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AN 
 
 ESSAY 
 
 ON THE ‘33ESTI0N OF 
 
 REDUCING THE INTEREST 
 
 OF THE 
 
 Jiational Bebt; 
 
 IN WHICH THE 
 
 JUSTICE AND EXPEDIENCY OF THAT MEASURE 
 U ARE FOLLY ESTABLISHED. 
 
 BY 
 
 J. R. M‘CULLOCH, Esq. 
 
 EDINBURGH : 
 
 PRINTED FOR DAVID BROWN, AND ADAM BLACK, 
 EDINBURGH ; AND T. & G. UNDERWOOD, 
 FLEET-STREET, LONDON. 
 
 1816 . 
 
Edinburgh : Printed by A. Balfour. 
 
 
 
PREFACE. 
 
 In a very short Essay, published last spring, 
 after shewing the impolicy of the corn laws, 
 and the strong probability that, if they were 
 repealed, the mean price of wheat would 
 not in this country exceed 50s. per quar- 
 ter, I endeavoured to shew the justice 
 and expediency of reducing the interest of 
 the public debt contracted during the high 
 prices. The views contained in the present 
 Essay are fundamentally the same ; but I 
 have endeavoured to prove, that a great 
 portion of the paper lent to Government 
 during the late war was depreciated , and 
 that if the stockholders are now paid the 
 same nominal sums they lent with undepre- 
 dated paper, they will get an undue advan- 
 tage, at the expence and ruin of the pro- 
 ductive classes. In order accurately to as- 
 certain, whether or not there had been any 
 
IV 
 
 depreciation or comparative redundancy of 
 our currency* it was necessary to inquire 
 into the value of gold and silver in the dif- 
 ferent states of Europe and America : And 
 the illustrious author of “ The Wealth of 
 Nations” having shewn, that the precious 
 metals had not fallen in value from 1640 
 to 1775, I commenced my inquiries at the 
 latter period ; and have found myself au- 
 thorised to conclude, in opposition to the 
 greater part of the late political economists 
 of this country, that there has been no ge- 
 neral fall in the value of money since that 
 era. In the course of this Inquiry, I have 
 pointed out the causes which have prevent- 
 ed the increased influx of bullion from rai- 
 sing prices ; and have given a short, but I 
 hope a correct, view of the progress of agri- 
 culture, industry, and population, in the 
 United States, and the principal kingdoms 
 of Europe since 1775. This sketch is of 
 paramount importance, as indicating the 
 relative situation of Great Britain, and other 
 nations, who will now be our rivals in ma- 
 nufactures and commerce. In this Essay 
 I have examined the principles and effects 
 
V 
 
 of the corn laws at considerable length ; I 
 have also endeavoured to shew the real im- 
 portance of our foreign trade, and the fatal 
 effects that the present system of taxation 
 must have, not only on the commerce, but 
 on the general prosperity of the country. 
 And, in conclusion, I have applied the facts 
 and principles, previously established, to 
 prove, the justice and expediency of redu- 
 cing the interest of the public debt. 
 
 The major part of the principles which 
 pervade this Essay, have been sanctioned 
 by the ablest writers on Political Economy. 
 In applying them to the present question, 
 I have been actuated solely by a desire of 
 contributing to the general advantage, 
 (not to that of any particular faction or 
 party,) and to the improvement of the 
 science of Political Economy. The difficul- 
 ty and obscurity involving some of the sub- 
 jects treated of, will excuse any slight er- 
 rors into which I may have fallen ; and the 
 importance of the general conclusions, will 
 bespeak an impartial examination of the 
 premises from which they are deduced. 
 
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CONTENTS. 
 
 SECTION FIRST. P age . 
 
 General Principles regulating the Price of Bullion and 
 other Commodities — Attempt to estimate the quantity 
 of the Circulating Medium of Great Britain in 1797 
 and 1812 — Some observations on Banking — And 
 consequences of a local accumulation of Specie 1 
 
 SECTION SECOND. 
 
 General principles of Exchange — Application of these 
 principles to the Exchange between Great Britain 
 and other Countries, from 17.99 to 1815, inclusive. . . 25 
 
 SECTION THIRD. 
 
 Inquiry into the Rise of Prices throughout Europe 
 since 1775 ; with some account of the Progress of 
 Manufactures, and of the Increase of Population. ... 58 
 
 SECTION FOURTH. 
 
 Price of Corn in this Country fictitiously kept up by 
 the Corn Laws — Such advancement of Price preju- 
 dicial to the Manufacturers, without being advantage- 
 ous to the Agriculturists — Famine and scarcity, ge- 
 nerally caused by Restrictions on the Corn Trade. . . 122 
 
 SECTION FIFTH. 
 
 Estimate of the Number of Individuals in Great Britain 
 directly supported by Foreign Trade— Effects of a 
 great relative Taxation on Manufacturing Industry — 
 Difference of the State of Great Britain in 1783 and 
 1815 — And Confutation of the Reasoning of Dr Col- 
 quhoun and others, who attempt to prove that a 
 large National Debt is not injurious to a State .... 147 
 
CONTENTS. 
 
 viii 
 
 SECTION SIXTH. 
 
 Propriety of Repealing the Restriction Act, and of 
 obliging the Bank of England to resume Cash Pay- 
 ments — Inexpediency of Cash Payments, unless ac- 
 companied with a Reduction of the Interest of the 
 National Debt — Proofs of the Necessity and Justice 
 of this measure of Reduction — Expediency of apply- 
 ing the Sinking F und to the general service of the 
 State — Conclusion 
 
\ 
 
 AN 
 
 ESSA : Y.:: ; ,, .... „ 
 
 ON A REDUCTION CP ^Vl& INTEREST OF * 
 
 •' * » » v, v ' 
 
 The National • Dgbt:, V . 
 
 ] * > J ) j j l J ) } j > J >3 
 
 &c. &c. 
 
 SECTION FIRST. 
 
 General Principles regulating the Price of Bullion 
 and other Commodities — Attempt to estimate the 
 quantity of the Circulating Medium of Great 
 Britain in 1797 and 1812 — Some observations 
 on Banking — And consequences of a local accu- 
 mulation of Specie . 
 
 “ Bullion,” says Mr Thornton, “ is a commo- 
 dity, and nothing but a commodity : and it rises 
 and falls in value, on the same principle as all 
 other commodities. It becomes like them, dear, 
 in proportion as the circulating medium for 
 which it is exchanged is rendered cheap, and 
 cheap in proportion as the circulating medium is 
 rendered dear.” * 
 
 * Essay on Paper Credit, p. 202. 
 
 A 
 
2 
 
 Bullion constitutes the universal circulating 
 medium of civilized nations, the demand for it 
 is general and permanent, and while the new 
 supplies dug from fjie mines are equally distri- 
 buted to each country in: proportion to its wants, 
 it cannot become superabundant or cheap in any. 
 The conversion of bullion into the coin of a par- 
 ticular state does not materially affect the gene- 
 ral laws to which it was before subject : the ease 
 with which it is again melted down, and the ac- 
 knowledged inefficacy of all restrictions on its 
 exportation, render it in a general point of view 
 almost exactly the same. 
 
 Now, if more coin circulates in a particular 
 country, compared with its exchangeable pro- 
 duce, than what circulates in others, it must be 
 cheap relatively to bullion,* (the general medium 
 of exchange,) and to all other commodities : it 
 would, therefore, be for the interest of indivi- 
 
 * The cheapness or dearth of coin or currency relatively to 
 bullion, is at once ascertained by referring to the mint and 
 market price of the latter. A pound of gold bullion, in this 
 country, when taken to the mint, was, without any expence, 
 coined into 44i| guineas, weighing a pound. Consequently, 
 when guineas were not comparatively redundant, and when 
 paper was equivalent to them, a pound of gold bullion might 
 always be purchased for £4 6 : 14 : 6, either in coin or paper. 
 On the contrary, when guineas were over-abundant, and 
 when paper was depreciated, bullion became more valuable 
 than either. This was shortly expressed by saying, that its 
 market price was higher than its mint price. 
 
3 
 
 duals to melt down part of this superabundant 
 coin, and send it abroad to a better market; and 
 this exportation would, in defiance of all con- 
 trary prohibitions, continue till such time as the 
 equilibrium was again restored, or until bullion 
 was as dear at home as in other places. 
 
 “ When,” says Dr Smith, “ the quantity of 
 gold and silver imported into any country ex- 
 ceeds the effectual demand, no vigilance of Go- 
 vernment can prevent their exportation. All 
 the sanguinary laws of Spain and Portugal are 
 not able to keep their gold and silver at home. 
 The continual importations from Peru and Bra- 
 zil exceed the effectual demand of those coun- 
 tries, and sink the price of those metals below 
 that in the neighbouring countries. If, on the 
 contrary, in any particular country their quan- 
 tity fell short of the effectual demand, so as to 
 raise their price above that of the neighbouring 
 countries, the government would have no occa- 
 sion to take any pains to import them. If it 
 were even to take pains to prevent their impor- 
 tation, it would not be able to effectuate it. 
 Those metals, when the Spartans had got where- 
 withal to purchase them, broke through all the 
 barriers which the laws of Lycurgus opposed to 
 their entrance into Lacedemon. All the san- 
 guinary laws of the customs are not able to pre- 
 vent the importation of the teas of the Dutch 
 
and Gottenburgh East India Companies ; be- 
 cause somewhat cheaper than those of the Bri- 
 tish Company. A pound of tea, however, is 
 about an hundred times the bulk of one of the 
 highest prices, 16‘s. that is commonly paid for it 
 in silver, and more than two thousand times the 
 bulk of the same price in gold, and consequently 
 just so many times more difficult to smuggle.” * 
 “ An advanced pricfe of goods,” according to 
 Mr Thornton, “ is the same thing as a reduced 
 price of coin : the coin, therefore, in consequence 
 of the reduced price, is carried out of the coun- 
 try for the sake of obtaining for it a better 
 market.” f 
 
 It is therefore clear, that a local circulating 
 medium, such as the paper of a particular coun- 
 try not convertible into gold and silver, can alone 
 become cheap compared with bullion for any con- 
 siderable period ; and further, that this very 
 cheapness is of itself a decisive proof of its ex- 
 cess. 
 
 The impossibility of retaining a great relative 
 quantity of coin or currency in a particular coun- 
 try, previous to the restriction act of 1797, effec- 
 tually kept down the issues of the Bank of Eng- 
 land to the amount necessarily required to circu- 
 
 j \ 
 
 * Wealth of Nations, 8vo. edit Lond. 1802, vol. ii. p. 149. 
 
 t Essay, p. 211. 
 
late the produce of Britain at a price nearly 
 equal to its price in the European market. If 
 a rise of prices consequent on an overissue of paper 
 had then taken place in Britain, all our transac- 
 tions with foreign countries would have been car- 
 ried on with bullion. We would not have sent dear 
 goods to a cheap market, but we would have 
 sent cheap gold and silver to a dear market. 
 In this state of things, if the Bank had not dimi- 
 nished its issues, and thereby lowered the price 
 of goods, their notes would have been sent in as 
 soon as issued to be paid in gold, and the gold 
 would have been immediately melted and sent 
 abroad. In vain would statutory enactments 
 and custom-house oaths have attempted to coun- 
 teract the natural course of things : the allure- 
 ments of gain, and the impulses of cupidity, are 
 not to be thwarted by such impotent barriers. 
 
 During the last twenty years, the necessaries 
 and luxuries of life have in this country been 
 raised to double or triple their former price, 
 while in the continent of Europe their price has 
 remained nearly stationary. * Our bullion, and 
 afterwards our coin, in conformity with the 
 above principles, entirely disappeared. As soon 
 as they began to depart, the money price of com- 
 modities should have fallen : but the place of 
 
 * See Section III, 
 
6 
 
 both being filled with paper issued to a much 
 greater extent, the price of commodities, or their 
 value compared with paper , increased according to 
 its increase ; and consequently the enlarged is- 
 sue of paper was the chief, if not the sole, cause 
 of that local rise in the price of bullion, of provi- 
 sions, and of every other commodity, we have 
 experienced. * 
 
 Let us suppose a bank to be opened in a coun- 
 try where there was not previously any similar 
 establishment, and that its issues average one 
 million : Although this sum came first into the 
 hands of master manufacturers and agriculturists, 
 it would not be hoarded by them ; it would be 
 expended in paying the wages of labour, or in 
 the purchasing of some species of commodities : 
 
 * This conclusion, as far as respects the price of all com- 
 modities except bullion, (which can in no case become cheap 
 compared with specie, but from a redundancy of the latter,) 
 is obviously founded on the principle of a free trade, and 
 must accordingly be modified, when applied to a country pla- 
 ced under the restrictive system. If prohibitive enactments 
 prevent the importation of corn or other necessary commodi- 
 ties into a rich and highly populous country, their price may 
 rise much higher than in surrounding states, although the 
 currency of all be virtually the same. In the sequel of this 
 inquiry, we shall endeavour to ascertain what part of the late 
 high price of provisions is to be ascribed to the depreciation 
 of paper, and what to the prohibitive system. 
 
7 
 
 money does not of itself produce any thing, it is 
 only a medium of exchange : this million would, 
 therefore, be engrossed into the circulation, and 
 if money had before been in that country at par 
 with its value in others, unless a million of its 
 specie was exported, its circulating medium 
 would now be relatively redundant , and the price 
 of its produce comparatively high. 
 
 The issuing of this million on bills at short 
 dates, and of undoubted solidity, cannot possibly 
 affect this almost self-evident conclusion. Of 
 whatsoever kind the bills were on whose credit 
 it was advanced, it would not the less speedily 
 get into circulation, and must either displace an 
 equal portion of coin, or lowering the value of 
 the whole currency, proportionally raise the price 
 of commodities. 
 
 Where a bank increases the number of its notes 
 already in circulation, the same results obviously 
 follow. 
 
 The total amount of Bank of England notes in 
 circulation, from 1790 to April 1796, fluctuated 
 from ten to twelve and eleven millions. In the 
 latter part of 1 796, and the early part of 1 797, 
 they were greatly diminished ; but in 1 798, the 
 first year after the restriction, the total average 
 issue amounted to L. 13,337,477, almost one mil- 
 lion more than it had been in any one of the se- 
 ven preceding years, three of which were a sea- 
 
8 
 
 son of peace and of great prosperity. From 1802 
 to 1808, both inclusive, the issues were rather 
 upwards of seventeen millions ; in 1809, they 
 rose to nineteen millions; and in 1814, nearly 
 averaged the enormous sum of twenty-eight mil- 
 lions. 
 
 It is not possible accurately to ascertain the in- 
 crease in the quantity of country bank paper since 
 1797, but there are good grounds for thinking 
 its augmentation to have been even more rapid 
 than that of the Bank of England. 
 
 The convertibility of country bank paper into 
 that of the Bank of England, could have no ef- 
 fect in restraining the issues of the former, till 
 such time as the price of commodities in the coun- 
 try had been brought nearly to a par with their 
 price in London. As soon as this equalization 
 was attained throughout the empire, a further 
 issue of country paper, or a further rise of prices 
 there, would be impracticable ; for the notes would 
 certainly be returned by the holders, in order to 
 get Bank of England paper, that could purchase 
 a greater quantity of commodities in another 
 quarter. The issues of the country banks would 
 then be checked by the very same principle that, 
 previous to the restriction, kept down the issues 
 of the Bank of England itself — the impossibility 
 of raising prices in a particular country, whose 
 currency is essentially the same as that of others. 
 
9 
 
 If, therefore, the whole paper currency of the 
 kingdom has been depreciated, it must have been 
 owing to an overissue of Bank of England paper ; 
 for the provincial banks merely keep the country 
 currency on a level with the currency of the ca- 
 pital and ; its vicinity, and while their paper is 
 convertible at pleasure into that of the Bank of 
 England, its quantity must be proportional, and 
 it cannot become less valuable. 
 
 Mr Thornton and Lord King have abundant- 
 ly proved the many advantages resulting from 
 the multiplication of country banks. Every new 
 establishment of that kind increases the public 
 security ; the failure of any one company be- 
 comes of less disadvantage ; greater caution and 
 circumspection are used in the discounting of 
 bills ; forgeries are more easily detected ; and 
 reservoirs, in which floating capital, and the gains 
 of the industrious, may be advantageously depo- 
 sited, are -spread over the whole country. These 
 facts ought to be carefully kept in view, as they 
 serve to shew the futility of the attempts made 
 to throw the entire blame of the depreciation on 
 the country banks. — We return to the investiga- 
 tion of the increase of the currency. 
 
