 124s. 
 
 67s. 
 
 55s. 
 
 October 
 
 107s. 
 
 88s. 
 
 61s. 
 
 54s. 
 
 November 
 
 108s. 
 
 77s. 
 
 59s. 
 
 54s. 
 
 December 
 
 119s. 
 
 74s. 
 
 58s. 
 
 53s. 
 
 
 1804. 
 
 1805. 
 
 1806. 
 
 1807. 
 
 January 
 
 51s. 
 
 86s. 
 
 75s. 
 
 77s. 
 
 February 
 
 50s. 
 
 89s. 
 
 74s. 
 
 75s. 
 
 March 
 
 50s. 
 
 93s. 
 
 74s. 
 
 76s. 
 
 April - 
 
 51s. 
 
 91s. 
 
 77s. 
 
 76s. 
 
 May 
 
 51s. 
 
 87s. 
 
 84s. 
 
 75s. 
 
 June - 
 
 51s. 
 
 89s. 
 
 84s. 
 
 74s. 
 
 July 
 
 53s. 
 
 90s. 
 
 82s. 
 
 73s. 
 
 August 
 
 60s. 
 
 100s. 
 
 81s. 
 
 74s. 
 
 September 
 
 64s. 
 
 89s. 
 
 80s. 
 
 ... 
 
 October 
 
 67s. 
 
 81s. 
 
 78s. 
 
 68s. 
 
 November 
 
 81s. 
 
 78s. 
 
 77s. 
 
 65s. 
 
 December 
 
 84s. 
 
 76s. 
 
 77s. 
 
 68s. 
 
 
 1808. 
 
 1809. 
 
 1810. 
 
 1811. 
 
 January 
 
 68s. 
 
 91s. 
 
 lOls. 
 
 96s. 
 
 February 
 
 69s. 
 
 92s. 
 
 99s. 
 
 95s. 
 
 March 
 
 69s. 
 
 94s. 
 
 102s. 
 
 92s. 
 
 April 
 
 71s. 
 
 92s. 
 
 104s. 
 
 88s. 
 
 May 
 
 78s. 
 
 90s. 
 
 110s. 
 
 88s. 
 
 June 
 
 80s. 
 
 88s. 
 
 ••• 
 
 86s.
 
 15 
 
 
 1808. 
 
 1809. 
 
 1810. 
 
 1811. 
 
 July 
 
 81s. 
 
 88s. 
 
 114s. 
 
 87s. 
 
 August 
 
 81s. 
 
 94s. 
 
 116s. 
 
 91s. 
 
 September 
 
 84.S. 
 
 101s. 
 
 116s. 
 
 97s. 
 
 October 
 
 87s. 
 
 103s. 
 
 101s. 
 
 100s. 
 
 November 
 
 92s. 
 
 101s. 
 
 101s. 
 
 105s. 
 
 December 
 
 90s. 
 
 102s. 
 
 95s. 
 
 «•» 
 
 
 1812, 
 
 1813. 
 
 1814. 
 
 1815. 
 
 January 
 
 105s. 
 
 l]8s. 
 
 78s. 
 
 60s. 
 
 February 
 
 105s. 
 
 120s. 
 
 78s. 
 
 64s. 
 
 March 
 
 113s. 
 
 122s. 
 
 78s. 
 
 66s. 
 
 April r 
 
 126s. 
 
 119s. 
 
 76s. 
 
 71s. 
 
 May - 
 
 133s. 
 
 117s. 
 
 68s. 
 
 70s. 
 
 June 
 
 133s. 
 
 117s. 
 
 69s. 
 
 69s. 
 
 July - 
 
 146s. 
 
 116s. 
 
 67s. 
 
 67s. 
 
 August 
 
 155s. 
 
 112s. 
 
 74s. 
 
 68s. 
 
 September 
 
 132s. 
 
 98s. 
 
 77s. 
 
 64s. 
 
 October 
 
 110s. 
 
 93s. 
 
 75s. 
 
 57s. 
 
 November 
 
 122s. 
 
 85s. 
 
 73s. 
 
 56s. 
 
 December 
 
 121s. 
 
 73s. 
 
 70s. 
 
 55s. 
 
 
 1816. 
 
 1817. 
 
 1818. 
 
 1819. 
 
 January 
 
 52s. 
 
 103s. 
 
 85s. 
 
 79s. 
 
 February 
 
 56s. 
 
 102s. 
 
 85s. 
 
 80s. 
 
 March 
 
 54s. 
 
 102s. 
 
 84s. 
 
 79s. 
 
 April 
 
 60s. 
 
 102s. 
 
 90s. 
 
 74s. 
 
 May - 
 
 76s. 
 
 105s. 
 
 86s. 
 
 72s. 
 
 June 
 
 74s. 
 
 Ills. 
 
 84s. 
 
 68s. 
 
 July - 
 
 73s. 
 
 100s. 
 
 87s. 
 
 75s. 
 
 August 
 
 82s. 
 
 86s, 
 
 79s. 
 
 74s. 
 
 September 
 
 85s. 
 
 76s. 
 
 81s. 
 
 72s. 
 
 October 
 
 93s. 
 
 78s. 
 
 Sis. 
 
 66s. 
 
 November 
 
 98s. 
 
 80s. 
 
 82s. 
 
 67s. 
 
 December 
 
 103s. 
 
 84s. 
 
 80s. 
 
 65s.
 
 16 
 
 
 1820. 
 
 1821. 
 
 1822. 
 
 January 
 
 63s. 
 
 54s. 
 
 49s. 
 
 February 
 
 65s. 
 
 53s. 
 
 49s. 
 
 March 
 
 7]s. 
 
 54s. 
 
 46s. 
 
 April 
 
 69s. 
 
 54s. 
 
 44s. 
 
 May - 
 
 70s. 
 
 51s. 
 
 47s. 
 
 June 
 
 70s. 
 
 52s. 
 
 44s. 
 
 July - 
 
 67s. 
 
 52s. 
 
 43s. 
 
 August 
 
 72s. 
 
 56s. 
 
 43s. 
 
 September - 
 
 68s. 
 
 61s. 
 
 39s. 
 
 October 
 
 58s. 
 
 58s. 
 
 38s. 
 
 November 
 
 57s. 
 
 55s. 
 
 39s. 
 
 December 
 
 54s. 
 
 49s. 
 
 38s.
 
 17 
 
 No. IV. TABLE of the PRICES of 3 PER CENT. 
 STOCKS, from 1731 to 1822 inclusive. 
 
 MPNTHI.Y PRICES. 
 
 
 1731. 
 
 1732. 
 
 1733. 
 
 1734. 
 
 January 
 
 95 
 
 96 
 
 100 
 
 92 
 
 February - 
 
 - 94. 
 
 97 
 
 ... 
 
 ... 
 
 March 
 
 90 
 
 ••• 
 
 ... 
 
 90 
 
 April 
 
 - ... 
 
 ... 
 
 102 
 
 ... 
 
 May 
 
 - 
 
 ... 
 
 ... 
 
 ... 
 
 June 
 
 - 99 
 
 ... 
 
 103 
 
 94 
 
 July 
 
 95 
 
 98 
 
 100 
 
 92 
 
 August 
 
 - 96 
 
 99 
 
 97 
 
 93 
 
 September 
 
 - 
 
 ... 
 
 97 
 
 94 
 
 October - 
 
 ■ . - 94 
 
 ... 
 
 92 
 
 92 
 
 November 
 
 - 95 
 
 101, 
 
 ... 
 
 ... 
 
 December 
 
 - - 97 
 
 ... 
 
 ••• 
 
 94 
 
 
 1735. 
 
 1736. 
 
 1737. 
 
 173S. 
 
 Januaiy 
 
 94. 
 
 100 
 
 ... 
 
 106 
 
 February 
 
 - 92 
 
 102 
 
 ... 
 
 ... 
 
 March - ' 
 
 94 
 
 104 
 
 ... 
 
 105 
 
 April 
 
 - ... 
 
 ... 
 
 105 
 
 ... 
 
 May 
 
 - 
 
 ... 
 
 ... 
 
 ... 
 
 June 
 
 ... 
 
 105 
 
 107 
 
 ... 
 
 July 
 
 97 
 
 113 
 
 105 
 
 102 
 
 August 
 
 - 94 
 
 105 
 
 106 
 
 105 
 
 September 
 
 - 
 
 ... 
 
 ... 
 
 ... 
 
 October - 
 
 - 
 
 ... 
 
 ... 
 
 • ■» 
 
 November 
 
 98 
 
 ... 
 
 ... 
 
 ... 
 
 December 
 
 - 93 
 C 
 
 ... 
 
 ... 
 
 106
 
 18 
 
 
 1739. 
 
 1740. 
 
 1741. 
 
 1742. 
 
 January 
 
 - 104 
 
 98 
 
 98 
 
 98 
 
 February - 
 
 " " ••• 
 
 99 
 
 99 
 
 99 
 
 March 
 
 - 105 
 
 100 
 
 ••• 
 
 100 
 
 April 
 
 • " ••• 
 
 101 
 
 101 
 
 101 
 
 May 
 
 ■ ••• 
 
 ... 
 
 ••• 
 
 ••• 
 
 June 
 
 100 
 
 100 
 
 ••■ 
 
 102 
 
 July 
 
 98 
 
 • •• 
 
 99 
 
 100 
 
 August 
 
 - 99 
 
 101 
 
 98 
 
 101 
 
 September 
 
 98 
 
 100 
 
 99 
 
 100 
 
 October 
 
 - 97 
 
 99 
 
 89 
 
 .M 
 
 November 
 
 98 
 
 ••• 
 
 101 
 
 101 
 
 December 
 
 100 
 
 ••• 
 
 100 
 
 102 
 
 
 1743. 
 
 1744. 
 
 1745. 
 
 1746. 
 
 January 
 
 - 101 
 
 99 
 
 89 
 
 76 
 
 February - 
 
 100 
 
 96 
 
 ... 
 
 75 
 
 March 
 
 ... 
 
 90 
 
 ... 
 
 ••• 
 
 April 
 
 - 101 
 
 93 
 
 92 
 
 82 
 
 May 
 
 - 103 
 
 ••• 
 
 93 
 
 •.* 
 
 June - 
 
 102 
 
 ••• 
 
 92 
 
 83 
 
 July 
 
 - 103 
 
 ••• 
 
 90 
 
 85 
 
 August 
 
 102 
 
 ... 
 
 87 
 
 89 
 
 September 
 
 - 101 
 
 ••• 
 
 85 
 
 88 
 
 October 
 
 102 
 
 ... 
 
 86 
 
 85 
 
 November 
 
 ■■ • ••• 
 
 ... 
 
 ... 
 
 83 
 
 December 
 
 - 
 
 ... 
 
 ... 
 
 84 
 
 ... 
 
 1747. 
 
 1748. 
 
 1749. 
 
 1750. 
 
 January 
 
 83 
 
 79 
 
 91 
 
 98 
 
 February - 
 
 - 84 
 
 82 
 
 94. , 
 
 99 
 
 March 
 
 86 
 
 76 
 
 95 
 
 ... 
 
 April 
 
 - 85 
 
 80 
 
 «•• 
 
 100 
 
 May 
 
 86 
 
 88 
 
 100 
 
 • »• 
 
 June • 
 
 ■ • ••» 
 
 90 
 
 99 
 
 101
 
 19 
 
 
 1747. 
 
 1748. 
 
 1749. 
 
 1750. 
 
 July - 
 
 • • ••• 
 
 89 
 
 100 
 
 «•• 
 
 August 
 
 - 82 
 
 90 
 
 100 
 
 100 
 
 September 
 
 • • •«• 
 
 88 
 
 101 
 
 ••• 
 
 October 
 
 " ~ M» 
 
 91 
 
 102 
 
 101 
 
 November 
 
 > ■ •»• 
 
 90 
 
 99 
 
 ... 
 
 December 
 
 . 81 
 
 89 
 
 100 
 
 99 
 
 
 1751. 
 
 1752. 
 
 1753. 
 
 1754. 
 
 January 
 
 - - 97 
 
 101 
 
 106 
 
 104. 
 
 February 
 
 - 98 
 
 102 
 
 104 
 
 102 
 
 March 
 
 99 
 
 ••• 
 
 ••• 
 
 ••• 
 
 April 
 
 100 
 
 103 
 
 105 
 
 103 
 
 May 
 
 99 
 
 104 
 
 ... 
 
 ..• 
 
 June 
 
 - 101 
 
 105 
 
 ... 
 
 104 
 
 July - 
 
 103 
 
 106 
 
 ... 
 
 «» 
 
 August - 
 
 - 100 
 
 105 
 
 103 
 
 ... 
 
 September 
 
 99 
 
 • f* 
 
 104 
 
 ... 
 
 October - 
 
 - 100 
 
 104. 
 
 n» 
 
 103 
 
 November 
 
 101 
 
 ... 
 
 ... 
 
 102 
 
 December 
 
 - 102 
 
 106 
 
 105 
 
 *»• 
 
 
 1755. 
 
 1756. 
 
 1757. 
 
 1758. 
 
 January 
 
 100 
 
 89 
 
 86 
 
 91 
 
 February 
 
 - 101 
 
 ... 
 
 87 
 
 £4 
 
 March - 
 
 99 
 
 ••• 
 
 89 
 
 .M 
 
 April 
 
 - 98 
 
 90 
 
 88 
 
 93 
 
 May 
 
 97 
 
 89 
 
 89 
 
 94 
 
 June 
 
 - 99 
 
 ... 
 
 90 
 
 95 
 
 July 
 
 • * ••• 
 
 87 
 
 88 
 
 97 
 
 August 
 
 92 
 
 69 
 
 89 
 
 90 
 
 September 
 
 - 90 
 
 88 
 
 91 
 
 89 
 
 October 
 
 93 
 
 ... 
 
 ... 
 
 90 
 
 November 
 
 - 91 
 
 89 
 
 89 
 
 91 
 
 December 
 
 92 
 C 2 
 
 SS 
 
 90 
 
 98
 
 m 
 
 ■•'■■ \ ' 
 
 .ru;f 1759.T!v 
 
 1 1760. 
 
 1761. 
 
 1762. 
 
 January o i - 
 
 y-, 88 ... 
 
 82 
 
 - 74- 
 
 63, 
 
 February 
 
 ■ - 86 ■ 
 
 81 
 
 73 
 
 68. 
 
 March - lUL- 
 
 -: 82 ... 
 
 82 
 
 76. ; 
 
 67. 
 
 April ■* .' 
 
 -- 80 . 
 
 ... 
 
 88 •: 
 
 70 
 
 May 
 
 ■^ . ••• 
 
 ... 
 
 .. 87. • 
 
 73 
 
 June '-■! 
 
 ' - 79 , 
 
 ... 
 
 86 :" 
 
 72 
 
 July 
 
 - 
 
 83 
 
 81 
 
 75 
 
 August ■ - ■' 
 
 .'-V 82' 
 
 ... 
 
 76 
 
 79 
 
 September^ • ' ^ - 
 
 -^■S 81 "^ 
 
 82 
 
 - 74, V,' 
 
 :.:-8^. 
 
 October -^ - 
 
 - ... 
 
 83 - 
 
 72 '.■■ 
 
 8CJ 
 
 November— - 
 
 - ' 84 ■ 
 
 '■ 80 
 
 71 
 
 86' 
 
 I>eeember' ''' 
 
 ' - ... " 
 
 76 
 
 66 
 
 87 
 
 
 i : 17C3. 
 
 1764. 
 
 1765. 
 
 1766. 
 
 January 
 
 90 
 
 82 
 
 85 
 
 89 
 
 February - f 
 
 ; w 93 
 
 .,; 84 
 
 87 
 
 87. 
 
 March -..1- 
 
 T.. 96 
 
 :• 86 
 
 ... 
 
 88 
 
 April „■: 
 
 •'(;4 92 i 
 
 ;r 83 
 
 • •« 
 
 89 
 
 May 
 
 91 , 
 
 ... 
 
 ... 
 
 90 
 
 June r-/ • - 
 
 'ivr* 
 
 ... 
 
 86 
 
 ■ ••• 
 
 July - - 
 
 - . 89 
 
 81 
 
 ... 
 
 88 
 
 August '- 
 
 - 87 
 
 82 
 
 87 
 
 90 
 
 September* ^ - 
 
 - 84. • 
 
 83 
 
 89 
 
 87- 
 
 October ■■^ 
 
 '■•- ••• 
 
 ■ 80 
 
 91 
 
 89 
 
 November ^'"^ - 
 
 - 83 
 
 82 
 
 92 
 
 • §• 
 
 December - 
 
 - ... 
 
 83 
 
 92 
 
 ... 
 
 
 17C7. 
 
 1768. 
 
 1769. 
 
 1770. 
 
 January 
 
 88 , 
 
 91 
 
 88 
 
 85 
 
 February 
 
 - 89 
 
 92 
 
 ... 
 
 87 
 
 March 
 
 88 
 
 93 
 
 ..• 
 
 ••• 
 
 April 
 
 - 
 
 ... 
 
 ... 
 
 •«• 
 
 May - V . . 
 
 - 
 
 ... 
 
 89 
 
 86 
 
 June '''•>'. 
 
 - 87 
 
 92 
 
 - 89 
 
 84
 
 21 
 
 
 I7fi7. 
 
 1 7(i«. 
 
 nao. 
 
 1770. 
 
 July - 
 
 - 
 
 90 
 
 ... 
 
 83 
 
 August 
 
 - ... 
 
 89 
 
 ... 
 
 78 
 
 September 
 
 . . 88 
 
 ... 
 
 88 
 
 ... 
 
 October 
 
 - 90 
 
 ... 
 
 «.. 
 
 .*• 
 
 November 
 
 91 
 
 88 
 
 84- 
 
 ... 
 
 December 
 
 .- 90 
 
 89 
 
 ... 
 
 8*. 
 
 
 1/71. 
 
 1772. 
 
 1773. 
 
 1774. 
 
 January 
 
 - 86 
 
 87 
 
 87 
 
 87 
 
 February - 
 
 - 85 
 
 .... 
 
 .... 
 
 86 
 
 March - - 
 
 - . 87 
 
 .... 
 
 
 ««•• 
 
 April 
 
 - 88 
 
 88 
 
 86 
 
 • •*• 
 
 INIay 
 
 81 
 
 .... 
 
 .... 
 
 87 
 
 June .i.^n ' 
 
 - 86 
 
 .... 
 
 87 
 
 .... 
 
 July -'5?. - 
 
 
 
 95 
 
 .... 
 
 88 
 
 August "- 
 
 - .... 
 
 89 
 
 .... 
 
 .... 
 
 September 
 
 87 
 
 .... 
 
 .... 
 
 .... 
 
 October 
 
 - .... 
 
 88 
 
 86 
 
 .... 
 
 November 
 
 - 
 
 • ••• 
 
 
 
 89 
 
 December . 
 
 - 86 
 
 .... 
 
 — 
 
 .ui. 
 
 
 1775. 
 
 1770. 
 
 1777. 
 
 1778. 
 
 January 
 
 90 
 
 90 
 
 80 
 
 72 
 
 February - 
 
 - •— 
 
 89 
 
 78 
 
 70 
 
 March - - 
 
 87 
 
 87 
 
 79 
 
 64 
 
 April 
 
 - 88 
 
 86 
 
 .... 
 
 61 
 
 May 
 
 - 
 
 85 
 
 • «•• 
 
 • ••• 
 
 June 
 
 - .... 
 
 84 
 
 76 
 
 62 
 
 July 
 
 ■• .«•« 
 
 82 
 
 .... 
 
 61 
 
 August 
 
 - 89 
 
 .... 
 
 .... 
 
 63 
 
 September 
 
 
 
 83 
 
 78 
 
 64. 
 
 October 
 
 - .... 
 
 81 
 
 .... 
 
 66 
 
 November 
 
 88 
 
 .... 
 
 - .... 
 
 63 
 
 December 
 
 
 
 82 
 
 76 
 
 62
 
 n 
 
 
 1779. 
 
 1780. 
 
 1781. 
 
 1782. 
 
 January 
 
 60 
 
 61 
 
 57 
 
 •«•• 
 
 February - 
 
 - 59 
 
 .... 
 
 58 
 
 S3 
 
 March - 
 
 61 
 
 .... 
 
 59 
 
 54 
 
 April 
 
 - 64^ 
 
 60 
 
 .... 
 
 57 
 
 May 
 
 63 
 
 .... 
 
 .... 
 
 59 
 
 June 
 
 - 60 
 
 .... 
 
 57 
 
 60 
 
 July - - 
 
 59 
 
 63 
 
 .... 
 
 55 
 
 August 
 
 - 61 
 
 .... 
 
 .... 
 
 56 
 
 September 
 
 ■• •••• 
 
 ...» 
 
 56 
 
 57 
 
 October 
 
 " ••«• 
 
 61 
 
 • ••• 
 
 58 
 
 November 
 
 - 
 
 • •t« 
 
 .... 
 
 59 
 
 December 
 
 60 
 
 • •»• 
 
 .... 
 
 61 
 
 
 1783. 
 
 1784. 
 
 1785. 
 
 1786. 
 
 January 
 
 64< 
 
 57 
 
 56 
 
 70 
 
 February - 
 
 - 66 
 
 56 
 
 55 
 
 69 
 
 March - 
 
 68 
 
 55 
 
 51 
 
 •••• 
 
 April 
 
 - .... 
 
 56 
 
 58 
 
 •••• 
 
 May 
 
 • •••• 
 
 57 
 
 .... 
 
 70 
 
 June 
 
 - 66 
 
 .... 
 
 .... 
 
 71 
 
 July - - 
 
 - 67 
 
 55 
 
 .... 
 
 70 
 
 August 
 
 
 
 54- 
 
 59 
 
 73 
 
 September 
 
 66 
 
 • ••• 
 
 65 
 
 74 
 
 October 
 
 - 63 
 
 •••• 
 
 66 
 
 76 
 
 November 
 
 62 
 
 55 
 
 70 
 
 78 
 
 December 
 
 - 58 
 
 • ••• 
 
 71 
 
 74 
 
 
 1787. 
 
 1788. 
 
 1789. 
 
 1790. 
 
 January 
 
 73 
 
 76 
 
 72 
 
 78 
 
 February - 
 
 - 70 
 
 75 
 
 73 
 
 ••» 
 
 March - 
 
 74 
 
 •••• 
 
 74 
 
 •••• 
 
 April 
 
 - 76 
 
 .... 
 
 .... 
 
 80 
 
 May 
 
 77 
 
 .... 
 
 75 
 
 73 
 
 June 
 
 - 73 
 
 76 
 
 77 
 
 •M.
 
 23 
 
 
 1787. 
 
 1788. 
 
 1789. 
 
 1790. 
 
 July 
 
 70 
 
 .... 
 
 .... 
 
 .... 
 
 August 
 
 - - 72 
 
 74. 
 
 78 
 
 77 
 
 September 
 
 69 
 
 .... 
 
 80 
 
 •••• 
 
 October 
 
 - 70 
 
 .... 
 
 .... 
 
 74 
 
 November 
 
 72 
 
 .... 
 
 78 
 
 79 
 
 December 
 
 - 75 
 
 73 
 
 .... 
 
 80 
 
 
 1 -.91. 
 
 1702. 
 
 1793. 
 
 1794. 
 
 January 
 
 80 
 
 90 
 
 77 
 
 70 
 
 February - 
 
 - .... 
 
 94 
 
 72 
 
 67 
 
 March - 
 
 81 
 
 96 
 
 75 
 
 .... 
 
 April 
 
 - 78 
 
 95 
 
 78 
 
 69 
 
 May 
 
 81 
 
 92 
 
 76 
 
 70 
 
 June 
 
 - 82 
 
 91 
 
 77 
 
 .... 
 
 July - 
 
 81 
 
 92 
 
 «... 
 
 67 
 
 August 
 
 - 86 
 
 91 
 
 t*«» 
 
 •••• 
 
 September 
 
 89 
 
 90 
 
 74, 
 
 76 
 
 October 
 
 - 88 
 
 .... 
 
 75 
 
 64 
 
 November 
 
 87 
 
 88 
 
 74, 
 
 67 
 
 December 
 
 - 89 
 
 76 
 
 •••• 
 
 65 
 
 
 1795. 
 
 1796. 
 
 1797. 
 
 1798, 
 
 January 
 
 63 
 
 69 
 
 54. 
 
 48 
 
 February - 
 
 - 62 
 
 68 
 
 53 
 
 49 
 
 March - 
 
 m m ♦«•• 
 
 • •■• 
 
 50 
 
 50 
 
 April 
 
 - 63 
 
 67 
 
 •••• 
 
 49 
 
 May 
 
 65 
 
 65 
 
 48 
 
 48 
 
 June 
 
 . 67 
 
 63 
 
 50 
 
 49 
 
 July - 
 
 68 
 
 60 
 
 53 
 
 48 
 
 August 
 
 • " •••• 
 
 59 
 
 52 
 
 49 
 
 September 
 
 69 
 
 56 
 
 50 
 
 50 
 
 October 
 
 - 68 
 
 58 
 
 49 
 
 51 
 
 November 
 
 68 
 
 56 
 
 48 
 
 55 
 
 December 
 
 - 70 
 
 57 
 
 49 
 
 52
 
 24 
 
 
 1799. 
 
 1800. 
 
 1801. 
 
 1802. 
 
 January 
 
 53 
 
 61 
 
 60 
 
 68 
 
 February - 
 
 - .... 
 
 .... 
 
 57 
 
 69 
 
 March - 
 
 54 
 
 62 
 
 56 
 
 .... 
 
 April 
 
 , - 54 
 
 63 
 
 59 
 
 76 
 
 May 
 
 55 
 
 .... 
 
 60 
 
 75 
 
 June . - 
 
 - 59 
 
 62 
 
 61- 
 
 .... 
 
 July 
 
 62 
 
 63 
 
 60 
 
 73 
 
 August 
 
 - 65 
 
 64 
 
 .... 
 
 69 
 
 September 
 
 64 
 
 65 
 
 .... 
 
 ..« 
 
 October 
 
 - 60 
 
 64 
 
 67 
 
 68 
 
 November 
 
 61 
 
 .... 
 
 68 
 
 ... 
 
 December 
 
 - 62 
 
 63 
 
 67 
 
 * 
 
 
 1803. 
 
 1804. 
 
 1805. 
 
 1806. 
 
 January 
 
 72 
 
 56 
 
 61 
 
 60 
 
 February - 
 
 . - 71 
 
 55 
 
 58 
 
 60 
 
 March - 
 
 65 
 
 56 
 
 58 
 
 60 
 
 April 
 
 
 
 55 
 
 58 
 
 60 
 
 May 
 
 59 
 
 57 
 
 58 
 
 60 
 
 June 
 
 - 57 
 
 55 
 
 59 
 
 63 
 
 July 
 
 ^55 
 
 57 
 
 60 
 
 64 
 
 August 
 
 - 54 
 
 56 
 
 57 
 
 62 
 
 September 
 
 54 
 
 57 ■ 
 
 58 
 
 63 
 
 October 
 
 - 52 
 
 57 
 
 58 
 
 61 
 
 November 
 
 53 
 
 58 
 
 60 
 
 61 
 
 December 
 
 - 54 
 
 59 
 
 62 
 
 60 
 
 
 I807. 
 