 There is no longer, as in the time of Dr Smith, 
 a difference of a half or more, between the price 
 of labour, he. in the remote counties, and Lon- 
 don and its vicinity. Since 1797, the equaliza. 
 
10 
 
 tion has been extremely rapid, and is a sure test 
 of the rapid increase of provincial paper. 
 
 While the credit of a country bank is good, 
 and while the prices in its district are not higher 
 than in London, there is no conceivable motive 
 for the holders of such paper wishing to convert 
 it into that of the Bank of England. Under the 
 present system, the one would just as easily pro- 
 cure bullion as the other, and for every domestic 
 purpose they are exactly the same. 
 
 Provincial banks of established credit might, 
 therefore, in ordinary cases, keep a great amount 
 of notes in circulation, without having propor- 
 tionally large quantities of those of the Bank of 
 England in their coffers ; and there is no doubt, 
 that, since the restriction, the quantity of their 
 unproductive stock has been much diminished. 
 This fact is admitted by Messrs Thomson, Stuc- 
 key, and Tritton, gentlemen of much commercial 
 information, in their evidence taken by the Bul- 
 lion Committee. 
 
 These different presumptions of an immense 
 increase in the amount of country bank paper 
 since 1797, are supported by indisputable facts. 
 
 The number of country banks in 1797 is not 
 exactly known, but very probably it was not far 
 from 300;* in 1800 they amounted to 386 ; in 
 
 * According to Mr Thornton, (Essay, p. 1 54.) there were 
 
11 
 
 January 1810 to 721 ; and were since increased 
 to between SOO and 900. 
 
 It is certain, that the circulation of all the old 
 established country banks has greatly increased 
 since the restriction, and may be held to be at 
 least doubled. Assuming the issues of the 300 
 private banks existing in 1797 to have averaged 
 L. 50,000 each in 1812, and supposing their issues 
 in 1797 to have amounted to L. 30,000, which 
 allows only L. 20,000 of increase, that will give 
 an addition of six millions to the circulation from 
 this source. 
 
 Supposing the issues of the 500 private banks 
 established since 1797 to have each averaged 
 L. 40,000 in 1812, that would constitute a fur- 
 ther addition to the currency of twenty millions.* 
 
 Now, if we could ascertain the quantity of 
 specie in circulation in 1797 and 1812, we would 
 
 353 country banks in 1797; but other accounts reduce this 
 number to 230. App. Bull. Rep. p. 140. 
 
 * Mr Tritton, in his evidence annexed to the Bullion Re- 
 port, estimated the country bank paper then circulating, 
 (April 1810,) at £20,000,000, and Mr Richardson at 
 £30,000,000. The former of these gentlemen reckoned each 
 bank on an average to have £30,000 in circulation ; but the 
 latter must have computed their issues at above £ 40,000, for 
 at that time there were only 721 country banks. There seems 
 little doubt, that Mr Richardson’s estimate was at the 
 time very moderate : and it is certain the issues, as well as 
 the number of the country banks, were considerably increa- 
 sed, subsequently to the rejection by the House of Commons 
 of the recommendation of the Bullion Report. 
 
12 
 
 be able to make a pretty accurate estimation of 
 the actual increase of the currency in that in- 
 terval. 
 
 Mr Whitmore, Governor of the Bank of Eng- 
 land, was of opinion, that the quantity of gold 
 coin in circulation for the three years previous to 
 the restriction, was rather below than above 
 twenty millions; * but supposing it to have 
 amounted to that sum, and that there was be- 
 sides three millions of silver currency, that would 
 make the entire specie in circulation in 1797 
 
 * App. Bull. Rep. p. 121. — There was coined, in the pe- 
 riod of the great recoinage, from 1773 to 1777, both inclu- 
 sive, of gold, .... £19,591,833 
 
 Remained in circulation of old guineas, of heavy 
 and light weight, not brought in, about* . . . 2,000,000 
 
 There was coined in the period from 1778 to 
 1796, both inclusive, of gold, . .. £28,80*3,437 
 But Mr Rose states, that very near 
 one half of the gold coined from 1778 
 to 1798 was procured from melted 
 light guineas, &c. t and therefore de- 
 ducting 14,000,000 
 
 There remains sum added to the cur- 
 rency from 1778 to 1790, both inclusive . . . 14,863,437 
 
 £36,455,260 
 
 Now supposing eight millions of gold coin to have been 
 locked up iii the coffers of the Bank of England, of the coun- 
 try banks, and of individuals in 1796 : and estimating at other 
 eight millions the quantity of guineas sent abroad as subsi- 
 
 * Chalmers’ Comparative Estimate, p. 350. 
 
 ■f Brief Examination, App. No. 4. 
 
13 
 
 twenty-three millions. The whole gold and silver 
 in circulation in 1812, has been estimated as low 
 as three millions ; but taking it at four, the whole 
 amount of the currency at these different peri- 
 ods will be as follows : 
 
 1797 Bank of England notes in circulation, . . £11,000,000 
 
 Issues of 300 private banks £30,000, . . 9*000,000 
 
 Gold and silver in circulation, 23,000,000 
 
 Gross amount of circulating medium in 1 ^ ^ ^ 
 
 1797, . . 3 ’ ’ 
 
 1812 Bank of England notes in circulation, . . £23,500,000 
 
 Issues of 300 private banks £50,000, . . 15,000,000 
 
 Issues of 500 private banks £40,000, . . 20,000,000 
 
 Gold and silver, 4,000,000 
 
 Gross amount of circulating medium in 
 1812, 
 
 If these calculations are nearly accurate, they 
 shew that an addition had been made to the cur- 
 rency, in the interval between 1796 and 1813, of 
 about twenty millions, over and above the specie 
 displaced , or sent abroad. 
 
 dies, during the American war and the three first years of 
 the late war, including those exported by individuals during 
 the unfavourable exchanges of 1783, 1794, 1795, &c. (which, 
 considering that no seignorage is exacted from the gold coin 
 in this country, and that, therefore, when melted down, it 
 may be exported without any loss, is certainly a very mode- 
 rate allowance ;) it results that Mr Whitmore’s estimate may 
 be justly considered, as coming as near the truth as it is possi- 
 ble to attain in such matters. 
 
 } 
 
 £62,500,000 
 
14 
 
 The circulating medium of a country may be 
 really increased by other means than by its mul- 
 tiplication. 
 
 Where commercial detail is well understood* 
 where credit is high, and where there is a brisk 
 circulation of produce, a very small quantity on- 
 ly of circulating medium is required in propor- 
 tion to the payments to be made. In London, 
 and other large towns in Britain, the economi- 
 sing of currency is carried to a great extent ; the 
 number of notes in circulation compared with the 
 amount of payments that are constantly a ma- 
 king, being very small indeed. 
 
 Mr Thomas, inspector of the clearing house in 
 Lombard-street, states the average amount of 
 the drafts on the different bankers balanced there 
 daily at L. 4,700,000, and that not more than 
 L. 220,000 in bank notes are required for that 
 purpose. Mr Richardson, whose vast experience 
 renders him an excellent judge, states as his opi- 
 nion, that the London bankers did not, in 1810, 
 require so many notes by one-eighth in proportion 
 to the amount of payments made as in 1802.* The 
 same system of economising money having been 
 greatly extended throughout the country since 
 1797, though there had been no actual addition 
 made to the then existing currency, it would have 
 
 * App. Bull, Rep. 
 
15 
 
 been virtually increased to a considerable ex- 
 tent. 
 
 The simple fact of a great addition having been 
 made to the circulating medium, does not of it- 
 self shew that it was not really required, or that 
 it was excessive ; but coupling with this fact the 
 equally indisputable ones, of a given quantity of 
 bullion having become more valuable than the 
 same nominal amount of currency, and that the 
 price of all other commodities has risen much 
 faster in this country than in any other, — the 
 proof of a depreciation, or relative redundancy of 
 the circulating medium, appears complete and ir- 
 resistible. 
 
 The lending of many millions to Government 
 not exigible for years, is a transaction altogether 
 inconsistent with the real nature of banking, and 
 which could not fail to prove fatal to any compa- 
 ny who were obliged to pay their notes on de- 
 mand. If we suppose, that before a loan of this 
 kind is made, the currency was sufficiently abun- 
 dant, and that paper was exactly on a par with 
 gold, it is obvious that this additional supply 
 would sink its value, and, as we have shewn, 
 there would be a run on the Bank for gold for ex- 
 portation : thus circumstanced, unless the Bank 
 had immense surplus funds which it could easily 
 convert into specie, it would stand an extreme 
 
I 
 
 16 
 
 risk of being obliged to stop payment, and would 
 at all events suffer considerable embarrassment 
 and difficulty. 
 
 A banking company, on the contrary, whose 
 paper is entirely issued in discount of bills or 
 loans to individuals of undoubted credit at short 
 dates, could never be exposed to like risks, be- 
 cause in a short time they would recover pay- 
 ment of all these bills, which must more than 
 equal the amount of their notes in circulation. 
 
 If a considerable amount of paper had been 
 borrowed by Government from a bank on long 
 credit, without supposing its issue to have been 
 in excess, it might nevertheless expose the esta- 
 blishment to great jeopardy. In the case of 
 either real or imaginary dangers, arising from 
 political or other causes, a run is always made 
 on the banks, and if their funds are locked up, 
 or not tangible, the consequences must inevi-. 
 tably prove fatal. 
 
 Circumstances of this kind caused the crisis 
 of 1 797, and the restriction act. The issues of 
 the Bank were not at that time superabundant, 
 for there was no excess of the market above the 
 mint price of gold. The run was entirely owing 
 to political causes, and would soon have stopped 
 though the Directors had continued paying in 
 specie, which they might have done had their 
 
 paper been only issued to individuals, from whom, 
 4 
 
17 
 
 in the course of 60 days, they would have re- 
 covered payment. Their capital, however, and 
 several millions of their notes, having been lent 
 to Government, they could not recover payment 
 of either the one or the other. The beggarly 
 importunity of the ministry had emptied their 
 coffers, and multiplied their notes, — increased 
 their debts, and lessened their means of pay- 
 ment. “ It was then owing,” says Mr Ricardo, 
 <f to the too intimate connection between the 
 Bank and Government, that the restriction be- 
 came necessary : it is to that cause, too, that we 
 owe its continuance.” 
 
 The Bank Directors reluctantly, and against 
 their better judgment, advanced those sums which 
 the ministry greedily borrowed, without any re- 
 gard to the consequences. * To the conduct of 
 
 * In 1794 and 1795, an unfavourable foreign exchange 
 caused a drain on the Bank for specie, and they besides ad- 
 vanced large sums of cash and bullion to Government, which 
 were immediately sent abroad to the Emperor of Austria and 
 our other allies. On the 8th of October 17 95, the Directors 
 addressed a letter to Mr Pitt, in which they stated, that they 
 conceived an absolute necessity to exist for diminishing the 
 sum of their advances to Government : But, notwithstanding 
 of this remonstrance, in 1796 they were again prevailed upon 
 to furnish additional sums of cash and bullion to remit to fo- 
 reign powers. They did this with great reluctance, and on 
 the 28th of July, the Directors declared, “ That nothing 
 could induce them, under the present circumstances, to com- 
 ply with the demand now made upon them, but the dread 
 
 B 
 
18 
 
 the latter, the lasting mischief arising from the 
 restriction must therefore be ascribed. The Di- 
 rectors cannot be blamed for accepting what, to 
 
 that their refusal might be productive of a greater evil, and 
 nothing but the extreme pressure and exigency of the case 
 can in any shape justify them for acceding to this measure ; 
 and they apprehend that in so doing, they render themselves 
 totally incapable of granting any farther assistance to Govern- 
 ment during the remainder of this year, and unable even to 
 make the usual advances on the land and malt taxes for the 
 ensuing year, should those bills be passed before Christmas.” 
 The Bank had already gone much too far ; but the susequent 
 crisis was accelerated by the infinite pains taken in the au- 
 tumn of 1796, to terrify the people with alarms of invasion. 
 In some of the maritime counties, agents were authorised to 
 take inventories of stock ; and this circumstance, giving rise 
 to a suspicion that the stock was to be put in requisition, the 
 farmers made haste to dispose of their corn and cattle, and to 
 convert them into cash. The alarm became general, and a 
 run, to an unprecedented extent, was first made on the coun- 
 try banks, and afterwards on the Bank of England, which, 
 in its then state of exhaustion, was but ill fitted to weather 
 such a tempest. On the 25th of February, the Directors 
 communicated to Government their apprehensions, that they 
 would very speedily be drained of their entire specie : and 
 the Government being altogether unable to repay the Bank 
 the sums it had borrowed. Ministers, in order to save the Com- 
 pany from the impending ruin, caused by a too obsequious 
 compliance with their demands, on the following day, Sunday 
 26 th February 1797, by an order in council authorised the 
 Bank Directors to refuse payment of their notes. * 
 
 Mr Thornton endeavours to shew, that the issues of the 
 Bank to individuals were too much reduced previous to the 
 
 • The money advanced by the Bank of England for the public service 
 outstanding on the 25th Feb. 1797, amounted, exclusive of interest, to 
 £ 9,984,413, 3s. The total amount of Bank notes in circulation during 
 the week ending same day, was only £ 8,640,250. Macphersos’s An- 
 iials of Commerce^ iv. p. ill. 
 
19 
 
 them at least, was a boon ; for availing them- 
 selves of immense advantages when within their 
 reach : and they deserve much praise for having 
 used them with a moderation, which could not 
 have been rationally expected from the unre- 
 strained forbearance of any body of men. 
 
 From what has been stated, the proper line of 
 conduct that banks ought to pursue in discount- 
 ing, naturally suggests itself. If the bills are 
 good, and not at too long dates, they cannot dis- 
 count too many while the market price of bullion 
 
 restriction ; and that that circumstance increasing the em- 
 barrassments of the commercial world, was one of the chief 
 causes of the run made on the Bank. Although this opinion 
 has been countenanced by the Bullion Report, its accuracy 
 seems very questionable. It appears certain, that to have is- 
 sued notes during the alarm of invasion, could have had no 
 other effect but to drain the Bank still faster of its gold. 
 They might have given a temporary accommodation to mer- 
 chants ; but as soon as they entered into circulation, they 
 would have been sent to the Bank for payment. It was not 
 commercial difficulties, or a failure of mercantile credit, which 
 then caused the run ; it was entirely owing to the panic cau- 
 sed by the dread of a successful invasion, which would have 
 rendered every other currency except gold and silver altoge- 
 ther worthless. In 1783, the Bank laboured under similar 
 difficulties, and the then Directors not only lessened their dis- 
 counts, but took the decisive step of refusing to make the ad- 
 vances on the loan of that year : a cessation of the run was the 
 consequence, t The Bank acted in the same manner, and 
 with the same effect, before the restriction, whenever they ex- 
 perienced a continued demand for cash. 
 
 •f Bullion Report, p, 20. 
 
20 
 
 corresponds with the mint price. Their issues 
 then are alike advantageous to themselves and 
 to the community : They contribute powerfully 
 to the extension of commerce, and to the econo- 
 mising of currency: They substitute a cheap for 
 an expensive medium of exchange, and enable our 
 merchants to send abroad a useless part of the spe- 
 cie of the country, for which they bring back pro- 
 duce really valuable. While the banks were 
 obliged to pay their notes in specie, they could 
 not overstep the proper limit ; it was not, how- 
 ever, to be wondered at, if they were not all suf- 
 ficiently quicksighted to the general good when 
 this obligation was removed. 
 
 In the ordinary transactions of society, men 
 do not prefer accumulating money more than 
 beef, or bread, or any other commodity, but be- 
 cause it is more readily exchangeable for what- 
 ever articles they may wish afterwards to ac- 
 quire, and because they know, with considerable 
 accuracy, what quantity of them a given sum of 
 money can purchase. When I buy a loaf, a book, 
 or a hat, and give money for them, they are to 
 me really preferable products ; * and it was with 
 
 * Mr Ganilh, in a very late publication, terms gold and sil- 
 ver really preferable products, and contends that their value 
 cannot be diminished by their multiplication. It is astonish- 
 
21 
 
 view of procuring them, that on some previous 
 occasion I had purchased the money now given 
 for them. Every similar transaction is in fact a 
 real barter, settled at two different times : A 
 farmer who wishes to buy a coat exchanges a 
 quarter of wheat for money, merely to procure 
 a commodity suiting the clothier, the hatter, the 
 shoemaker, <kc. and he would have done the same 
 thing for cowries , had they been the general me- 
 dium of exchange. In no case but in that of 
 the confirmed miser, of the wretch who exclaims, 
 
 Populus me sibilat : at mihi plaudo 
 
 Ipse domi : shnulac nummos contemplor in area! 
 
 is money, literally speaking, the end of our exer- 
 tions. It is not the money, but the money’s 
 worth — the produce which the draft commands, 
 that men are anxious to acquire. But as the va- 
 lue of money, like the value of every other mer- 
 chandise, rises and falls according as its quantity 
 is diminished or increased, it follows that the ac- 
 tual amount of specie in a state individually con- 
 sidered , in a country secluded from the rest of 
 the world, cannot be of any consequence ; for it 
 is the same thing whether one shilling or a gui- 
 nea is given for a hat, if the one be as difficult 
 
 ing such shallow nonsense could be published by a person not 
 destitute of sense, and who appears to have read the " Wealth 
 of Nations.” ' % 
 
to procure as the other, and if each commands an 
 equal quantity of the necessaries and the luxuries 
 of life. The only thing to be desired is, that all 
 the inhabitants may possess a due share of the 
 circulating medium, its total amount having no 
 influence on their happiness. * 
 
 While, however, there is any intercourse a- 
 mongst nations, we have shewn that the pains 
 taken by the different governments to accumu- 
 late an extraordinary quantity of the precious 
 metals in the particular countries they govern, 
 can never attain their object. It only remains 
 shortly to examine what would be the conse- 
 quences, if any one nation having an intercourse 
 with others, could become permanently success- 
 ful in this attempt. 
 
 When specie flows into a country where its va- 
 lue is great , coming first into the hands of capi- 
 talists, it has not, till expended by them, any ef- 
 fect in raising the wages of labour, or the price 
 of provisions. When unemployed, or in the cof- 
 fers of individuals, it is the same to the state as 
 if it were still in the Andes. It is only during 
 its conversion into general circulation, that an in- 
 flux of specie is salutary. All wish to share in 
 the new supplies, to acquire an increased portion 
 of the precious metals, from the universal though 
 
 * This point is well illustrated in Mr Harris’s Essay on 
 Coins, cap. 2. § 14. 
 
23 
 
 fallacious belief, that they will then be able to 
 purchase an equally increased portion of ex- 
 changeable produce. A stimulus is thus applied 
 to the industry of every particular class of the 
 community, and a greater production taking 
 place, the whole society is permanently benefit- 
 ed, although after the influx has ceased, the com- 
 parative situation of individuals may be nearly 
 the same as before. 
 
 As long as an influx of specie has the effect 
 of bringing forth a proportional quantity of 
 new produce, the price of commodities will not 
 rise, foreign trade will not suffer, and the cur- 
 rency will not be redundant. But as soon 
 as specie, or its representative signs, in place 
 of being invested in new branches of indus- 
 try, is engrossed into circulation, it must raise 
 prices, and become really prejudicial. When the 
 price of labour and of commodities is relatively 
 high, the produce of the country can no longer 
 be sold to foreigners. And the inhabitants of 
 every description purchasing cheap foreign com- 
 modities, the ruin of commerce, and ultimately 
 of agriculture, necessarily follows the too great 
 multiplication of money. * 
 
 * This was the case of Spain after the discovery of the 
 American mines. That country overflowed with specie, 
 while other nations were poor in the extreme. The impolitic 
 regulations of Government against the export of specie aug- 
 
24 
 
 It is only, therefore, in particular cases, that 
 any increase of the circulating medium is at all 
 desirable. An influx of gold and silver into a 
 country like Russia, where prices are much be- 
 low the par of Europe, would stimulate industry, 
 and be advantageous, till such time as the level 
 of price was attained : But every additional in- 
 flux, having the effect of raising prices above 
 the general level, must either be sent abroad, or 
 exert a fatal operation on industry. 
 
 Governments believe that these consequences, 
 as far, at least, as the home market is concerned, 
 (for they admit that strangers cannot be com- 
 pelled to purchase high-priced goods), may be 
 * prevented, by prohibiting the import of foreign 
 commodities, whenever these can be bought 
 cheaper than such as are manufactured at home. 
 The experience of all ages sufficiently proves, 
 that prohibitive regulations can have no such ef- 
 fect ; but admitting them to be completely suc- 
 
 menting the evil, the consequence was, that provisions, la- 
 bour, manufactures, &c. becoming comparatively high, the 
 Spaniards first lost their export trade, and very soon became 
 dependent on those foreigners they had previously supplied, 
 for their most necessary articles. As one false step generally 
 brings on another, in the reign of Philip II. the rise of price 
 was ascribed to the operations of forestalled, regraters, &c. 
 and the magistrate being authorised to fix the price of corn, 
 and manufactured goods, completed the ruin of every species 
 of industry. Townsend’s Travels in Spaing 2d edit. ii. 229, 
 246. Wealth of Nations , ii. 272. 
 
25 
 
 cessful, the consequences would be extremely 
 prejudicial. National industry, isolated and de- 
 prived of the powerful stimulus of emulation, 
 would languish and decline. Every day it would 
 become less able to stand a competition with fo- 
 reigners : a want of enterprize and of exertion 
 would be universally felt ; and a dull sullen apa- 
 thy would usurp the place of genius and intelli- 
 gence. 
 
 SECTION SECOND. 
 
 General principles of Exchange . — Application of 
 these principles to the Exchange between Great 
 Britain and other Countries, from 1799 to 1815 , 
 inclusive . 
 
 A knowledge of the state of the exchanges of 
 any particular country, enables us to form an 
 opinion respecting the depreciation or redun- 
 dancy of its currency, as accurately as a know- 
 ledge of the fact of an agreement or disagree- 
 ment between the market and mint price of its 
 bullion. 
 
 Bullion being the universal circulating medium 
 of the mercantile world, it is by the actual quan- 
 
tit y of it contained in the coins of different na- 
 tions, that their value in exchange is calculated. 
 When for 100 grains of silver in London we can 
 purchase an order for 100 grains of silver pay- 
 able in Paris, the exchange between these two 
 cities is precisely at par: if for 100 grains of sil- 
 ver in London, an order could be purchased on 
 Paris for 105 grains, the real exchange would be 
 five per cent, in favour of the former, and vice 
 versa. 
 
 If we suppose 24 francs to contain the same 
 quantity of bullion as a pound sterling, the ex- 
 change is at par between London and Paris, 
 when an order from the one on the other is set- 
 tled on this footing : if, however, the pound ster- 
 ling, or the one pound note representing it, does 
 not contain as much bullion as the 24 francs, but 
 10 per cent, less, the exchange will be at realgar, 
 when it is nominally 10 per cent, against Lon- 
 don. This is the case either when our coin by 
 wearing, clipping, &c. does not contain the stand- 
 ard quantity of bullion ; or when the order ha- 
 ving to be paid in bank notes, they are insufficient 
 to purchase the bullion they nominally repre- 
 sent. Previous to the reformation of the coin in 
 the reign of King William, the nominal exchange 
 between England and Holland, computed accord- 
 ing to the standard of their respective mints, 
 was 25 per cent, against England ; but the real 
 
n 
 
 value of the English coin, at that time, was more 
 than 25 per cent, less than its mint value, and 
 consequently the real exchange may then have 
 been in favour of England, although the compu- 
 ted exchange was so much against it.* 
 
 It being thus established that the real par of 
 exchange depends on the absolute quantity of 
 bullion in the coins of the different countries 
 trading together, or in the quantity that can be 
 purchased in the market by their representative 
 signs ; and it having been already shewn that an 
 excessive issue of bank paper naturally lowers 
 its value, compared with bullion, it follows, that 
 such an issue must, in a country where paper is 
 almost the sole species of currency, directly pro- 
 duce an unfavourable computed exchange. 
 
 A strong proof of this inference may be drawn 
 from the state of the exchange with Ireland sub- 
 sequent to 1797. 
 
 In that kingdom the nominal value of the shil- 
 ling being raised from 12d. to 13d. an increase of 
 8J per cent., when the exchange of London with 
 Dublin proceeding on the bullion value of the coins 
 of the different countries is per cent, against 
 the latter, it is said to be at par. In the six years 
 subsequent to the Bank restriction act, the Bank 
 of Ireland quintupled the issues of its notes, in- 
 
 * Wealth of Nations, vol. ii. p. 215. 
 
28 
 
 creasing* them from about L. 600,000 to nearly 
 three millions. The issues of the Bank of Eng- 
 land not being doubled in the same time, the ex- 
 change between London and Dublin became suc- 
 cessively 10 and 18J per cent, against the latter. 
 During the same period, the nominal exchange 
 between London and Belfast, where no paper 
 currency circulated, was at 7j per cent. ; so that 
 in fact the nominal exchange was at the same 
 instant about 10 per cent, against Dublin, which 
 had a paper currency, and 1 per cent, in favour 
 of Belfast, w^hich had a gold currency. As the 
 commerce in bullion was free between the two 
 countries, it could not be said that the difficult 
 ties in the way of transporting it was the cause 
 of this difference, as that expence did not amount 
 to more than one per cent. ; and as it was fur- 
 ther shewn, that the real balance of payments 
 was in favour of Ireland, there could be no doubt 
 that the excessive issue of Irish bank paper was 
 the sole cause of this anomaly in the exchange ; 
 and in fact, the issues of the Bank of Ireland not 
 having increased after 1804, while those of the 
 Bank of England were greatly enlarged, the ex- 
 change with Dublin again came to par . 
 
 The paper currency of the continental powers, 
 when issued in excess, has had exactly the same 
 effects in rendering the exchange unfavourable 
 
as that of the Bank of Ireland. * The his- 
 tory of the French assignats affords the most 
 memorable example of the miserable consequen- 
 ces of vesting a discretionary power over the 
 currency in the hands of Government. Had 
 only moderate numbers of assignats been issued, 
 their value would have sunk very little. On their 
 first appearance they bore a premium, and it was 
 only after their excessive multiplication that 
 they became altogether worthless. Till more 
 had been issued than the demands of the state 
 required, they made no alteration on the ex- 
 change ; but as soon as they became over- abun- 
 dant, every fresh emission rendered it more un- 
 favourable. 
 
 The assignats, by depreciating the currency of 
 France, caused the exportation of almost all her 
 gold and silver. Her rulers, indeed, maintained 
 there was no depreciation, but that there was a 
 rise in the value of gold and silver, caused by an 
 increased foreign demand. Acting on this pre- 
 tended principle to a greater extent than their 
 more prudent imitators in this country have since 
 
 * “ Towards the latter end of the reign of Adolphus Fre- 
 derick, hank notes being issued in such large numbers, and 
 many at so low a value as Is. 6d. scarcely any specie was 
 left in the kingdom , (Sweden), the bank was so drained of 
 cash as not to be able to exchange its notes but in copper 
 money, and paper was almost the only currency.” Cove’s 
 Travels in the North , 5th ed. vol. iv. p. 13& 
 
30 
 
 ventured to do, they quickly and palpably demon- 
 strated its falsity ; for no sooner had the assig- 
 nats ceased to circulate, than gold and silver 
 flowed again into the country, and speedily 
 brought the value of money in France to an 
 equilibrium with its value in the rest of Eu- 
 rope. * 
 
 Since the restriction act, the circulation of 
 Bank of England paper has been nearly as com- 
 pulsory as that of any continental power. While 
 the creditors of the state are compelled to re- 
 ceive payment of their interest, to the extent 
 of 45 millions annually, in Bank of England 
 notes, and while they are a legal tender, it is ri- 
 diculous to talk about the Bank’s issues being 
 voluntary : and such language, where it does not 
 spring from ignorance, can be used only for the 
 purpose of deluding and deceiving.f 
 
 There are obvious reasons why Bank of Eng- 
 
 * Sismondi de la Richesse Commerciale , tom. i. 138. 
 
 t “ Mr Baring (one of the Bank Directors) expressed his 
 sense of the necessity of returning as soon as it was practi- 
 cable to do so, to cash payments ; and exposed the absurdity 
 of the statement made by the Chancellor of the Exchequer, 
 that the circulation of the paper was safe because it was issued 
 voluntarily — the great mass of the Bank paper being issued 
 compulsorily in the payment of the public creditor, and in the 
 other great transactions of government.’’ See Mr Baring’s 
 Speech in the House of Commons, as reported in the Morning 
 Chronicle, 2d May 1816. See also Mr Huskisson’s Pamphlet, 
 " Question,” &c. p. 113. 
 
31 
 
 land paper, though to a great extent compulsory, 
 should not have been so much depreciated as that 
 of the continental states. The Bank of England 
 fortunately was not under the entire controul of 
 Government, many of its Directors were men of 
 respectability and perfect independence ; and 
 what was of still more importance, it was liable 
 to have its concerns enquired into by Parlia- 
 ment, and canvassed by the public. This coun- 
 try, besides, has not been exposed to violent and 
 sudden convulsions in its domestic concerns from 
 political causes. In 1809 , when Austrian paper 
 money was at a discount of 300 or 400 per cent. 
 Vienna was in the possession of an enemy ; and 
 it may be questioned, had London been in the 
 same situation, if Bank of England paper would 
 not have been equally a drug. 
 
 It is not meant, however, to maintain, that the 
 state of the exchange solely depends on the relative 
 values of the currency of different countries ha- 
 ving an intercourse together. To a certain ex- 
 tent, and for short intervals, it depends on the 
 state of their export and import trade, or rather 
 on the balance of their payments. 
 
 A country possessing the purest currency in 
 no excess as compared with others, may have an 
 unfavourable exchange, or be laid under the ne- 
 cessity of remitting specie abroad, if the value of 
 its imports from foreign countries, or the price 
 
32 
 
 they cost in the foreign market , be greater than 
 the value of the goods it has sent there , taken 
 at the price at which they are sold. Thus if 
 Britain imports corn bought at Dantzic for one 
 million sterling, and if the goods she had sent to 
 that city only sold for L. 800,000, it is clear she 
 would have to remit a balance of L.200,000 in 
 bullion, if there was then no demand for an addi- 
 tional supply of goods , and if hills on some other 
 place for the balance could not he given . The 
 holders of bills upon London being in this case 
 more numerous than those having money to re- 
 mit, would offer their bills at a discount ; and 
 this discount would be the nett advantage gain- 
 ed by the foreigners in their exchange transac- 
 tions with this country. It could not, however, 
 in any instance, greatly exceed the expence of 
 transmitting specie ; for if it exceeds that ex- 
 pence, it operates as a bounty on the export of 
 pur manufactures. If we suppose the real ex- 
 change to become 10 per cent, against Britain, 
 a foreign merchant would find it for his advan- 
 tage to export goods from this country, and 
 would make an actual profit of 5 per cent, by 
 the transaction, although he should sell them 
 5 per cent, below their cost. The impulse thus 
 given to the export of manufactures is prodi- 
 gious, and tends strongly to restore the par of 
 exchange, and to bring that restoration about 
 
33 
 
 without the necessity of remitting bullion from 
 the debtor country. 
 
 An unusual deficiency in our crops, or in ar- 
 ticles of the first necessity, for one or two years, 
 is the only way that, in peaceable times, the en- 
 tire amount of our imports, valued in the foreign 
 market, is rendered greater than the amount of 
 our exports valued in the same place. In time 
 of war, bills upon London become more nume- 
 rous, by the amount of the drafts for payment of 
 the armaments abroad, and for the payment of 
 subsidies to foreign powers : and if a deficiency 
 in our crops should be felt at the same time, 
 both causes coming into conjoint operation, 
 might make bills on London sell at a considera- 
 ble discount ; but the obvious advantages then 
 attending the export of our manufactures, would 
 not fail speedily to restore the par of exchange. 
 
 It is quite erroneous to suppose, that an im- 
 portation of corn, or other produce paid in spe- 
 cie, can be disadvantageous. If the corn that 
 cost a million in gold or silver in Poland is worth 
 a million and a half in Britain, there is a gain of 
 the half million to the country by the importa- 
 tion. In all countries it is the combined power 
 of capital and labour that procures every thing 
 purchased by man ; and it is by the amount of 
 their expenditure, that the value of every mar- 
 ketable commodity is to be ascertained. A less 
 
 c 
 
34 
 
 amount of capital and labour being- in this case 
 required to procure the bullion than would be 
 necessary to raise the corn at home, renders 
 the transaction really beneficial. A West India 
 merchant would laugh at any person who should 
 advise him to import gold or silver from Jamaica 
 rather than rum, if the gain to be made by the 
 latter was greater than what could be realised 
 by the other. In such cases, there is a greater 
 demand at home for goods than for specie : The 
 trade of the merchant is to carry the different 
 productions of the earth to those places in which 
 they are in chief request ; and we may rest as- 
 sured, that whatever speculative politicians may 
 say about money being a preferable product, no 
 merchant will either import or export it, while 
 there is any other produce with which to carry 
 on trade, that will yield a larger profit. 
 