 1808. 
 
 1809. 
 
 1810. 
 
 January 
 
 60 
 
 63 
 
 65 
 
 68 
 
 February - 
 
 - 62 
 
 63' 
 
 67 
 
 67 
 
 March - 
 
 62 
 
 64 
 
 67 
 
 68 
 
 * Up to this date is taken from Sir John Sinclair's work upou 
 the Revenue. The prices after this, are the prices, upon, or about 
 the 20th of each month, exclusive of fractional parts.
 
 25 
 
 
 1807. 
 
 1808. 
 
 1809. 
 
 1810. 
 
 April 
 
 62 
 
 66 
 
 - 67 
 
 69 
 
 May 
 
 - 63 
 
 68 
 
 68 
 
 70 
 
 June 
 
 61 
 
 70 
 
 69 
 
 71 
 
 July 
 
 - 61 
 
 68 
 
 68 
 
 68 
 
 August 
 
 62 
 
 67 
 
 68 
 
 68 
 
 September 
 
 - 62 
 
 66 
 
 68 
 
 65 
 
 October 
 
 62 
 
 66 
 
 68 
 
 66; 
 
 November 
 
 - 63 
 
 66 
 
 70 
 
 67' 
 
 December 
 
 64 
 
 66 
 
 71 
 
 67 
 
 
 1811. 
 
 1812. 
 
 1813. 
 
 1814. 
 
 January 
 
 66 • 
 
 62- 
 
 -60 
 
 67 
 
 February - 
 
 - 66 
 
 62 
 
 59 
 
 70 
 
 March - 
 
 65 
 
 60 
 
 59 
 
 71 
 
 April 
 
 - 64 
 
 60 
 
 59 
 
 67 
 
 May 
 
 65 
 
 61 
 
 59 
 
 67 
 
 June 
 
 . 64 
 
 .... 
 
 .... 
 
 .... 
 
 July 
 
 63 
 
 56 
 
 56 
 
 68 
 
 August 
 
 - 62 
 
 58 
 
 58 
 
 66 
 
 September 
 
 63 
 
 59 
 
 58 
 
 64 
 
 October 
 
 - 63 
 
 58 
 
 58 
 
 65 
 
 November 
 
 64 
 
 59 
 
 59 
 
 65 
 
 December 
 
 - .... 
 
 .... 
 
 .... 
 
 • ••• 
 
 
 1815. 
 
 1816. 
 
 1817, 
 
 1818. 
 
 January 
 
 66 
 
 60 
 
 62 
 
 80 
 
 February - 
 
 - 65 
 
 62 
 
 66 
 
 79 
 
 March - 
 
 61 
 
 61 
 
 70 
 
 78 
 
 April 
 
 - 57 
 
 61 
 
 72 
 
 80 
 
 May 
 
 58 
 
 62 
 
 73 
 
 79 
 
 June 
 
 - .... 
 
 .... 
 
 .... 
 
 • ••• 
 
 July - - 
 
 57 
 
 64 
 
 82 
 
 77 
 
 August 
 
 - 56 
 
 62 
 
 79 
 
 76 
 
 September 
 
 - 57 
 D 
 
 62 
 
 80 
 
 74
 
 26 
 
 
 1815. 
 
 1816. 
 
 1817. 
 
 1818. 
 
 October 
 
 61 
 
 62- 
 
 82 
 
 77 
 
 November 
 
 - 62 
 
 63 
 
 83 
 
 77 
 
 December 
 
 • •••• 
 
 .... 
 
 .... 
 
 1 -'' 
 
 
 1819. 
 
 1820. 
 
 1821. 
 
 1 
 
 1822. 
 
 January 
 
 78 
 
 77 
 
 69 
 
 76 
 
 February - 
 
 - 77 
 
 68 
 
 72 
 
 78 
 
 March - 
 
 74 
 
 68 
 
 70 
 
 80 
 
 April 
 
 - . 73 
 
 70 
 
 72 
 
 78 
 
 May 
 
 71 
 
 69 
 
 74 
 
 79 
 
 June 
 
 - .... 
 
 .... 
 
 .... 
 
 •••■ 
 
 July - 
 
 - 70 
 
 69 
 
 76 
 
 79 
 
 August 
 
 - - 71 
 
 68 
 
 76 
 
 80 
 
 September 
 
 - 70 
 
 66 
 
 76 
 
 81 
 
 October 
 
 - - 77 
 
 67 
 
 78 
 
 81 
 
 November 
 
 67 
 
 69 
 
 78 
 
 81 
 
 December 
 
 - .... 
 
 «••• 
 
 • •M 
 
 78
 
 «7 
 
 YEARLY AVERAGES. 
 
 1731, 
 
 95 
 
 1732, 
 
 98 
 
 1733, 
 
 98 
 
 1734., 
 
 92 
 
 1735, 
 
 94 
 
 1736, 
 
 105 
 
 1737, 
 
 106 
 
 1738, 
 
 105 
 
 1739, 
 
 100 
 
 1740, 
 
 99 
 
 1741, 
 
 97 
 
 1742, 
 
 100 
 
 1743, 
 
 101 
 
 1744, 
 
 94 
 
 1745, 
 
 89 
 
 1746, 
 
 83 
 
 1747, 
 
 84 
 
 1748, 
 
 86 
 
 1749, 
 
 98 
 
 1750, 
 
 99 
 
 1751, 
 
 100 
 
 1752, 
 
 104 
 
 1753, 
 
 104 
 
 1754 
 
 103 
 
 1755 
 
 95 
 
 1756 
 
 , 88 
 
 1757 
 
 89 
 
 1758 
 
 , 93 
 
 1759 
 
 , 82 
 
 1760, 
 
 81 
 
 1761, 
 
 77 
 
 1762, 
 
 75 
 
 1763, 
 
 89 
 
 1764, 
 
 82 
 
 1765, 
 
 88 
 
 1766, 
 
 88 
 
 1767, 
 
 89 
 
 1768, 
 
 90 
 
 1769, 
 
 87 
 
 1770, 
 
 84 
 
 1771, 
 
 85 
 
 1772, 
 
 89 
 
 1773, 
 
 86 
 
 1774, 
 
 87 
 
 1775, 
 
 88 
 
 1776, 
 
 85 
 
 1777, 
 
 78 
 
 1778, 
 
 64 
 
 1779, 
 
 60 
 
 1780, 
 
 61 
 
 1781, 
 
 57 
 
 1782, 
 
 57 
 
 1783, 
 
 53 
 
 1784, 
 
 55 
 
 1785, 
 
 62 
 
 1786 
 
 72 
 
 1787 
 
 , 72 
 
 1788 
 
 75 
 
 D 2
 
 eg 
 
 1789, 76 
 
 1790, 77 
 
 1791, 84 
 
 1792, 90 
 
 1793, 75 
 
 1794, 67 
 
 1795, 66 
 
 1796, 61 
 
 1797, 50 
 
 1798, 50 
 
 1799, 59 
 
 1800, 63 
 
 1801, 61 
 
 1802, 71 
 
 1803, 58 
 
 1804, 56 
 
 1805, 59 
 
 1806, 
 
 61 
 
 1807, 
 
 62 
 
 1808, 
 
 66 
 
 1809, 
 
 68 
 
 1810, 
 
 68 
 
 1811, 
 
 64 
 
 1812, 
 
 59 
 
 1813, 
 
 58 
 
 1814, 
 
 67 
 
 1815, 
 
 60 
 
 1816, 
 
 62 
 
 1817, 
 
 75 
 
 1818, 
 
 77 
 
 1819, 
 
 72 
 
 1S20, 
 
 68 
 
 1821, 
 
 74 
 
 1822, 
 
 79
 
 29 
 
 No. V. AMOUNT of the NATIONAL FUNDED DEBT 
 at the Revolution, and at the Commencement and Termi- 
 nation of each War, to 1812. 
 
 (From Dr Hamilton's Inquiry concerning the National Debt J. 
 
 National debt at the Revolution - 1689 
 Funded debt at the peace of Ryswick, 1697 
 
 — at the commencement of the war, 1701 
 
 — at the peace of Utrecht, •. \1\^ 
 including annuities afterwards sub- 
 scribed to the South Sea stock. 
 
 — at the commencement of the war, 1740 
 
 — at the peace of Aix-la-Chapelle, 1748 
 
 — at the commencement of the war, 1756 
 
 — at the peace of Paris, - 1763 
 including i 9,839,957, which was 
 
 funded in the subsequent years. 
 
 Besides this, tliere was about £'6,000,000 
 
 of debt paid off without being funded. 
 
 — at the commencement of the Ameri- 
 can war, - - - 1775 
 
 — at the peace of Versailles, - 1783 
 Besides this, there was a large unfund- 
 ed debt, which being funded in the fol- 
 lowing years, raised the amount to - 
 
 And this was reduced by purchases for 
 the redemption of the national debt, 
 at the commencement of the war, 1793 
 
 Funded debt at the peace of Amiens, 1802, in- 
 cluding the loan of that year, £'567,008,978 
 Of which redeemed, - 67,255,915 
 
 There was no reduction of the 
 
 national debt in the short 
 
 peace which followed the 
 
 treaty of Amiens. 
 Funded debt 1st Feb. 1812, £769,764,356 
 Of which redeemed, - 189,538,480 
 
 £1,054,925 
 21,515,772 
 16,394,701 
 55,282,978 
 
 47,954,623 
 
 79,193,313 
 
 73,289,673 
 
 133,959,270 
 
 123,644,500 
 211,363,524 
 
 238,231,248 
 227,989,148 
 
 499,753,063 
 
 580,225,876
 
 so 
 
 No. VI. An ACCOUNT of the AMOUNT of BANK 
 NOTES in CIRCULATION on the under-mentioned 
 Days. 
 
 (From the Report of the Committee of the House of Commons, in 
 1819, on the Sank resuming Cash Payments.) 
 
 Total. 
 
 1792 - February - 25 - a^l 1,149,809 
 
 August - - 25 - 11,006,969 
 
 1793 - February - 26 - 11,428,381 
 
 August - - 26 - 10,838,214 
 
 1794 - February - 26 - 10,697,924 
 
 August - - 26 - 10,628,220 
 
 1795 - February - 26 - 13,539,163 
 
 August - - 26 - 11,458,382 
 
 1796 - February - 26 - 10,909,694 
 
 August - - 26 - 9,531,335 
 
 1797 - February - 25 - 8,601,964 
 
 August - - 26 - 10,568,216 
 
 1798 - February - 26 - 12,850,085 
 
 August - - 25 - 12,191,025 
 
 1799 - February - 26 - 12,636,145 
 
 August - - 26 - 13,259,873 
 
 1800 - February - 25 - 15,236,676 
 
 August - - 26 - 14,735,378 
 
 1801 - February - 26 - 16,577,514 
 
 August - - 26 - 14,970,321 
 
 1802 - February - 26 - 15,458,876 
 
 August - - 26 - 16,887,113 
 
 1803 - February - 26 - 15,576,932 
 
 August - - 26 - 17,035,959
 
 31 
 
 Total. 
 
 1804. - February - 25 - jgl 7,577,352 
 
 August - - 25 - 17,323,994? 
 
 1805 - February - 26 - 17,234,4-66 
 
 August - - 26 - 16,296,178 
 
 1806 - February - 25 - 17,H'8,446 
 
 August - - 26 - 19,072,893 
 
 1807 - February - 26 - 17,205,344 
 
 August - - 26 - 20,034,112 
 
 1808 - February - 26 - 18,593,054 
 
 August - - 26 - 17,365,266 
 
 1809 - February - 25 - 18,014,677 
 
 August - - 26 - 19,357,241 
 
 1810 - February - 26 - 20,429,281 
 
 August - - 25 - 24,446,175 
 
 1811 - February - 26 - 23,384,833 
 
 August - - 26 - 23,793,115 
 
 1812 - February - 26 - 22,998,197 
 
 August - - 26 - 23,482,910 
 
 181S - February - 26 - 23,307,471 
 
 August - - 26 - 24,024,869 
 
 1814) - February - 26 - 25,095,415 
 
 August - - 26 - 28,979,876 
 
 1815 - February - 25 - 26,673,370 
 
 August - - 26 - 27,024,049 
 
 1816 - February - 26 - 25,680,069 
 
 August - - 26 - 27,075,854 
 
 1817 - February - 26 - 27,058,578 
 
 August - - 26 - 30,099,908 
 
 1818 - February - 26 - 28,279,043 
 
 August - - 26 - 26,602,837 
 
 1819 - February - 11 - 25,947,637
 
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 36 
 
 No. IX. The Amount of ADVANCES made by the Bank 
 of England to Government, on Exchequer Bills and other 
 Securities, including Exchequer Bills, Navy Bills, Vic- 
 tualling Bills, &c. purchased. 
 
 (From the Hcport of the Committee of the House of Commons, in 
 1819, on tJie Bank resummg Cash Payments.) 
 
 1792 - 
 
 February 
 
 - 25 
 
 
 August - 
 
 - 25 
 
 1793 ^ 
 
 February 
 
 - 26 
 
 
 August - 
 
 - 26 
 
 1794 •- 
 
 February 
 
 -. 26 
 
 
 August - 
 
 - 26 
 
 1795 > 
 
 Februar}' 
 
 -. 26 
 
 
 August - 
 
 - 26 
 
 1796 - 
 
 February 
 
 - 26 
 
 
 August - 
 
 - 26 
 
 1797 - 
 
 February 
 
 - 25 
 
 ::< ""-' - • 
 
 August - 
 
 - 26 
 
 17^8 - 
 
 February 
 
 - 26 
 
 
 August - 
 
 - 25 
 
 1799 - 
 
 February 
 
 - 26 
 
 
 August - 
 
 - 26 
 
 1800 - 
 
 February 
 
 - 25 
 
 
 August - 
 
 - 26 
 
 1801 - 
 
 February 
 
 - 26 
 
 
 August - 
 
 - 26 
 
 Total. 
 jg^l 0,968,306 
 11,684,484 
 
 10,529,828 
 11,851,388 
 
 10,816,867 
 . 8,737,806 
 
 13,118,013 
 . 13,460,144 
 
 12,717,239 
 10,454,614 
 
 10,181,862 
 7,145,134 
 
 9,807,814 
 9,444,976 
 
 10,082,739 
 8,986,439 
 
 13,201,639 
 12,899,239 
 
 15,289,439 
 11,948,539
 
 37 
 
 m^: 
 
 
 
 
 Total. 
 
 1802 
 
 - February 
 
 - 26 
 
 - jgl 4,284,239 
 
 
 August - 
 
 - 26 
 
 13,552,339 
 
 1803 
 
 - February 
 
 . 26 
 
 9,595,939 
 
 
 A ugust - 
 
 - 26 
 
 13,635,239 
 
 1804 
 
 - February 
 
 - 25 
 
 14,715,239 
 
 
 August - 
 
 - 25 
 
 15,304,439 
 
 1805 
 
 - February 
 
 - 26 
 
 17,202,739 
 
 
 August - 
 
 - 26 
 
 11,745,339 
 
 1806 
 
 - February 
 
 - 25 
 
 14,663,339 
 
 
 August - 
 
 - 26 
 
 14,445,339 
 
 1^07 
 
 - February 
 
 - 26 
 
 13,763,539 
 
 
 August - 
 
 - 26 
 
 13,665,339 
 
 1808 
 
 - February 
 
 - 26 
 
 14,364,939 
 
 
 August - 
 
 - 26 
 
 15,677,539 
 
 1809 
 
 - Februai-y 
 
 - 25 ■ 
 
 15,400,139 
 
 
 August - 
 
 - 26 
 
 16,009,339 
 
 ^^aho 
 
 February 
 
 - 26 
 
 15,017,839 
 
 0:- 
 
 August - 
 
 - 25 
 
 17,689,739 
 
 ^<^''i8ii 
 
 - February 
 
 - 26 
 
 18,068,439 
 
 
 August - 
 
 - 26 
 
 22,696,239 
 
 1812 
 
 - February 
 
 - 26 
 
 22,551,739 
 
 
 August - 
 
 - 26 
 
 21,957,639 
 
 1813 
 
 - February 
 
 - 26 
 
 25,893,939 
 
 
 August - 
 
 - 26 
 
 25,731,239 
 
 1814. 
 
 - February 
 
 - 26 
 
 24,484,039 
 
 
 August - 
 
 - 26 
 
 35,814,539 
 
 1815 
 
 - February 
 
 - 25 
 
 28,032,739 
 
 
 August - 
 
 - 26 
 
 24,955,839 
 
 1816 
 
 - February 
 
 - 26 
 
 19,865,039 
 
 
 August - 
 
 - 26 
 
 27,222,845
 
 38 
 
 1817 
 1818 
 1819 
 
 February 
 August - 
 
 - 26 
 
 - 26 
 
 26,373,570 
 28,300,200 
 
 February 
 August - 
 
 - 26 
 
 - 26 
 
 28,035,523 
 28,087,865 
 
 February 
 
 - 11 
 
 23,028,820
 
 39 
 
 No. X. An ACCOUNT of the AGGREGATE VALUE 
 (as calculated at the Average Market Prices in England 
 and Wales) of all CORN, GRAIN, MEAL, and 
 FLOUR, imported from Foreign Parts into Great Bri- 
 tain during each of the last six Years. 
 
 (Fr(mi the Report of the Committee of the Home of Commons, in 
 1819, on the Bank resuming Cash Payments.) 
 
 £m s. d, 
 
 1813 - - - 2,192,592 3 6 
 
 1814. - - 2,815,319 4 
 
 1815 - - - 793,24-5 8 11 
 
 1816 - - 942,497 19 7 
 
 1817 - - - 6,403,893 10 6 
 
 1818 - - 10,908,140 2
 
 40 
 
 
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 41 
 
 No. XII. An ACCOUNT of the Total Amount of OUT- 
 STANDING DEMANDS on the Bank of England, and 
 likewise the Funds for discharging the same, 30th Janu- 
 ary, 1819. 
 
 (From the Report of the Committee of the House of Commons, in 
 1819, on the Bank r.^suming Cash Payments. J 
 
 DK. 
 
 The Bank, 
 
 30th January, 1819. 
 
 CR. 
 
 TO Bank Notes out 
 To other Debts, viz. 
 Drawing Accounts 
 Audit Roll - 
 Exchequer Bills 
 
 deposited - 
 And various other 
 Debts 
 
 Balance of Sur])lus 
 in favour of the 
 Bank of England, 
 exclusive of the 
 Debt from Go- 
 vernment, at £3. 
 per cent. 
 
 £11,686,800^ 
 
 And the Advance to 
 
 Government, per 
 
 56 Geo. III. cap. 
 
 96 at £3. per cent. 
 
 ^3,000,000 
 
 £. 
 26,094,430 
 
 7,800,150 
 
 33,894,580 
 
 - 5,202,320 
 
 £39,096,900 
 
 BY Advances on Go- 
 vernment Securi- 
 ties, viz, £. 
 
 On Exchequer Bills" 
 on Malt, &c. 1818 
 
 Bank Loan, 1808 
 
 Supply, 1816, at £4 
 per cent. 
 
 Growing Produce of 
 
 the Consolidated}- 8,438,660 
 Fluid to 5th April, 
 18 19, and Interest 
 due, and Loans to 
 Government on 
 unclaimed Divi- 
 dends 
 
 By aU other Credits, 
 viz. 
 
 Cash and BuIHon 
 
 Exchequer Bills pur- 
 chased & Interest 
 
 Bills and Notes dis- 
 counted 
 
 Treasury Bills for 
 the Service of Ire- 
 land 
 
 Money lent, and va- 
 rious other Articles 
 
 - 30,658,240 
 
 =^39,096,9(10 
 
 By the permanent 
 Debt due from 
 Government, for 
 the Capital of the 
 Bank at £3. per 
 cent. j)cr Annum 
 
 By the Advance to 
 Government, per 
 Act 56 Geo. III. 
 cap. 96, at £3 per 
 cent, per Annum 
 
 11,686,800 
 
 3,000,000 
 
 WILLIAM DAWES, Accountant GeneraL 
 B(mJc of Eiifflandy 22nd Februart/, 1819.
 
 No. XIII. ACCOUNT of the Market Prices of STAND- 
 ARD GOLD, the real par and course of exchange be- 
 tween London and Hamburgh, and the per centage in 
 favour of and against London.* 
 
 (From the Ai-tkle Exchange, in the Supplement to the Ericj/clopcsdia 
 Britannica.J 
 
 
 
 
 
 
 
 
 
 
 Price of 
 
 Par of Ex- 
 
 Course of Per cent.)Per cent. 
 
 
 
 Standard 
 
 change 
 
 exchange 
 
 in favour 
 
 against 
 
 
 
 Gold 
 
 with 
 
 ■with 
 
 of 
 
 London. 
 
 
 
 per oz. 
 
 Hambro'. 
 
 Hambro'. 
 
 London. 
 
 
 
 
 £. s. d. 
 
 sch. gr. 
 
 
 
 
 1760 
 
 Jan. 1 
 
 3 18 6 
 
 32 9.9 
 
 36 4 
 
 10.6 
 
 
 
 May 2 
 
 3 19 1 
 
 33 3.7 
 
 35 6 
 
 6.5 
 
 
 
 Sept. 2 
 
 4 1 
 
 33 6.0 
 
 32 2 
 
 
 4 
 
 I 
 
 Jan. 2 
 
 3 18 10 
 
 32 0.1 
 
 32 
 
 
 0.1 
 
 
 May 1 
 
 4 
 
 32 0.1 
 
 32 2 
 
 0.4 
 
 
 
 Sept. 1 
 
 4 6 
 
 33 0.9 
 
 32 5 
 
 
 2 
 
 2 
 
 Jan. 1 
 
 3 19 
 
 33 1.8 
 
 32 11 
 
 
 2.0 
 
 
 May 4 
 
 3 19 3 
 
 32 7.9 
 
 34 3 
 
 4.8 
 
 
 
 Sept. 3 
 
 3 19 4 
 
 33 11.2 
 
 35 
 
 3.6 
 
 
 3 
 
 Jan. 4 
 
 4 
 
 33 10.1 
 
 34 2 
 
 0.9 
 
 
 
 May 3 
 
 4 1 3 
 
 33 2.6 
 
 34 2 
 
 2.7 
 
 
 
 Sept. 2 
 
 4 1 6 
 
 34 4.0 
 
 34 7 
 
 0.7 
 
 
 4 
 
 Jan. 3 
 
 : 3 18 3 
 
 33 8.7 
 
 34 5 
 
 1.9 
 
 
 * " This table, with the exception of the column of the Bank of 
 " England notes, from 1760 to 1809, is extracted from the second 
 " edition of Mr Mushet's pamphlet. The last ten years have been 
 " filled up from the accounts given in the Reports on the Expediency 
 " of the Bank resuming Cash Payments, laid before parliament in 1819. 
 " T!he fixed par is taken at 34 schillings, 11 grotes, and \, which is 
 " esteemed the true par by the merchants, though it diSers about | 
 " per cent, from the par (35s. Id. Hamburgh currency), as estimated 
 " by Dr Kelly from the Mint regulations. The bills on Hamburgh 
 " from the negociation of which tliis table has been formed, have 
 " been mvariably drawn at 2\ usances."
 
 43 
 
 
 
 Price of 
 
 Par of Ex- 
 
 Course of 
 
 Per cent. 
 
 Per cent. 
 
 
 
 Standard 
 
 change 
 
 Exchange 
 
 in favour 
 
 against 
 
 
 
 Gold 
 
 
 with 
 
 with 
 
 of 
 
 London. 
 
 
 
 per 02 
 
 ■• 
 
 Hamhro'. 
 
 Hambro'. 
 
 London. 
 
 
 
 1 £. s. 
 
 rf. 
 
 sch. gr. 
 
 
 
 
 1761' 
 
 May 1 3 18 
 
 3 
 
 34 3.1 
 
 34 11 
 
 1.1 
 
 
 
 Sept. 4 3 18 
 
 
 
 34 2.0 
 
 35 
 
 2.4 
 
 
 5 
 
 Jan. 1 3 18 
 
 
 
 34 2.0 
 
 35 1 
 
 2.6 
 
 
 
 May 3 3 18 
 
 
 
 33 9.0 
 
 34 11 
 
 3.4 
 
 
 
 Sept. 3 
 
 3 18 
 
 8 
 
 33 7.9 
 
 34 4 
 
 2.0 
 
 
 6 
 
 Jan. 3 
 
 3 18 
 
 7 
 
 33 2.9 
 
 34 6 
 
 3.7 
 
 
 
 May 2 
 
 3 19 
 
 2 
 
 33 1.2 
 
 34 11 
 
 5.4 
 
 
 
 Sept. 2 
 
 3 19 
 
 
 
 32 9.6 
 
 35 3 
 
 8.2 
 
 
 7 
 
 Jan. 2 
 
 3 19 
 
 3 
 
 32 9.3 
 
 35 6 
 
 8.3 
 
 
 
 May 1 
 
 3 19 
 
 10 
 
 32 10.7 
 
 35 10 
 
 8.9 
 
 
 
 Sept. 1 
 
 3 19 
 
 5 
 
 33 2.6 
 
 35 11 
 
 8.1 
 
 
 8 
 
 Jan. 1 
 
 3 18 
 
 8 
 
 33 4.8 
 
 84 11 
 
 4.4 
 
 
 
 May 3 
 
 3 19 
 
 1 
 
 33 0.9 
 
 34 8 
 
 4.8 
 
 
 
 Sept. 2 
 
 3 19 
 
 6 
 
 33 4.6 
 
 34 5 
 
 3.0 
 
 
 9 
 
 Jan. 3 
 
 3 19 
 
 7 
 
 33 3.7 
 
 33 2 
 
 
 0.5 
 
 
 May 2 
 
 4 
 
 3 
 
 33 2.3 
 
 33 8 
 
 1.4 
 
 
 
 Sept. 1 
 
 4 
 
 4 
 
 33 1.2 
 
 33 6 
 
 1.2 
 
 
 1770 
 
 Jan. 2 
 
 4 
 
 6 
 
 33 0.4 
 
 33 2 
 
 0.4 
 
 
 
 May 1 
 
 4 
 
 4 
 
 32 10.1 
 
 33 3 
 
 1.3 
 
 
 
 Sept. 4 
 
 4 
 
 
 
 33 5.4 
 
 33 2 
 
 
 0.1 
 
 1 
 
 Jan. 1 
 
 3 18 
 
 9 
 
 32 8.2 
 
 33 8 
 
 .5 
 
 
 
 May 3 
 
 3 19 
 
 2 
 
 32 6.0 
 
 33 6 
 
 ,5 
 
 
 
 Sept. 3 
 
 4 
 
 8 
 
 33 4.3 
 
 33 11 
 
 
 1.4 
 
 2 
 
 Jan. 3 
 
 4 1 
 
 
 
 33 2.9 
 
 32 7 
 
 
 2.0 
 
 
 May 1 
 
 4 
 
 9 
 
 32 10.7 
 
 32 10 
 
 
 2 
 
 
 Sept. 1 
 
 3 19 
 
 
 
 33 9.6 
 
 33 5* 
 
 
 1.2 
 
 3 
 
 Jan. 5 
 
 3 18 
 
 
 
 33 7.5 
 
 34 
 
 1.1 
 
 
 
 May 4 
 
 3 17 
 
 11 
 
 33 10.1 
 
 34 9 
 
 2.6 
 
 
 
 Sept. 3 
 
 3 17 
 
 9 
 
 34 0.1 
 
 34 8 
 
 1.9 
 
 
 4 
 
 Jan. 4 
 
 3 17 
 
 9 
 
 34 7. 
 
 34 9 
 
 0.4 
 
 
 
 May 3 
 
 3 17 
 
 9 
 
 33 11. 
 
 34 7 
 
 1.9 
 
 
 
 Sept. 2 
 
 3 17 
 
 7 
 
 34 2.8 
 
 34 5 
 
 0.5 
 
 
 5 
 
 Jan. 3 
 
 3 17 
 
 7 
 
 33 8.5 
 
 34 3 
 
 1.6 
 
 
 
 May 2 
 
 3 17 
 
 7 
 
 33 2.3 
 
 34 4 
 
 3.4 
 
 
 
 Sept. 1 
 
 3 17 
 
 7 
 
 34 0.6 
 
 34 4 
 
 0.8 
 
 
 6 
 
 Jan. 5 
 
 3 17 
 
 7 
 
 33 3.7 
 
 34 1 
 
 4.8 
 
 
 
 May 3 
 
 3 17 
 
 7 
 
 32 8.2 
 
 33 8 
 
 3. 
 
 
 
 Sept. 3 
 
 3 17 
 
 7 
 
 32 11.3 
 
 33 5 
 
 1.4 
 
 
 7 
 
 Jan. 3 
 
 3 17 
 
 7 
 
 31 11.6 
 
 33 2 
 
 3.7 
 
 
 
 May 2 
 
 3 17 
 
 7 
 
 32 2-9 
 
 32 10 
 
 1.8 
 
 
 F 2
 
 44> 
 
 
 
 Price of 
 
 Par of Ex. 
 
 Course of 
 
 Per cent. 
 
 Per cent. 
 
 
 
 Standard 
 
 change 
 
 Exchange 
 
 in favour 
 
 against 
 
 
 
 Gold 
 
 
 with 
 
 with 
 
 of 
 
 London. 
 
 
 
 per 02 
 
 ;. Hambro'. 
 
 Hambro'. 
 
 London. 
 
 
 
 
 £. s. 
 
 rf. 
 
 sch. gr. 
 
 
 
 
 
 1777 
 
 Sept. 2 
 
 3 17 
 
 7 
 
 32 7.5 
 
 32 
 
 2 
 
 1.4 
 
 
 8 
 
 Jan„ 2 
 
 3 17 
 
 7 
 
 31 3.2 
 
 32 
 
 4 
 
 3.4 
 
 
 
 May 1 
 
 3 17 
 
 7 
 
 32 11.3 
 
 34 
 
 2 
 
 3.7 
 
 
 
 Sept. 1 
 
 3 17 
 
 7 
 
 33 5.4 
 
 34 
 
 5 
 
 2.8 
 
 
 9 
 
 Jan. 1 
 
 3 17 
 
 7 
 
 34 9.5 
 
 35 
 
 6 
 
 2.9 
 
 
 
 May 4 
 
 3 17 
 
 6 
 
 34 5.9 
 
 36 
 
 2 
 
 4.8 
 
 
 
 Sept. 3 
 
 3 17 
 
 6 
 
 33 4.8 
 
 33 
 
 9 
 
 1. 
 
 
 1780 
 
 Jan. 4 
 
 3 17 
 
 6 
 
 34 2.5 
 
 34 
 
 6 
 
 0.8 
 
 
 
 May 2 
 
 3 17 
 
 6 
 
 32 7.9 
 
 35 
 
 2 
 
 7.6 
 
 
 
 Sept. 1 
 
 3 17 
 
 6 
 
 33 0.4 
 
 34 
 
 1 
 
 3.2 
 
 
 1 
 
 Jan. 2 
 
 3 17 
 
 6 
 
 32 10.7 
 
 34 
 
 1 
 
 3.6 
 
 
 
 May 1 
 
 3 17 
 
 6 
 
 31 11. 
 
 33 
 
 7 
 
 5.2 
 
 
 
 Sept. 4 
 
 3 17 
 
 6 
 
 31 S.S 
 
 32 
 
 2 
 
 2.2 
 
 
 2 
 
 Jan, 1 
 
 3 17 
 
 6 
 
 31 0.2 
 
 31 
 
 9 
 
 2.3 
 
 
 
 May 3 
 
 3 17 
 
 6 
 
 30 4.7 
 
 32 
 
 11 
 
 8.3 
 
 
 
 Sept. 3 
 
 3 17 
 
 9 
 
 31 1.3 
 
 32 
 
 6 
 
 4.4 
 
 
 S 
 
 Jan. 3 
 
 3 17 
 
 9 
 
 31 9.6 
 
 32 
 
 7 
 
 2.4 
 
 
 
 May 2 
 
 3 18 
 
 
 
 30 10.5 
 
 31 
 
 9 
 
 2.8 
 
 
 
 Sept. 2 
 
 3 18 
 
 
 
 31 7.9 
 
 31 
 
 6 
 
 
 0.5 
 
 4 
 
 Jan. 2 
 
 3 18 
 
 
 
 33 1.5 
 
 33 
 
 6 
 
 1.1 
 
 
 
 May 4 
 
 3 17 
 
 101 
 
 34 2.8 
 
 34 
 
 4 
 
 0.2 
 
 
 
 Sept. 3 
 
 3 17 
 
 lOi 
 
 34 2.8 
 
 34 
 
 7 
 
 1.0 
 
 
 5 
 
 Jan. 7 
 
 3 17 
 
 104 
 
 34 6.2 
 
 35 
 
 
 
 1.4 
 
 
 
 May 3 
 
 3 17 
 
 101 
 
 34 7.9 
 
 34 
 
 11 
 
 0.7 
 
 
 
 Sept. 2 
 
 3 17 
 
 6 
 
 35 0.6 
 
 35 
 
 4 
 
 
 
 € 
 
 Jan. 3 
 
 3 17 
 
 6 
 
 34 4.2 
 
 34 
 
 10 
 
 1.1 
 
 
 
 May 2 
 
 3 17 
 
 6 
 
 33 11.2 
 
 34 
 
 5 
 
 1.4 
 
 
 
 Sept. 1 
 
 3 17 
 
 6 
 
 34 2,5 
 
 34 
 
 3 
 
 0.1 
 
 
 7 
 
 Jan. 2 
 
 3 17 
 
 6 
 
 34 6.2 
 
 34 
 
 5 
 
 
 0.1 
 
 
 May 1 
 
 3 17^ 
 
 6 
 
 34 0.9 
 
 34 
 
 7 
 
 4.0 
 
 
 
 Sept. 4 
 
 3 17 
 
 6 
 
 33 9.6 
 
 ^S 
 
 
 
 3.5 
 
 
 8 
 
 Jan. 1 
 
 3 17 
 
 6 
 
 33 9.6 
 
 35 
 
 1 
 
 3.8 
 
 
 
 May ^ 
 
 3 17 
 
 6 
 
 33 9.6 
 
 35 
 
 4 
 
 4.5 
 
 
 
 Sept. 2 
 
 3 17 
 
 6 
 
 33 9.6 
 
 35 
 
 
 
 3.5 
 
 
 S 
 
 Jan. 6 
 
 3 17 
 
 6 
 
 33 9.Q 
 
 34 
 
 10 
 
 3.0 
 
 
 
 May 1 
 
 3 17 
 
 6 
 
 34 0.9 
 
 35 
 
 6 
 
 4.1 
 
 
 
 Sept. 1 
 
 3 17 
 
 6 
 
 34 6.2 
 
 35 
 
 5 
 
 2.6 
 
 
 1790 
 
 Jan. 29 
 
 3 17 
 
 6 
 
 34 5.9 
 
 35 
 
 
 1.4 
 
 
 
 May 4 
 
 3 17 
 
 6 
 
 34 0.9 
 
 35 
 
 4 
 
 3.7 
 
 
 
 Sept. 3 
 
 3 17 
 
 6 
 
 34 5.9 
 
 35 
 
 6 
 
 2.9 

 
 45 
 
 
 
 Price of 1 
 
 Par of Ex- 
 
 I!ourse of 
 
 Per cent. 
 
 Per cent. 
 
 
 
 Standard 
 
 change 
 
 Exchange 
 
 in favour 
 
 against 
 
 
 
 Gold 
 
 
 with 
 
 with 
 
 of 
 
 London. 
 
 
 
 per oz. 
 
 Hambro'. 
 
 Hambro'. 
 
 London. 
 
 
 
 
 £. s. 
 
 rf. 
 
 sch. gr. 
 
 
 
 
 1791 
 
 Jan. 4 
 
 3 17 
 
 6 
 
 34 2.5 
 
 35 6 
 
 3.7 
 
 
 
 May 3 
 
 3 17 
 
 6 
 
 34 0.9 
 
 35 11 
 
 5.4 
 
 
 
 Sept. 2 
 
 3 17 
 
 6 
 
 34 7.6 
 
 35 6 
 
 2.5 
 
 
 2 
 
 Jan. 3 
 
 3 17 
 
 6 
 
 33 8.2 
 
 34 6 
 
 2.4 
 
 
 
 May 1 
 
 3 17 
 
 6 
 
 33 0.4 
 
 34 3 
 
 3.7 
 
 
 
 Sept. 4 
 
 3 17 
 
 6 
 
 33 1.8 
 
 34 
 
 2.5 
 
 
 3 
 
 Jan. 1 
 
 3 17 
 
 6 
 
 33 3.4 
 
 35 4 
 
 6.1 
 
 
 
 May 3 
 
 3 17 
 
 6 
 
 34 5.9 
 
 37 6 
 
 8.7 
 
 
 
 Sept. 3 
 
 3 17 
 
 6 
 
 35 0.6 
 
 36 
 
 2.7 
 
 
 4 
 
 Jan. 3 
 
 3 17 
 
 6 
 
 35 0.6 
 
 35 9 
 
 2.0 
 
 
 
 May 2 
 
 3 17 
 
 6 
 
 35 2.3 
 
 36 7 
 
 4.0 
 
 
 
 Sept. 2 
 
 3 17 
 
 6 
 
 35 3.9 
 
 35 
 
 
 1.0 
 
 5 
 
 Jan. 2 
 
 3 17 
 
 6 
 
 34 7.6 
 
 34 6 
 
 
 0.4 
 
 
 May 1 
 
 S 17 
 
 6 
 
 35 3.9 
 
 34 4 
 
 
 2.8 
 
 
 Sept. 1 
 
 * 
 
 
 
 32 6 
 
 
 
 6 
 
 Jan. 1 
 May 3 
 
 
 
 
 32 7 
 
 33 10 
 
 
 
 
 Sept. 2 
 
 3 17 
 
 6 
 
 33 11.2 
 
 33 7 
 
 
 1. 
 
 7 
 
 Jan. 3 
 
 3 17 
 
 6 
 
 33 1.8 
 
 35 6 
 
 7. 
 
 
 
 May 2 
 
 S 17 
 
 6 
 
 32 7.9 
 
 36 
 
 10. 
 
 
 
 Sept. 1 
 
 3 17 
 
 104 
 
 35 5,9 
 
 38 
 
 7. 
 
 
 8 
 
 Jan. 2 
 
 3 17 
 
 lOi 
 
 36 1.1 
 
 38 2 
 
 5.7 
 
 
 
 May I 
 
 3 17 
 
 lOi 
 
 35 2.5 
 
 37 8 
 
 7. 
 
 
 
 Sept. 4 
 
 3 17 
 
 lOi 
 
 35 5.9 
 
 37 6 
 
 5.Q 
 
 
 9 
 
 Jan. 1 
 
 3 17 
 
 9 
 
 34 10.5 
 
 37 7 
 
 7.7 
 
 
 
 May 3 
 
 3 17 
 
 9 
 
 34 10.5 
 
 35 6 
 
 1.8 
 
 
 
 Sept. 3 
 
 3 17 
 
 9 
 
 
 33 4 
 
 
 
 1800 
 
 Jan.fS 
 
 
 
 
 32 
 
 
 
 
 May 2 
 
 4 5 
 
 
 
 34 0.4 
 
 32 5 
 
 
 5.3 
 
 
 Sept. 2 
 
 4 5 
 
 
 
 34 0.4 
 
 32 2 
 
 
 5,5 
 
 1 
 
 Jan. 2 
 
 4 6 
 
 
 
 33 11.2 
 
 29 8 
 
 
 12.6 
 
 
 May 1 
 
 4 3 
 
 
 
 31 10. 
 
 31 6 
 
 
 1. 
 
 
 Sept. 1 
 
 
 
 
 31 7 
 
 
 
 * " Wherever a blank space is left, it shews that no prices of bul. 
 " lion are quoted of that date, either at Lloyd's, or at the Bullion 
 " Office in the Bank of England." 
 
 ■|- " From 1800 to 1810, standard gold and silver in bars are not 
 " regularly quoted. Portugal gold in coin, being nearly of the same 
 " standard, has in several instances been quoted as standard gold."
 
 46 
 
 1802 
 
 8 
 
 1810 
 
 11 
 
 12 
 
 13 
 
 14 
 
 15 
 
 Jan. 
 May 
 Sept, 
 Jan. 
 May 
 Sept. 2 
 Jan. 
 May 
 Sept. 4 
 Jan. 1 
 May 3 
 Sept. 3 
 Jan. 3 
 May 2 
 Sept. 2 
 Jan. 2 
 May 1 
 Sept. 4 
 Jan. 1 
 May 3 
 Sept. 2 
 Jan. 3 
 May 
 Sept, 
 Jan. 
 May 
 Oct. 
 Jan. 22 
 Mayl4 
 Aug 30 
 Jan. 31 
 May22 
 Oct. 2 
 Jan. 22 
 May21 
 Oct. 1 
 Feb. 8 
 May24 
 Oct. 4 
 Jan. 3 
 
 Price of 
 
 Par of Ex- 
 
 Course oi 
 
 Per cent. 
 
 Standard 
 
 change 
 
 Exchange 
 
 in favour 
 
 Gold 
 
 with 
 
 with 
 
 of 
 
 per oz. 
 
 Hambro'. 
 
 Hambro'. 
 
 London. 
 
 £. s. d. 
 
 sch. gr. 
 
 
 
 4 3 6 
 
 
 32 2 
 
 32 8 
 
 33 3 
 34 
 
 34 4 
 32 10 
 
 34 10 
 
 35 9 
 
 
 4 
 
 34 9.3 
 
 35 10 
 
 3. 
 
 4 
 
 33 5.7 
 
 35 6 
 
 6.0 
 
 4 
 
 34 5.9 
 
 35 5 
 
 2.6 
 
 4 
 
 ' 
 
 35 5 
 33 3 
 
 33 8 
 
 34 4 
 34 8 
 34 10 
 34 3 
 34 4 
 34 9 
 34 8 
 31 3 
 
 
 4 11 
 
 38 0.8 
 
 30 6 
 
 
 4 9 \0\ 
 
 36 10.9 
 
 29 
 
 
 4 9 lOi 
 
 
 29 3 
 31 3 
 
 
 4 5. 
 
 
 31 
 
 
 4 7 6 
 
 34 9.9 
 
 26 
 
 24 
 
 25 6 
 
 
 4 18 6 
 
 
 27 6 
 
 
 4 17 
 
 35 6.2 
 
 29 
 
 
 5 7 
 
 
 28 
 
 
 5 4 
 
 
 29 
 
 
 5 3 
 
 34 11.2 
 
 28 
 
 
 5 8 
 
 36 2.3 
 
 26 6 
 
 
 5 8 
 
 35 6.8 
 
 29 
 
 
 5 3 
 
 
 28 
 
 
 4 5 
 
 34 9.3 
 
 32 10 
 
 
 4 6 6 
 
 34 10.4 
 
 32 4 
 
 
 Per cent, 
 against 
 London. 
 
 19.9 
 21.4 
 
 25.3 
 
 18.4 
 
 24.6 
 29.1 
 14.5 
 
 5.6 
 7.3
 
 47 
 
 
 
 Price of 
 
 Par of Ex- 
 
 Course of 
 
 Per cent. 
 
 Per cent. 
 
 
 
 Standard 
 
 change 
 
 Exchange 
 
 in favour 
 
 against 
 
 
 
 Gold 
 
 with 
 
 with 
 
 of 
 
 London. 
 
 
 
 per oz. 
 
 Hambro'. 
 
 Hambi-o'. 
 
 London. 
 
 
 
 
 £. s. d. 
 
 sch. gr. 
 
 
 
 
 ISlSMay 2 
 
 5 6 
 
 36 2.3 
 
 28 2 
 
 
 22.2 
 
 
 Sep. 15 
 
 4 9 
 
 35 10.6 
 
 32 9 
 
 
 8.7 
 
 16 
 
 Jan. 16 
 
 4. 2 
 
 36 2.8 
 
 34 4 
 
 
 5.2 
 
 
 May28 
 
 4 
 
 36 2.3 
 
 35 10 
 
 
 1.0 
 
 
 Oct. 1 
 
 S 19 
 
 36 7.5 
 
 36 11 
 
 0.8 
 
 
 17 
 
 Jan. 17 
 
 3 19 6 
 
 36 6.7 
 
 36 1 
 
 
 1.3 
 
 
 June 6 
 
 3 19 
 
 34 10.7 
 
 35 
 
 0.3 
 
 
 
 Sept. 5 
 
 4 
 
 35 3.9 
 
 35 2 
 
 
 0.5 
 
 18 
 
 Jan. 9 
 
 4 6 
 
 35 3.1 
 
 34 6 
 
 
 2.2 
 
 
 May26 
 
 4 1 6 
 
 34 7.3 
 
 33 11 
 
 
 2.0 
 
 
 Sep. 15 
 
 4 
 
 34 9.3 
 
 35 2 
 
 1.1 
 
 
 19 
 
 Jan. 8 
 
 4 3 
 
 35 2.9 
 
 33 9 
 
 
 1.9 
 
 
 Mar 23 
 
 4 1 
 
 34 1.5 
 
 34 4 
 
 0.6 

 
 48 
 
 No. XIV. EXTRACT from the EVIDENCE of David 
 Hodgson, Esq. before the AGRICULTURAL COM- 
 MITTEE of 1821. 
 
 (From the Report of the Committee of the House of Commons on 
 the Agriculture of the United Kingdojn, 1821.^ 
 
 You are a partner in the house of Cropper, Benson, and 
 Company, at Liverpool ? I am. 
 
 In w^hat line of business are you engaged ? We are in 
 various lines of business, the East India, the American, and 
 the Irish corn trade. 
 
 Have you been extensive dealers in foreign corn ? We 
 have. 
 
 And are now holders of foreign corn in bond ? We are. 
 
 Have you, with a view to guide your commercial transac- 
 tions in the article of corn, endeavoured, by any means, to 
 ascertain what has been, of late years, the state of the wheat 
 crops of this country ? We have. 
 
 Have you any objection to state to the committee, the 
 mode which you have adopted for ascertaining this point ? 
 None ; but we should prefer, in giving a detail of it, that it 
 was only used for the conviction of the committee, in order 
 that they might decide what importance they might attach 
 to the results ; we have been at very considerable expence, 
 and consumed a great deal of time in obtaining the informa- 
 tion, and we should prefer that the details of the manner 
 were not made public. 
 
 Have the goodness to state the results ? We have ex- 
 amined, for the last several years, but more correctly since 
 1815, a district of the country, comprising about 1,000 
 miles, and we have endeavoured, as accurately as possible, 
 to take a fair average of the fields examined.
 
 4^ 
 
 What are the districts of country generally included in 
 this survey of 1,000 miles ? We have generally commenced 
 in Kent, and gone down the whole of the east coast to Ber- 
 wick, and once or twice to Edinburgh, as one part of the 
 survey ; the others we have taken from Liverpool, through 
 Cheshire, Shropshire, Worcestershire, Herefordshire, round 
 by Birmingham, and taken in the whole of Warwickshire 
 and Staffordshire, and come round in that circuit home 
 again. 
 
 This survey, of course, is taken about the time the har- 
 vest is going to begin ? Yes ; just when we consider the 
 wheat ripe. 
 
 Has the result of this survey been such as to afford you 
 satisfactory information for the guidance of your commercial 
 speculations in corn ? We have been guided by it, though 
 not always to the result we expected ; but latterly it has 
 been becoming more perfect, at the same time there are va- 
 rious contingencies that often disappoint any opinion con- 
 nected with an article so extensively held, or otherwise, ac- 
 cording to the spirit of speculation which may prevail. 
 
 You consider the result of the survey to be a material in- 
 gredient in forming your conclusions as to the state of the 
 crop, and the probability of the country being in want, or 
 not in want of a foreign supply ? Certainly. 
 
 And of the probable price of corn in the year following 
 your survey ? We do. 
 
 Have you any objection to state to the committee, upon 
 any scale you may have formed, what has been the compa- 
 rative productiveness of the crops of the last six years ? 
 None whatever; the crop of 1815, according to the method 
 explained, gave a result of 37 Winchester bushels per acre ; 
 1816 gave 25xV; 1817 gave 33,*o; 1818 gave 32 and ,%; 
 1819, 27 f^; 1820, 37tV; this is the quantity reduced to 
 Winchester bushels, at sixty pounds a bushel, but then it is 
 supposing the whole surface of the acre to produce: we 
 
 G
 
 50 
 
 have not any accurate method of knowing what the real 
 produce per acre is, but in making some attempt at a de- 
 duction, we have been rather led to believe it would not fall 
 much short of a sixth, but that is estimated entirely ; the 
 loss by hedges, the loss in harvesting, the loss in furrows 
 and by vermin, the waste in machining ; every thing goes 
 out of the quantity stated. 
 
 You are of opinion, then, that in order to get at the 
 produce actually brought to market, a deduction of not less 
 than a sixth ought to be made from this acreable return ? 
 — I give it as a very vague estimate ; the data we have had 
 to go upon have been so uncertain ; we had a very small 
 quantity once tried, which made a deduction of about ten 
 per cent, but this I should, myself, think was quite under the 
 mark. 
 
 Of course you are aware that the losses some years are 
 much greater than in others ? — Unquestionably. 
 
 You have now stated the quantities only, without refer- 
 ence to the quality or state in which the grain is harvested ? 
 — Certainly, I should state, that we have not weighed it 
 wet ; we have reduced it all to what we esteemed the same 
 state of dryness. 
 
 But still supposing these to be the quantities, all reduced 
 to an equal state of dryness, the quality or fitness of the 
 produce for converting into flour for the use of the popula- 
 tion of this country, must vary materially ?— Very materi- 
 ally, I should think. 
 
 And that, also, must be a main consideration in your cal- 
 culations ? — That is always considered in our estimates ; but 
 these figures are free from all estimate. 
 
 Can you state, with respect to those six years, those in 
 which the grain has been considerably injured, and those in 
 which the produce has been generally of a good quality ?— 
 That in 1815 was a very good crop, and we considered it 
 above an average at the time, decidedly; in 1816 it was
 
 51 
 
 very much worse than the survey. I ought to mention with 
 regard to 1815 and 1816, that our examinations were not so 
 perfect as they have been in the four years since, especially 
 1816 ; for, from the condition in which it was received, we 
 were so thoroughly satisfied of the deficiency, that we were 
 rather inattentive, and did not weigh nearly the same num- 
 ber ; we had gained our point in respect of information, and 
 did not pursue it further; but it was very much worse than 
 the survey; it was nearly rotten. In 1817, the quality 
 was not very good. 
 
 In 1818? — In 1818, according to my recollection, the 
 quality was good; I do not perceive that I have made a re- 
 mark upon it ; but I am satisfied, on recollection, it was very 
 good. In 1819, it was very good, not so good as 1818. 
 The last crop ;— The last crop is not very good. 
 Not so good in quality as in 1819 ? — No, nor nearly so 
 good as 1818 ; there is a considerable mixture of mildew in 
 the corn of 1820. 
 
 It is generally sound and dry ? — Yes ; but not equally 
 good with either of the preceding years. 
 
 More mildewed than in 1819 ?— Yes, I think so. 
 Can you state the average acreable produce of the six 
 years of which you have given us the detail ? — The average 
 acreable produce will be about thirty-two. 
 
 You have stated, that your survey, though less perfectly 
 carried on, embraced a period of nine years ? — It went back 
 to the year 1809, embracing altogether a period of twelve 
 years. 
 
 Can you state, as far as your survey was then established, 
 what was the crop of 1813? — We discovered in the year 
 1814, that the person we had employed in 1813, had made 
 a very gross mistake, which was to take the crown of the 
 ridge, and to select the best ears ; so that we reject it in our 
 calculations : but we have every reason to believe it was the 
 greatest crop we have ever known.
 
 52 
 
 When you say, you have every reason to believe it was 
 the greatest crop you have ever known, you have other rea- 
 sons for that opinion ? — We have other reasons and general 
 observation, from the time that the grain of that season re- 
 mained, in considerable quantity, in the market; I think 
 two or three years afterwards. 
 
 Your survey not extending to Ireland and Scotland, have 
 you any means of giving any information to the committee, 
 as to the state of the crops of those two parts of the United 
 Kingdom for the two last years ? — No, nothing but infer- 
 ence, no survey. 
 
 What is your impression ? — My impression is, that the 
 crop of Ireland in 1820 was good; it appeared to be the 
 course of the crop last year to improve towards the west ; 
 and I think, there has been a very considerable extension of 
 cultivation in Ireland last year, for a reason I will give by 
 and by. 
 
 Do you consider the crop of ] 820, as far as ascertained 
 by your survey, to be above an average crop i — Certainly. 
 
 How much do you imagine above an average crop ? — 
 Upon the average of the six years which I have given, it 
 would appear as about five in thirty-two, between a sixth 
 and a seventh; but if we go further back, and include 1809, 
 1810, 1811, 1812, and 1814, rejecting 1813, on account of 
 its being uncertain what the real figure was ; applying the 
 data of the square yard as actually taken for the last six 
 years, it would give a result for an average crop of 34 in 
 place of 32 ; of course, in estimating the crop of last year 
 with reference to the acreable produce, it will depend on 
 whether it is called 32 or 34. 
 
 Does it appear from the result of this survey, that taking 
 the best year and the worst to which it applies, the fluctua- 
 tion has been so much as a third ?— Nearly. 
 
 NEWCASTLE : PRINTED BY EDW. WALKER.
 