 If Avhat we have just stated on the subject of 
 exchange be correct, it is evident that the account 
 of imports and exports, as usually calculated, can 
 afford no information sufficient to determine the 
 real payments of specie made by one country to 
 another. Let us suppose a merchant to export a 
 cargo of muslin to Russia worth L. 10,000, and to 
 sell it there for L.1000 of profit, exclusive of the 
 cost of freight, insurance, &c. ; if we farther sup- 
 pose him to purchase iron or flax with the 
 L. 11,000, which, when brought tp Britain, will 
 sell for L. 12,000, exclusive of expences, it is evL 
 
35 
 
 dent that the country would in this case import 
 a greater value than it exported, that it gained 
 L.2000 by the transaction, but that it was not 
 necessary to export one sixpence of bullion. So 
 far, therefore, from the excess of the exports over 
 the imports being any criterion of an advantage- 
 ous commerce, it is quite the reverse ; and the 
 truth is, the more the amount of imports exceeds 
 the exports, the greater is the real gain to the na- 
 tion.* Were this not the case, were the exports 
 greater than the imports, the merchants, or rather 
 the country, would lose on every transaction with 
 foreigners, and the trade with them would be 
 speedily relinquished. It is said, indeed, that 
 the balances appearing from the custom-house 
 books are always paid in specie ; but if this had 
 been the fact, according to these books there 
 should now have been above 300 or 400 millions 
 in Britain, after deducting all that has been sent 
 abroad by Government. It is not necessary to 
 state how different the real fact is : but the sup- 
 position of such an accumulation is in itself ab- 
 surd ; for money can never become greatly cheap- 
 er in one than in other states. 
 
 Where the balance of payments is in favour 
 of Britain with a country where specie is of more 
 value than here, such balance will never be set- 
 tled by an import of bullion. No specie can 
 
 * Say Traite D'Economie Politique , tom. i. p. 182. 
 

 come from a good to a bad market. Some spe- 
 cies of merchandise will in every such case be 
 imported in lieu of the balance ; and iq propor- 
 tion as the value of bullion is high, that of other 
 produce being low, its importation will be of 
 real advantage. 
 
 In the autumn of J 799, a considerable and 
 rapid fall took place in the exchange, though 
 the market price of bullion was not then higher 
 than the mint price. This depression continued 
 in its full extent to November 1801, gradually 
 diminished in 1802, and reverted nearly to a no- 
 minal par in July 1803. In 1800 the price of 
 bullion fluctuated from L.4 to L.4, 6s. ; in 1801 
 and 1802 it fell to L.4, 4s. ; and in 1803, it con- 
 tinued at about L.4.* 
 
 The unfavourable exchange in the latter part 
 of 1799 was chiefly owing to the large importa- 
 tions of foreign grain that were then made. 
 Mr Ricardo has justly observed, in his admira- 
 ble Essay on the high price of bullion, that when 
 a deficient harvest takes place in a country, it is 
 just the same thing as depriving it of a part of 
 its commodities, and that therefore requiring a 
 less amount of circulating medium, a part of its 
 specie may be exported with advantage. In a 
 natural state of things, and with a gold curren- 
 
 * The mint price of gold bullion is L.S : 17 : 10] per oz. 
 
37 
 
 cy, * or one fundamentally so, the depression in 
 the exchange could not have continued beyond 
 the continuance of the cause that produced it ; 
 the market price of bullion could not have risen 
 higher than the mint price, whatever might have 
 been the amount of it exported ; or, granting 
 that to have been possible, it would then have 
 been altogether impracticable to have added ano- 
 ther note to the currency. In 1800 , however, 
 the Bank of England increased its issues by 
 about L. 1,700, 000, and during that year it is 
 well known the issues of the country banks were 
 at least proportionally augmented. If, therefore, 
 there was a demand for bullion for exportation 
 sufficient of itself to have raised its price in Bri- 
 tain, this additional supply of paper must have 
 raised it still higher, and depressed the exchange 
 still lower ; and what was chiefly injurious, by 
 keeping up the price of commodities, increased 
 the cost of labour, and prevented bullion from 
 again flowing into the country. 
 
 It has been often argued, that in a season of 
 scarcity a nation requires more money, on ac- 
 count of the rise of prices that then takes place. 
 But supposing a nation with a gold currency and 
 without mines to be isolated from the rest of the 
 world during a year of scarcity, it is certain its 
 
 * By a gold currency , I always mean a currency partly 
 consisting of the precious metals, and partly of paper con- 
 vertible at pleasure into them. 
 
38 
 
 prices would rise though there could not be any 
 addition made to its currency. The competi- 
 tion that ensues for any article when scarce, in- 
 creases its price ; but this is the effect either of 
 the buyers saving proportionally on some other 
 article of expence, or, if it be an essential neces- 
 sary of life, by exchanging part of their capital 
 for it. Buying and selling are entirely questions 
 of power between the consumers and the hold- 
 ers of an article. If the supply of necessary 
 commodities is short of the demand, the sellers 
 elevate their price to a par with the exertions of 
 the consumers to purchase. It is evident that 
 the increasing of the circulating medium equally 
 to each party, can give the one no advantage 
 over the other. If an additional supply of cash 
 come solely into the hands of the consumers, 
 their offers may be augmented ; but they cannot 
 derive any advantage from that circumstance, 
 unless the supply of the scarce article is thereby 
 increased. They might offer 40s. for what be- 
 fore they could only give 20s. ; but the sellers 
 perceiving this increase in the power of the pur- 
 chasers, or in the competitors for their goods, 
 would equally rise in their demands. * On the 
 
 * Mr Malthus, founding on this very principle, has, with 
 irresistible force and effect, exposed the absurdity of attempt- 
 ing generally to alleviate the necessities of the poor in a 
 year of scarcity, by supplying them with large sums of mo- 
 ney. Essay , book iii. cap. 5. 
 
39 
 
 other hand, if an increase of circulating medium 
 comes into the possession of farmers and corn 
 merchants, it enables them to make good their 
 rents and other advances, without laying them 
 under the necessity of selling their produce till 
 such time as competition has reached its utmost 
 limits. It is therefore obvious on every view of 
 the matter, that in a season of scarcity, the in- 
 creasing the quantity of the currency is quite 
 uncalled for, and can have no other effect but 
 to augment the evil , and to raise prices beyond 
 their natural level. 
 
 A great disadvantage of such enhancement of 
 prices is the revulsion it causes when they fall, 
 either from an abundant harvest, or from any 
 shock being given to public credit. It is not 
 possible to ascertain what part of the price of 
 corn in 1800 and 1801 is to be ascribed to the 
 increased issues of the banks in these years, but 
 it was not perhaps less than from 25 to 30 per 
 cent. In 1803, the Bank of England diminish- 
 ed the issues of its notes, and this, combined 
 with the good crop of that year, caused a much 
 greater fall in the price of corn than either cir- 
 cumstance taken singly could have effected. 
 As long as our currency continues in its present 
 state, we must experience great fluctuations in 
 our prices. When grain sells high, farmers easi- 
 ly procure discounts and accommodations of all 
 
40 
 
 kinds ; but when an extraordinary crop necessa- 
 rily causes a serious fall in the prices of agricul- 
 tural produce, the country bankers become just- 
 ly alarmed, and, refusing to accommodate the 
 farmers as before, compell the latter to sell their 
 grain prematurely, and thence more rapidly to 
 depress the market. They assist the agricultu- 
 rist when he has comparatively no need of assist- 
 ance ; but unfortunately they cannot extend the 
 same support to him in the hour of his distress. 
 With a gold currency, we would in a great mea- 
 sure escape these evils ; the banks would not be 
 able to issue notes when there was a demand for 
 specie for exportation ; prices would neither be 
 fictitiously raised, nor fictitiously diminished; and 
 agricultural industry would in nowise depend 
 for its due reward on the opinions and views, 
 whether right or wrong, of bankers, but solely on 
 the effective demand for its produce, and on the 
 real wealth of the other classes of the commu- 
 nity. 
 
 From this statement, the truth of which ap- 
 pears undeniable, it is seen how little force there 
 is in the specious observation made by some of 
 the apologists for the restriction act ; that the 
 increased issues of the banks following the unfa- 
 vourable exchanges were not the cause of them, 
 and were really required to make up for the 
 specie sent abroad. We do not say that in all 
 
41 
 
 cases the state of the currency alone causes an 
 unfavourable exchange ; but we maintain, that to 
 issue notes when the paper price of bullion is ri- 
 sing from a foreign demand, must have the effect 
 to raise it still higher, and consequently to conti- 
 nue the unfavourable exchange. If in 1 800 two 
 millions of specie were exported from this coun- 
 try to pay imported grain, it is clear that if no 
 paper had been issued in its place, the price of 
 bullion, of corn, and of all other products, would 
 have fallen ; and when the foreign grain was 
 imported, an increase being made in the quanti- 
 ty of commodities, and none in the currency, it 
 would have had a double effect in reducing the 
 previous prices. It is one of the main advanta- 
 ges of a gold currency, that in a season of scar- 
 city, its exportation brings back the commodity 
 wanted, and checks any exorbitant advance of 
 its home price ; while, in a year of plenty, the 
 influx of bullion from foreign parts to purchase 
 cheap produce raises prices, and thereby prevents 
 the farmer from being ruined , as in a different 
 state of things he generally is, by the bounty of 
 heaven. Our present system counteracts these 
 natural and beneficial principles. When a de- 
 mand for bullion shews that part of our curren- 
 cy may with advantage be exported, and that it 
 is really less required here than some other com- 
 modities, we instantly deluge the nation with fic- 
 
42 
 
 titious money. When prices fall, and the ex- 
 change becoming really favourable, shews that 
 our currency is not overabundant, with an admi- 
 rable consistency in folly, the fictitious money is 
 withdrawn, to the real injury of those who 
 depended for support and assistance on a continu- 
 ance of its supplies. 
 
 The depreciation of our paper as compared 
 w ith bullion, had continued at from three to four 
 per cent, from 1803 to 1808, when the value of 
 bullion rapidly rose, and the nominal exchange 
 became greatly against this country. The notes 
 of the Bank of England were not much aug- 
 mented in 1808, and the sudden fall in the ex- 
 change that year, seems to have been owing 
 to the stopping of the supplies of bullion 
 previously brought into the country by the Ame- 
 rican merchants. Our transatlantic brethren 
 were in the habit of importing into Britain an- 
 nually no less a sum than four or five millions 
 sterling, the price of the raw materials and colo- 
 nial produce they disposed of on the continent. 
 This sum was sent by their agents to the manu- 
 facturing districts, in payment of goods commis- 
 sioned for America. But the orders in council (the 
 most efficacious of all the measures ever adopt- 
 ed to ruin the commerce and industry of this 
 country) speedily put an end to the neutral trade, 
 and consequently to this import of bullion. The 
 
43 
 
 Government was no longer able to procure the 
 quantities of specie it required to send abroad 
 from the merchants of London, or, what was the 
 same thing, to procure their orders on their Ame- 
 rican correspondents in other countries ; and, as 
 the demand for bullion to carry on the Spanish 
 war increased at the same time, there can be no 
 doubt that these concurring and extraordinary 
 circumstances must have temporarily raised its 
 value in Britain. 
 
 This local rise in the value of bullion, conse- 
 quent on a cessation of the usual remittances, 
 would have been but of short continuance, if the 
 quantity of paper in the country had not at the 
 same time been greatly augmented. Had the 
 real price of bullion continued for any consider- 
 able period greater in Britain than in the con- 
 tinent, it would soon have found its way here in 
 spite of all endeavours to the contrary. In 1809 
 and subsequent years, however, when the Bank is- 
 sues had increased immensely, guineas were smug- 
 gled abroad, notwithstanding of the most severe 
 enactments. This fact of itself shews incontro- 
 vertibly, that there was then no rise in the value 
 of gold in Britain, but that it was really cheaper 
 here than in the continent ; for it would be worse 
 than ridiculous to suppose, that men would, at 
 the risk of incurring punishment, carry away an 
 article from a good to sell it in a bad market. 
 
Average Amount of Bank of England Notes, including Bank 
 Post Bills , in circulation in each of the following Years. 
 
 •Years. 
 
 Notes of L. 5 and 
 upwards. 
 
 Notes under L.5. 
 
 Total. 
 
 1807 
 
 . . . 13,221,938 . . . 
 
 . 4,183,013 . . 
 
 . 17,405,001 
 
 1808 
 
 . . . 13,402,160 . . . 
 
 . 4,132,420 . . 
 
 . 17,534,580 
 
 1809 
 
 . . . 14,133,615 . . . 
 
 . 4,868,275 . . 
 
 . 19,001,890 
 
 1810 
 
 . . . 16,085,522 . . . 
 
 . 6,644,763 . . 
 
 . 22,730,285 
 
 1811 
 
 . . . 16,286,950 . . . 
 
 . 7,260,575 . . 
 
 . 23,547,525 
 
 1812 
 
 . . . 15,862,120 . . . 
 
 . 7,600,000 . . 
 
 . 23,462,120 
 
 1813 
 
 . . . 16,057,000 . . . 
 
 . 8,030,000 . . 
 
 . 24,087,000 
 
 1814 
 
 . . . 18,540,780 . . . 
 
 . 9,800,000 . . 
 
 . 27,840,780 
 
 1815 
 
 . . . 18,157,956 . . . 
 
 . 9,161,454 . . 
 
 . 27,319,410 
 
 From the foregoing Table of the Bank notes in 
 circulation from 1807 to 1815, it is seen how ra- 
 pidly they increased after 1808. The increased 
 number of notes under L .5, may have been par- 
 tially required, in order to make up for the guineas 
 melted down and exported ; but the excessive 
 increase in the amount of those above L.5, at a 
 time too that the demand for them was less than 
 before, that the commerce of the country was 
 not extended, and when economy in the use of 
 paper was generally understood, could not fail 
 to depreciate the currency, and effectually pre- 
 vent the import of bullion, which had been stop- 
 ped by the orders in council, from being again 
 restored in any other manner. Although, there- 
 fore, it must be admitted, that political events 
 were the chief causes of the sudden fall in the 
 exchange that took place in the latter part of 
 1808, it is abundantly certain, that the increase 
 in the issues of the banks at and after that pe- 
 
45 
 
 riod, was the chief cause of its continuance for so 
 long a time. 
 
 The inference we have just made, derives ad- 
 ditional confirmation from the fact, that in 1808, 
 when the orders in council began to operate, near- 
 ly three millions in specie was remitted to the Pe- 
 ninsula ; but in 1809, the remittances did not 
 amount to half a million; in 1810 and 1811, to 
 little more than L. 700,000 ; and about one mil- 
 lion and a half in each of the two subsequent 
 years of the war. The votes of credit to our al- 
 lies in 1813 and 1814, were almost all cancelled 
 with shipments of manufactured goods and mili- 
 tary stores ; and of the sum of five millions voted 
 to them, not more than L. 300,000 was paid in 
 specie.* The high money price of bullion in 
 1809 and subsequent years, could not, therefore, 
 be owing to the purchases made by Government 
 in that period, for they were too trifling to have 
 any such effect ; and is altogether inexplicable, 
 if we do not admit, that the immense additions 
 then made to the circulating paper had sunk its 
 value compared with the other. 
 
 The advocates of the restriction act, have in- 
 sisted much on the expence of transmitting spe- 
 cie to the continent subsequent to 1808, as being 
 the chief cause of the unfavourable exchange. 
 
 * Edin. Rev. No. li. p. 154. 
 
46 
 
 They assume in this statement, that the real ba- 
 lance of payments was then against us ; but of 
 this there is not the shadow of evidence ; and if 
 the custom-house accounts are good for any thing 
 at all, they exhibit such an exportation of Bri- 
 tish goods to the continent in 1809 and subse- 
 quently, as would authorise us to conclude pre- 
 cisely the reverse. Not to insist, however, on 
 this circumstance, the cause here assigned will 
 not account for the effects. Mr Goldsmid 
 stated to the Bullion Committee, that in 1809, 
 the expence of transmitting gold to Holland 
 and Hamburgh varied from 4 to 7 per cent, in- 
 clusive of insurance, freight, &c. ; and Mr Gre- 
 fulhe’s statement was to the same effect. But 
 in January of that year, the exchange with Ham- 
 burgh was 9 per cent, and in July 16^ per cent, 
 against this country; and in 1810, 1811, &c. it 
 was still more to our disadvantage. The expence 
 of sending bullion abroad, admitting that it was 
 necessary to do so, will not, therefore, explain 
 this extraordinary depression, all the fall above 
 7 per cent, remaining entirely unaccounted for 
 on that principle. 
 
 From 1809 to 1813 inclusive, the exchange 
 fluctuated from 8 to 30 per cent, against us. 
 The currency of the foreign merchant, there- 
 fore, in his transactions with this country, 
 was from 8 to 30 per cent, more valuable than 
 
47 
 
 ours ; and, as Mr Thornton remarks, he was ndt 
 deterred from buying by our nominal prices, for 
 « a compensation in the exchange was given for 
 the disadvantage attending the purchase of our 
 articles.” * This circumstance, in some degree, 
 contributed to increase our continental exports 
 during the late war, notwithstanding of the de- 
 crees of Bonaparte, though its effects have been 
 greatly exaggerated by Say, and other writers 
 not so well informed. The annihilation of the 
 neutral trade, preventing the importation of co- 
 lonial produce and raw cotton into the continent 
 for the purpose of manufacturing, rendered the 
 merchandise of England almost indispensible ; 
 and to this our exporting, in spite of all difficul- 
 ties, is to be ascribed. Mr Grefulhe stated to the 
 Bullion Committee, that in 1810, cotton selling in 
 England for 2s. per pound, was worth 6s. at Am- 
 sterdam, and 8s. at Paris ; and that the chief ar- 
 ticles of export from this country to the conti- 
 nent, brought prices there from 50 to 200 and 
 300 per cent . higher than they brought at home . f 
 The gain on exportation was, therefore, so enor- 
 mous, that no despotic mandates could possibly 
 prevent a great influx of British goods ; and ac- 
 cordingly, immense quantities of them were dis- 
 posed of in Holland, and other parts of the con- 
 
 * Essay on Paper Credit, p. 200. 
 
 f App. Bull. Hep. p. 67. 
 
48 
 
 tinent. The distress of the manufacturers at 
 that period, was not owing to the anti-commer- 
 cial system adopted by the French, but to the 
 cessation of the American demand, caused by the 
 orders in council. These were not repealed, 
 till they had done vital injury to our manufac- 
 turers, by shutting them out of their most exten- 
 sive market, and till they had given a solid foun- 
 dation to a dangerous competition in the United 
 States. 
 
 British goods cannot now be vended to any ex- 
 tent on the continent, without a much greater 
 reduction in their price, than thq difference of 
 exchange from 1809 to 1814 made on their no- 
 minal value* The real price of manufactured 
 commodities, has been greatly raised by the for- 
 mer excess of our paper, the operation of the corn 
 laws, and the oppressiveness of taxation ; but it 
 is clear, that no permanent advantage can be 
 given in exchange to the foreigners on the real 
 price of manufactures, without causing their cer- 
 tain ruin. If the real exchange were greatly 
 against us, our warehouses might indeed be clear- 
 ed of high priced goods, but then we would, in 
 fact, be paying the foreigners for taking them 
 away. A trade of that kind must be soon relin- 
 quished, every successive sale annihilating a part 
 of the capital that carried it on. Hence, after a 
 fictitious system has once been acted upon, and 
 
49 
 
 after a great overissue of paper, a fall in the ex- 
 change cannot, as Mr Thornton imagines, enable 
 our merchants and manufacturers to dispose of 
 their goods to any advantage. To effect this 
 most desirable object, the fictitious system itself 
 must be abolished ; a recurrence must be made 
 to natural and sound principles ; and if the price 
 of provisions and of labour shall then rise, it will 
 be from an increase in real, not imaginary riches. 
 
 The fact of the exchange with Hamburgh and 
 other places having again come to a computed 
 par, while the restriction act continues in full force, 
 has been appealed to with much confidence, as 
 affording a practical and clear proof, that the late 
 unfavourable exchanges were not at all caused 
 by the issues of the banks having been excessive, 
 and that they originated solely in the peculiar 
 political circumstances of the country. How 
 such an inference could be drawn from such a 
 fact, is really astonishing. No person ever con- 
 tended that the restriction was prejudicial, but 
 as it enabled the banks to issue too much paper. 
 If the banks had never availed themselves of this 
 power, if they had shewn a degree of forbearance 
 not to be expected of any body of men, the re- 
 striction act, though unwise, would have been, as 
 to consequences, the same as if it had never ex- 
 isted ; besides, if the banks once made an impro- 
 per use of their power under the restriction, 
 
 D 
 
50 
 
 there was surely nothing to hinder them from 
 again reverting to sounder principles. Absolute 
 regulators as they were of the currency of the 
 kingdom, nothing could prevent their issuing 
 it in excess at one time, and too sparingly 
 at another. It is, therefore, of no consequence 
 to tell us, that the exchange is now at par, while 
 the Bank restriction exists. To prove that the 
 increased issues of the banks had no effect on the 
 exchange, it must be shewn to be at par while as 
 many notes circulate as in the periods of its great- 
 est depression. If this can be established, and if the 
 demand for them cannot be shewn to be equally 
 increased, we shall be compelled to admit the 
 truth of the long exploded doctrine, that a great 
 relative redundancy of currency has no effect in 
 rendering the exchange unfavourable. 
 
 The general average price of wheat in 1813 
 was about 108s. a quarter; but the price in the 
 autumn of that year was considerably lower, 
 owing to the importations from the continent, 
 consequent on the opening the communication 
 with Holland. In 1814, posterior to the first 
 abdication of Bonaparte, from the proximity of 
 France, and from the comparative cheapness of 
 grain in that country, the importations were much 
 augmented, and the price fell to 74s. a quarter. 
 The fall in the price of grain in 1813 was not 
 sufficiently great to cause any serious alarm to 
 
51 
 
 the farmers, or to the country bankers. Confi- 
 dent expectations were entertained, that as soon 
 as Parliament met they would prohibit the use 
 of foreign corn, and that the prices would con- 
 tinue as they had been for the last five years. 
 The rejection of the corn bill of 1814, and the 
 opening of the French ports, put an end to these 
 delusive expectations. The price of agricultural 
 produce rapidly fell ; and to fill up the measure 
 of distress, the provincial bankers were generally 
 compelled greatly to limit the amount of their 
 usual discounts. All the defects of the fictitious 
 system in which we had been proceeding at once 
 became apparent : imaginary riches, which had 
 been so long, and so very generally mistaken for 
 real wealth, vanished away; leaving, in too many 
 cases, only bankruptcy, and squalid poverty, to 
 occupy their place. 
 
 It is not possible to say what part of the fall 
 in the price of agricultural produce should be 
 ascribed to the foreign importations, and what to 
 the reduction of the circulating medium : But, 
 considering how immensely the issues of the 
 Bank of England and the country banks had 
 been increased from 1808 to 1813, and the vast 
 farming speculations undertaken by persons of 
 small capital, in the expectation of obtaining dis- 
 counts and loans, it is impossible not to ascribe 
 a very considerable part of the fall to the sudden 
 
52 
 
 withdrawing of their accustomed resources from 
 the agriculturists. The shock given to paper 
 credit in 1793, cannot, in point of extent, be for 
 one moment compared with what has been lately 
 experienced ; yet even in that year, Mr Thorn- 
 ton, who had been governor of the Bank of Eng- 
 land, informs us the price of corn fell in several 
 places from 20 to 30 per cent. “ The fall arose,-' 
 he continues, “ from the necessity of selling 
 corn, under which some farmers were placed, to 
 carry on their payments. Much of the circula- 
 ting medium being withdrawn, the demand for 
 it was in those places far greater than the sup- 
 ply ; and the few persons, therefore, who were 
 in possession of cash, or of what could pass as 
 cash, having command of the market, obliged thfc 
 farmers to sell at a price thus greatly reduced. 
 It was a new and sudden scarcity of cash, not any 
 new plenty of corn, which caused the price of corn 
 to drop.”* 
 
 How exactly these particular facts represent 
 the general situation of the farmers in 1 8 1 4, must 
 be evident to every person who knows any thing' 
 of the situation of the country in that period. 
 Many agriculturists had not merely their rents 
 to pay, but they had to dispense with and dis- 
 charge the accommodations, previously afforded 
 
 * Essay, p. 197. 
 
53 
 
 them by the bankers and their other friends. 
 From the amount of their rents, some abatement 
 might have been justly expected, and delay might 
 have been granted in their payment; but the other 
 demands were necessarily urgent, unlooked for, 
 and incapable of diminution. That support on 
 which many of the agriculturists rested, was torn 
 away at the time it was most necessary. Credit 
 fell to the ground, mutual confidence entirely 
 ceased, and the fall of price was both caused 
 and accompanied with the necessity of paying up 
 every sixpence of borrowed capital the farmers 
 might have in their possession, and with the fur- 
 ther want of it during the continuance of the low 
 prices. 
 
 In 1815, this state of things was only altered 
 to the worse, and the price of corn fell to about 
 60s. a quarter. In the month of May this year, 
 an act w'as passed, prohibiting the use of foreign 
 corn till the price rose to 80s. a quarter ; but that 
 prohibition could not be of much consequence till 
 the stock on hand was consumed. A great por- 
 tion of the farmers had foolishly imagined, that 
 this corn law would instantly raise the prices ; and 
 when they found themselves disappointed in this 
 expectation, panic and dismay attained their 
 acme. Whatever confidence or credit might have 
 
 survived in 1814 was now totally annihilated; 
 
 r> 
 
54 
 
 and in counties far removed from markets, the 
 distress was extreme. 
 
 Since 1813, besides the diminution in the is- 
 sues of all the country bankers, a considerable 
 number of them have unfortunately been obliged 
 to stop payment. Taking the number of private 
 banks that year at 800, we will be much below 
 the truth, if we take the average diminution of 
 their issues at L. 20,000 each, which alone gives 
 a reduction of the circulating medium to the ex- 
 tent of sixteen millions. Mr Horner, in a speech 
 lately made by him in the House of Commons, 
 states, fitf that from enquiries he had made, and 
 from the accounts on the table, he was convin- 
 ced that a greater and more sudden reduction of 
 the circulating medium, had never taken place in 
 any country than had taken place since the peace 
 in this country, with the exception of those re- 
 ductions which had happened in France after the 
 Mississippi scheme, and after the destruction of 
 the assignats. * He should not go into the ques- 
 tion how this reduction had been effected, though 
 it was a very curious one, and abounded in illus- 
 trations of the principles which had been so much 
 disputed in that House. The reduction of the 
 
 * In some of the communications to the Board of Agricul- 
 ture, published in their late Report, it is stated, that above 
 three millions of paper has been withdrawn from circulation 
 in the county of Lincoln only. 
 
55 
 
 currency had originated in the previous fall of the 
 prices of agricultural produce. This fall had 
 produced a destruction of the country bank pa- 
 per, to an extent which would not have been 
 thought possible, without more ruin than had 
 actually ensued. The Bank of England had also 
 reduced its issues. As appeared by the accounts 
 recently presented, the average amount of their 
 currency was not, during the last year, more than 
 between twenty-five and twenty-six millions; 
 while two years ago it had been nearer twenty- 
 nine millions, and at one time even amounted to 
 thirty-one millions. But without looking to the 
 diminution of Bank of England paper, the reduc- 
 tion of the country paper was enough to account 
 for the fall which had taken place.”* 
 
 There is one circumstance that explains why 
 the issues of the Bank of England have not been 
 still further diminished. The currency of those 
 districts, where private banks have failed, and 
 where their credit is suspicious, being now com- 
 posed of Bank of England paper, it is spread over 
 a larger surface than before, and, though its 
 amount was the same, it would in this way be 
 really reduced. 
 
 It being, therefore, certain, that in the last 
 three years, at least twenty millions of notes have 
 been withdrawn from the circulation of this coun- 
 * Morning Chronicle, 2d May 1816. 
 
56 
 
 try,* is it surprising, that the value of the rest 
 Compared with bullion has increased, and that 
 consequently our foreign exchanges have impro- 
 ved ? Is not this fact the strongest possible cor- 
 roboration of the doctrines advanced in the Bul- 
 lion Report, and advocated by every writer on 
 such subjects worthy of the least regard ? They 
 maintained, that if the quantity of the circulating 
 medium was sufficiently reduced, the exchange 
 would again come to par ; and the fullest experi- 
 ence has completely justified their conclusions, and 
 placed them beyond the reach of cavil and dis- 
 pute. 
 
 If the recommendation of the Bullion Com- 
 mittee had been attended to in 1810 , if the Bank 
 of England had then been laid under the neces- 
 sity of restricting its issues, much of the mischief 
 that has lately overtaken the farmers, and the 
 country bankers, would have been avoided ; the 
 evil would have been repressed nearer the com- 
 mencement; and though the shock even then 
 would have been very great, it must necessarily 
 have proved much less sudden and paralizing 
 than it has since done, when the reduction of 
 paper was combined with other circumstances, of 
 themselves sufficient to produce much misery. 
 
 * Sixteen millions of country bank paper, and four millions 
 of that of the Bank of England. 
 
57 
 
 In 181.5, after the return of Bonaparte from 
 Elba, the price of bullion rapidly rose, and the 
 exchange became proportionally unfavourable to 
 this country. This was a natural and unavoid- 
 able effect of the prodigious and unparalleled fo- 
 reign expenditure we sustained that season. Bills 
 on London swarmed in every part of the conti- 
 nent, and consequently sold at a considerable 
 discount. They were instantaneously thrown into 
 the market ; but fortunately their influx ceased 
 before any additional export of manufactured 
 goods had time to counteract their effects on the 
 exchange, which, as soon as this expenditure 
 ceased, became rapidly favourable. Bank notes 
 had not been forced into circulation during its 
 continuance, and did not therefore oppose any ob- 
 stacle to its return to par, when the cause of the 
 temporary derangement was removed. The case 
 was very different in 1799 and 1800. During 
 the great expenditure of these years, a more than 
 proportional addition being made to the curren- 
 cy, prevented the exchange reverting to par till 
 upwards of two years after the drain ceased. 
 The fact, therefore, that has been laid hold of as 
 disproving the principles we have endeavoured to 
 establish, affords them the most effectual sup- 
 port. We have stated, that, with the soundest 
 currency, an unfavourable exchange might be in- 
 duced, by suddenly throwing a vast number of 
 
58 
 
 bills on London into the market ; but we proved, 
 that if the currency did not afterwards become 
 redundant, the export of manufactures would very 
 speedily restore the equilibrium, and that if the 
 supply of these bills was suddenly exhausted, the 
 exchange would as suddenly become favourable/' 
 
 SECTION THIRD. 
 
 Inquiry into the Rise of Prices throughout Europe 
 since 177 * 5 ; with some account of the Progress 
 of Manufactures , and of the Increase of Popu- 
 lation . 
 
 The greater part of the writers who maintain 
 that our paper currency has not been deprecia- 
 
 * It is of some importance to observe, that although the ex- 
 pence of the short campaign of 1815 was incomparably great- 
 er than had been incurred in any previous year of the war, 
 the exchange was not so much depressed. In 1811, the ex- 
 change with Hamburgh was at one time nearly 32 per cent, 
 and during the whole of that year more than 20 per cent, 
 against London. In 1815, notwithstanding of the sudden- 
 ness and immensity of the expenditure, the exchange was not 
 more than 18 per cent, against this country ; affording a strong 
 proof, that, in the former of these periods, the great compara- 
 tive redundancy of our currency had been the chief cause of 
 the depression. 
 
59 
 
 ted since 1797, affirm that the value of gold 
 rose in Britain, because of an increased demand 
 for it in the continent. But we must recollect 
 that an increased demand for specie in any coun- 
 try can only be caused by the prices there falling 
 below what they had previously been from an in- 
 creased production of commodities, or supposing 
 the prices to remain the same, from the circula- 
 ting medium of other states being augmented in 
 a greater proportion. In either case, there is a 
 transfer of bullion from the countries where pro- 
 duce is dear to where it is cheap ; and, as we 
 shewed in the First Section, this transfer of bul- 
 lion will continue till such time as the equilibri- 
 um of price is restored. If, therefore, the price 
 of commodities has been falling in Europe since 
 1797, that circumstance will satisfactorily ac- 
 count for a portion of our specie having been 
 sent abroad ; but it will also serve to prove the 
 depreciation of our currency in the most incon- 
 trovertible manner. Gold and silver do not 
 measure the value of commodities more than 
 commodities measure the value of gold and sil- 
 ver ; consequently, if the real value of gold and 
 silver has risen in Britain, because of a demand 
 for them in the continent, the money price of 
 produce must on that supposition, if our curren- 
 cy has been virtually the same as gold, be now 
 cheaper, at all events not dearer than it was 
 
60 
 
 when that exportation began. The contrary is 
 notoriously the fact, our prices having risen, or 
 the value of money in this country having fallen 
 at least cent, per cent, since 1797. 
 