 AN 
 
 ON 
 
 THE GENERAL PRINCIPLES 
 
 AND 
 
 PRESENT PRACTICE 
 
 OF 
 
 BANKING, 
 
 IN 
 
 (Cnglanti anD ^cotlanti j 
 
 WITH 
 
 OBSERVATIONS UPON THE JUSTICE AND POLICY 
 
 OF AK 
 
 IMMEDIATE ALTERATION 
 
 IK 
 
 'E^e Cliactec of tfie Banfe of d^nglanti, 
 
 AND THE 
 
 MEASURES TO BE PURSUED IN ORDER TO EFFECT IT. 
 
 BY T. JOPLIN. 
 
 FOURTH EDITION.
 
 DeDicatiott* 
 
 TO NONE CAN IT BE MORE PROPER TO DEDICATE A 
 WORK OF ANY KIND THAN TO THOSE WHOM IT PRO- 
 POSES TO SERVE, THEREFORE, 
 
 TO THE MANUFACTURERS, MERCHANTS, AND TRADES- 
 WEN, OF ENGLAND AND IRELAND, THIS ESSAY IS RE- 
 SPECTFULLY DEDICATED BY 
 
 THE AUTHOR.
 
 PREFACE. 
 
 Ihe following Essay, though more immediately ad- 
 dressed to the Gentlemen, Merchants, and Others, of 
 Newcastle upon Tyne, Shields, Durham, and Sunder- 
 land, and their respective neighbourhoods, is equally 
 applicable to every part of England; and it is to be 
 hoped, that the steps recommended to be pursued, in 
 order to procure an alteration in the Charter of the 
 Bank of England, or similar ones, will be immedately 
 taken, wherever it may be intended to establish Banks 
 on the principles recommended. A simultaneous 
 movement in different quarters, and a general combi- 
 nation in favour of the object proposed, would at once 
 render nugatory any opposition from those who may 
 expect to lose by it. 
 
 An effectual opposition, however, in the present 
 state of the public mind, need not be dreaded. The 
 absolute necessity of a change in our Banking System
 
 VIU 
 
 has long been felt, and is quite obvious ; but the pre- 
 sent Bankers have great influence in Parliament, and 
 might succeed, perhaps, in getting some half-measure 
 adopted, if the public v^^ere to shew the least indiffer- 
 ence or want of determination on the subject. 
 
 A perfect freedom with respect to the System of 
 Banking which it may choose to adopt, more espe- 
 cially since this can be attained without injuring the 
 Bank of England, the country ought to look for, and 
 insist upon. Were the clause in its Charter, for in- 
 stance, expunged with respect to Country Banks only, 
 as has been done in Ireland, the same defective and 
 insecure principle of Banking would be continued in 
 the metropolis, and the System would still be bad 
 where it ought to be best. 
 
 In London, it is requisite that more confidence 
 should be placed in Bankers than in any other part 
 of the kingdom. The circumstances of individuals 
 cannot there be known as in the country, by the ob- 
 servation and report of their neighbours, hence they 
 are obliged to make reference to their Bankers when 
 it is necessary to verify their credit, who can or who 
 will only know the credit they are entitled to, by the 
 goodness of their accounts ; and consequently those
 
 IX 
 
 who have any considerable credit to maintain, aie 
 always obliged to keep large balances in their hands. 
 Country Bankers are under the necessity of doing the 
 same, in order to meet the bills upon London, which, 
 in the way of their business they have to draw. A 
 great number of noblemen and country gentlemen of 
 large property, also keep their accounts with them, 
 which together with the great money transactions of 
 foreign nations and governments now negociated in 
 London, with all of which the Bankers have more or 
 less to do, necessarily render the business of the Lon- 
 don Banks immense. 
 
 The large balances which the merchants in London 
 must keep with their Bankers, would not only with 
 Public Companies be safe, but productive. At pre- 
 sent they get nothing for them but their Banker's 
 good word ; while with such Companies they would 
 also be allowed three or four per cent, interest. 
 
 The Plan recommended to the inhabitants of New- 
 castle, it will, perhaps, be best to pursue every where. 
 The Deputies of a Company will always have more 
 weight than individuals, however respectable. There 
 can, also, it is trusted, be little doubt of success ; and 
 even should any serious opposition arise, by a rro-
 
 per union there need be no great fear of overcoming 
 it. The present System can never be supported a- 
 gainst the united convictiens of both government and 
 the country.
 
 AN 
 
 6ssat» ott TBatikinS' 
 
 JjANKS are by far the most important of all 
 our commercial establishments. They are the 
 fountains of our currency, the depositories of 
 our capital, and at once the wheels and pillars 
 of our trade. Business to any great extent 
 could not be carried on without them. All 
 who have cash transactions of any kind are 
 more or less dependent upon them. The landed 
 proprietor finds them a convenient place of de- 
 posit for the ready money he possesses, or a 
 useful resource in case of need. The capitalist, 
 when he deems them safe, can lodge his money 
 with them, receive interest for it, and have it 
 ready when the chances of trade or changes of 
 property may throw a desirable purchase in his 
 
 B
 
 2 
 
 way. Merchants and traders of every denomi- 
 nation are enabled through them to send money 
 to, and receive it from the most distant places, 
 to raise money when in want of it upon the 
 Bills which they receive from their customers, 
 to have those Bills presented for payment 
 through a channel which in general secures 
 their being duly honoured, and to deposit in 
 them those sums which any particular occasion, 
 or the current demands of their business re- 
 quire. Their Promissory Notes, also, furnish 
 the country with a useful and convenient cir- 
 culating medium, and are in the hands of every 
 one. 
 
 They are, therefore, intimately connected 
 with every class of society. Every person who 
 has any thing to do either with capital or mo- 
 ney is interested in their stability. But the 
 capitalist, merchant, manufacturer, and trades- 
 man, and all who have large payments to make 
 and receive, are continually under the necessity 
 of trusting them in amounts, the loss of which 
 might prove their utter ruin. They have besides 
 daily to confide in them for the negotiation of 
 Bills and advances of capital, which, in com- 
 mercial transactions, are continually required. 
 
 On this account, a very deep interest is felt 
 in the welfare of Banks. Nothing can in any 
 way affect them without exciting the immediate
 
 3 
 
 attention of the public, and (if it involve their 
 credit) without producing the greatest possible 
 agitation and alarm. Thus when the slightest 
 apprehension is entertained respecting their 
 solvency, however groundless it may sometimes 
 prove, a run upon them immediately takes 
 place. That is, hundreds of people immediate- 
 ly crowd the doors of the Banks, to demand 
 payment of the Notes they hold, or to with- 
 draw that money out of their hands, which 
 they have deposited with them. This puts a 
 stop to their usual Banking operations, and 
 people in trade cannot receive that accommo- 
 dation upon which they have relied, and upon 
 which the regularity of their payments, and 
 consequently their credit, depends. In the 
 mean time, no person can make remittances 
 without placing their money in a state of peril, 
 which they can only ascertain to be groundless, 
 by waiting until it is over. All is, therefore, 
 confusion ; and the whole community is thrown 
 into a state of apprehension and alarm, which 
 may be better conceived than described. 
 
 Upon such occasions the greatest exertions 
 are always made to allay the fears, and restore 
 the confidence of the public ; and very great 
 risks are sometimes run in doing so. It is not 
 unusual for the friends of a Bank so situated, 
 to issue out Bills or Notices, pledging them- 
 
 B 2
 
 selves to the public, to take its Notes in pay- 
 ment, to any amount. By this measure, 
 should the Bank happen to stop, many of them 
 would necessarily be ruined. Within these few 
 years, pledges of this kind were repeatedly is- 
 sued in favour of the Durham, Stockton, and 
 Sunderland Banks, which* ultimately failed. 
 But, as they were not attended with any 
 serious consequences, it is probable that the 
 Banks did not stop payment imm.ediately when 
 they were issued, or perhaps ^he public might 
 have overlooked the obligation contracted, and, 
 from inadvertency, not have called upon the 
 parties to redeem the pledge they had given. 
 
 * I have to apologize to the very respectable Bank- 
 ing House of Messrs Hutchinson, of Stockton, for a 
 verbal inaccuracy, in the former Editions, at which they, 
 (no doubt with great justice,) took umbrage, and publicly 
 called for an explanation. Instead of "which ultimately 
 failed," it was stated in the former Editions " all of whom 
 ultimately failed," from whence it might have been inferred 
 that Messrs H. had failed too. This inference, howevei*, 
 could only have been made where, except by name, they 
 were utterly unknown. The only reason, if I can assign 
 any for the inaccuracy, was, that I had never heard of any 
 pledges having been issued in their favour of the nature re- 
 ferred to, which from Mr Hutchinson's public correspond, 
 ence upon the subject, I infer must have been the case. In 
 Newcastle, during all the stormy period of the failures that 
 took place around them, their credit was never once doubt- 
 ed.
 
 We may, however, form some idea of the in- 
 conveniences in which the mercantile world are 
 involved, when people are found wandering so 
 far out of the tract of ordinary prudence as to 
 guarantee the security of establishments with 
 whose affairs they have no intimate acquaint- 
 ance, and whose insolvency would involve them 
 in certain destruction. 
 
 Nothing, in fact, can affect the credit of the 
 Banks witliout being immediately felt in a cor- 
 responding degree by the public ; and the ac- 
 tual stoppage of an extensive Banking concern 
 deranges the whole frame of mercantile affairs, 
 and carries confusion, misery, and ruin, into 
 every department of society. 
 
 Great, however, as the inconveniences are 
 which the discredit of Banks, and consequent 
 runs upon them occasion : and great as are the 
 calamities by which their failures are uniformly 
 attended, they are, both in this country and 
 Ireland, of very common occurrence. 
 
 By an account printed in the appendix to 
 the Lords* Report upon the Bank resuming 
 Cash Payments, it appears, that in the last 
 twenty years, (that is, twenty years previous to 
 1818), no fewer than two hundred and thirty 
 commissions of bankruptcy had been issued 
 against Banks ;* an average of ffiilures, pro- 
 
 * This statement, not having the Lords' report to refer 
 to, I took from a newspaper, as I mentioned jn a note to my
 
 6 
 
 portioned to the total number of them, in all 
 probability far exceeding that of any other re- 
 gular business. 
 
 Sometimes, as if epidemically, the Banks of 
 a whole district fail together, as was the 
 case a year or two ago, in the south of Ireland. 
 That part of the country was, in consequence, 
 
 first Edition. I have since, however, procured the table re- 
 ferred to, which I here give. 
 
 APPENDIX, G 3. 
 
 RETUaN OF THE PATENTEE TOR THE EXECUTION OF THE LAWS AKD STATUTES 
 CONCERNING BANKRUPTS. 
 
 „ . . against 
 
 Years. Commissions. _g°„;ters. 
 
 1790 issued 747 none. 
 
 1791 769 1 
 
 1792 934 1 
 
 1795 1956 26 
 
 1794 1041 2 
 
 1795 879 7 
 
 1796 954 6 
 
 1797 1115 3 
 
 1798 911 5 
 
 1799 717 6 
 
 1800 951 8 
 
 1801 1199 5 
 
 1802 1090 8 
 
 1803 1214 8 
 
 1804 1117 6 
 
 Years. Commissions, * , 
 
 Jiankers, 
 
 1805 issued 1129 9 
 
 1806 1268 5 
 
 1807 1362 1 
 
 1808 1435 5 
 
 1809 1S8£ 7 
 
 1810 2514 26 
 
 1811 2500 4 
 
 1812 2228 IT 
 
 1815 1953 8 
 
 1814 1612 29 
 
 1815 2284 26 
 
 1816 2731 37 
 
 1817 1927 5 
 
 1818 1245 6 
 
 JOSEPH DORIN, 
 
 Deputy Patentee. 
 
 Bankrupt Office, 15th February, 1819.
 
 involved in the greatest distress ; its trade was 
 materially injured, and a shock given to its 
 prosperity, from which it is said not yet to have 
 recovered. The same event happened also in 
 the county of Durham a few years back, when 
 one Durham, two Sunderland, and two Stock- 
 ton Banks failed within a short time of each 
 other, being five out of the seven Banks then 
 in the county. This part of the country, how- 
 ever, was better able to endure it, though the 
 inconveniences generally felt were great, and 
 the sufferers numerous. Even in this town, to 
 which the evil but partially extended, the want 
 of confidence and the general state of alarm 
 which it produced, must be fresh in the recol- 
 lection of every one. 
 
 Now, while England and Ireland are con- 
 tinually subject to disasters of this kind, it 
 seems an extraordinary fact, that Scotland is 
 totally free from them : the Scotch Banks rare- 
 ly, if ever, either failing or losing money. 
 
 No one, I dare say, will, from this, imagine, 
 that there is any thing different in the nature 
 of their money transactions, or that trade is 
 subject to fewer vicissitudes in Scotland than 
 with us. I believe that trade is pretty much 
 the same in both nations, or if there is any dif- 
 ference, that the merchants of Scotland are the 
 more speculative, and less stable of the two. 
 But the true cause of the difference is to be
 
 8 
 
 found in the nature of their respective Banking 
 Establishments : the Scotch Banks being Joint 
 Stock Companies, while the English Banks are 
 private concerns. 
 
 The Scotch Banks consist of a great number 
 of Proprietors or Stock Holders, who contri- 
 bute, some to the extent of one hundred 
 pounds, some of a thousand, and some many 
 thousands. By these means they form a joint 
 capital, establish a Bank, and entrust the ma- 
 nasrement of it to a Committee chosen from their 
 body, called a Court of Directors. The Eng- 
 lish Banks, on the contrary, never consist of 
 more than six partners, though often fewer, and 
 are for the most part, managed by one, or at 
 the furthest by two of them. 
 
 To the uniform success of Joint Stock Bank- 
 ing Companies, history affords but one excep- 
 tion, viz. : — The case of the Douglass, He- 
 ron, and Co. (or Ayr) Bank, some account of 
 which is given by Smith, page 58, vol. 2nd, of 
 his Wealth of Nations, if, however, we exa- 
 mine the circumstances which produced that 
 failure, we shall find it attributable to causes 
 which are not likely again to occur, and that 
 as an exception, it merely establishes the rule. 
 
 About fifty years ago, this Bank was formed 
 in the West of Scotland, by a number of coun- 
 try gentlemen, totally ignorant of business, and 
 entertaining erroneous views of Banking. Their
 
 9 
 
 object was not to make money, but to furnish 
 capital, (which was then scarce,) to the country 
 at large, in order to promote and improve the 
 cultivation of land, &c. This they imagined 
 could be done by means of a few reams of pa- 
 per, manufactured into Notes. They were un- 
 able to see that it was not in the power of any 
 Bank to keep more Notes in circulation than 
 are wanted as a circulating medium by the 
 country, and that the surplus would inevitably 
 be returned upon them for repayment. Con-, 
 formably to the object of its establishment, the 
 Bank therefore issued its Notes, with great free- 
 dom, in permanent loans, which were immedi- 
 ately expended in agricultural improvements, 
 and when they were returned for payment (hav- 
 ing been issued in advances which could not be 
 recalled) it had nothing to pay them with ; and 
 was compelled, in a short time, to raise money 
 by improvident expedients, at eight or ten per 
 cent, when it had lent it out to others at five. 
 Such a mode of business was not likely, of 
 course, to be long pursued. The Bank came 
 to a stand in about two years, its proprietors 
 lost money, and it now remains the only ex- 
 ception to the success of such concerns. 
 
 It must, however, be understood, that the 
 uniform success of the Scotch Banks, applies 
 only to the Joint Stock Companies. Private 
 Bankers fail in Scotland, as well as in other 
 
 c
 
 . 10 
 
 places. Tlie Private Banks in Scotland, how- 
 ever, are but few, and only one or two of them 
 at present issue notes. They keep the accounts 
 of individuals, and transact business with the 
 Public Banks in the same manner as the Bankers 
 of London transact it with the Bank of Eng- 
 land, But the credit requisite even to Private 
 iBanks is much greater in Scotland than with 
 us, in consequence of their having to compete 
 with establishments of superior stability, which 
 do business upon the same terms. 
 
 The only Bank failures, however, that I 
 have heard of in Scotland, with the exception 
 of the Ayr Bank already spoken of, are the Mer- 
 chant Banking Company of Stirling, Grace's 
 Bank of Dumfries, and the Falkirk Union 
 Bank. The first two were each of them carri- 
 ed on by an individual, and the last had only 
 three partners. To these must be also added, 
 the Merchant Banking Com.pany of Glasgow, 
 about twenty years ago, a very small concern, 
 which must likewise, I think, have been a Pri- 
 vate Bank, as but few particulars are generally 
 known respecting it. Had it been a Public 
 Establishment, a greater degree of publicity 
 would have been given to its affairs. 
 
 In consequence of the uniform success of the 
 Public Banks of Scotland, the most unbounded 
 confidence is felt and reposed in them, both by 
 the stock-holders and the public. Every holder
 
 11 
 
 of stock, (except with the chartered companies) 
 however small the amount, incurs all the re- 
 sponsibility of a partner, yet that responsibility 
 having been proved by all experience to be 
 merely nominal, has no effect whatever on the 
 sale of it. A person buys a hundred pounds 
 share of the stock of any of the Banks, with the 
 same freedom that he would purchase the same 
 amount of stock in the three per cent, consols, 
 without the responsibility weighing with him 
 one shilling in the purchase. 
 
 In addition, however, to their success, some 
 of the Scotch Banks have very considerable 
 capitals, particularly the Edinburgh Banks, 
 which have from five to fifteen hundred thou- 
 sand pounds each. Hence their credit is al- 
 most unbounded, being considered by the 
 Scotch equal to that of the Bank of England 
 itself. The evils, therefore, which we suffer 
 from the feeble and fluctuating credit of most 
 of our Banks, and the disastrous failures of 
 many of them, are nearly unknown to the peo- 
 ple of Scotland. 
 
 From the very great credit enjoyed by the 
 Scotch Banks, they are enabled to transact bu- 
 siness to a much greater extent, and on very 
 different principles, than with us. From this 
 source, still more important, though less obvi- 
 ous benefits arise, and these it may not be im- 
 proper for us in the first place to consider, 
 "c 2
 
 12 
 
 The original and proper business of a Banker 
 is to trade in capital. He ought to be that me- 
 dium between the borrower and lender in the 
 money market, which a merchant is in other 
 commodities. It is the business of a merchant 
 or trader to buy of the producer on the one 
 hand, and to sell to the consumer or retailer on 
 the other. He acquires a knowledge of both 
 parties, and they of him, and for his credit, 
 capital, labour, and knowledge, he charges a 
 profit upon the commodity which, through his 
 agency, is transferred from the party who has 
 it to sell, to the party wanting to purchase it. 
 Now, what a merchant is in other commodities, 
 the Scotch Banks are in the money market. 
 They borrow of those who have money to lend, 
 and lend to those who want to borrow, acquire 
 a knowledge of both parties, and charge a pro- 
 fit of one per cent, upon the transaction. Any 
 person opening an account with them, re- 
 ceives four per cent.* upon the balance in their 
 hands. He may pay money to the credit of his 
 account when he chooses, and he receives inte- 
 rest for it from the day it is deposited ; he may 
 draw his money out of the Bank when and in 
 such sums as he thinks proper, and only loses 
 
 * Some of them have lately reduced the interest they 
 give, but others continue to give four per cent, as before. 
 
 Fourth Edition. They have now, I understand, reduced 
 the interest they give, generally.
 
 IS 
 
 interest upon the sum drawn, from the day of 
 receiving it. On the contrary, any person 
 giving proper securities, may open an account 
 with them, and draw to the extent of the se- 
 curity given, for which they will charge him 
 five per cent, upon the fluctuating balance he 
 owes. Consequently, a person who has money 
 to lend is saved all the trouble, not unattended 
 with risk, of mortgages, and may have his mo- 
 ney, or any part of it, at any time, should a 
 desirable purchase fall in his way ; whereas 
 with a mortgage he cannot draw his money 
 when he wants it — must take it altogether when 
 he does draw it — or, if the borrower chooses, 
 must take it whether he wants it or not. Their 
 object, however, in borrowing, being to lend, 
 the facilities given to borrowers, are equally 
 great. In the first place, they will discount 
 bills and other mercantile securities, that are 
 perfectly regular and good, at any time, and 
 to any amount. Thus merchants can calculate 
 with certainty upon being accommodated in 
 the course of regular transactions to any ex- 
 tent, which is of infinite service to them, as it 
 would be better for a merchant not to have such 
 assistance at all, than to have any uncertainty 
 respecting it. In the next place, they grant 
 Cash Accounts, that is, any person in busi- 
 ness, by giving two sufficient securities, may 
 open an account with them, and overdraw
 
 14 
 
 it to the extent of the security given, for 
 which, as before stated, he is charged five per 
 cent, upon the balance he owes. Very great 
 advances, not to mercantile men only, but to 
 all classes of persons, are made in this way; 
 and in the last place, they make advances up- 
 on real property, some of them to a very consi- 
 derable extent. The plan they pursue, I 
 believe, is, for the proprietor to pledge his 
 estate, or other property^ with the Bank, for a 
 given amount, open an account with it, and 
 draw as his occasions may require, to the 
 amount prescribed. Thus, when any persons 
 wish to borrow, the facilities held out to bor- 
 rowers induce them, equally with the lenders, 
 to make application to the Bank. 
 
 As individuals often call in the money they 
 have lent out on mortgage when they can find 
 better employment for it, or when the death of 
 a party produces a division of his property, by 
 which a great expence to the mortgagee is in- 
 curred in procuring a fresh mortgage. Banks 
 are therefore more to be depended upon, and 
 borrowers being just as much wanted by them 
 as lenders, and the money which they lend be- 
 ing rarely, or in fact, never, called in again 
 until it is the pleasure of the borrower to pay 
 it off, people, in want of money, will prefer 
 dealing with the Banks at even a higher per 
 centage, while lenders, on their part, prefer
 
 15 
 
 dealing with them at a per centage something 
 less than individuals would give. Thus in con- 
 sequence of the security of their property, and 
 the readiness with which they can at all times 
 obtain it when wanted, a difference of one per 
 cent, is not found to be a sufficient inducement 
 for the borrowers and lenders to pass by the 
 Banks and to transact their business directly with 
 each other. If they did, the gain would, of 
 course, have to be divided between them, and 
 a half per cent, would be no compensation to 
 either party for the additional inconvenience, 
 risk, and trouble, in which they would be in- 
 volved. Whereas the Bank being open and 
 ready at all times to meet the wants of each 
 party, unless among particular friends, neither 
 party ever thinks of making further enquiries 
 upon the subject, but transacts the business 
 with the Banks as a matter of course. They 
 are, therefore, at once, the great depositories 
 of the money capital of the country, and the 
 source from whence the supplies of it are 
 drawn. 
 
 Although considerable advances are made 
 by the Scotch Banks upon real property, it is 
 rather a ground of complaint, that they have 
 been too much in the habit of speculating in 
 the funds, when it might have been more to 
 the advautage of their country that they should 
 have lent out their capital at home ; and while
 
 16 
 
 lending their money at home appears to be pre- 
 ferable for a Public Bank, to gambling in the 
 funds, it seems also to be the duty of such an 
 establishment to lend its money at home when- 
 ever it can do so with safety. 
 
 The failures which continually take place 
 amongst the English, particularly the Country 
 Banks, and the consequent discredit in which 
 they are held, of course almost totally preclude 
 them from trading in capital in the manner 
 pursued by the Banks of Scotland. The Lon- 
 don Bankers are the only Bankers, it is general- 
 ly understood, who at all do so, and they are not 
 considered good mortgagees. Their strictness 
 in requiring powers of sale, &c. to be granted 
 them, which their limited credit renders neces- 
 sary, in order to be able to call in their money 
 at the shortest notice, should the state of their 
 credit at any time require it, places the mort- 
 gager in a state of disagreeable dependence. 
 The business of an English country bank is, 
 however, principally confined to lending out 
 that capital which it raises by the circulation 
 of its Notes, and the comparatively small sums 
 deposited with it, mostly without interest, 
 (its customers seldom depositing more money 
 with it, than their current occasions require) 
 and to buying and selling Bills upon London. 
 The advances of capital which it makes are, of 
 necessity, principally confined to the discount-
 
 17 
 
 ing of such short dated Bills of Exchange as 
 through its London agents can be turned at 
 any time into cash ; as it is always liable to be 
 called upon to pay oft* its notes, and all the 
 money in its hands, at the shortest notice, it 
 should always be prepared to do so ; and the 
 most prudently managed and best English 
 Banks are those which confine themselves most 
 strictly to the limits which their uncertain cre- 
 dit prescribes to them. 
 
 Credit is, in fact, the proper capital of a 
 Bank, without which it is impossible for 
 it to be carried on with any great advan- 
 tage to the country. For w'ant of this the 
 business of English Banks, extensive as it may 
 appear, is quite inconsiderable compared with 
 that of the Banks of Scotland, and far short of 
 what it would be with a different system. 
 
 Thus, then, it appears to be the result of ex- 
 perience, that while our Banks are often de- 
 structive, at all times dangerous, and at the 
 very best totally inadequate, from want of sta- 
 bility and credit, to perform their proper func- 
 tions, the Scotch Banks never fail, nor is any 
 danger ever apprehended from them ; and that, 
 in consequence, Banking is carried an in that
 
 18 
 
 kingdom to an extent unknown, and, of course,> 
 with advantages totally unfelt in our own. 
 
 We have stated that the superiority in the 
 success, as well as in the stability and credit of 
 the Scotch Banks, arises from their being pub- 
 lic, and not private concerns, which is also 
 proved by our own experience. We have but 
 one Public Bank, the Bank of England, and it 
 has uniformly done well since its first establish- 
 hient. The same may be also inferred of the 
 Bank of Ireland, the only Public Bank in that 
 country. Lately, when applying for a re- 
 newal of its charter, it appeared, that besides 
 its annual divideffids, it had made and saved 
 half a million of money, a sum much greater 
 than the Stock-holders had any conception of. 
 This at once proves, that successful manage- 
 ment is not at all peculiar to Scotland, or any 
 nation, but is inherent in the system itself. 
 
 The cause 6f this difference proceeds from 
 the charters of the Banks of England and Ire- 
 land, which prevent, in their respective coun- 
 tries, more than six persons from entering into 
 a Banking concern, while in Scotland there 
 is no such monopoly, and Banks can be esta- 
 blished on the proper principles, and as many 
 people become partners in them as choose. 
 
 From the limited number, of partners in our 
 Banks, their management has frequently fallen 
 into hands totally incompetent to such a trust.
 
 19 
 
 There is, perhaps, nothing in the theory of 
 Banking very complicated. But to manage a 
 Bank well, requires a degree of firmness, 
 and judgment, which every individual does not 
 possess. If a Banker be too safe and injudi- 
 ciously cautious in his transactions, he is apt 
 to ruin his business for want of liberality ; if 
 too confident, to ruin himself for want of 
 prudence ; while he must possess firmness sufii- 
 cient to enable him to refuse the most pressing 
 solicitation of even his friends, when necessary 
 to do so. This knowledge, discrimination, and 
 firmness, not only require natural talent in the 
 person possessing them, but previous practice 
 and experience in the business of the world. 
 Whereas persons are often placed in the manage- 
 ment of English Provincial Banks, by some con- 
 nection or other chance, which usually deter- 
 mines the lot of individuals in the common 
 affairs of life. Or, if they are chosen express- 
 ly for their presumed fitness for the trust, their 
 fitness will then depend upon whether the part- 
 ners who choose them, are themselves sufficient- 
 ly competent to form such a choice ; inde- 
 pendent of which, however, the energy and vi- 
 gilance of every individual is at times apt to 
 slumber, and we occasionally find the ablest 
 men get very far wrong. 
 