 Another and much more acute method of rea- 
 soning has been adopted by a few political eco- 
 nomists, who deny the depreciation of our cur- 
 rency. They do not set out with an assumption 
 whose inherent absurdity serves for its own con- 
 futation ; but they maintain, that in all the 
 states of Europe the currency has been as much 
 depreciated as in our own ; that, therefore, there 
 has been no comparative redundancy of money 
 in Britain, but that its value throughout Europe 
 has equally sunk. In a word, they affirm, that 
 prices since 1797 have risen as rapidly in the 
 nations of the continent as they have done here. 
 
 Though the fact were such as now stated, 
 it would nowise account for the long excess of 
 the market above the mint price of gold, and for 
 the unfavourable exchanges : these circumstan- 
 ces taken conjointly afford certain evidence of a 
 depreciation, and are amply sufficient of them- 
 selves to determine the question at issue. 
 
 But not to insist on these proofs, we shall 
 now endeavour to shew, that there has been no 
 corresponding rise of prices in the continent, and 
 that there has not been any fall in the value of 
 money in the market of the world since 1775. 
 
61 
 
 The importance, as well as the obscurity of the 
 investigation which this part of our subject in- 
 volves, will require it to be discussed at some 
 length. 
 
 Dr Smith has shewn that the value of silver 
 compared with corn was less in the fourteenth than 
 in the fifteenth century, and that the money price 
 of corn continued to fall till about the middle of 
 the sixteenth century, when the silver of America 
 was poured in immense quantities into Spain. This 
 increase in the relative value of specie is easily 
 accounted for. In the fourteenth and fifteenth 
 centuries, the Italian republics began to shake 
 off the lethargy of the preceding ages, and to 
 cultivate a considerable commerce. Cities at 
 that time acquired privileges which secured them 
 from the rapacity of the nobles on the one hand, 
 and of the kings on the other. The Hanseatic 
 league had already become formidable to the 
 sovereigns of the North, and had introduced arts 
 and civilization into countries whose barbarism 
 had ever remained impervious to the Roman 
 power. The certainty of enjoying the fruits of 
 their industry roused men into action, and new 
 energy was inspired into the nations of Europe. 
 
 The quantity of specie, however, from the ex- 
 haustion of the then known mines, not increa- 
 
62 
 
 sing in proportion to that of other produce* 
 its value rose, and the money price of com fell 
 at a time that Europe was advancing in real 
 wealth and riches. From 1570 to about 164Q, 
 on the contrary, the money price of com conti- 
 nued to increase ; but at the latter period, the 
 effects produced by the discovery of the Ameri- 
 can mines in raising the price of corn seem to 
 have been completed; and from 1640 to 1775, 
 the value of corn compared with silver was 
 nearly stationary, or had again begun to in- 
 crease. 
 
 Dr Smith has further and satisfactorily shewn, 
 why the importations of specie from America 
 subsequent to 1640 had not the effect of raising 
 the price of commodities. The continued improve- 
 ment of Europe, of America itself, and the con- 
 stant demand for silver in the Asiatic trade, suf- 
 ficiently accounted for that fact. The quantity 
 of exchangeable produce being increased every 
 year, required a greater quantity of specie to 
 circulate it at the same nominal price. The 
 wear, rubbing, and loss of this specie from 
 shipwrecks, &c. must have tended constantly to 
 its diminution ; besides, as nations increase in 
 opulence, they become more enamoured of splen- 
 did and ornamental furniture. The quantity of 
 plate and trinkets in all rich countries is im- 
 mense, and the amount of bullion annually con- 
 
63 
 
 sinned in their manufacture, in gilding books, in 
 embroidery, &c. is necessarily very great. 
 
 These conclusions of Dr Smith are incontro- 
 vertible, and have seldom been disputed. The 
 whole of the depreciation in the value of money 
 we are now considering, is said to have taken 
 place since the publication of the (t Wealth of 
 Nations,” and to have been caused by the in- 
 creased productiveness of the American mines, 
 by the more economical use of circulating me- 
 dium, and by the general extension of banking. 
 
 Dr Smith estimated the quantity of the pre- 
 cious metals annually imported into Europe at 
 L. 6,000,000 sterling. This estimate was found- 
 ed on that of Mr Meggens, who computed the 
 annual importation into Spain and Portugal on 
 an average of the six years from 1748 to 1753 
 at L.5, 746,000, and that of Raynal, who, on an 
 average of eleven years, from 1 754 to 1 764, both 
 inclusive, reckoned the annual importation at 
 L.6,075,000. * In 1772, a very great increase 
 took place in the productiveness of the Mexi- 
 can mines, f and, according to the well inform- 
 ed M. Humboldt, at the era of the publication 
 of the “ Wealth of Nations,” (1775), the annual 
 importation was upwards of eight millions. Since 
 that period it has gradually augmented; and, 
 
 * Wealth of Nations, vol. i. p. 326. 
 
 t The mines of Gualgayoc were discovered in 1771. 
 
64 
 
 before the late disturbances in Spanish America, 
 the same gentleman estimated the entire pro- 
 duce of the American mines at 4*3,500,000 dol- 
 lars, or about L. 9,5 00,000 sterling ; * but as this 
 estimate, as far at least as respects the im- 
 portation from the Brazils, is not unsuspected of 
 exaggeration, f we shall, perhaps, be justified in 
 supposing it to have then amounted to the enor- 
 mous sum of nine millions sterling. 
 
 The average price of wheat for the ten years 
 ending 1774 was 45s. 6d. per quarter, and the 
 average price of the quarter for the ten years 
 ending 1794 was 45s. 2|d. Hence it is obvi- 
 ous, that during that period there had been no 
 variation in the value of money as compared 
 with corn. In 1795 and 1796, the prices were 
 considerably higher, but these were both years 
 of scarcity, and in 1797 the price fell to very 
 near the former average. The greatly increased 
 current of specie that had flowed into Europe 
 from 1772 had not, therefore, previous to 1797, 
 any effect on the prices of corn in this country. 
 The increased consumption of the precious me- 
 tals was then fully equal to absorb the augment- 
 ed supply without leaving any room for depreci- 
 ation. Something very peculiar must surely be- 
 
 • Statistical Essay on New Spain ; English Translation, 
 vol. iii. p. 394. 
 
 t Edinburgh Review, No. xxxvii. p. 190. 
 
65 
 
 long to that year which could at once change a 
 ratio of such long continuance ; that, without 
 increasing the supply of gold and silver, could 
 at once lessen their demand, and make them 
 sink in value in the market of the world. It is 
 not equivocal or contradictory facts that will 
 prove what is so much out of the ordinary course 
 of events ; they must be clear, explicit, and un- 
 questionable. 
 
 The causes assigned by Dr Smith as prevent- 
 ing any depreciation in the value of money since 
 1640, have all been operating with increased en- 
 ergy during the last twenty years. The bury- 
 ing of gold and silver, which was very general 
 in France before the Revolution, greatly increa- 
 sed in that turbulent period. * The same 
 practice was universal in Germany and Italy ; 
 and there can be little doubt that the late extra- 
 ordinary frequency of political changes through- 
 out the continent would have the same effect in 
 other countries, in increasing this mania for 
 hoarding they had in France. And as a vast 
 number of peasants and farmers have of late 
 been killed in battle, and by mauraders, it is cer- 
 tain that a more than usual proportion of the 
 money so deposited will never again be drawn 
 
 * Sismondi de la Richesse Commercials, tom. i. p. 138, 143. 
 
 s 
 
66 
 
 forth. In the despotical states of Asia and Afri- 
 ca, a vast quantity of specie is annually consu- 
 med in this manner. There, every rich indivi- 
 dual reckons as his principal resource the amount 
 of the treasure he has withdrawn from circula- 
 tion ; and every poor man trusts to earth what- 
 ever fruits of his labour the avarice of his mas- 
 ters enables him to realize. 
 
 Although there is now, comparatively speaking, 
 very little specie circulating in Britain, there is 
 still a very great consumption of bullion in dif- 
 ferent manufactures. According to Mr Chal- 
 mers, during the ten years ending with 1797, 
 there were made into gold-plate - 10,1711bs. 
 
 In the ten years ending with 1809 16,942 
 
 In the first period there were made 
 
 of silver - 919,283 
 
 In the second period - - 1,130,451* 
 
 The increase in the consumption of plated or 
 
 gilt goods has been vastly greater during the last 
 20 years than in any preceding period. Every 
 individual is now master of a watch ; and in eve- 
 ry part of the country, jewellery and trinkets of 
 various descriptions are to be met with. Dr Smith 
 estimated the quantity of specie Annually consu- 
 med in Birmingham in plating, gilding, Ac. at 
 L. 50,000, and it is certain that many times that 
 
 * Comparative Estimate, p. 470. 
 
67 
 
 sum is now required for the same purpose in 
 that city. 
 
 The demand for plate and costly furniture of 
 that kind has proportionally increased in the con- 
 tinent. In 1 79 5 , Geneva alone consumed bullion 
 to the value of ten millions of francs (L.4 16,000) 
 in the manufacture of watches ; * and previous 
 to 1792, above 70,000 workmen were employed 
 in the goldsmith and jewellery trade in Paris, 
 Lyons, and Strasbourg. The revolution, no 
 doubt, gave a momentary check to this branch 
 of industry ; but as we shall immediately shew, 
 that the real wealth of the great mass of the 
 people of France and of the whole continent has 
 been much increased since that event, we shall 
 be authorised to conclude that a greater quanti- 
 ty of bullion will now be required for plate, 
 gilding, &c. than at any former period. 
 
 The increased productiveness* of the Ameri- 
 can mines during the last half century, has been 
 to a considerable extent counteracted and pre- 
 vented from producing its full effect in Europe, 
 by the enlarged consumption of the precious me- 
 tals in South America itself. The valuable 
 works of Humboldt exhibit the most satisfacto- 
 ry details as to the rapid advancement of the 
 Spanish colonies in real wealth and riches. Un- 
 
 * Peuchet. Statistique Elementaire de la France » Paris,, 
 1805, p. 425. 
 
68 
 
 questionably they must of late have suffered 
 temporary embarrassment and decline ; but when 
 they shall have succeeded in their noble ef- 
 forts to shake off the galling chains of an odi- 
 ous and unprincipled despotism, their improve- 
 ment in arts and manufactures will be infinitely 
 greater than heretofore ; and they will of course 
 require a much greater portion of circulating 
 medium. 
 
 North America draws the whole of its sup- 
 plies of specie from South America, either by 
 means of a direct trade with that country, or by 
 the more circuitous rout of Europe. Since the 
 revolution, that established an independent re- 
 public in that country, its improvement has been 
 rapid in a degree altogether unknown in the 
 eastern hemisphere. Not only the country bor- 
 dering on the Atlantic has become much more 
 populous and better cultivated, but civilization 
 has also taken firm root in the interior of the 
 country. The possession of New Orleans, by se- 
 curing the navigation of the Mississippi to the 
 United States, has opened up a market for the 
 products of the immense and fertile territory wa- 
 tered by that mighty river. The facilities of in- 
 ternal communication, by means of water and 
 other natural advantages, combined with the mild 
 and liberal spirit of the government, the cheap- 
 ness of land, and the lightness of taxation, must. 
 
I 
 
 69 
 
 in the natural course of events, ensure the pros- 
 perity of this highly fortunate commonwealth. 
 
 Of all the pernicious effects caused by the late 
 war, and the anti-commercial spirit in which it 
 was carried on, perhaps none will eventually be 
 found more prejudicial to this country, than the 
 extraordinary impulse that was thereby given to 
 American manufactures. The intercourse of the 
 United States with Europe having been much 
 obstructed, they were forced to rely on their own 
 industry for a supply of those articles they had 
 been in the habit of importing from thence. The 
 attention of a considerable portion of the popula- 
 tion was diverted from agriculture and domestic 
 manufactures, to manufacturing on a great scale 
 for the public demand. The effects were such as 
 could hardly have been anticipated. In 1810, no 
 fewer than 3,257,812 yards of woollen cloth were 
 manufactured in the state of New York alone, at 
 an expence to the manufacturers of about 4 > dol- 
 lars 57 cents, which they sold at the price of Bri- 
 tish cloth, or from 12 to 14# dollars per yard. It 
 is clear, they might have sold it at a much less 
 price with a great profit ; and, as soon as British 
 cloth came into the American market, it was so 
 reduced to the almost effectual exclusion of the 
 latter. In 1791, the first cotton mill used in 
 America was erected in the state of Rhode 
 Island ; another was constructed in the same 
 
70 
 
 state in 1 795, and two in the state of Massachu- 
 setts in 1803 and 1804; ten more were erected 
 before 1808 ; and by the commencement of 1811, 
 eighty-seven were in full operation, turning 80,000 
 spindles.* The number of mills must have in- 
 creased prodigiously since that period ; for in the 
 report of the committee of commerce and manu- 
 factures, presented to the House of Representa- 
 tives of the United States, 13th February 1816, 
 the number of bales of cotton manufactured in 
 1810 is estimated at 10,000, and in 1815 at 
 90,000. The capital now engaged in this branch 
 of industry is, in the same document, estimated 
 at 40 millions of dollars ; the number of people 
 employed at 100,000; and the number of yards 
 of cotton manufactured in 1815 at 81 millions. 
 
 A severe check has undoubtedly been given to 
 this excessively rapid progress in manufacturing, 
 by the late influx of British goods, and by the 
 losing prices at which they have been sold. It 
 appears certain, however, that no European na- 
 tion will, for any length of time, be able to com- 
 pete with the Americans in their own market. 
 The long voyage, and the consequent high char- 
 ges for freight, insurance, kc. would of themselves, 
 without the aid of protecting duties, of which the 
 Americans are not sparing, give their manufac- 
 
 * Gallatin's Report to the House of Representatives, on the 
 state of American manufactures in 1310. 
 
 i 
 
71 
 
 turers a manifest advantage over foreigners. The 
 high wages of labour in the United States, will 
 be gradually reduced by the rapid progress of po- 
 pulation, consequent on the cheapness of pro- 
 visions, and by the employment of machinery. 
 The raw material too being in their possession, 
 and their taxes extremely moderate, we need not 
 certainly be surprised, if we are not only forced 
 to forego the American market, but find them 
 dangerous competitors in that of Europe. 
 
 It is extremely probable, that manufactures 
 would ere long have got a stable foundation in 
 the United States, although the Government, and 
 the peculiar circumstances of the times, had no- 
 wise encouraged them. Every part of America 
 is at too great a distance from Europe, to be 
 able to send many species of her rude produce to 
 the markets there with any advantage. The 
 western states are still more disadvantageously 
 situated in this respect than those on the Atlan- 
 tic, and could not possibly dispose of their wheat, 
 cattle, Ac. unless there were manufacturers among 
 them ; and accordingly it is stated, that in those 
 western states, where improvement has been most 
 rapid, manufactures have been introduced to a 
 surprising extent.* 
 
 “ No cause,” Mr Gallatin judiciously observes. 
 
 Report of the 13th of February 1816, 
 
72 
 
 “ has, perhaps, more promoted, in every repect, 
 the general improvement of the United States, 
 than the absence of those systems of internal re- 
 strictions and monopoly which continue to disfi- 
 gure the state of society in other countries. No 
 laws exist here, directly or indirectly, confining 
 man to a particular occupation or place, or ex- 
 cluding any citizen from any branch he may at 
 any time think proper to pursue. Industry is in 
 every respect perfectly free and unfettered ; eve- 
 ry species of trade, commerce, art, profession, 
 and manufacture, being equally open to all, with- 
 out requiring any regular apprenticeship, admis- 
 sion, or licence. Hence the improvement of 
 America has not been confined to the improve- 
 ment of her agriculture, and to the rapid forma- 
 tion of new settlements and states in the wilder- 
 ness ; but her citizens have extended their com- 
 merce to every part of the globe, and carry on, 
 with complete success, even those branches for 
 which a monopoly had heretofore been consider- 
 ed essentially necessary.” 
 
 The population of the United States in 1800, 
 amounted to 5,309,758 individuals of all classes, 
 and in 1810 it amounted to 7,239,903. * If the 
 increase of population since 1810 has been pro- 
 
 * Pitkin’s Statistical View of the Commerce , fyc. of the Uni - 
 ted States . Hartford, (America) 1816. 
 
portional to its increase in the preceding ten 
 years, the United States, exclusive of the Flo- 
 ridas, will now contain about 8,800,000 inha- 
 bitants ; and, including the Floridas, and ma- 
 king allowance for the late excessive emigrations 
 from Europe, the present population cannot be 
 reckoned short of nine millions. 
 
 There is thus in North America an immense- 
 ly increased and rapidly increasing demand for 
 the specie of its southern neighbours : a demand 
 many times greater than when Dr Smith wrote, 
 and which could not have failed to raise its price, 
 had not the supplies been greatly augmented 
 since 1770. 
 
 The table of prices at different epochs (1728, 
 1798, 1811,) given in Mease’s Picture of Phila- 
 delphia, shews that there has been no general 
 rise on the articles of primary use between 1798 
 and 1811. Some of them have risen a little^ 
 and others have fallen during that period ; but, 
 on the whole, their equality is at once obvious 
 and striking, f 
 
 + In 1798, fine bread sold at 75s. per cwt. (Pennsylvania 
 currency,) and in 1811 it only brought 67s. 6d. In the same 
 period the price of middling bread rose 7s. 6d. per cwt. 
 Money accounts in America are generally kept in dollars and 
 cents, but as the nominal value of the dollar varies in different 
 states, and in none of them corresponds exactly with its va- 
 lue in Britain, this circumstance must always be taken into 
 account in comparing their prices together, and with our 
 
 1 
 
iThe following statement of the price of wheat 
 per bushel, from 1806 to 1813 inclusive, is ex 
 tracted from the valuable work of Mr Pitkin. 
 
 Doll, Cents. Doll. Cent£. 
 
 1806 .... 
 
 «% 
 
 
 33 
 
 1810 . . . 
 
 
 50 
 
 1807 .... 
 
 
 25 
 
 1811 . . . 
 
 
 75 
 
 1808 .... 
 
 
 2 5 
 
 1812 . . . 
 
 . . . 1 
 
 9 * 
 
 1809 .... 
 
 
 25 
 
 1813 . . . 
 
 
 75 
 
 The export of wheat from the United States 
 to Europe in 1811, 1812, 1813, was vastly great- 
 er than ordinary, and sufficiently explains the 
 rise in these years above the mean price of 
 1 dollar 25 cents, or 5s. 7d. per bushel, f 
 
 We now proceed shortly to examine the pro- 
 gress of industry in the principal states of Eu- 
 rope, and, by a comparison of prices, to deter- 
 mine whether there is any ground for concluding 
 that gold and silver have lately sunk in value. 
 We begin with France, by far the most import- 
 ant of the continental nations, and, in respect of 
 civilization, nearly on a par with this country. 
 
 own. It was lately stated in the public prints, as a proof of 
 the dearth of provisions in Baltimore, that wheat was then 
 selling at 10s. per bushel, and mutton at 9d. per pound; but 
 it should have been mentioned, that the shilling there is only 
 equal to 7|d. of our money, and consequently the price of 
 wheat bought with English currency would only have been 
 6s. pei* bushel, and the mutton less than 6d. per pound. 
 App. Bull. Rep. No. 62. 
 
 t Statistical Vievo, dec. p.. 91 > 92, 
 
75 
 
 Whether the French revolution has been pro- 
 pitious, or otherwise, to the social relations and 
 general happiness of Europe* may perhaps be 
 questioned ; but there can be no doubt of its ha- 
 ving much improved the condition of the great 
 body of the French people themselves, especially 
 those supported by agriculture. The abolition 
 of the hereditary privileges of the nobility and 
 clergy, of the gabelle, the corvees, and other grie- 
 vously oppressive and partial imposts and bur- 
 dens, would of themselves have sufficed to ren- 
 der the situation of the farmers and peasants 
 more respectable and comfortable. It was not, 
 however, in this way only they were bene- 
 fited; a great portion of the property of the 
 emigrants and of the church came into their 
 hands at very low prices ; from being depen- 
 dents, they became independent. Their politi- 
 cal and religious equality, and the inviolability 
 of their property, being secured and protected by 
 a vigorous and energetic government, a new and 
 effectual impulse was given to their industry, 
 and to the improvement of the country. The 
 farmers and peasantry were no longer oppressed 
 and plundered by rapacious nobles, and ignorant 
 monks ; and their industry being exerted for their 
 own advantage, did not fail to produce corre- 
 sponding effects. * 
 
 ® An ample and authentic account of the various oppres- 
 
76 
 
 “ On my first landing,” says Mr Birkbeck, 
 “ I was struck with the respectable appearance 
 of the labouring class : I see the same marks of 
 comfort and plenty every where as I proceed, 
 I have inquired, and every body assures me, that 
 agriculture has been improving rapidly for the 
 last twenty-five years ; that the riches and com- 
 forts of the cultivators of the soil have been dotc- 
 bled during that period ; and that vast improve- 
 ment has taken place in the condition and cha- 
 racter of the common people.” * The testimony 
 of this excellent traveller is confirmed by Peu- 
 chet, who tells us, that the agriculturists, who 
 formerly lived on a very rude diet, and were 
 only regaled with an unhealthy beverage, have 
 now abundance of butcher’s meat, bread, wine, 
 cider, and beer ; and he adds, that colonial pro- 
 duce, since the increase in the wealth of the cul- 
 tivators, is very generally distributed throughout 
 the country, f Much as the ministers of Louis 
 might have wished to represent the country as 
 
 sions and hardships inflicted on the peasantry and lower classes 
 of the people of France, by the feudal tyranny existing in 
 that country previous to the revolution, may be found in Mr 
 Young s Travels. No man of common feelings, this writer 
 observes, can possibly regret the fall of that abominable sys- 
 tem, which made a whole parish slaves to the lord of the 
 manor. 
 
 * Birkbeck’s Tour in France , 4th edit. p. 11. 
 
 t Peucket . Statistique Elementaire de la France, p. 280. 
 
r n 
 
 ruined and impoverished by the revolution and 
 the sway of Bonaparte, they were forced to ad- 
 mit the improvement that had taken place in its 
 agriculture. The fact was too certain, two self- 
 evident, even for them to attempt to controvert 
 or deny it. 
 
 It is this great improvement of agriculture that 
 enables us to explain the otherwise unaccount- 
 able fact of the population of France having in- 
 creased, notwithstanding of the massacres of the 
 revolution, of the sanguinary wars in which she 
 has been since engaged, and the loss of her fo- 
 reign trade. In 1785 , Necker estimated the 
 population of France, exclusive of Corsica, at 
 24 , 676 , 000 ; and inclusive of that island, at 
 24 , 800 , 000 . In 1789 , Pomelles, from a compa- 
 rison of the registers of births, deaths, and mar- 
 riages, reckoned the inhabitants of France, in- 
 cluding Corsica, at 25 , 065,883 individuals of all 
 ages and sexes. A committee of the National 
 Assembly bestowed a great deal of attention to 
 the same subject, and the result of their inquiries 
 gives a population of 26 , 363,074 ; but from the 
 circumstance of the taxes being diminished to 
 the poorer classes in proportion to the number of 
 their children, there is reason to suspect that 
 this estimate may have been somewhat too high. 
 This suspicion derives some confirmation from 
 the fact, that in the table framed by the National 
 
78 
 
 / 
 
 Assembly, the population of the department of 
 the Seine, or of Paris, is reckoned at 725,333, * 
 when later and more correct returns only give a 
 population of 629, 763, f though the city is known 
 to have increased considerably since 1 790. Sub- 
 sequent to the revolution, and when the con- 
 scription was organized, it became of essential 
 consequence precisely to ascertain the number of 
 inhabitants, and all the different enumerations de- 
 monstrate an increase. In 1805, the population 
 of the whole Empire, including Corsica and the 
 annexed departments, according to the most ac- 
 curate computations, amounted to 34,518,385; 
 and as the population of Flanders, Piedmont, 
 and the other annexed districts, amounted in 
 all to 6,750,960, the entire population of Old 
 France, (inclusive of Corsica, and the depart- 
 ment of Vaucluse, containing Avignon, and a 
 population of 190,000 souls,) must then have 
 been equal to 27,767,42 5. 
 
 The more costly manufactures have, perhaps, 
 declined in France since 1789. The fortunes of 
 the great proprietors being divided, and exter- 
 nal commerce being almost annihilated during 
 the war, there were but few purchasers of very 
 expensive goods. It does not appear, however, 
 that there has been any falling off in the manu- 
 
 * Young’s Travels in France, 2d Edit. Vol. I. p. 479» 
 f Peuchet, p. 2 55 . 
 
79 
 
 factures of general use, and on the contrary many 
 of them have greatly advanced. The improve- 
 ment in the circumstances of the agriculturists 
 causing an extension of the home market, made 
 some amends for the loss of the foreign trade. 
 Peuchet says, that, notwithstanding the decline 
 of the silk manufactories at Lyons, the internal 
 consumption was augmenting;* and it is ex- 
 tremely probable, that any falling off in the silk 
 trade is not to be ascribed so much to a decrease 
 of the exports, as to the increased consumption 
 of cottons. Delessert, quoted by Peuchet, af- 
 firms, that in 180.5, there were 50 large and 200 
 small establishments for spinning cotton in 
 France, able to put in motion from 300,000 to 
 400,000 spindles. That number has since been 
 greatly multiplied, though they are still inade- 
 quate to furnish a sufficient supply of yarn to the 
 weavers, f 
 
 Mr Young, when contending for a rise of 
 prices in France, £ founds on the Report of M. 
 
 * Peuchet, p. 41 9. 
 
 t Mr G. A. Lee stated to the select committee of the House 
 of Commons, appointed last session to inquire into the state 
 of children employed in manufactories, that the cotton-facto- 
 ries at Rouen and Paris almost rival those of England : that 
 they are possessed of equally good machinery ; and have in 
 every considerable establishment English overseers, enjoying 
 all the advantages of our experience. 
 
 * In his pamphlet entitled, “ Inquiry into the Rise of Pri„ 
 ees in Europe, &c.” published in the Pamphleteer, No. XI, 
 
80 
 
 feilvestre, presented to the Society for promoting 
 Agriculture at Paris in 1805, where it is stated, 
 that in most of the departments, the price of la- 
 bour since 1789 is increased by one-third, in 
 others by one-half, and that in a few it is doubled ; 
 and that the prices of cattle, agricultural imple- 
 ments, Ac. were increased in nearly similar pro- 
 portions ; and, on the speech of M. Daru to the 
 legislative body in 1810, in which he argued that 
 Louis the XVIth, with a civil list of 2 6 millions, 
 would be as rich as the Emperor with a sum 
 one-third greater, on account of the increase in 
 the cost of the articles on which it would have 
 to be expended. It is, however, certain, that an 
 increase will take place in the price of many 
 kinds of produce in a country that is improving, 
 without any fall taking place in the real value of 
 money. Such a fall can only be inferred from a 
 permanent rise in the price of corn ; and there is 
 unquestionable evidence to prove, that its price 
 has not risen in France since 1770. 
 
 From the fact of an additional supply of corn, 
 in countries where it is the chief food of the in- 
 habitants, creating an additional demand for that 
 article, * and a diminished supply a diminished 
 
 * Si la quantite de ble decuplait dans le monde, la demande 
 du ble decuplerait aussi, parce qu’il naitrait des hommes pour 
 le manger ; et le ble, relativement aux autres denrees garde- 
 rait a peu pres sa meme valeur.— Say, tom. ii. p. 21. 
 
SI 
 
 demand, circumstances in which the cultivation 
 of com differs from any other species of industry, 
 it follows that the demand for it, on an average 
 of some years, is more nearly equal than for any 
 other commodity. It is true also, as Dr Smith 
 has observed, that the expence of raising equal 
 quantities of corn in different stages of improve- 
 ment is nearly balanced. The price of cattle, 
 the principal instruments of agriculture, of ma- 
 chinery, and of labour, being greater in an ad- 
 vanced than in a rude stage of society, serve as 
 a counterpoise to the ameliorations that may have 
 been introduced in the system of cultivation ; 
 and rendering the real expence bestowed on the 
 raising of corn nearly equal at different periods, 
 it becomes a “ more accurate measure of value than 
 any other commodity or set of commodities * and 
 therefore it is by the rise and fall of its nominal 
 price, that we can best judge of the rise and fall 
 in the value of money, f 
 
 The very important table of the price of wheat 
 at the Paris or Rosoy market for 146 years, end- 
 ing 1788, given by Mr Young in his Travels in 
 France, and inserted below, shews that from 
 1766 to 1775, the price was higher than in any 
 
 * Wealth of Nations, vol. i. p. 293. 
 t Say, tom. i. p. 358. 
 
 F 
 
82 
 
 other period of the century.* In 1 763, Louis the 
 XV th conferred an essential benefit on agricul- 
 ture, by granting an entire freedom to the home 
 trade in corn. And by an edict of the following 
 year, a liberty of exportation from the greater 
 part of the French ports was also granted till 
 such time as the home price should reach SO 
 livres the septier, about 48s. the Winchester quar- 
 ter. f This liberty of exporting, combined with 
 a cessation of the supplies which some parts of 
 France previously drew from England, but chief- 
 ly the very bad seasons from 1766 to 1771 in- 
 
 * Table of the price of the septier of wheat, at the Paris or 
 Rosoy market, for 146 years, ending 1788. 
 
 
 
 liv. 
 
 so. 
 
 den. 
 
 
 
 liv. 
 
 so. den. 
 
 1643 to 1652, 
 
 35 
 
 14 
 
 1 
 
 From 1726 to 1735, 
 
 16 
 
 9 
 
 4 
 
 1653 
 
 1662, 
 
 32 
 
 12 
 
 2 
 
 1736 
 
 1745, 
 
 18 
 
 15 
 
 7 
 
 1663 
 
 1672, 
 
 23 
 
 6 
 
 11 
 
 1746 
 
 1755, 
 
 18 
 
 10 
 
 11 
 
 1673 
 
 1682, 
 
 25 
 
 13 
 
 8 
 
 1756 
 
 1765, 
 
 17 
 
 9 
 
 1 
 
 1683 
 
 1692, 
 
 22 
 
 0 
 
 4 
 
 1766 
 
 1775, 
 
 28 
 
 7 
 
 9 
 
 1693 
 
 1702, 
 
 31 
 
 16 
 
 1 
 
 1776 
 
 1785, 
 
 22 
 
 4 
 
 7 
 
 1703 
 
 1712, 
 
 23 
 
 17 
 
 1 
 
 
 1786, 
 
 20 
 
 12 
 
 6 
 
 1713 
 
 1715, 
 
 33 
 
 1 
 
 6 
 
 
 1787, 
 
 22 
 
 2 
 
 6 
 
 1716 
 
 1725, 
 
 17 
 
 10 
 
 9 
 
 
 I— * 
 
 00 
 
 00 
 
 24 
 
 0 
 
 0 
 
 General average of the 146 years, 24liv. 1 so. 4 den. 
 
 This Table, and the calculations in the text, refer to the 
 price of the very best wheat, or bio de tele, weighing 240 lbs. 
 mark the septier. The medium sort only weighs from 220 
 
 to 230 lbs. N. B. Lavoisier estimated the ordinary price 
 
 of wheat in France before the revolution at 24 liv, the septier. 
 Say, tom. i. p. 352. 
 
 t The Winchester quarter is equal to one septier and ff, or 
 to If very nearly. 
 
83 
 
 elusive, * appear to have been the causes of the 
 unusual rise in the prices of that period. The 
 confusion of the revolution, by distracting the 
 attention of the cultivators, rendered the crops 
 deficient ; and since, there have been a few sea- 
 sons of scarcity, but there has not been any ge- 
 neral rise of price, f In 1800, the mean price 
 of wheat in the Paris market was exactly 14? 
 fr. 19 cents the hectolitre, equal to 21 fr. 28 
 cents the septier. £ In the following year, the 
 mean price of the septier in the eleven depart- 
 ments forming the district of the North, which 
 comprises Paris, reached 29 fr. 40 cents ; but 
 the price was then reckoned very high. § Peu- 
 chet gives us a table of the price of wheat in 
 the different departments of France during 
 the month of February 1805, and the mean 
 price of the hectolitre in the above-mentioned 
 district is 16 fr. 55 cents, or 24 fr. 60 cents 
 the septier. || From this period up to 1812, 
 
 * CEuvres de Turgot, tom. vi. p. 182. 
 
 + In. 1789, 1794, and 1795, the price of corn was very high 
 in France, and the lower classes suffered much distress. In 
 1 798 and 1799, too, a scarcity was felt ; but since that period, 
 the prices have been nearly the same as before. The inclu- 
 ding these five years of scarcity in the average from 1788 to 
 1 805, induced M. Silvestre to say in the report we have no- 
 ticed, that the price of wheat had risen one-sixth in France 
 since the revolution. 
 