 Now, the true reason of the success of Pub- 
 lic Banks may be ascribed to their never being 
 D 'i
 
 20 
 
 managed by any single person, but by a Court 
 of Directors, periodically chosen by the holders 
 of stock ; and their fitness for the trust not de- 
 pending upon the opinion of an individual or 
 two, but of hundreds, founded upon the clear 
 evidence which their successful management of 
 their own aifairs^ has afforded. No man is ever . 
 chosen as the director of a joint stock compa- 
 ny, where the choice is unbiassed by influence, 
 who has not given sufficient proof in the eyes 
 of the world of his ability for the management, 
 and has not justly inspired his fellow proprie- 
 tors with that confidence which they repose in 
 him.* 
 
 The principal causes which produce the ruin 
 of private Banks may be stated to be, — first, a 
 confusion in their accounts, arising from a bad 
 or relaxed and careless management, so very 
 frequently exhibited in common affairs ; but 
 which, in Banking, must ever be fatal ; second- 
 ly, speculations with the capital in the Bank ; 
 and thirdly, and most frequently, accommoda- 
 ting great houses, either from motives of pri- 
 vate friendship, or the temptation of extra 
 Banking profits, until they are so involved that 
 they must stand or fall with them. The two 
 great failures which have happened in this part 
 
 * Since the publication of this Essay, I have understood 
 that this is far from being always the case.
 
 21 
 
 of the countiy were Surtees, Burdon, and Ca* 
 and the Durham Bank. The first was produced 
 by entering into private speculations with the 
 capital in its liands, and the last by accommo- 
 dating a great mining concern. But with Pub- 
 lic Banks these causes, by which failures are 
 generally produced, cannot exist. In the first 
 place, the vigilant check necessarily kept upon 
 the accountant, and those who have the charge 
 of the books, which must at all times show, 
 without trouble to the Directors, the state of 
 the company's affairs, prevents the possibility 
 of their getting back or into confusion. In the 
 next place, the Directors could not appropriate 
 the money of the Bank to views of private 
 speculation, if they were wishful to do so, 
 as they are a check upon each other. If 
 they were respectable men, they would not at- 
 tempt it, and if they were not, they would not 
 be there : besides, there is no instance recorded 
 of such a thing. In the third place, they have too 
 little personal interest in the Bank to be tempt- 
 ed by extra profit out of the path of safety, in 
 accommodating great houses : or if any of them 
 were influenced by private friendship to do so, 
 it could never be the case with them all ; and 
 they would be also in that respect a check upon 
 each other. 
 
 Independent of the general Court of Di- 
 rectors, there is also a Managing Director,
 
 2^ 
 
 Cashier, Secretary, and Accountant, or some- 
 times Cashier, Secretary, and Accountant, or 
 Cashier and Accountant alone, according to 
 the business done, either the Cashier or Secre- 
 tary in the latter cases acting as Managing Di- 
 rector, and taking all the practical management ; 
 and if the Directors are careful to choose men 
 fit for these stations, and see that they do their 
 duty, the concern will generally succeed. 
 
 The Directors having in general business of 
 their own to attend to, cannot give their whole 
 attention to the Bank affairs. Their part is more 
 to deliberate, judge, and determine, than to con- 
 trive. Consequently the Managing Director, 
 or he who is at the head of the executive de- 
 partment, sits with and joins the Directors in 
 their deliberations, and proposes to them such 
 views and opinions as his practical knowledge 
 and undivided attention to the affairs of the 
 Bank, suggest to him. These they take into 
 consideration, and approve, alter, or otherwise 
 direct, as they may think proper. The ener- 
 getic and profitable management of such a con^ 
 cern, therefore, greatly depends upon the abi- 
 lity of its officers, who are expected to submit 
 a variety of views and propositions to the Di- 
 rectors, of which there is no fear that they adopt 
 any which are too speculative. The errors 
 of Public Banks are generally on the side of 
 safety, but the concern is apt to flag when the
 
 23 
 
 practical management is not in the hands of 
 men possessed in some degree of ready appre- 
 hension, practical energy, and talent for busi- 
 ness ; and I understand, it is consistent with 
 experience, that when the officers of a Bank 
 are not of this description, the business of the 
 concern is apt to fall off, and to become less 
 profitable. 
 
 The business, however, of such a Bank, 
 though it may not be pushed, is seldom neg- 
 lected. When the Directors can give no at- 
 tention to the concern, they generally resign, 
 or when it is their turn to go out, are not 
 re-elected. On the other hand, they are not 
 likely to get wrong in taking up sanguine 
 views, by which individuals often mislead them- 
 selves. They are responsible in the estimation 
 of the Stock-holders for all that is done, and 
 individually have but little to gain by success ; 
 whereas, if their management produced any 
 considerable loss to the concern, they would be 
 turned out of office, and stand committed with 
 the public in a manner that would render them 
 ridiculous, and necessarily produce feelings the 
 most disagreeable and painful. 
 
 As, therefore, it thus appears, that the causes 
 which operate in producing the failure of Pri- 
 vate Banks are totally prevented by the consti- 
 tution of Public Companies, we cease to wonder 
 at the uniform success by which the latter are
 
 24 
 
 attended. But the risk incurred by Bankers is 
 not, perhaps, so great as we are apt to imagine. 
 With loans on property, or on the personal se- 
 curities required to establish a Cash account, 
 there is no risk at all. Property is not taken, 
 if not sufficient to cover the loan upon it, and 
 the sureties accepted when a cash account is 
 opened, are each of them required to be suffi- 
 ciently able to fulfil the obligation of the bond 
 they enter into. Should any thing happen to 
 either of them, another name must be immedi- 
 ately substituted. Independent therefore of the 
 party with whom the account is opened, there 
 are always two perfectly good and sufficient 
 sureties, to make up any deficiency, even to 
 the full amount of the debt, should it be called 
 for. 
 
 The greatest risk incurred by a Bank, is in 
 the Discounting of Bills of Exchange, though 
 it is, at the same time, its most desirable busi- 
 ness, from being the principal means by which 
 it keeps its Notes in circulation. But with this 
 class of business also, the risk, under pro- 
 per management, is much less than is sup- 
 posed. It is said, that the Bank of England, in 
 ordinary times, does not calculate upon a 
 greater loss than one pound in three hundred 
 thousand. Leith is quite a speculating town, 
 and its merchants are subject, in consequence, 
 to considerable vicissitudes. Yet the Branch of
 
 25 
 
 the Commercial Bank there, during the first 
 four years of its establishment, did not lose one 
 pound out of many millions of discounts, al- 
 thougli, in consequence of having entirely new 
 connexions to form, it rejected no business that 
 it could with any degree of prudence accept. 
 The experience of those also, who live in coun- 
 try towns, where the losses which the Banks 
 sustain are generally known, will point out 
 to them, if they have made the observation, 
 that it is only very rarely that a well managed 
 Bank suffers any loss at all. 
 
 The Scotch Banks, in fact, in the arrange- 
 ments which they make with their agents 
 established in distant towns, assume that there 
 is no risk whatever, and lay it down as a rule, 
 that if they incur any loss, they are to suffer it 
 themselves. The Directors, in general, select 
 for Agents, tried men of business, who have 
 proved, by the manner of conducting their own 
 affairs, their capability of successfully transact- 
 ing whatever may be confided to them. Secu- 
 rities are required of them, in a town of any 
 business, to the extent, I understand, of not 
 less than ten thousand pounds, and they receive 
 a fixed salary of (say) from two to four hundred 
 per annum, according to the size of the place 
 and business done in it. It is, I believe, gene- 
 rally calculated by the Agent, that if he can 
 make out a case of very unforeseen loss, it will 
 
 E
 
 26 
 
 be partly allowed him ; but the assumed princi- 
 ple is, that there need be none at all. It is 
 a most curious circumstance, however, and 
 completely proves the insecurity of private 
 management in Bank affairs, that the Banks 
 lose more money through their agents than in 
 any other way. 
 
 The distance of the town, where the Agent 
 is established, from the Bank, renders it impos- 
 sible that any proper judgment can be formed 
 by the Directors, of the stability of the persons 
 with whom the Agent does business. The great 
 sum, however, required as a security, the busi- 
 ness character he possesses, and the risk he him- 
 self runs, naturally remove all suspicion as to 
 the prudence of his transactions. Should his 
 affairs become involved, he is, perhaps, suffi- 
 ciently clever to hide it for a considerable 
 length of time. This he probably does with 
 the hope of recovering himself, until the failure, 
 perhaps of some house he has imprudently ac- 
 commodated, or his deficiency is too great for 
 further concealment, when his own ruin, the 
 loss of the friends who are security for him, and 
 the loss of the Bank besides, to perhaps three 
 times the amount, prove his unfitness for the 
 trust that has been reposed in him. 
 
 This does not unfrequently happen, and no 
 greater proof of the insecurity of private ma- 
 nagement could well be afforded. If Agents,
 
 27 
 
 without the temptation of profit, and under the 
 control of their Banks, cannot keep right, 
 how much more likely are Private Banks to 
 get wrong, without any such control, and 
 with all the usual temptations to influence 
 them ? 
 
 Although our Banking System has been so 
 long in its present state, its effects seem not to 
 have forced themselves on the consideration 
 either of the government or the public, until 
 lately, when the fliilures in Ireland, and the 
 lamentable effects produced by them, attracted 
 the notice of the whole kingdom, and called 
 the attention of those interested in the welfare 
 of Ireland, to the subject. 
 
 In a conversation which, in consequence, 
 took place in the House of Lords, upon the 
 state of commercial credit in Ireland, the Mar- 
 quis of Lansdowne stated, that the present dis- 
 tress in Ireland was principally occasioned by 
 the late failures amongst the Banks in that 
 country, which failures were to be attributed 
 to the law that limited the number of partners 
 in Banking Firms, and he called upon Lord 
 Liverpool, with reference to Ireland, to reme- 
 dy the evil by an alteration in the law, in or- 
 der that proper Banks might be established. 
 
 E 2
 
 S8 
 
 In answer to this. Lord Liverpool said, " that 
 " not only did he agree in the suggestion of 
 " the Noble Marquis, but it was his anxious 
 " wish that the number of partners should be 
 " extended not only in Ireland, but in Eng- 
 " land,'* and instanced the hardship of Liver- 
 pool, Bristol, &c. being prevented from estab- 
 lishing Banks that would be instrumental to 
 their prosperity and strength. 
 
 Since that time a negociation has taken place 
 between government and the Bank of Ireland, 
 in which it has been stipulated, that the Bank 
 shall give up the restrictive clause in its char- 
 ter with respect to Country Banks, and it has 
 done so without an objection. A bill has con- 
 sequently passed through parliament, by which, 
 in the country districts ^f Ireland, Public Banks 
 may now be established. 
 
 After what has been said by Lord Liverpool, 
 as well as what has been done for Ireland, there 
 can be no doubt of the disposition of govern- 
 ment on the subject. It is the declared wish 
 of Lord Liverpool, who expressed the gene- 
 ral sentiment of ministers, (as their subsequent 
 conduct with respect to Ireland has proved) that 
 the impediment to the establishment of proper 
 Banks ought to be removed, and that this coun- 
 try should enjoy the advantages of a better 
 system. 
 
 To again call the attention of government
 
 29 
 
 to the subject, is all that is now, therefore, ne- 
 cessary ; and it will be creditable to the spirit 
 and intelligence of the Gentlemen, Merchants, 
 and others of the town and neighbourhood of 
 Newcastle upon Tyne, to be the first to set the 
 example. The proper plan to pursue is, in the 
 first place to form a company, and then ap- 
 point a deputation to wait upon ministers, and 
 the Directors of the Bank of England, and ne- 
 gociate with them respecting the alteration pro- 
 posed, and at the same time, pursue such other 
 steps as may prove necessary to the ultimate 
 attainment of the object desired. 
 
 That such an application must be made by a 
 Company, to be made with proper effect, is 
 evident. A Company will carry with it a 
 weight which no individual can have, while it 
 will prove how much alive the country is to 
 the advantages of a better system, by its readi- 
 ness to adopt it. It will also evince a proper 
 confidence in the declaration of ministers, as 
 made by Lord Liverpool, that they wished to 
 see a better system of Banking introduced ; 
 and there can be no doubt that the ministry will 
 have every disposition to give to their own de- 
 claration the earliest effect. 
 
 There is in fact but little doubt that govern- 
 ment will use all its influence to get the char- 
 ter altered, on an application to it for that pur- 
 pose. There can exist no reason why it should
 
 30 
 
 not. Ministers have declared the clause a great 
 evil, and are bound by their sense of duty to 
 endeavour to remove it. They have done so 
 with respect to Ireland ; and can have no mo- 
 tive or apology for not doing so with respect to 
 us. Ministers, I suppose, will occasionally be 
 wrong as well as any other set of men. Yet so 
 far as we can see, they are generally conscienti- 
 ous. A sufficient ground may sometimes exist 
 for their opinions and conduct being at vari- 
 ance ; but there is evidently none in the pre- 
 sent case, and their co-operation may therefore 
 be relied upon. 
 
 The charter of the Bank of England does 
 not, however, expire until 1833, and the ob- 
 noxious clause will require to be immediately 
 expunged from it. But this can be done with- 
 out injuring the Bank, and the wishes of minis- 
 ters, with the directors of the Bank, must neces- 
 sarily be imperative. Besides, we have nothing 
 to fear from the directors themselves, who, in 
 conducting the affairs of the Bank, have always 
 acted upon disinterested and public spirited 
 principles. Neither can it be supposed that any 
 measure for the public welfare, which was con- 
 ceded by the Bank of Ireland without an ob- 
 jection, would be resisted by the Bank of Eng- 
 land. The consent of the directors to any 
 alteration which benefits the public without 
 materially injuring the Bank, may, therefore.
 
 31 
 
 also be relied upon. Yet, as to anticipate the 
 worst, is sometimes the best policy, (viewing it 
 as a possible case that the directors may not be 
 at once disposed to accede to the wishes of the 
 nation,) we will examine whether, in that case, 
 parliament ought not to alter the clause with- 
 out their consent. 
 
 The Bank, though intimately connected with 
 government in its transactions, is an indepen- 
 dent establishment, governed by directors of its 
 own choosing. It was commenced by indivi- 
 duals as a speculation, and was chartered by 
 government on the grounds of its public utility. 
 Upon the same principle it has been continued 
 a Bank by its proprietors, and the charter re- 
 newed by government to the present day. It 
 would be absurd to suppose that the Bank 
 proprietors would have carried on the Bank 
 merely to serve the public, had they not there- 
 by served themselves, or that the public would 
 have conferred upon them, A. B. and C. the 
 holders of Bank Stock, any exclusive privilege 
 from time to time, except upon the ground of 
 public advantage. 
 
 That the Bank is held to be as much a pub- 
 lic institution as a private speculation, is evin- 
 ced by the interference of Parliament in its 
 affairs. This interference is quite oppos- 
 ed to the common law of the land, yet it is 
 perfectly justifiable with respect to the Bank
 
 32 
 
 of England, in consequence of its enjoying pri- 
 vileges as much for the public benefit as for 
 that of its proprietors. The Bank is in fact 
 an engine of the state ; and acts of parliament 
 are continually made for regulating its affairs, 
 without any reference to the proprietors, but 
 solely for the public convenience ; and the 
 right of parliamentary interference in its af- 
 fairs, when the public good is involved, is 
 clearly established by this usage. 
 
 It must, however, be kept in view, that 
 though the affairs of the Bank have been regu- 
 lated by the independent authority of parlia- 
 ment, its substantial interests have never been 
 infringed upon. At each renewal of its charter 
 a pecuniary fine, or loan at a reduced rate of 
 interest, has generally been exacted, by which 
 it has fairly purchased the profit to be made by 
 its charter daring the term of it. Hence the 
 pecuniary emoluments which were intended to 
 be secured to it, have never been curtailed. 
 Mr Pitt, when he persisted in drawing the spe- 
 cie from the Bank, protected it from the conse- 
 quences of his doing so, by an act of parliament 
 to suspend the payment of its notes. From this 
 restriction it derived great advantage ; and al- 
 though when the Bank was ordered, by act of 
 parliament, to return to cash payments, the 
 measure was contrary to its interests, it only 
 restored the contract to its original footing.
 
 S3 
 
 Now the exclusive right of Banking, as a 
 Joint Stock Company, in this kingdom, is of no 
 advantage whatev^er to the Bank, except in 
 London and Lancashire, and the latter is pro- 
 bably the result of chance. The advantage 
 it derives from it, is the monopoly which it 
 secures in those districts to the circulation of 
 its notes. Private Bankers, in London, are 
 not prevented, any more than Country Banks, 
 from issuing notes, if they thought proper, but 
 they would be continually liable to runs upon 
 them, from the never-ending rumours of the 
 metropolis. In the country, a Banker's proper- 
 ty is seen ; his economical habits, and prudent 
 management, if he possess those qualities, are 
 generally known, and a run upon him without 
 some cause, cannot so easily happen. In Lon- 
 don, on the contrary, the public at large, or 
 even the customers of a Bank, have hardly any 
 means of forming a knowledge as to the manage- 
 ment, prudence, or property of its partners. 
 Hence its credit would be totally at the mercy 
 of every offended or malignant individual, runs 
 would continually happen upon one Bank or 
 another, and the town would be in a continual 
 commotion. No Bank, therefore, whatever may 
 be its present credit, would find its interest in 
 issuing notes, and it is probable that as the 
 charter, and the present system of Private
 
 34 
 
 Banking now stands, it is perfectly effectual 
 in securing the Bank the monopoly of London, 
 In the country, however, with the exception 
 of Lancashire, Bank of England Notes have no 
 circulation at all. Country Banks issue their 
 Notes, in general, upon the same terms as the 
 Bank of England ; making no other charge 
 than the interest upon the Bills they discount* 
 The Bank of England having no means of issu- 
 ing its Notes out of London, the Country 
 Banks entirely possess the country circulation. 
 Independent of this. Bank of England Notes 
 would not pass in most parts of the kingdom, 
 as, where Local Notes can be had, no person 
 in the more Northern Counties, will take 
 a Bank of England Note if he can help it. 
 The signatures of Country Notes are, gene- 
 rally, written in a legible and distinct uni- 
 form character, peculiar to the writer, and well 
 known to the public. Hence every person can, 
 at least, attempt, to form a judgment, whether 
 a note is forged or not. Should his observation 
 upon hand-writing not be sufficient to enable him 
 to distinguish any discrepancies in it, or between 
 it and a printed fac-simile, the notes have, in ge- 
 neral, some little figure or etching, with which he 
 is familiar, and in which he might discover any 
 slight variation from the original. But, in con- 
 sequence of the number of Bank of England 
 Notes to be signed, from their not being more
 
 35 
 
 than once issued, the signing clerks and signa- 
 tures are so numerous, and the latter are written 
 so hastily, that nothing can be ascertained from 
 them; and the object of the signature is total- 
 ly defeated. I never remember having once 
 seen a person look at the signature of a Bank 
 of England Note, in order to ascertain whether 
 or not it was a forgery. The rest of the 
 Note is also little more than a piece of plain 
 printing, and presents (at least to a person in the 
 country,) nothing by which a forgery can be dis- 
 tinguished. Country Notes, therefore, are al- 
 ways preferred. 
 
 In Lancashire, however, there seems to be a 
 prejudice in favour of Bank of England Notes, 
 which is rather surprising. The Banks there do 
 not, in consequence, issue their own, but Bank 
 of England paper, and to compensate this sup- 
 posed disadvantage, charge a commission up- 
 on their discounts; which method must ren- 
 der their business a great deal less hazard- 
 ous, and more profitable. Hence also they are 
 never subject to runs, and when they discount 
 a Bill, are sure of their commission of 5 or 10s. 
 per cent. Banks in other districts, on the con- 
 trary, that charge no commission, constantly 
 have their Notes returned upon them through 
 other Banks, the next day after issuing them ; 
 and, by this means, where the Lancashire Bank- 
 ers would gain a handsome profit, they often do 
 F 2
 
 36 
 
 not make a farthing. By this prejudice, how- 
 ever, the Bank of England also enjoys the al- 
 most exclusive circulation of Lancashire. 
 
 It has been very usual to consider the de- 
 rangement and loss by the circulating medium, 
 particularly to the poor, the greatest evil at- 
 tending the failure of Banks. This is, however, 
 an erroneous view of the matter ; for Country 
 Notes are, upon the whole, a better currency 
 than Bank of England paper. A good deal of 
 present inconvenience may occasionally for a 
 short time- be sustained where the Banks of a 
 country fail all together (as was before 
 mentioned of Ireland) 5 but the loss by the 
 Notes in actual circulation is widely spread, 
 and, comparatively speaking, little felt. The 
 evil would be trifling if it extended no fur- 
 ther than to the Notes which are in the hands 
 of individuals ; that proportion which is held 
 by the lower classes, even taking it in the 
 aggregate, can never be considerable, more 
 especially since the Savings' Banks were esta- 
 blished J it will probably seldom exceed a 
 pound to a hand, and even ift that case, the 
 Bank ought to fail on Saturday, the day on 
 which wages are generally both paid and spent. 
 The circulation is principally in the hands of 
 tradesmen, and the richer classes, few of whom 
 would not prefer the risk attending Country 
 Paper, if it were three times as great as it is.
 
 37 
 
 rather than incur the plague, trouble, and in- 
 convenience which they suffer from the fear of 
 forgeries, so prevalent with Bank of England 
 Paper, as well as the loss by them, which there 
 is no avoiding. This is incontestably proved 
 by the decided preference which is actually 
 given to the paper of Country Banks wherever 
 it is circulated. 
 
 Upon considering the generally acknowledg- 
 ed superiority of Country Notes, it seemed at 
 first natural to think that the prejudice existing 
 in Lancashire against them must have originat- 
 ed with the Bankers in that part of the country 
 themselves, as it was apparently their interest to 
 support it. I had even formed a conjecture to 
 this effect, until I observed in the papers of the 
 day an account of the transactions and resolu- 
 tions of a meeting, held on the 1st of September 
 last, by the Merchants and Manufacturers of 
 Manchester, on the subject. By the proceed- 
 ings at this meeting, it seems that the Bankers of 
 that town, not content with the present profits 
 of their trade, have had it in contemplation to 
 issue notes, expecting, no doubt, to enjoy their 
 present commissions, and the advantage to be 
 gained from the circulation of the country be- 
 sides. This scheme, it is likely, in the end, they 
 would have found impracticable ; for in the 
 free competition of this country, the profits of 
 no trade can be kept for any length of time
 
 38 
 
 above their natural level, and the ruin of their 
 commissions, from the competition of other 
 Banks, would most probably have been the re- 
 sult. But the merchants and manufacturers 
 met for the purpose of resisting the attempt, 
 and refused to take the notes which it was 
 thus proposed to issue. A great deal of very 
 ingenious arguments were used by the pro- 
 posers of the resolutions entered into at this 
 meeting. The statement, however, which pro- 
 bably carried the most conviction and unanimi- 
 ty along with it, was the fact, that fewer of 
 those Banks fail which do not issue Notes, than 
 of those which do. Now, as there is no reason 
 why Banks that issue notes, and get smaller 
 profits, should undertake greater risks than 
 those who have more temptations of profit to 
 influence them ; as also there can be nothing 
 in the mere issuing of their own notes very ma- 
 terially different from that of issuing those of 
 any other establishment ; and lastly, since 
 though they may stop payment by a run, they 
 seldom become bankrupts when they are not 
 insolvent : the difference mentioned must prin- 
 cipally arise from the issuing of notes being 
 attended with the same risk, but with much 
 less profit. It is inconceivable that the issu- 
 ing of notes should make any other difference 
 than that which arises from reducing the com- 
 mission upon discounts. Bankers who circu-
 
 39 
 
 late notes may, from the fear of runs, be ob- 
 liged to circumscribe their business, and with- 
 out great profits, may indulge in great ex- 
 pence ; or should they have lent out their 
 money too freely, they may also, it is true, be 
 brought to a stand by a run upon them ; but if 
 they are solvent, any loss which may be thus 
 caused will of course fall upon themselves. 
 
 The superior safety of those Banks which 
 do not issue notes, can, therefore, I apprehend, 
 only arise. from their business paying them bet- 
 ter ; and if the merchants and manufacturers 
 of Manchester will continue to pay Messrs 
 Jones and Co., or Messrs Heywood and Co., 
 the same commission as before, they may be 
 safely allowed to do as they think proper. But 
 if the Bankers take the very sensible advice of 
 Mr Wood, they will make no further attempt to 
 alter their present system. The fear of runs 
 might compel them to curtail their business, 
 and they may be sure the profits of Banking in 
 Manchester, as in other places, would find their 
 level. The probability therefore is, that if they 
 were to issue notes, they would discover, in the 
 end, that in grasping at the circulation, they had 
 only illustrated the fable of the Dog and the 
 Shadow. 
 
 The apprehensions expressed at this meeting, 
 that persons of no property would issue notes, 
 and maintain a circulation in competition with
 
 40 
 
 Bankers of stability and credit, is supposing 
 what is contrary to experience, and could 
 never happen. But in this case there is lit- 
 tle doubt that, in time, the trade of Bank- 
 ing would not be so profitable in Manches- 
 ter, and the business would be done upon more 
 liberal terms ; if the Banks issued notes, the 
 present bankers might go out of the business, 
 others would not make so much money, and 
 they would consequently not be so safe as 
 the rich Bankers in question. In that view of 
 the subject, therefore, the meeting was right 
 in the resolutions it adopted. But to pay a 
 Banker an extra profit, in order to render you 
 safe in transacting with him, is the same as giv- 
 ing a premium for insurance against a sea risk. 
 It is prudent, at any rate, perhaps, to insure, 
 though the premium may be high, but it be- 
 comes a question for serious consideration, 
 whether you cannot get your insurance effected 
 at a cheaper rate. 
 
 The circulation of the Bank of England 
 notes in Lancashire, is evidently founded upon 
 a view of the subject taken up by the manufac- 
 turers and merchants in Manchester alone, and 
 in consequence it is only enjoyed by a kind 
 of chance. To give the Bank that circulation 
 was evidently, therefore, not the intention of 
 the charter, while the tenure by which it is 
 held is too frail to be relied upon, and there-
 
 44 
 
 fore can neither be argued upon as a matter of 
 right conferred by the charter, nor depended 
 upon as a source of profit. 
 
 The right, consequently, of the Bank to pre- 
 vent more than six partners entering into a 
 Banking Concern, is, with respect to the whole 
 kingdom except London, a right which confers 
 no advantage upon it, while it loosens the whole 
 frame of commercial credit, of which Banks are 
 the pillars and support. To call it, therefore, 
 a right, with respect to the country, is impro- 
 per ; legally it may be so termed, but equi- 
 tably it is nothing but a wrong. 
 
 It seems also by the act which conferred it, 
 that this privilege was first granted by a mis- 
 take. By Stat. 6 Anne, c. 22, it was enacted 
 that '■'■for securing ike credit of the Bank of 
 *' England.,^' no other Banking Company in Eng- 
 land should consist of more than six partners. 
 Now it did not secure the credit of the Bank of 
 England in the smallest degree. The credit of 
 the Bank of England depended upon the a- 
 mount of its capital and the state of its affairs. 
 This act merely ruined the credit of every other 
 Bank ; and it is almost certain that had the 
 true object of the bill been stated, and had the 
 preamble run thus ^^ for the intent and pur-^ 
 pose of ruining the credit of all the unchartered 
 Banks in England^ it was enacted^ t^c." it may 
 be safely affirmed, that no such act would have 
 
 G
 
 4^ 
 
 been passed by any British Parliament* at least 
 since the Revolution. The error then commit- 
 ted, has been continued to the present day ; but 
 when the practical evils produced by it have 
 been so severely felt, and are become so evi- 
 dent, it is the duty of parliament to correct it. 
 
 Parliamentary interference in the aifairs of 
 the Bank, is, as we have endeavoured to shew, a 
 right whicli practice has conferred ; but, admit- 
 ting, for the sake of argument, our conclusions 
 on that view of the subject to be erroneous, it 
 must be obvious to the commonest apprehen- 
 sion, that there is a right in any government to 
 take from any body of men, a monopoly which 
 does them no good, while it does the country a 
 great deal of harm. An indefeasible right of 
 inflicting a wrong, would be a new principle in 
 our institutes. 
 
 The only permanent and substantial good 
 which the Bank derives from the clause in its 
 charter is the monopoly of the circulation of 
 London, and its neighbourhood. The circula- 
 tion of Lancashire, as we have seen, cannot be 
 depended upon. 
 
 Now, a worse way of securing the circula- 
 tion of London cannot be conceived. The ob- 
 ject is to prevent the Bankers of London from 
 issuing Notes ; and the manner of doing it is to 
 weaken their credit, and keep it so low that 
 they cannot. Nothing could be more simple.
 
 43 
 
 nor more effectual, than to prevent them from 
 issuing Notes, by enacting that they should not 
 do so. Instead of that, the object is accom- 
 plished by taking from them their credit, the 
 vital principle of their trade. It would be just 
 as proper to bleed a horse in order to diminish 
 his speed ; to take from him his strength in or- 
 der to reduce his action ; instead of an addition- 
 al bridle and curb, to restrain his pace by 
 the weakness produced from the frequent use 
 of the lancet ; you would, no doubt, thereby 
 effectually reduce his fire and check his speed, 
 but you would also ruin his constitution, and 
 the probability is, in such a case, that upon 
 the slightest trip, both horse and rider would 
 tumble into the ditch. Nothing, in fact, 
 can be more absurd than the present man- 
 ner in which the monopoly is secured, while 
 its baneful influence extends to every part 
 of the country. The constitutions of our 
 Banks are unequal to the burthens they have 
 to support ; and it may be truly said, that the 
 Banks and the country are continually, in some 
 part or other, tumbling together into a ditch, 
 and often one so deep that they never get pro- 
 perly out again. 
 
 It must be admitted that the restriction is 
 productive of less apparent ill consequences in 
 London than in the country. The reason of this 
 is, that ViQ business of Banking is more profit- 
 
 G 2
 
 44 
 
 able in London, (where all business is generally 
 better managed) than it is in the country ; for 
 it is principally in the hands of old houses, con- 
 ducted by acting partners, who have been all 
 their lives in the houses which they manage, 
 and who have raised themselves by their in- 
 dustry, experience, and talents. 
 
 All, therefore, that the country requires is, 
 that the monopoly of the Bank of England be se- 
 cured to it, in a more simple and direct manner. 
 That in lieu of the clause enacting, that not 
 more than six partners shall enter into other 
 Banking concerns, it be enacted that no Banks 
 shall issue notes within the boundaries of the 
 present monopoly. In doing this, there is no in- 
 fringement of the rights of the Bank. The ob- 
 ject of its charter is to give it an exclusive pri- 
 vilege, which, by this alteration, will be the 
 more effectually preserved j for it is merely in- 
 cidentally secured by the present terms of it. 
 
 Government have no right to do the Bank 
 an injury, but they have surely a right to 
 remove from its charter any impediment to the 
 public welfare, upon granting it an equivalent. 
 This is nothing more than the principle upon 
 which all Acts of Parliament are passed, for 
 making roads, canals, &c. through private pro- 
 perty. The individual is fully compensated 
 for the loss he sustains, and substantial justice
 
 45 
 
 being done him, his inclinations are not con- 
 sulted in the matter. 
 
 If an argument in favour of the present sys- 
 tem should be drawn from the circulation 
 enjoyed by the Bank in Lancashire, the 
 merchants and manufacturers of Manchester 
 have it in their power, effectually to destroy its 
 efficacy. They have but to encourage, instead 
 of suppressing Local Notes ; and whether the 
 present Banks issue them or not, they will, no 
 doubt, by the competition of trade from other 
 quarters, find their way into circulation. 
 
 It is, however, equally the interest of the 
 Bank, to have its monopoly secured in a more 
 direct and less questionable manner. Any per- 
 son may, at present, issue Notes in London, 
 and nothing but want of credit, prevents Pri- 
 vate Banks from doing it. If any plan, how- 
 ever, should be thought of, to give the Notes of 
 Private Banks sufficient credit, there would, 
 doubtless, be found Banks to issue them, and 
 there can also be little question that the public 
 would, as in the country, give them a prefer- 
 ence. 
 
 Without entertaining any wish to deprive the 
 Bank of its monopoly, but to show that it does 
 not stand upon the securest footing, how easy 
 would it be for Private Banks in London to a- 
 dopt the plan proposed by the Chancellor of 
 the Exchequer two or three years ago, with
 
 46 
 
 respect to country establishments. If, for in- 
 stance, a private Bank were to issue half a mil- 
 lion of paper, it might purchase stock to that 
 amount, and assign it to trustees, and these trus- 
 tees might indorse and guarantee the notes, hold- 
 ing the stock to meet their payment, should they 
 be ever called upon by the failure of the Bank. 
 There would then not only be value in the funds 
 sufficient tb pay them with, which could not be 
 applied to any other purpose, but the holders 
 of the Notes, should it be necessary, would have 
 a claim upon the estate of the Bank to the full 
 amount of their value, and thus no apprehen- 
 sion respecting them could possibly be enter- 
 tained. A renewal would, of course, from time 
 to time, be requisite, but the trustees would 
 take care, for their own sakes, before they en- 
 dorsed a new Note, that an old one of the 
 same value should be cancelled. 
 
 Many other plans might, I have no doubt, 
 be contrived to attain the same object, and 
 render the Notes of private Bankers perfectly 
 safe to the public, by which they need not as 
 now apply to the Bank of England for Notes, 
 but issue their own, and in that case the charter 
 of the Bank would be rendered almost useless. 
 The alteration proposed, therefore, is as much 
 the interest of the directors and proprietors of 
 the Bank, as of any set of men in the kingdom. 
 The charter of the Bank does not expressly con-
 
 47 
 
 fer a monopoly, nor could it be discovered from 
 the charter itself, that the monopoly of a circu- 
 lation of Notes was intended. But if a mono- 
 poly was intended, there needed to have been 
 no fear of expressing it in words ; and it would 
 now be desirable to the Bank for it to have that 
 monopoly which it has paid for, clearly ex- 
 pressed and secured to it. Thus there can 
 be but little doubt that we shall meet with 
 the ready co-operation as well of the directors 
 as of parliament and ministers, in the measure. 
 The only persons who will be injured by it, 
 will be the present Bankers. But no set of men 
 can expect a country to continue voluntarily to 
 submit to an evil after it has discovered the 
 cause and can apply the remedy. They must 
 take the fate incident to all rights or institu- 
 tions, founded in error : as soon as truth appears, 
 the fabric, for want of its foundation, must be de- 
 stroyed. But on none can a loss fall more light- 
 ly. If a Banker be not independent of his trade, 
 he ought not to be a Banker. He has gained a 
 credit that he is not entitled to ; and to deprive 
 him of a business he should not, and could not 
 carry on, if the public were aware how little se- 
 curity he afforded them, is nothing more than an 
 act of justice. If he be independent of his bu- 
 siness, which the great majority of Bankers are, 
 he may lose, but cannot feel his loss very se- 
 verely.
 
 48 
 
 The Clerks and Managers of those Banks 
 whose business may be curtailed, will find as 
 good, if not better situations than they had 
 before, with the New Companies, who will, as 
 a matter of common sense, be anxious to em- 
 ploy them, for the sake of their practical know- 
 ledge. Hence we may safely calculate, that 
 the amount of positive injury to individuals, 
 produced by the loss of the means of support, 
 from the proposed change, will not be great ; 
 and by no means equal to what the failure of any 
 one considerable Banking Concern would occa- 
 sion, under the present system, if it be continued. 
 
 In order that we may form an idea of the 
 profit to be made by establishing a public Bank 
 in this town, we will next examine the suc- 
 cess that has attended those which we propose 
 for our models. 
 
 The stock of many of the Local Banks of 
 Scotland has sold much higher than the stock 
 of the Edinburgh Banks. The Edinburgh Banks, 
 however, are those to which we shall more par- 
 ticularly refer, as the business of this town and 
 neighbourhood is sufficiently extensive to re- 
 quire an establishment of equal magnitude. 
 
 There are four Banks in Edinburgh : The 
 Royal Bank of Scotland, The Bank of Scot-
 
 49 
 
 land, The British Linen Company, and The 
 Commercial Bank. The last established was 
 the Commercial Bank, in 1810 ; it commenced 
 with a subscribed capital of Six Hundred Thou- 
 sand Pounds ; it has divided from 6 to 8 per 
 cent., and its stock is at present at 50 per cent, 
 premium. It has had to contend in a ground 
 completely pre-occupied, and the most ruinous 
 times in our mercantile history ; and in strug- 
 gling to form connexions, it has been led into the 
 midst of the failures that have happened, and 
 has met with considerable losses. The Directors 
 have, in consequence, reduced the dividend 
 from 8, which they had paid the first few years, 
 to 6 per cent. Its stock, however, has not fall- 
 en in consequence. It has never, I under- 
 stand, been higher than it is at present ; and 
 there is little doubt, that had it continued to 
 divide 8 per cent., the stock would by this time 
 have doubled its original value. The Directors, 
 it is supposed, will not again divide more than 
 six per cent., until they have accumulated such 
 a reserved fund as that, in future, when the 
 dividends are increased, there may never be a 
 necessity for their being reduced again. The 
 success upon the whole of this concern, consi- 
 dering the opposition it has encountered, which 
 was very great, and the bad times it has met 
 with, which were equally so, has not, I have 
 heard, disappointed its Stock-holders. 
 
 H
 
 50 
 
 The Bank of Scotland, and Royal Bank Stock, 
 are at a premium, I understand, upon the ori- 
 ginal capital advanced, of from about 90 to 
 140 per cent. But their capitals are, I believe, 
 a million and a half each, being unnecessarily 
 large for the Trade of Edinburgh. Their cre- 
 dit would be as good, and their business as ex- 
 tensive, if they were to pay off half their capi- 
 tals, each Stockholder would then get as much 
 profit upon half his present stock as he now 
 does upon the whole of it. All that a Bank 
 can gain by capital is credit, and when its 
 capital is sufficiently large to put that upon the 
 most solid basis, it is as large as there is any 
 occasion for. More only incumbers it, and 
 would be as well in the hands of the origi- 
 nal Stock-holders, many of whom would pro- 
 bably turn it to better account. 
 
 The most successful, however, of the four 
 establishments, has been the British Linen 
 Company. Tt commenced originally with one 
 hundred thousand pounds, which afterwards, 
 either by an accumulation of profits, or by a 
 further advance of capital, was doubled. Upon 
 this capital it annually made very handsome 
 dividends, and also accumulated a reserved 
 fund, which, about eight or nine years ago, 
 amounted to nearly three hundred thousand 
 pounds, making its capital, in all, nearly half 
 a million. It was not then a Chartered Com-
 
 51 
 
 pany, but it applied to Government for a char- 
 ter, and got one, the proprietors having, it is 
 understood, subscribed a small deficiency ne- 
 cessary to raise their capital to five hundred 
 thousand pounds. Since then they have gone on, 
 notwithstanding the precarious and disastrous 
 state of the mercantile world, with almost un- 
 paralleled success, so that now their half mil- 
 lion of stock is worth a million and a half; it 
 meets a ready sale at not less than two hun- 
 dred per cent, premium. I do not imagine that 
 their charter has contributed much, if any 
 thing, towards this increase of value. The 
 only advantage the charter gives, is to free the 
 Stock-holders from responsibility beyond their 
 respective shares in the capital of the Bank. 
 This, however, can be no advantage in Scot- 
 land, where the very idea of danger, beyond a 
 capital of half a million, would be considered 
 as one of the absurdest chimeras that could be 
 entertained. I do not suppose the stock of the 
 Commercial Bank, which is not chartered, sells 
 for a pound less on that account. It is, in pro- 
 portion to the interest paid upon it, nearly 
 about the same price as the 3 per cent, consols, 
 and it is not likely a charter would raise it 
 higher. I therefore imagine that the value of 
 the British Linen Company's stock arises alto- 
 gether from the ability with which the Bank is 
 managed, and the amount of dividends it con- 
 H 2
 
 52 
 
 sequently makes. It must be also considered, 
 that government could not, with justice to the 
 public, and therefore would not, grant a char- 
 ter, if it was really any thing more than a name. 
 It would never agree to exonerate any set of 
 men who enjoyed a certain gain, from the loss 
 incident to it, and throw it upon the unsuspect- 
 ing public. It is only when the capital of a 
 Bank is sufficiently great to satisfy the most 
 sceptical doubt with regard to the safety of the 
 public, that a charter can ever be granted. 
 Besides which, if the freedom from personal 
 responsibility conferred by the charter on the 
 Stock-holders of the British Linen Company, 
 had been of any real use in freeing them from 
 risk, it must have destroyed their trade. No- 
 body would make permanent deposits in a 
 Bank, whose partners, by any peculiar privi- 
 lege, were freed from the loss which their own 
 transactions involved. They would naturally 
 have dealt with those that had no charter, in 
 preference, or with the other Chartered Banks 
 that had three times the capital. Had the 
 charter not, in every respect been a mere dead 
 letter, it must have injured the concern. 
 
 It is evident, that if Banking is carried on at 
 all, it must be with a profit more than adequate 
 to the risk incurred ; and those who gain the 
 profit must take the risk they are paid for. 
 The reason why the charges of Bankers are so
 
 53 
 
 small is, that they are found, with judicious 
 management, to cover all risk, besides leaving a 
 sufficient profit. 
 
 The business for a Bank in this town and 
 neighbourhood, I should think by no means in- 
 ferior to that of either the Commercial Bank or 
 the British Linen Company. In the present state 
 of the country, however, as it is far from being 
 certain that government may not be compelled 
 to reduce the interest of the national debt,* it is 
 not necessary to make out a case of extravagant 
 profit, in order to induce capitalists to enter 
 into such a concern. Equal interest with 
 greater safety would of itself be a sufficient in- 
 ducement. But with the chance, which expe- 
 rience has reduced to a certainty, of increasing 
 their capital at least 50 per cent, what proba- 
 bility is there of capitalists turning their mo- 
 ney at present to such account in any other way ? 
 
 As this Bank will be the first of the kind, it 
 will also, with equal management, be the best. 
 There is no connexion more stable than the 
 connexion of a Bank. When a person once 
 opens an account with it, if he does his busi- 
 ness creditably, he never has occasion to leave 
 it ; and if he does not, he could gain nothing 
 by the change. Hence it generally happens 
 that merchants adhere through life to the Bank 
 
 * Since the meeting of parliament all fears, on this head, 
 seem to be removed.
 
 54 
 
 they begin with, provided it stands. When, 
 however, in addition to this, we consider the 
 fine field which this great mining and commer- 
 cial district presents, we may be a little more 
 sanguine in our calculations. I should think 
 we have a right to expect as great a profit as 
 has ever been made by any public Bank yet 
 established. 
 
 Where public Banks have not been establish- 
 ed, and I may say, also, where private Banks 
 have, there appears always to have existed a 
 prejudice on the subject of Banking. On this 
 account, at the first formation of public Banks, 
 we generally find it has been considered politic 
 to encourage them, by granting charters. That 
 there exists at present in this country a great 
 prejudice against Banks and Banking, from the 
 disasters they have produced both to the part- 
 ners in them and the public, there can be no 
 question. As also there can be little doubt that 
 when the present impediment is removed, go- 
 vernment will be disposed, for the benefit of 
 commerce, and for the general convenience de- 
 rived from public Banks, to encourage them, I 
 should suppose that where a sufficient capital is 
 subscribed, there will be no objection to grant- 
 ing a charter, if it is required. I would there- 
 fore propose, that the Bank in question be 
 commenced with a capital sufficient to com- 
 mand a charter, if one was desired, or to
 
 55 
 
 make it a matter of perfect indifference in the 
 event of government declining to grant char- 
 ters, whether one was to be had or not. It is 
 also reasonable to suppose, that in granting 
 charters, government will only require such an 
 amount of stock, to be possessed by each Bank, 
 as the business of the place where they may be 
 established, shall seem to render necessary. 
 The capital required for a Bank in Manchester 
 or Liverpool, where mercantile transactions are 
 so large, could not be employed in a small town 
 like Sunderland, and would never pay in a town 
 like Newcastle. 
 
 Considering the business of this town and 
 neighbourhood, however, we should suppose 
 that government would not grant us a char- 
 ter under half a million of capital, if it would 
 even grant a charter at all with a less sum ; 
 and we should think, that with such a capital, 
 it would be immaterial whether we had a char- 
 ter or not. The most sceptical, whatever their 
 prejudices on the subject might be, could never 
 imagine any danger with such a security, either 
 to the public with a charter, or to the private 
 property of the Stock-holders without. 
 
 So large a capital, however, would warrant a 
 greater extension of business than our own 
 town affords. The Edinburgh Banks have 
 agencies, and do business to a great amount, 
 in all the principal towns of Scotland, which
 
 56 
 
 no doubt is on the aggregate found to pay 
 them. In that respect it is proposed, with re- 
 ference to the neighbouring towns at least, that 
 we shall follow their example : but while we do 
 this, we must also endeavour to improve by 
 their experience. And the following is the 
 plan we beg to submit : — 
 
 1. That a Bank with a capital of ^500,000 
 be established in Newcastle, with Branches at 
 Durham, Sunderland, Shields, and any other 
 place which may be hereafter determined upon. 
 
 2. That no individual shall be allowed to hold 
 more stock than to the amount of two thou- 
 sand pounds. 
 
 3. That the capital be subscribed as follows : 
 — Two hundred thousand in Newcastle and 
 neighbourhood ; one hundred thousand in Sun- 
 derland ; fifty thousand in Durham ; fifty thou- 
 sand in Shields, and their respective neighbour- 
 hoods, and the other hundred thousand as may 
 be hereafter determined upon. 
 
 4. That the Bank in Newcastle be governed 
 by four Directors, three of them chosen by the 
 Newcastle Stock-holders, and the fourth to be 
 their Chairman, and be chosen by the other 
 three. One of these Directors to go out an- 
 nually, and not for one year be eligible to be 
 re-elected. That the Chairman be elected an- 
 nually, and be eligible to be re-elected.
 
 57 
 
 5. That the Branches be governed by three 
 Directors, chosen by their respective Stock- 
 holders, and a Chairman chosen by the three 
 Directors in the same manner as with the main 
 branch in Newcastle. 
 
 6. That the Branches be under the general 
 management and control of the Court of Di- 
 rectors in Newcastle, who shall receive daily 
 or weekly accounts of their transactions. 
 
 7. That the Chairman of the Branches form 
 with the Newcastle Directors a Committee of 
 General Management, and come into Newcas- 
 tle every month to examine the affairs of the 
 establishment, and consult and decide with the 
 Newcastle Directors all questions and rules of 
 General Management, which it may be neces- 
 sary from time to time to lay down. 
 
 8. That none but the Chairman, and the 
 Newcastle Directors, have any inspection of 
 the particular transactions of each Branch ; but 
 that a general meeting of the whole Directors 
 shall be periodically held for the purpose of 
 making laws, or may at any time be called to 
 consult upon any given question, either with 
 respect to the transactions of any Branch with 
 an individual, or upon any specific point of 
 management which may be proposed to it, and 
 its decision to control and bind the Committee 
 of General Management with respect to that
 
 58 
 
 point ; and two Directors to have at any time 
 the power of calling a general meeting. 
 
 9. That there also be a Governor and De- 
 puty-Governor, the latter of whom to be chosen 
 by the Committee of General Management, 
 and the former either by the Directors at large, 
 or the Stock-holders. The Governor to be 
 principally an honorary appointment, and to be 
 a member of one of the two houses of parlia- 
 ment, and the Deputy-Governor some gentle- 
 man resident in Newcastle, who has leisure and 
 inclination to give his attention to the affairs of 
 the Bank, and preside at the monthly meetings.^ 
 
 10. That the executive officers of the Esta- 
 blishments consist of a Cashier and Accountant, 
 with a Secretary, if required j and such other 
 Clerks as are necessary for each Branch, and a 
 Managing Director in Newcastle.* 
 
 11. That the division into Branches extend 
 only to the division of the capital and manage- 
 ment, and not to the profits, which shall be 
 divided equally. 
 
 This gives a general outline, and I need not 
 go further. The first step that the Company 
 will have to take must necessarily be to appoint 
 
 * It seems also the general opinion, that there ought to 
 be a couple of salaried Directors.
 
 59 
 
 a Committee to procure all the laws and regu- 
 lations of the Public Banks of England and Ire- 
 land, and the leading Public Banks of Scotland. 
 They must examine into their comparative suc- 
 cess, and the cause of it, and from their rules 
 draw out such a constitution, as, adapted to the 
 peculiarities of our local situation, shall be the 
 best fitted to secure both the safest and most 
 profitable management. In proposing this out- 
 line, my object is principally to suggest the en- 
 quiry, and not by any means to presume that a 
 better plan may not be adopted. That the 
 constitutions of some of the present Public 
 Banks are not so good as they might be, and 
 not suited to such a town as this, I am pretty 
 well convinced ; and as it is difficult to 
 make a change after a constitution is once act- 
 ed upon, it will be evidently proper to consider 
 the subject well beforehand. The outline 
 which I have given, I shall, however, take the 
 liberty of illustrating by a few explanatory ob- 
 servations. 
 
 In the first place, the capital proposed will at 
 once have the effect of giving the concern sta- 
 bility, and of securing the unlimited confi- 
 dence necessary to be reposed in it by the pub. 
 lie, in order to render it equally profitable and 
 useful. In the next place, limiting the amount 
 of stock held by each individual, will keep the 
 concern in the hands of the public. It is very 
 
 I 2
 
 60 
 
 usual with Private Bankers and other wealthy 
 individuals, to buy largely of the Stock of the 
 Public Banks in Scotland, which is a disadvan- 
 tage to them, as the greater the number of per- 
 sons interested in supporting such a concern, 
 the better. There are two individuals who each 
 hold upwards of a hundred thousand pounds 
 of the British Linen Company's Stock, neither 
 of whose accounts with it are so profitable, nor, 
 in all probability, is their influence in its fa- 
 vour nearly so advantageous as the transac- 
 tions and influence of a respectable tradesman, 
 or merchant, would be, who was in a situation 
 to hold a^2000 Stock independent of the capi- 
 tal of his trade. One of them is, in fact, him- 
 self a Banker, and issues notes, so that he must 
 be a rival, as far as his business extends, and 
 not a friend to the Bank. By this means, it is 
 deprived of at least a hundred interested sup- 
 porters, which, by our plan, it would have, and 
 the profit of the smaller Stock-holder is dimi- 
 nished in a corresponding degree. There is 
 also another practical evil, of still greater im- 
 portance, which would be av^oided. The Pri- 
 vate Bankers in Edinburgh who do not issue 
 Notes, keep an account with one of the Public 
 Banks, in the same manner as the London 
 Bankers do with the Bank of England, and dis- 
 count with it, or draw upon it for the cash 
 they require. They have, generally, made it
 
 61 
 
 their policy, to buy largely of the Stock of the 
 Bank they do business with, so that by the 
 amount of their stock, together with their pri- 
 vate influence as Bankers, they might get 
 themselves chosen Directors. By that means 
 they not only gain an undue preference in their 
 transactions with the Bank, but, as it has been 
 proved, have, sometimes, for years together, 
 contrived to render the Bank totally subservi- 
 ent to the extension and profit of their own 
 private business. 
 
 Where great Public Banks are established, 
 there will always be trade to a certain extent 
 for such Bankers. They draw upon London, 
 act as Bill Brokers, charging a commission 
 upon their discounts, &c. and when capital is 
 scarce, by their superior credit and influence 
 in obtaining discounts, contrive sometimes to 
 do business to considerable extent. We mav 
 consequently expect that the same, in a great- 
 er or less degree, will be the case in this town, 
 and as sucli Bankers here will have the same 
 interest to prompt them as in Edinburgh, they 
 may be expected to endeavour to take the same 
 steps. But by limiting the amount of Stock 
 held by each individual to a6''2,000, no mono- 
 poly can take place, and one Stock-holder can- 
 not possess any advantage over another. 
 
 Such persons generally, no doubt, get pos- 
 session of the Stock by giving the best price
 
 62 
 
 for it ; and by thus limiting the competition, 
 individual sellers will not get, at the moment, 
 quite as much as it would otherwise bring. By 
 a strict adherence, however, to the rule, the 
 profit of the concern will be improved, and in- 
 stead of a holder having to sell his Stock with 
 a dividend of 10 per cent., it may leave a divi- 
 dend of 12^. Thus though he may not get so 
 much for it when it comes into the market, as 
 with a free competition, yet he will evidently 
 get more for it than if, from the consequence 
 of such competition, the dividends were ^^ P^r 
 cent. less. 
 
 It may be said that ^^2000 stock is not a 
 sum large enough to give any Directors a suffi- 
 cient interest in the management. To this it 
 may be answered, nor yet would three times 
 the amount, if they felt no interest in the ma- 
 nagement independent of the profit of their 
 stock. The Directors in general will be wealthy 
 individuals, with whom that profit can be of 
 little importance. 
 
 With respect to the division into Branches, 
 there can be no doubt that by thus effectually 
 embracing the business of the different towns 
 wherein they are established, the profit of the 
 concern will be materially increased, and that 
 capital, which might be too large for Newcas- 
 tle alone, become only proportioned to a plan 
 so much more comprehensive. But there will
 
 6.3 
 
 be also great advantages derived from it in the 
 system of management whicli it affords. 
 
 There are two objects to be aimed at in 
 planning the constitution of a Bank. First, its 
 safety : and next, its success. And though 
 safety is a natural consequence of success, yet 
 there may be great safety where the success is 
 but small. They are, in fact, partly opposed 
 to each other. That constitution which would 
 best secure the one might be very liable to di- 
 minish the other. In a multitude of Directors 
 there would be safety, but the chances would 
 not be so much in favour of success. It is 
 commonly said, and with truth, *' What is 
 every body's business is nobody's ;" and this in 
 some degree would be the case with a multi- 
 tude of Directors. The common routine of 
 transactions would be done by the officers of 
 the institution ; but no able or energetic, and 
 successful management, would be attempted. 
 The responsibility lies with the Directors at 
 large. No individual director would conse- 
 quently take any step of the least importance 
 himself. Nothing would be done without a ma- 
 jority present, and too little interest would be 
 felt by the majority for it ever to attend. Be- 
 sides, when many people meet, they talk more 
 than they act : and if they differ in opinion, 
 are apt to do nothing, leaning always to the 
 safe side. Little being therefore done, and
 
 64 
 
 always that little with superlative safety, the 
 business of the concern would be liable to flag, 
 if not fall off altogether. It will sometimes hap- 
 pen, as with the Bank of England, where a 
 considerable business is necessarily done, that 
 with a number of Directors a good arrange- 
 ment may be adopted, and the management go 
 on tolerably well. But the Bank of England 
 derives its business from its monopoly, in spite 
 of its Directors, and not from its superior ma- 
 nagement. Four and twenty Directors could 
 never successfully compete with the manage- 
 ment of a smaller body. This is partly proved 
 by its own experience. It does business upon 
 the same principles as the Private Banks, yet 
 notwithstanding its superior credit, it gets little 
 or nothing to do, beyond the circulation of its 
 notes, and keeping the accounts of government. 
 On the contrary, were the Directors fewer, the 
 interest they felt would be greater. The whole 
 credit of the management would attach solely 
 to them ; they would acquire a better know- 
 ledge of it, do it with more ease and pleasure, 
 and give that spirit and energy to the direction 
 by which the business of the concern would be 
 extended, and its profits increased. There is 
 also another disadvantage arising from too many 
 Directors. Few people like their cash transac- 
 tions to be known, and none, that they should 
 come under the review and cognizance of their
 
 65 
 
 neighbours, who might sometimes even be their 
 rivals in trade. This will always be particular- 
 ly the case with borrowers, who are as good 
 customers, and as necessary to a bank, as lend- 
 ers : and when there is a great number of Di- 
 rectors, people are apt to feel that privacy is al- 
 most out of the question. This, I dare say, is one 
 of the principal causes which gives business to 
 the Private Bankers in Edinburgh ; and it will 
 always induce many country gentlemen (more 
 particularly those with whom a few shillings per 
 cent, is less an object) to do their business with 
 Private Banks in preference, if they possess the 
 requisite credit, or can give them the accom- 
 modation they require. 
 
 Now, by the plan proposed, we shall com- 
 bine all the advantages of both public and pri- 
 vate management, without the drawbacks of 
 either. 
 
 For these reasons, the fewer the Directors 
 the better : but there could not well be fewer 
 than four ; and, indeed, perhaps no Bank could 
 be safely trusted to the management of so small 
 a number. By the Branches being under the 
 control of the Newcastle Directors, however, 
 while they will enjoy all the advantages of the 
 most private management, they will have all 
 the security of the most public. The same will 
 be the case with the management at Newcas- 
 tle : it will regularly come under the inspection 
 
 K
 
 66 
 
 and control of the Chairman of the Branch 
 Directors, and any thing wrong in the manage- 
 ment will immediately be discovered, and cor- 
 rected or exposed. By this means, no doubt, 
 the transactions of individuals with the Bank 
 will be reviewed by more than four Directors. 
 They will, however, generally be strangers ; 
 and people have a much greater objection to be 
 immediately under the cognizance of their 
 neighbours, and those they are known to, in 
 money matters, than they have to their affairs 
 being reviewed by persons who do not know 
 them, and who only stand in the relation to- 
 wards them of A. to B. 
 
 A declaration, however, if not an oath pub- 
 licly made, ought to be required from every 
 Director, that he would never make the trans- 
 actions of the Bank a subject of conversation 
 to any but those concerned in the management ; 
 and from the Committee of General Manage- 
 ment, that their individual communications to 
 the Branch Directors, should embrace only 
 points of general management, unless a gene- 
 ral meeting is to be called, and any question to 
 be discussed which shall involve the detail of 
 any particular transactions. By this means the 
 public might be continually reminded and as- 
 sured that their transactions would have the 
 greatest privacy possible, an assurance which
 
 67 
 
 there can be little doubt, would be of consider- 
 able benefit to the business of the Bank. 
 
 Another great advantage of tliis plan is the 
 superior activity which the comparing and in- 
 specting of each others management will natu- 
 rally produce. While the Directors at New- 
 castle will require a good account of the ma- 
 nagement of the Branches, they will naturally 
 be anxious to give as good an account to the 
 Branch Directors, in return. Thus by being 
 poised against each other, an emulation will 
 be excited, which, by keeping the interest and 
 attention of all parties continually alive, must 
 prove of incalculable service in promoting the 
 interest of the establishment : for a falling off 
 in the time, trouble, and attention given by 
 those who are entrusted with the management, 
 is the easily besetting sin of the Directors of all 
 public concerns. 
 
 If the public could be equally assured of the 
 goodness of the management, it would be bet- 
 ter that the Directors once chosen should never 
 be changed. The secrets of the Bank ought to 
 be kept in as small a compass as possible. 
 
 The management of a Bank also requires a 
 practical knowledge, which, of so great a busi- 
 ness, must take some time to acquire. Of this 
 the Scotch are aware, and though some of the 
 Directors go out every year, they generally re- 
 elect such as have been Directors before, so 
 K 2
 
 68 
 
 that the same set of persons, whom experience 
 has rendered the most fit, are continually in 
 the management. 
 
 In order, therefore, not to have more changes 
 than necessary, and to introduce no strange 
 faces that can be dispensed with, it is proposed 
 that but one Director shall go out each year by 
 rotation, and that the order of rotation be not 
 imperative. If to retain a Director, whose use- 
 fulness is such, that his brother Directors think 
 he ought not to retire, or if to permit one to 
 go out who may have found that he cannot give 
 the attention required, the Directors choose to 
 alter it, so much the better. In so small a 
 number, it would neither be desirable to lose a 
 good Director, nor to retain a bad one ; and of 
 their respective qualifications and usefulness, 
 the Directors will themselves be the best judges.' 
 It will also generally happen, that there is some 
 one individual who has more time, takes more 
 pleasure and interest in, and gives more atten- 
 tion to, the management than the rest, and the 
 object in giving the Directors the choice of the 
 fourth member themselves is, that they may 
 choose this person for their Chairman. He will 
 always have the most knowledge of the trans- 
 actions of his particular branch, and will be the 
 fittest to give any explanations respecting it, 
 at the monthly meetings of the Committee of 
 General Management, and will have the most
 
 69 
 
 tact and fitness for that inspection and judg- 
 ment which he will be called upon to exercise 
 on the transactions of the other branches, that 
 will come under his review. 
 
 The monthly meetings of the Chairmen of 
 the Branches, with the Newcastle Directors, be- 
 ing for the purpose of scrutinizing and control- 
 ling each others management, it is possible 
 that differences of opinion may sometimes arise. 
 In order, however, to prevent such differences 
 from ever producing any disunion (which varie- 
 ties of opinion, when people are earnest in a 
 pursuit, have been known to cause) it is pro- 
 posed, that the Deputy Governor who presides 
 at these meetings, shall have nothing to do with 
 the particular management of any Branch. Be- 
 ing chosen by the Committee, whose respect 
 and confidence he will in consequence natural- 
 ly enjoy, he will possess sufficient influence to 
 prevent any such event from ever happening. 
 It is likely, however, from the character and 
 respectability of the parties, that a misunder- 
 standing is merely a possible, but not at all a 
 probable event. 
 
 The Governor having merely an honorary sta- 
 tion, should be chosen in a manner calculated 
 to convey the greatest compliment, and should 
 always be a member of one of the Houses of 
 Parliament, both in order that he may be a 
 man of undoubted rank, and in order to secure
 
 70 
 
 a parliamentary interest and co-operation in 
 promoting any measure, or procuring any act 
 which may hereafter be wanted. 
 
 The superior power of control possessed by 
 the general court of Directors, does not involve 
 its interference in the details of the concern, 
 and will not, consequently, in the least degree, 
 embarrass its operations, which might be the 
 case if it were called upon to take a practical 
 management. It will merely be a superior court 
 of appeal, to which reference may be made 
 upon any particular question or point, by the 
 Committee of General Management, or any two 
 of its members. Its judgment and interference 
 will be merely occasional, and never exercised 
 without being specially called for, which it is 
 probable will rarely be the case. The existence 
 of the power may be useful, however, though 
 never exercised. 
 
 Independent of these different checks, the 
 Managing Director ought to make periodical 
 visits, more particularly at the commencement 
 of the concern, to aid, with his advice and as- 
 sistance, the Directors of the Branches. By 
 thus diffusing his practical knowledge into every 
 department, a general uniformity and harmony 
 in the direction of affairs, will subsist through- 
 out, which will render the positive application 
 of any one of the checks, an event rarely called 
 for.
 
 71 
 
 By this plan, therefore, I should imagine, 
 that there would be every probability of the 
 establishment being conducted both with safety 
 and success. The whole management," in a 
 short time, would become a very well under- 
 stood routine. Any appeals would merely take 
 place on particular occasions, by the Directors 
 of the Branches requiring the additional autho- 
 rity of the Committee of General Management; 
 or by the Committee of General Management, 
 on any important point, requiring the addition- 
 al authority of the General Court of Directors, 
 to relieve themselves from responsibility. 
 
 Branches may also be established at Berwick, 
 Carlisle, Stockton, &c. upon the same princi- 
 ples, but the distance would be too great to re- 
 quire the monthly attendance of their Chair- 
 men. If they came once or twice a year, to 
 ascertain, for the benefit of their constituents, 
 the general state of the concern, it would be 
 sufficient. In any large town, however, where 
 an Agent was appointed, and any considerable 
 business done, it would be better to have a 
 Board of Directors. No business could be done 
 to any extent, without a discretionary power 
 exercised upon the spot ; and the experience of 
 the Scotch Banks has proved, that it is not 
 safe to entrust such a power to an Agent. With 
 these few observations, we will leave the plan 
 to the consideration of the public.
 
 SUPPLEMENTARY 
 
 OBSERVATIONS 
 
 TO 
 
 THE THIRD EDITION 
 
 OF 
 
 li^ ^@^^¥ 
 
 ON THE 
 
 GENERAL PRINCIPLES AND PRESENT PRACTICE 
 
 OF 
 
 BANKING, &c.
 
 SUPPLEMENTARY 
 
 OBSERVATIONS. 
 
 X HE general conviction which this Essay has 
 produced, and the active steps which, in 
 other more important commercial towns, it has 
 already given rise to, leave no room to doubt 
 the accomplishment of the change in our Bank- 
 ing system, which it recommends. No apolo- 
 gy, I trust, will therefore be necessary for my 
 hazarding a few observations on the mode of 
 proceeding which it will be proper to adopt, 
 both here and in other places similarly situated, 
 in order to set the proposed Banks on foot. 
 
 The objection to this, and almost every im- 
 portant change in the general business of man- 
 kind is, that some must lose by it. It cannot 
 be denied that a great Public Bank, established 
 in this town and neighbourhood, must materi- 
 L 2
 
 76 
 
 ally diminish the business of the very respect- 
 able private establishments which we now have. 
 The present system of Private Banking, how- 
 ever, is opposed to the welfare of the whole 
 community, and the interest of six or seven 
 persons can never be maintained against that 
 of sixty or seventy thousand. 
 
 No Banks, on the present system, could 
 stand higher in the estimation of the country 
 than the Banks of this town, and there can be 
 no doubt that they possess a great many friends, 
 who would be very willing to exert themselves 
 in opposing the establishment about to be form- 
 ed, had they any reasonable grounds to go upon. 
 
 Could it be maintained, for instance, that 
 the existing Banks possessed sufficient credit 
 to enable them to conduct the business of the 
 country on the principles of the joint stock 
 companies, so as to render them unnecessary ? 
 Or, could it be contended, that they would 
 always be as well managed as they are at pre- 
 sent, whatever changes may take place in their 
 partners ? Or, could any reasonable guarantee 
 be held out that other Banks, less entitled to 
 public confidence, would not set up in this 
 town, force themselves into credit, and abuse 
 it? Or even could all this be maintained, other 
 places could not be prevented from taking those 
 steps which they are about to take in order to 
 procure the alteration proposed in the Bank of
 
 77 
 
 England's Charter, and any such exertions 
 Would consequently be useless. 
 
 Opposition to a measure of this nature by the 
 present Banks, would evidently be totally una- 
 vailing. To expect their mercantile friends, 
 therefore, out of mere compliment, to forego 
 any advantage which may arise from purchasing 
 the stock of the proposed concern, would be 
 perfectly unreasonable. Such a compliment 
 might even be subject to misconstructions. 
 
 In carrying the proposed Bank into eifect, 
 there are two points of view in which it will 
 have to be considered : first, as a public institu- 
 tion, and next, as a speculation to individuals. 
 It has been said that half a million is too large 
 a capital to be raised in this district ; but that 
 can only be known by experiment, which re- 
 mains to be tried. As a public institution, it 
 is necessary that it should have a capital suffi- 
 ciently large to secure it the credit it requires ; 
 and it is of no consequence to the public whe- 
 ther it be raised in this district or not, if it 
 only be raised. When we want a machine or 
 engine which cannot be made at home, we do 
 not go without it on that account, but send for 
 it to where it can be had. The same must be 
 done with the capital of this Bank. If there 
 are not people here sufficient to supply the 
 amount required, let people at a distance be
 
 78 
 
 invited to make up the deficiency. A man who 
 deposits his money in such a Bank will consider 
 the half million of security held out as good to 
 him, if it comes from a distance, as if it were 
 raised at home. 
 
 The question then to be first determined is, 
 whether half a million of capital is necessary to 
 establish the unbounded credit required for a 
 public Bank in this district or not ? If de- 
 cided in the affirmative, which so far as I can 
 gather, has already been done, then let those 
 set up the Bank who can furnish it. I am, how- 
 ever, very much disposed to think, that when 
 subscriptions are opened, there will be found 
 more capital in Newcastle, Shields, Sunder^ 
 land, and Durham, than they have credit for 
 possessing. 
 
 As soon as this Bank divides six per cent, 
 with the prospect of its permanently continuing 
 to do so, its stock at the present value of mo- 
 ney, will be at 50 per cent, premium ; and tHs 
 will only be dividing five thousand per annum 
 above the interest of its capital, out of the 
 Banking Profits of four considerable towns, be- 
 sides an extensive commercial and mining dis- 
 trict, in which are two great shipping ports. 
 We should suppose that in this district there 
 are a very great many millions of capital at 
 present not near so well employed.
 
 79 
 
 But its capital will only be required by slow 
 degrees. No Bank could take up half a million 
 of money at once. If ten per cent, were paid 
 down, and after that ten per cent, every six 
 months, it would be advanced as quickly as it 
 could perhaps with prudent management be 
 required. 
 
 Now the steps which it is proposed to pursue 
 both in Newcastle and the neighbouring towns, 
 are as follow. It is intended that two hundred 
 thousand pounds be subscribed in Newcastle 
 and the neighbourhood. It is also desirable that 
 it should be subscribed by those who are likely 
 to be the best supporters to the establishment. 
 Although the respectability and character of 
 our present Bankers is such, as to render any 
 fears of ungentlemanly or splenetic conduct 
 equally groundless and improbable, yet it must 
 happen that many are so connected with them 
 that they would not wish to run any risk of 
 disobliging them by taking a share, however 
 groundless such an idea may be. It is there- 
 fore proposed to take subscriptions to the ex* 
 tent of one half in the first instance, which will 
 include those who are less dependent upon the 
 Banks, and the other half after it is set on foot, 
 when those who are more dependent upon them 
 need not dread inconvenience from their dis- 
 pleasure. 
 
 If there should be a considerable demand for
 
 80 
 
 the stock, it will be proper that the shares be 
 the smaller, in order that all may be supplied. 
 No set of persons ought to be allowed a mono- 
 poly. If the amount which each is allowed to 
 subscribe be too large to include all who are 
 entitled to shares, those who come first only 
 can be supplied ; whereas if they are too small, 
 they can easily be increased upon. It is, 
 therefore, on the safe side to take only mode- 
 rate subscriptions at first. They may be in- 
 creased afterwards, if necessary. It is conse- 
 quently proposed that no person be allowed to 
 subscribe in the first instance more than a thou- 
 sand pounds. 
 
 When the hundred thousand pounds are sub- 
 scribed, or as large a sum as is likely, with the 
 above limitation, a meeting will be called, and 
 a committee of subscribers chosen to prosecute 
 the measure, and one per cent, be paid down 
 to meet the expences which will be incurred. 
 
 If the hundred thousand pounds be not all 
 subscribed, the committee will have to de- 
 termine the proportions in which those who 
 have taken shares may increase the amount of 
 them ; or should there be found, as has been 
 suggested, any difficulty in raising either the 
 first or last half of the capital in this district, 
 monied men from a distance might then be al- 
 lowed to take up the surplus. There will be 
 no risk, I presume, in engaging that such men
 
 SI 
 
 will be readily found, though, for my part, I 
 am disposed to think that no such men are 
 at all likely to be wanted. 
 
 In procuring the first subscribers, no great 
 discrimination can be used, for no one is pro- 
 perly entitled to make the selection. Any who 
 are willing to subscribe must be allowed to do 
 so. By this, no doubt, it may happen that 
 the amount will be made up before many have 
 the opportunity of putting down their names, 
 who, from their business, are more particularly 
 intitled to subscribe ; but this there is no avoid- 
 ing. When, however, the second subscription 
 comes to be taken, the committee will have 
 the power of discriminating ; and it will be the 
 interest of the first subscribers, and the duty of 
 the committee, who represent them, to appor- 
 tion out the remaining shares in the manner 
 best calculated to further the interests of the 
 establishment. 
 
 I do not think, that if the shares are in de- 
 mand, they should be sold to the highest bid- 
 der ; that would be neither wise nor liberal. 
 The shares will be principally retained for the 
 benefit of those, whose connexion with the pre- 
 sent establishments is such, that they would be 
 good customers to any concern, and yet the na- 
 ture of that very connexion prevents them run- 
 ning the risk of being put to any inconvenience 
 by incurring the displeasure of the old Banks, 
 
 M
 
 8£ 
 
 before they have the new one to go to. As* 
 however, the second subscribers are thus parti- 
 cularly favoured, and are not called upon, in 
 the first instance, either to subscribe to the ex- 
 pence, or take any share in the trouble, of esta^ 
 blishing the concern, I think it would be per- 
 fectly fair that their shares should be subject 
 to a small premium of, say 5 or 7t P^^ cent. 
 This, I dare say, they will pay without any 
 objection, as an acknowledgement for the con- 
 sideration with which they will be treated. 
 By this arrangement a sum will be raised suffi- 
 cient to purchase offices, pay the expences 
 which must be incurred in setting the Bank on 
 foot, and enable it to begin its operations with 
 a clear and untouched capital. 
 
 It has been objected that the smallness of the 
 shares does not hold out sufficient inducement 
 for gentlemen and men of large property to 
 enter into the concern. The private property 
 of the share holders is, however, a matter of no 
 importance. The capital ought to be sufficiently 
 large to give the Bank the credit it requires, 
 did none of the partners possess more property 
 than the capital which they advance ; and it is 
 presumed that half a million is sufficient for 
 that purpose. No person of property will in 
 fact enter into the concern, if his property be 
 necessary to its credit. No man of common 
 sense will put his fortune in danger for the
 
 83 
 
 «ake of making a thousand pounds or two. It 
 is only in consequence of the capital being so 
 great that no danger can be apprehended, that 
 he will subscribe at all. 
 
 When, however, the capital of a Bank is suffi- 
 ciently large to hold out the requisite security, 
 its credit for any practical purpose cannot be 
 improved either by enlarging the capital, or by 
 taking into account the private property of its 
 stock holders. A person who deposits money 
 in a Bank gains nothing by the great wealth of 
 its proprietors. All that he desires is to be 
 satisfied that it is safe ; and capital enough to 
 render that obvious and palpable, is all that is 
 necessary. 
 
 Of the four Edinburgh Banks, the British 
 Linen Company holds out the least security. 
 It has half a million of capital ; but is a charter- 
 ed Bank, and the private property of its stock- 
 holders is not liable to the public. The other 
 two chartered Banks have three times the capi- 
 tal, and the Commercial Bank, which has no 
 charter, to a capital of six hundred thousand 
 pounds, adds the further security of the proper- 
 ty of its stock-holders, which probably amounts 
 to many millions. The credit of the British 
 Linen Company is, however, as good as any 
 of the other three, and its business, if we may 
 judge by the superior profits which it has made, 
 a great deal better. Therefore I apprehend 
 
 M 2
 
 84. 
 
 there can be no doubt that half a million of 
 capital in this district is sufficiently great to 
 render the property of individuals a matter of 
 no importance whatever to the credit of the 
 Bank. It must, at the same time, be equally 
 obvious, that if the property of an individual 
 can add nothing to its credit, by the same rule 
 his property can never be endangered by it. 
 
 The stock ought to be principally distributed 
 with a view to the business of the parties. It 
 will no doubt, however, be very desirable that 
 the neighbouring country gentlemen, should 
 give the Bank their countenance and support, 
 by taking shares in it. This they will probably 
 do upon principles of public spirit. They can 
 never be tempted by the magnitude of their 
 shares, to do so upon any other grounds ; other- 
 wise many more efficient supporters of the con- 
 cern would have to be left out. 
 
 It appears to be a general opinion, that two 
 thousand pounds stock is too small an amount 
 for the Directors to be confined to. I beg, 
 therefore, to suggest that after they are chosen 
 they may be allowed to hold shares to the a- 
 mount of five thousand pounds. The first Di- 
 rectors will make the most benefit by this pri- 
 vilege, but it will be a very cheap way of re- 
 warding them, and it is unquestionable that 
 having every thing to arrange from the com- 
 mencement, they will have the most trouble.
 
 85 
 
 I still, however, cannot help thinking that 
 after the annual profits of the Bank have be- 
 come stationary, and the stock attained its va- 
 lue in the money market, the small difference 
 which could be made on any stock that a Di- 
 rector may be allowed to hold, would not be a 
 consideration worth the attention of such men 
 as it is most probable will be always at the head 
 of this concern. If they do not undertake the 
 office as a public trust, execute it as a public 
 duty, and have a pleasure in doing so, they 
 are not the proper persons to fill the important 
 office to which they will be elected. A Direc- 
 tor, whose strongest motive for the performance 
 of his duty is 50 or 100 pounds per annum ex- 
 tra, which he may gain by the stock he possess- 
 es, holds a station he ought not to hold. In 
 fact, if such men only were chosen Directors, 
 there can be no doubt that the Bank would be 
 totally neglected. They would soon find that 
 they could make much more money by con- 
 fining the attention required by the Bank, to 
 their own private affairs. 
 
 After the subscribers have chosen a Commit- 
 tee, one of the first steps to be taken will be 
 to promote a petition to parliament for an alte- 
 ration in the charter of the Bank of England. 
 In this almost every person not connected with 
 the existing Banks, whether they are sub- 
 scribers to this Bank or not, will feel interest-
 
 86 
 
 ed, and join. It is a measure whieh will have 
 the good wishes of every one, and the public 
 voice will be unanimous in its favour. 
 
 The most decided and fairest mode of giving 
 expression to public opinion, is by a meeting of 
 the town to petition parliament, held under the 
 sanction of the magistrates, when the merits of 
 the question might be fairly discussed, and the 
 objections to it made known. By presenting a 
 requisition to the mayor, such a meeting would 
 no doubt be called. But in towns like this, 
 where the Bankers are intimate with all the 
 principal inhabitants, the proper persons to take 
 a lead in such a meeting might feel a delicacy 
 in doing so. It will perhaps, therefore, be as 
 well to set a petition on foot without a meet- 
 ing, and let it be numerously signed. It is a 
 question that admits of but one opinion, and 
 there can be no doubt that the petition will be 
 held to convey the unanimous sentiments of 
 the public. 
 
 There will always be the most difficulty in 
 setting a public Bank on foot in small towns : 
 the influence of the Banks being always greater 
 in proportion to the smallness of the place. 
 The first, however, is the only difficult step in 
 the business, and almost any one independent 
 and respectable person is competent to under- 
 take it. For instance, we will suppose Stock- 
 ton, Darlington, Richmond, and Stokesley,
 
 87 
 
 towns not far distant from each other, in each 
 of which there are Banks, to form a proper 
 district for a public company, with, say two 
 hundred thousand pounds capital. In any one 
 of those places, any respectable person might 
 open a subscription for, say five and twenty 
 thousand pounds stock, being half the propor- 
 tion to be subscribed in the town where he re- 
 sides. When the subscription is full, the sub- 
 scribers might then meet, deposit a per centage 
 on their shares, to cover the expences which 
 may be incurred, and appoint a committee to 
 stir up and co-operate with the other towns, or 
 such other towns as are disposed to join them, 
 in carrying the measure into effect. A commit- 
 tee being thus appointed, whose interest and 
 whose duty it is to bestir itself, there can be no 
 doubt of such a Bank being speedily establish- 
 ed. One of the Branches will have, like New- 
 castle, to be the centre of the system. It is 
 not, however, necessary that this Branch should 
 be in the principal town, the most central and 
 convenient would evidently be the best for it. 
 
 Nor, is it necessary that the shares should be 
 a thousand pounds each ; there can be no ob- 
 jection to take subscriptions for a hundred 
 pounds, and probably five hundred pound 
 shares would be as far as subscribers in the first 
 instance ought to be permitted to go. That is, 
 however, altogether a local question, which
 
 88 
 
 will have to be determined by the numbers and 
 class of persons likely to give their support to 
 the measure. No general rule can be laid 
 down. What is a large subscription in one 
 town may be a small one in another, and vice 
 versa. 
 
 That public Banks have not hitherto existed, 
 more especially in London and Lancashire, 
 seems to have arisen from the want of a proper 
 knowledge of the principles of Banking, rather 
 than from the charter of the Bank of England, 
 which I find does not prevent public Banks for 
 the deposit of capital from being established. 
 I hope it will not be considered as an attempt 
 to arrogate merit to myself, when I say that I 
 have not been able to discover any correct 
 views extant upon the subject. The disserta- 
 tions which I have met with, have generally 
 consisted, of what has been said by Smith in his 
 Wealth of Nations, the History of the Trans- 
 actions of the Bank of England with Govern- 
 ment, and a Eulogy of the Present System. In 
 the same manner as the rules for epic poetry 
 have been deduced from the writings of Homer, 
 so have the principles of Banking been deduced 
 from the practice of the Bank of England. 
 That Banks ought to be the permanent depo- 
 sitories of the capital of the country, is an idea 
 which no writer has hitherto entertained, and
 
 89 
 
 the silent operations of the Scotch Banks have 
 eluded observation. 
 
 It has in fact always been hitherto considered, 
 that the proper business of a Bank was to issue 
 notes and discount bills at short dates. This is 
 very strikingly exemplified, by the clause in 
 the charter of the Bank of England, which re- 
 stricts other Banks to six partners. 
 
 12 — " And to prevent any doubts that may 
 " arise concerning the privilege or power given 
 " by former acts of parliament, to the said gb- 
 " vernor and company of ea^clusive Banking, 
 " and also in regard to the erecting any other 
 " Banlc or Banks by parliament, or restraining 
 " any other persons Jrom Banking, during the 
 " continuance of the said privilege, granted to 
 " the governor and company of the Bank of 
 " England, as before recited, It is hereby fur- 
 " ther enacted and declared by the authority 
 " aforesaid, that it is the true intent and mean- 
 " ing of this act, that no other Bank shall be 
 " erected, established, or allowed by parliament, 
 " and that it shall not be lawful for any body 
 " politic or corporate whatsoever, erected, or 
 " to be erected, or for any other persons united 
 " or to be united in covenants or partnerships, 
 " exceeding the number of six persons, in that 
 " part of Great Britain called England, to bar' 
 ** row, owe, or take up, any sum or sums oj 
 ** money on their bills, or notes payable on de- 
 
 N
 
 90 
 
 " mand, or at any less time than six months from 
 " the borrowing thereof, during the continu- 
 '* ance of such said privilege to the said go- 
 " vernor and company ; who are hereby de- 
 " Glared to be and remain a corporation with 
 " the privilege of exclusive banking as before 
 " recited, subject to redemption on the terms 
 " and conditions before-mentioned." — 21 Geo, 
 3, c. 60. sec. 12. 
 
 It is quite evident that the framers of the 
 above clause considered the business pursued 
 by the Bank of England, the only proper 
 Banking. It appeared to them that preventing 
 Banks with more than six partners, from issu- 
 ing bills at short dates, or notes payable on de- 
 mand, was altogether conferring on the Bank 
 the privilege of exclusive Banking as a public 
 company. This, it did, no doubt according to 
 their definition of the term, but it still leaves 
 the most important part of Banking open to 
 the public. 
 
 There is at this moment no legal impediment 
 to the establishment of joint stock companies 
 for trading in real capital. Both the letter and 
 spirit of the charter has reference to the circu- 
 lation of bills and notes alone. A Bank which 
 traded only in capital, would not in the least 
 touch upon the monopoly of the Bank of Eng- 
 land, nor be any infringement of its charter. 
 Now in London and Lancashire, the Banks do
 
 91 
 
 principally trade in capital. In London, how- 
 ever, they accept bills, and in Lancashire they 
 draw them, which such Banks, without an al- 
 teration in the charter, could not do. But I 
 apprehend there is a great deal of drawing up- 
 on London from Lancashire, and consequently 
 of accepting in London, which woidd be quite 
 unnecessary with a better system.* 
 
 Such a Bank, though it could not draw upon 
 London, coidd sell to those who wanted such 
 bills as it had discounted for others, and as I 
 should imagine the balance of trade would, on 
 the average, be in favour of Lancashire, it 
 would not be many Bankers bills that would 
 be wanted. These could easily be procured 
 from other Banks, or the London agents of the 
 concern might appoint a person in Lancashire 
 
 * I understand that most of the bills in Lancashire are 
 made payable in London, which must arise from the demand 
 for capital in that great manufacturing and commercial dis- 
 trict, under the present system of Banking, being greater 
 than the supply. By the bills being made payable in Lon- 
 don, they can be discounted there ; and some of the Banks 
 have branches in London, which, it is probable, were ori- 
 ginally established to save the expence of agency. In- 
 stead of saying that the Lancashire Ranks trade in capital, 
 it would, perhaps, be more proper to designate them Bill 
 Brokers, on a large scale. Public Banks would, of course, 
 from the investments of capital made with them, be able to 
 discount bills, payable at home, by which the present ex- 
 pence of paying in London would be saved.
 
 92 
 
 to draw such bills upon them as the Bank re- 
 quired. As to accepting of bills, by the London 
 Banks, it is a part of their business, which, I 
 understand, is not much valued. It would, 
 however, be needless to go into the details of 
 management, which would have to be pursued 
 by a public Bank established with the charter 
 as it now stands. There is no reasonable 
 ground of probability that the directors of the 
 Bank of England will oppose the required alte- 
 ration. Sufficient, therefore, for our argument, 
 is it, that the establishment of Joint Stock 
 Companies without such alteration is perfectly 
 legal. 
 
 KDWARD WAI-KER, PRINTER, NEWCASTLE.
 
 APPENDIX 
 
 €sgap on Banfeins,
 
 APPENDIX. 
 
 No. I. Letters from The Times Newspaper. 
 
 JOINT STOCK BANKING COMPANIES. 
 
 To the Editor of The Times. 
 
 Sir, — As the important advantages to be derived 
 from the alteration of the Bank Charter and the estab- 
 lishment of Joint Stock Companies seem little under- 
 stood, permit me to offer a few observations on the 
 subject. 
 
 Experience has shown, that Joint Stock Companies 
 never fail, and from the nature of the management to 
 which they are subject, have been rarely known to 
 ever lose money. By the confidence which this secu- 
 rity inspires, and their liberal mode of transacting bu- 
 siness, they become permanently, to large amounts, 
 the depositories of the actual capital of the country. 
 This they lend out again, not only upon short dated 
 bills, but in permanent advances, upon sufficient per- 
 gonal and other securities, to merchants, manufactur- 
 
 A 2
 
 4 
 
 ers, and agriculturists, with great advantage, as has 
 been proved in Scotland, to the agriculture and com- 
 merce of the country. Provincial private banks (in 
 London they are more stable) are unable, from the 
 frail nature of their credit, to transact in this manner. 
 Not only are people deterred from keej^ing capital in 
 their hands, but the banks dare not re-issue that 
 which is deposited with them, except upon short dated 
 bills, and such available securities as, in the event of 
 a run upon them, can, through their London agents, 
 be turned into money at any time. Comparatively 
 speaking, therefore, the accommodation afforded to 
 trade by private banks is merely casual, while an en- 
 couragement is given to bill transactions, which often 
 leads to and is productive of the most fatal conse- 
 quences. To agriculture, where bills are not current, 
 they can give no accommodation at all. 
 
 The proposed alteration of the Charter is, in fact, 
 brought forward by ministers as a measure of agricul- 
 tural relief: and when properly considered, it will be 
 seen, that no proposition made this session of parlia- 
 ment for that purpose, can in point of magnitude or 
 efficacy, be compared with it. 
 
 It is understood, that ministers are very serious in 
 their intention of carrying it through, and will be 
 supported on both sides of the house ; but it is also 
 supposed, that on both sides of the house, from the 
 great connexions of country bankers in parliament, a 
 great deal of indirect influence will be opposed to it. 
 This, it is reported, government have already met, 
 even in the directors of the bank of England, who 
 have admitted the principle, but wish to defeat it in 
 practice. Not only have they stipulated that no Char-
 
 ters shall be granted, (a stipulation of not the slightest 
 importance to the Bank of England,) but it is under- 
 stood, that they wish to prevent any alteration of the 
 law with respect to Joint Stock Banks, which renders 
 a company liable for the obligations in the name of its 
 firm entered into by any of its partners. This, of 
 course, would completely prevent any such banks be- 
 ing established, and can have nothing else for its ob- 
 ject. By thus quibbling with the nation, the Direc- 
 tors may serve their friends, but they most seriously 
 commit the interests of their constituents. The Bank 
 is founded upon public opinion, and, perhaps, it is not 
 too much to say, even upon public prejudice. If, 
 however, it is thus foolishly opposed to the interests of 
 the nation, opinion and prejudice may take a turn, and 
 it may never have its Charter renewed again. 
 
 AN OBSERVER. 
 
 TO THE DIRECTORS OF THE BANK OF 
 ENGLAND. 
 
 Gentlemen, — At a meeting of the Bank Proprie- 
 tors, it was agreed to permit the establishment of Joint 
 Stock Companies at the distance of sixty-five miles 
 from London, upon having the Charter of the Bank 
 renewed for ten years. This agreement was a favour- 
 able one, inasmuch as for resigning a privilege worth 
 nothing, you were to receive a valuable consideration. 
 The circulation of Lancashire you have been for some
 
 6 
 
 lime desirous of discontinuing : to give it up was, 
 therefore, making no sacrifice. 
 
 Now, it is the interest of the Company, and your 
 duty, who are intrusted with the care of its interests, 
 to get this agreement carried into effect. Report, 
 however, states (how truly you best know,) that in- 
 stead of doing so, you have attempted to defeat this 
 measure. 
 
 You must know what Joint Stock Companies are. 
 The Bank of England is a Joint Stock Company. 
 You must also know very well, that by the laws of this 
 country, it is not practicable to establish these Com- 
 panies without some bill, which shall free them from 
 being responsible for the acts of individual partners, 
 which shall also make their stock transferable without 
 a formal dissolution of partnership, and contain other 
 regulations of a similar nature. 
 
 Now, when the Bank Proprietors agreed to their 
 establishment, they agreed also to such regulations as 
 a matter of course. If, however, you have quibbled 
 about them, with a view to get rid of the arrangement, 
 I leave it to your constituents and you to determine 
 how far you have done your duty. 
 
 AN OBSERVER. 
 
 BANKING SYSTEM. 
 
 To the Editor of The Times, 
 Sir, — I have read with some surprise two letters
 
 that have appeared in your journal from a correspon- 
 dent who signs himself " An Observer ;" and as you 
 invited, in a former journal, discussion on the subject 
 to which your correspondent has alluded, I trouble 
 you with a few remarks. Your correspondent is evi- 
 dently very angry with the Bank Directors, for not 
 promoting this new scheme of Joint Stock Companies. 
 Let me first ask, what is the object of these Joint Stock 
 Companies? And I believe a fair answer to this in- 
 quiry will be, that their design is to extend the circu- 
 lating medium, and thereby enhance prices. Now, if 
 your correspondent had taken a comprehensive view 
 of the subject, he would see the unpleasant, and I may 
 say dangerous, situation the Bank Directors will be 
 placed in ; for it must be remembered, that the same 
 paper which is issued, and will cause the rise of the 
 price of corn, will also cause the rise of the price of 
 gold ; and is it to be expected the Bank Directors can 
 permit Joint Stock Companies to issue all over Eng- 
 land their paper, and cause the rise of the prices of all 
 commodities (remember, gold included), and yet the 
 Bank Directors be bound by an act of parliament to 
 supply the public with one commodity (gold) at a fixed 
 price, viz. 31. 17s. lO^r/. per oz. ? One of two things 
 must ensue : either ruin to the Bank of England from 
 such an unequal trade, or a corresponding withdrawal 
 of their paper to the extent of the issues of the Joint 
 Stock Companies, to keep paper and gold at par. 
 Where then will be the use of these new companies ? 
 
 Should, however, any arrangement be made by a 
 breaking in upon Mr Peel's bill, and making the 
 bank note a legal tender, to increase the issue of pa- 
 per, this would be nothing more than a complete rob-
 
 8 
 
 bery of the 5 per cent, fund-holder. He has had 20 
 per cent, deducted from his income, and one principal 
 arofument to reconcile him to it has been, " Never 
 *« mind ; you can now purchase the same quantity of 
 " commodities for 801. you used to do for lOOl., and 
 ** therefore you are no worse off." But issue fresh pa- 
 per, and let prices increase, and then the poor fund- 
 holder will have again high prices, and 20 per cent, 
 income less. 
 
 That this will be the case, I appeal only to the ope- 
 ration of the paper system in 1816, and I must say 
 that any infraction whatever of Mr Peel's bill, after 
 the arrangement that has just been made with the pub- 
 lic creditor, is neither more nor less than a fraud upon 
 the fund-holder, and all who have had deductions 
 made from fixed salaries or rents, since the passing of 
 that bill. 
 
 Respecting the establishing of Joint Stock Compa- 
 nies, I shall then say, that more evil is likely to arise 
 to the community than good. One month a large is- 
 sue of paper will be made, and prices will rise ; ano- 
 ther month, a withdrawing by the Bank of England, 
 and prices will fall ; it will keep property in a complete 
 state of vacillation as to price, and the merchant will 
 also be liable to great fluctuation in his commodities. 
 There is no want of circulating medium, accordmg to 
 the present value of property at this moment; why 
 then make any alteration in the existing law, which 
 we were told, when made, was " to set the question 
 ** at rest for ever ?" Let it be remembered, that no- 
 thing is more dangerous to the well-being of a country 
 than tampering with the currency; and after the so- 
 lemn engagement the legislature has entered into, by
 
 9 
 
 unanimously passing a bill to return hona fide to cash 
 payments, I should hope the integrity of our govern- 
 ment will never be again compromised by allowing 
 any new paper projects, although they may be called 
 " Joint Stock Companies." J. F. 
 
 May 23, 1S22. 
 
 JOINT STOCK COMPANIES. 
 
 To the Editm- of The Times. 
 
 Sir, — In reply to the letter of J. F., in your paper 
 of yesterday, I beg to say, that I have no wish to im- 
 pute improper motives to the Directors of the Bank of 
 England, yet their conduct cannot appear otherwise 
 than extraordinary. 
 
 The reasons against the establishment of Joint Stock 
 Companies must either have been known before the 
 meeting of proprietors took place, or have been disco- 
 vered since. If they were known before, why was the 
 meeting called, and the measure agreed to ? The di- 
 rectors can have no faith in the soundness of their own 
 arguments, or they never would have acted in such 
 direct opposition to them. If, on the other hand, they 
 have been discovered since, allow me to say they are 
 mere lame apologies for equivocal conduct. 
 
 The apprehensions professed to be entertained are, 
 that by the establishment of these companies, the cir-
 
 10 
 
 culation will be extended, and the relative price of 
 gold and paper thereby altered — that is to say, while a 
 note is worth twenty shillings, a sovereign may rise to 
 twenty-two shillings ; and a demand be created for gold 
 which must fall upon the Bank of England, and either 
 ruin it or undermine its circulation. 
 
 Now, without disputing about the unqualified as- 
 sumption, first, that the circulation would be increas- 
 ed to so great an extent ; and next, that it would, in 
 the present state of the country and our exchanges, 
 alter the relative prices of gold and paper, let us admit 
 such to be the result of experience. Must it not then 
 appear to be a marvellous circumstance, that the Bank 
 of England, previous to the restriction act, had a note 
 in circulation at all ? The principle laid down is, that 
 the over issues of country banks contract those of the 
 Bank of England ; yet, as country banks have always 
 issued as much as they could, and often more than 
 they found profitable, it is really quite surprising that 
 the Bank of England has not, long ere this, ceased to 
 exist. 
 
 I am unable to say, at this moment, whether by the- 
 law as it now stands, country banks will not be oblig- 
 ed to pay in gold as well as the Bank of England. 
 However, let the law be restored to the state in which 
 it stood before the restriction act was passed, and the 
 relative situation of the banks will be precisely the 
 same. Each bank will enjoy the circulation of that 
 district the business of which it transacts, and any im- 
 providence in its issues will recoil upon itself. 
 
 Your correspondent inquires, what is the object of 
 these Joint Stock Companies ? It may be replied — ^to
 
 ir 
 
 supply to the country, banks with capital, where there 
 are now banks with none, and to give a security and 
 steadiness to its money transactions which they do not 
 now possess. How far they may contribute to extend 
 the circulation, and counteract the ruinous consequen- 
 ces which its great contraction has produced, I shall 
 leave to more competent judges to determine. I trust 
 it will in some degree assist the views of ministers in 
 relieving the distresses of the country, though it may 
 not altogether realise the apprehensions of the Bank 
 Directors with regard to the holders of five per cent, 
 stock. 
 
 It does not, however, appear to me, that the ori- 
 ginal promoters of these establishments had any such 
 views as those with which their present advocates are 
 charged. I quote the following from a paper publish- 
 ing in Newcastle, where the idea of establishing these 
 companies, founded upon the encouragement held out 
 last year by government, originated : — 
 
 *' It is the result of experience that public banks or 
 ** Joint Stock Companies, in consequence of the un- 
 *' bounded credit which they naturally possess, and 
 ** their liberal mode of doing business, receive great 
 ** permanent investments of capital. They are, in con- 
 •* sequence enabled to re-issue it in permanent advan* 
 ** ces to those who can give proper security. Where- 
 •* as private banks, for want of the necessary credit, 
 ** have not such large sums deposited with them ; nor 
 ** dare they, for fear of runs, to which they are so 
 "** subject, make advances, except upon bills, and such 
 " available securities as can, in case of need, be turn- 
 ** ed into money through their London correspondents 
 ** at any time. 
 
 b2
 
 12 
 
 y I <*' The consequence is, that the latter principle of 
 ^* banking is purely mercantile, and can afford no use- 
 " ful assistance to agriculture whatever. An advance 
 *' of money is of no use to the agriculturist without he 
 <-^ . is allowed years to re-pay it* Whereas the dubious 
 ff credit of private banks renders it necessary that they 
 $f. should principally limit their advances to the dis- 
 f.': counting of bills at two or three months. 
 .';*'. With Joint Stock Companies, however, this is 
 f not the case. If a farmer can produce two persons 
 f in sufficient credit to be his securities, he can open 
 *' a cash account, draw out of the bank the sum for 
 " which he: gives security, and repay it by degrees, as 
 " the returns of his farm, or success of the improve- 
 *' ments in which he has expended it, may eJn able him. 
 " It very often happens, that many valuable perma-r 
 *' nent improvements are totally prevented from want 
 *' of capital on the part of both landlord and tenant. 
 *' The landlord is very willing to allow for such im- 
 " provements by a . gradual deduction from the rent, 
 *' and the tenant to make them if he had the means; 
 <' but the want of this on both sides puts an entire stop 
 " to the improvements contemplated. With a Joint 
 «' Stock Bank, however, in the neighbourhood, this 
 *' would not be the case ; the landlord would have no 
 <' objection to become security to the bank for that 
 " money which he had himself ultimately to pay. It 
 ** could, therefore, be immediately raised for the 
 *' purpose required, and would be discharged by de- 
 " grees, as the rents came round. Even if the land- 
 *' lord did not pay for the improvements himself, were 
 ** a tenant to show how capital might be expended 
 " with advantage, his landlord could have no object
 
 13 
 
 ** tlon to become security for the money spent in the 
 *' improvement of his own property, the tenant eri-* 
 ** gaging to re-pay it before the expiration of his 
 1' lease. Thus, such a bank would be a source and 
 " main-spring of improvement and fertility to the 
 " neighbourhood in which it was placed, while the 
 ** business thus done by it would be a source of great 
 ** profit to the concern. 
 
 " Hence the establishment of Joint Stock Compa- 
 *' nies is a matter of great importance to the landed 
 *' interest, independent of remedying the positive evils 
 *' which have arisen out of the present system ; and 
 *' most of the intelligent country gentlemen, who have 
 *' been consulted upon the subject, are decidedly fa- 
 *' vourable to the measure." 
 
 The simple principle that these banks bring actual 
 capital to the aid of the practical agriculturist, who can 
 give security for it, is what is here proposed, and it 
 must be obvious that no advance of exchequer bills, 
 or any temporary expedient that can be devised, could 
 be either so practicable or so extensively useful to the 
 country. 
 
 Not only, however, will the proposed change in our 
 Banking System be of great service both to commerce 
 and agriculture, but an extensive evil will be thereby 
 remedied. During the last thirty years, nearly three 
 hundred Private Banks, principally provincial, have 
 failed. What an immense mass of misery does this 
 present to the imagination. Each failure was an earth- 
 quake to the neighbourhood where it took place. The 
 savings of the labourer, the capital of the tradesman, 
 the dependence of the widow, all swallowed up in its 
 dreadful vortex. Could a spectator but see the gene-
 
 14 
 
 ral alarm, the anxious inquiry, the frantic look, and 
 the domestic misery produced, he would be disposed to 
 class such an event amongst the greatest calamities to 
 which mankind are subject. Can a desire possibly ex- 
 ist in any quarter, then, of perpetuating that system 
 from which these evils have sprung ? 
 
 AN OBSERVER. 
 London, May 5th.
 
 15 
 
 No. II. Letter, from The Newcastle Courant, referred 
 to in the last Letter from The Times. 
 
 BANKING IN CONNECTION WITH AGRI- 
 CULTURE. 
 
 To the Editor of The Newcastle CouranU 
 
 By the Pamphlet which you have more than once 
 favoured with your notice, it is shewn to be the result 
 of experience, that public Banks or Joint Stock Com- 
 panies, in consequence of the unbounded credit which 
 they naturally possess, and their liberal mode of do- 
 ing business, receive great permanent investments of 
 capital. They are, in consequence, enabled to re-issue 
 it in permanent advances to those who can give pro- 
 per security. Whereas private Banks, for want of the 
 necessary credit, have not such large sums deposited 
 with them ; nor dare they, for fear of runs, to which 
 they are so subject, make advances, except upon bills, 
 and such available securities, as can, in case of need, 
 be turned into money, through their London corre- 
 spondents, at any time. 
 
 The consequence is, that the latter principle of 
 banking is purely mercantile, and can afford no useful 
 assistance to Agriculture whatever. An advance of 
 mcney is of no use to the Agriculturist without he is 
 allowed years to repair it. Whereas the dubious cre- 
 dit of private Banks renders it necessary that they 
 should principally limit their advances to the discount* 
 ing of bills at two or three months. 
 
 With Joint Stock Companies, however, this is not
 
 16 
 
 the case. If a Farmer can produce two persons in 
 sufficient credit to be his securities, he can open a cash 
 account, draw out of the Bank the sum for which he 
 gives security, and re-pay it by degrees, as the returns 
 of his farm, or success of the improvements in which 
 he has expended itj may enable him. It very often 
 happens, that many valuable permanent improvements 
 are totally prevented from want of capital on the part 
 of both landlord and tenant. The landlord is very 
 willing to allow for such improvements by a gradual 
 deduction from the rent, and the tenant to make them 
 if he had the means ; but the want thereof on both 
 sides, puts an entire stop to the improvements contem- 
 plated. With a Joint Stock Bank, however, in the 
 neighbourhood, this would not be the case, the land- 
 lord would have no objection to become security to the 
 Bank for that money which he had himself ultimately 
 to pay. It could therefore be immediately raised for 
 the purpose required, and would be discharged by de- 
 crees, as the rents came round. Even if the landlord 
 did not pay for the improvements himself, were a 
 tenant to shew how a few hundred pounds might be 
 expended with advantage, his landlord could have no 
 objection to become security for the money spent in 
 the improvement of his own property, the tenant en- 
 gaging to rei-pay it before the expiration of his lease. 
 Thus such a Bank would be a source and main spring 
 of improvement and fertility to the neighbourhood in 
 which it was placed, while the business thus done by it 
 would be a source of great profit to the concern. 
 • Hence the establishment of Joint Stock Banking 
 Companies, is a matter of great importance to the 
 landed interest, independent of remedying the positive
 
 17 
 
 evils which have arisen out of the present system ; and 
 most of the intelligent country gentlemen who have 
 been consulted upon the subject, are decidedly favour- 
 able the measure. 
 
 It has consequently been suggested that petitions 
 from the counties of Northumberland and Durham, 
 for the altei'ation of that clause in the charter of the 
 Bank of England, which restricts Banks to six part- 
 ners, ought to be set on foot, in order to permit the 
 establishment of such Banks. 
 
 By the Pamphlet above mentioned, it will be seen 
 that the clause in question is a mere error in legisla- 
 tion, and that error too a verbal one, and that the al- 
 teration proposed not only offers no injury to the Bank 
 of England, but puts its monopoly upon a better foot- 
 ing. Consequently opposition on any rational princi- 
 ple cannot be offered to the measure, admitting for a 
 moment that the interests of a Bank could be main- 
 tained against that of a kingdom. This point, how- 
 ever, as well as the subject generally, is very fully dis- 
 cussed in the Pamphlet alluded to, which has been very 
 generally circulated, and may be also had in all the 
 principal towns of the two neighbouring counties. 
 
 Independent of the great national advantages to be 
 derived from the system of banking recommended, the 
 gentlemen of the county of Durham are particularly 
 called upon to express themselves, by the positive in- 
 juries from the present system which the county has, 
 within these few years, sustained. It is but a short 
 time since five banks, viz. two at Stockton, two at 
 Sunderland, and one in the city of Durham, failed 
 nearly together, by which at least a million of money 
 was lost. No stronger argument than the evidence of
 
 18 
 
 this fact could be offered, both for the necessity and 
 duty of every gentleman in the county joining to pro- 
 mote any steps that may be necessary to prevent the 
 recurrence of evils so dreadful as these failures pro- 
 duced to hundreds of individuals. 
 
 Nor can it be less necessary for the gentlemen of the 
 county of Northumberland to bestir themselves. They 
 have recently had an indication of those evils which 
 Durham has suffered, while the failure of Messrs Sur- 
 tees, Burdon, and Co. cannot be forgotten. The cre- 
 dit of the present Banks, it must be admitted, leave 
 little room to doubt, that it will be some time before 
 any more disasters can happen of a similar nature ; yet, 
 the Banks referred to, and the latter in particular, had 
 a credit as good as the present, or any private Bank, 
 could possess. 
 
 No one can feel a greater respect for our present 
 bankers, both as gentlemen and men of business, than I 
 do ; and I am very well assured, that even they will not 
 contend, that if wc could discover (to speak allegorically) 
 a clear and safe North West Passage, we ought to 
 send our ships to China by the present route, and en- 
 counter the hurricanes of the Indian ocean, merely that 
 they might purchase their mutton at the Cape. T.
 
 19 
 
 No. III. Resolutions at Durham. 
 
 At a meeting of Gentry, Clergy, Magistrates, and 
 others, of the county of Durham, held at the Grand 
 Jury Room, on Wednesday the 1 7th of April, 
 
 THE RIGHT HON. LORD VISCOUNT BAR- 
 RINGTON, IN THE CHAIR, 
 
 Resolved, — That this meeting are convinced of the 
 superior security afforded by Joint Stock Banking 
 Companies, beyond that derived from private Banks, 
 as well as of their more extensive influence in promot- 
 ing the Commercial and Agricultural prosperity of a 
 country. 
 
 Mesolved, — That for the purpose of promoting the 
 establishment of Joint Stock Companies, a committee 
 be appointed, to correspond with other persons im- 
 pressed with the same sentiments. 
 
 Resolved, — That Lord Viscount Barrington, Wil- 
 liam Thomas Salvin, Francis Johnson, Edward Ship- 
 perdson, John Ralph Fenwick, Richard Scruton, and 
 John Ward, Esquires, be a committee for that pur- 
 pose. 
 
 Resolved, — That these resolutions be published in 
 the Newcastle and Durham newspapers. 
 
 BARRINGTON, Chairman.
 
 NEWCASTLE : PRINTED BY EDW. WALKER.