 £ Statistique Generale de la France, &c. tom. vii. p. 268. 
 
 Peuchet, p. 29 1. || Id. p. 450. 
 
84 
 
 when there was a slight deficiency in the crops, 
 the prices continued to decline . In July 1814, 
 Mr Birkbeck states the price of wheat in the 
 market at Rouen, one of the most populous ma- 
 nufacturing towns in France, as being equal to 
 3 4s. our quarter, which nearly corresponds to 
 14fr. 70 cents the hectolitre ;* and in October of 
 that year, Mr Malthus states, that the average 
 price of the hectolitre in 14 different markets (of 
 Normandy, I presume,) was 16 fr. 21 cents, being 
 24 fr. 31 cents the septier, or 30 s. 8d. our quar- 
 ter : f and it is of importance to observe, that this 
 average was taken after riots had occurred both 
 at Havre and Dieppe on account of the rise of 
 prices, and the quantity of wheat exported. Mr 
 Malthus adds, that, according to all the informa- 
 tion he had obtained, average prices had not been 
 higher in France during the last ten years. | 
 
 The law of 1814, authorising the export of 
 corn from France, ordered that it should cease 
 whenever the home price reached 49s. our quar- 
 ter : and as the object of this law was to conci- 
 liate the landed interest, and to encourage and 
 
 * Tour in France, p. 12. 
 
 t According to Mr Malthus, 38s. our quarter : but this pro- 
 ceeds on the supposition of the par of exchange being 24 fr. 
 to the pound sterling, whereas it is 24 fr. 73 cents. 
 
 X Grounds of an Opinion, &c. p. 13.— — — N. B. The franc 
 is equal to 1 liyre 0 sous 3 deniers. 
 
85 
 
 promote cultivation, we may be certain that 49s< 
 was reckoned a very high price. But, we have 
 already seen, that in 1764, when such powerful 
 motives to fix a high price could not exist, ex- 
 portation Was allowed till it reached 48s. the 
 quarter. This fact of itself sufficiently shews, 
 that the ordinary price of corn previous to 1814, 
 was not higher than it had been previous to 
 1764. 
 
 It may be added, that Mr Young, in his late 
 Pamphlet, unequivocally admits the price of wheat 
 in France has not risen since 1768. 
 
 In a country where neither the population nor 
 tillage is extending, it is evident there can be 
 4 little change in the relative price of corn or but- 
 cher’s meat. Supposing, however, an impulse to 
 be given to the population from an effective de- 
 mand for manufacturing labour, or from the in- 
 troduction of a more extensive and improved 
 system of agriculture, it is certain that the price 
 of butcher’s meat would increase faster than 
 that of corn. The extension of cultivation, by 
 diminishing the quantity of pasture grounds, en- 
 hances the price of cattle ; and, as Dr Smith has 
 stated, they necessarily continue to rise, till such 
 time as it becomes equally profitable to raise 
 them as to raise corn. * But it is not solely by 
 
 * Wealth of Nations, vol. i. p s 343. 
 
86 
 
 the diminution of the number of cattle that an 
 increase in the effective demand for labour en- 
 hances their price : it does so indirectly, by rai- 
 sing the wages of the lower classes, and enabling 
 them to indulge more in animal and other nutri- 
 tive food. Mr Arnould estimated the mean 
 annual consumption of each individual in France 
 previous to the revolution, at 583 liv. of bread, 
 and 80 liv. of flesh; in 1805, Peuchet estimated 
 it at 509 liv. of bread, and 183 liv. of flesh. * And 
 combining this fact of an increased consumption 
 of butcher’s meat, with the great extension of 
 tillage in France, resulting from the more mi- 
 nute division of property, we perceive the true 
 causes of the enhancement of the price of cattle, 
 in which we may rest assured the depreciation of 
 money has not had the slightest concern. 
 
 Although the wages of labour are ultimately 
 dependent on the price of corn, yet particular 
 circumstances may make the one increase or de- 
 cline in price relatively to the other during con- 
 siderable periods. A continued increase in the 
 wages of labour, without a corresponding rise in 
 the price of corn, is decisive of an amelioration 
 in the situation of the great body of the people : 
 And on an average of ten or twelve years, it can 
 only proceed from a much greater demand for 
 
 * Peuchet, p. 377. 
 
87 
 
 labourers, combined with a much better system of 
 cultivation; or what is nearly, though not exact- 
 ly, the same thing, with a much more extended 
 production. 
 
 In 1788, Mr Young estimated the average 
 wages of agricultural labour in France at 19 
 sous, or nearly lOd. per day. Mr Birkbeck in- 
 forms us, that in 1814 its mean price was from 
 Is. 3d. to Is. 8d. or Is. 5 \ d. per day, being a rise 
 of 70 per cent. And as the price of bread is the 
 same now as in 1788, and flesh meat only about 
 one-third dearer, it is indisputable that a vastly 
 increased power over the necessaries and luxuries 
 of life has been vested in the peasantry of France 
 by the revolution. 
 
 This rise in the price of labour has been said 
 to be a consequence of the diminution of the 
 number of labourers, caused by the conscription, 
 &c. But the fact of the population having in- 
 creased under its operation, shews the futility 
 of this remark : It is a consequence not of the 
 losses, but of the increasing wealth and real pros- 
 perity of the whole country. 
 
 “ It is the constant practice,” says Mr Birk- 
 beck, “ of the women of France to perform many 
 of the operations of husbandry, which in most 
 parts of our island are confined to men ; and, 
 from the universal cultivation of the country, 
 there is much more field labour there than with 
 
88 
 
 us ; women are therefore seen in far greater 
 numbers in the fields by the passing traveller. 
 From which, and the concurrent testimony of 
 the gazettes for the last twenty-five destructive 
 years, an Englishman, unacquainted with the 
 habits of the French peasantry, and probably 
 under the influence of political excitement, very 
 naturally infers a deficiency of the male popula- 
 tion. This was a subject we never lost sight 
 of; and from observation and inquiry in every 
 part of our journey, we were fully convinced 
 that the alleged disproportion between the sexes 
 does not exist. The abstraction of men was 
 not felt as a public grievance until the last two 
 years of Bonaparte’s tyranny, when the draughts 
 amounted to a number, as I was informed, con- 
 siderably exceeding a million. * Very many of 
 these, however, as well as of former conscrip- 
 tions, had returned when we visited France. 
 Indeed, the proportion which the French armies 
 bore to the mass of the people, was little more 
 than half the number absorbed by our army and 
 navy, in proportion to our entire population ; 
 and to these we have to add the prodigious num- 
 ber with us employed in commerce, who are 
 
 * A very great number indeed ; but we must recollect that 
 the French Empire then comprised the greater part of Italy, 
 the whole of Belgium and Holland, and some smaller dis- 
 
 victs. 
 
89 
 
 equally abstracted from the home supply ; yet 
 ive are not sensible of a paucity of males.” * 
 
 M. Daru, in the speech we have already quot- 
 ed, took into view, no doubt, the greatly en- 
 hanced cost of colonial produce. The rise on 
 cotton, sugar, coffee, tea, &c. caused by the war, 
 was extremely great, and must have seriously 
 affected the comforts of people in the higher and 
 middle classes. It would, however, be altogether 
 ridiculous to draw any conclusions in favour of 
 the idea of a depreciation in the value of money 
 from that circumstance ; for no sooner had peace 
 been made, than colonial produce immediately 
 fell back to its former price. 
 
 Spain. — The supporters of the opinion of a 
 general fall in the value of money throughout 
 Europe, have laid much stress on the advance 
 said to have taken place in the price of corn in 
 Spain during the last half century. But al- 
 though this advance were as certain as it is 
 doubtful, there are many obvious ways of ac- 
 counting for it, without recurring to this hypo- 
 thesis. 
 
 At the commencement of the eighteenth cen- 
 tury, the Spanish monarchy had reached its 
 lowest point of depression, and during the last 
 
 * Birkbeck's Tour, Appendix, p. 10. 
 
90 
 
 forty or fifty years, it has again been improving. 
 The exertions of La Ensenada and of Campom- 
 anes, effected some reformations in the financial 
 department; and procuring the abolition of a 
 few pernicious restrictions, powerfully contri- 
 buted to revivify the national industry, and to 
 awaken their countrymen to a sense of their true 
 interests. 
 
 At the accession of the Bourbon dynasty, Spain 
 was almost entirely destitute of manufactures, and 
 her internal consumpt and that of her colonies, 
 were supplied by foreigners. But now, notwith- 
 standing of the tax imposed on every sale of 
 commodities, * of the almost total want of canals 
 and of good roads, and of the numberless holi- 
 days that crowd her calendar, — she is nearly 
 able to supply her home market, and exports a 
 considerable quantity of manufactured goods to 
 
 * Called the Alcavala. This is an ad valorem tax, nominally 
 of 14 but really amounting to 6 or 7 per cent, payable on all 
 commodities, both on the raw material, and on manufactured 
 goods. It is exacted every time the property changes hands, 
 and is always rated according to the selling price: Forex- 
 ample, it is exacted from the pasture rents, the cattle again 
 pay it at every sale and re-sale ; and after all, the butcher’s 
 meat pays it when sold to the consumer. The Catalans reck- 
 on themselves happy in having got an oppressive income tax, 
 from which not even the wages of labour are exempted, sub- 
 stituted in place of the alcavala. Bour going Tableau de V Es- 
 pagne. Londres, 1808. tom. ii. p. 16 ; Jovellanos , in tlietrans - 
 lation of Laborde ; Townsend’ .s Travels in Spain , vol. ii. 
 pp. 178—198. 
 
91 
 
 her colonies ;f affording incontestable evidence 
 of the power and eminence to which she might 
 have attained, under a government that would 
 have encouraged and rewarded industry, in place 
 of sedulously fostering the inquisition, supersti- 
 tion, and idleness. 
 
 The improvement of manufactures has been 
 chiefly conspicuous in Catalonia. This province, 
 by particular privileges, enjoys an exemption 
 from the alcavala , and some other ruinous im- 
 posts; and the exertions of Campomanes pro- 
 cured the removal of the holla , characterised by 
 Mr Townsend as the worst impediment to ma- 
 nufactures the blind avarice of sovereigns ever 
 invented. Since that auspicious period, the pro- 
 verbial industry of the Catalans has been exert- 
 ed with more than its ancient vigour. Unfet- 
 tered by impolitic restraints, and permitted to 
 set their own value on their commodities exposed 
 to sale, their industry is free; while that of less 
 favoured provinces, harassed incessantly by the 
 collectors of the revenue, and the interposition 
 of the magistrate with his assize, is crippled in 
 all its operations. 
 
 Silk goods are manufactured to a great extent 
 in Catalonia, and it nearly engrosses the whole 
 of the Spanish trade in weaving and printing 
 
 + Laborde’s View of Spain, vol. iv. p. 369. 
 
cottons. In 1790, a factory for spinning cottoft 
 was erected at Barcelona, the flourishing capital 
 of this province ; and in about fifteen years, there 
 were no fewer than 100 similar establishments 
 in that city, and a still greater number in the 
 adjoining country.* 
 
 The Spanish West Indian and American trade, 
 after being long confined to Seville, was, in 1 720, 
 transferred to Cadiz, and excluded from the 
 other ports. While the trade languished under 
 this restraint, a very few ships sufficed to carry 
 it on, and it was of almost no consequence to the 
 state. The absurdity of the restriction at length 
 became obvious ; and, after various modifications, 
 in 1739 and 1764 it was totally abolished in 
 1778 by Charles III. who, at the suggestion 
 of the celebrated Galvez, threw open the trade 
 of America to all his subjects, except the Biscay - 
 ans.f The beneficial effects of this edict were 
 unprecedented ; the exports to America quadru- 
 pled in the course of ten years, and have conti- 
 nued to increase. In 1788, Spain had only four 
 or five hundred merchant ships ; but previous 
 to the late convulsions, Catalonia itself possess- 
 ed above a thousand ships, and the city of Cadiz 
 more than a hundred ship-owners. 
 
 In 1768, the inhabitants of Spain, of all ages 
 
 * Laborde, vol. iv. p. 351. 
 
 t Townsend, vol. ii. p. 400, 
 
93 
 
 and sexes, were estimated at 9,307,000. By the 
 census of 1787, this number was found to have 
 increased to 10,144,000; and, according to La- 
 borde, the census of 1797 and 1798 gives a po- 
 pulation of above 12 millions.* 
 
 When the removal of a few restrictions on 
 trade has so greatly increased the national indus- 
 try and population, we may easily conceive what 
 would have been the present state of Spain, if 
 the wretched nature of her domestic policy, which 
 effectually counteracts and oppresses every spe^ 
 eies of rural industry, had been totally changed. 
 We shall very briefly delineate a few of its more 
 striking peculiarities. 
 
 The immense extent of property held in Spain 
 by a few nobles under the strictest entail, and 
 the still greater extent of territory belonging to 
 the church and to corporations, are ranked by 
 Jovellanos f in the first class of obstacles to agri- 
 
 * These estimates are all very loose, and cannot be much 
 depended on; but the fact of a great increase since 1750 is 
 unquestionable. 
 
 t This excellent person was imprisoned six years, for the 
 sole offence of publishing his invaluable Memoir on the best 
 means of promoting agricultural improvement. It must ever 
 be lamented, that all the blood and treasure expended by the 
 Spaniards and the English in the late peninsular war, should 
 have only served to re-establish the detestable tyranny under 
 which that unhappy country had so long groaned. The con- 
 temptible bigotry, base ingratitude, and ruffian cruelty of 
 ferdinand, will ever be remembered; but for the welfare of 
 
94 
 
 culture. General information has not there, as 
 in Britain, pointed out to heirs of entail, that 
 their own interest is inseparably connected with 
 the proper management of their estates, and that 
 to draw a great revenue from them, it is neces- 
 sary they should be well managed. The needy 
 and imbecile nobleman who lives at court, en- 
 trusts the direction of his affairs to an agent in 
 the country, with the sole instruction to remit 
 all the money he can procure to the capital, to- 
 tally regardless of the welfare of his tenants. It 
 is not to be expected, that in such a state of 
 things, agriculture can make much progress ; 
 and the law rendering void the leases of entailed 
 estates on the death of the granters, seems to 
 have been ingeniously devised for its total de- 
 struction. 
 
 The advantages resulting from the freedom of 
 an internal corn trade, are nearly unknown in 
 Spain. * The superfluous produce of one part of 
 
 humanity, it is devoutly to be wished, that historians may 
 soon have to record his legitimate and exemplary punishment. 
 
 * In 1752, the Marquis de la Ensenada succeeded in pro- 
 curing an abolition of some restrictions on the internal corn 
 trade; but as late as 1804*, none but common carriers were 
 permitted to buy the grain of the country to sell it again, 
 without a special licence from government. ( Edin . Rev. No. 
 ix. p. 135.) Exportation to foreign ports was authorised in 
 1765 , was again forbidden, and subsequently permitted in 
 1 783 ; but the multiplicity of custom-house regulations, ren- 
 ders this liberty, like the former, merely nominal.— Towns- 
 end, vol, iii. p. 259. Bourgoing , tom. ii. p. 165. 
 
the country cannot, without much difficulty, be 
 employed in making up any deficiency in the 
 crops of another. The rapid progress of com* 
 merce and manufactures in Catalonia, has, not- 
 withstanding of the improvement of its agricul- 
 ture, caused an increased importation from France 
 and other foreign countries. Had the internal 
 commerce in grain been unrestricted, this supply 
 would undoubtedly have come from the fertile 
 province of Castile, where agriculture has great- 
 ly declined since the transfer of its commerce and 
 artisans to Barcelona, and the consequent dimi- 
 nution of the home demand. 
 
 The circumstance of the trade in corn between 
 the different divisions of Spain being greatly 
 shackled, w r ould of itself serve tocausegreat differ- 
 ences in its prices. But the operation of these re- 
 strictions is powerfully assisted by the miserable 
 state of the roads, and by the extreme difficulty of 
 transporting agricultural produce to any distance. 
 Thefanega of wheat in 1757 sold at Valencia at six 
 reals, and brought at St Andero, the nearest mar- 
 ket, 22 reals. * Even now, the corn purchased in 
 the markets of Leon, and sent to the seaports and 
 capital of the Asturias, sells for about 20s. lOd. per 
 load more than at the place of purchase, though 
 the distance is not above 20 leagues, f Hence 
 
 * Laborde, vol, iv. p, 291?. t Id. vol. iv. p, 288, 
 
96 
 
 it is evident, that a knowledge of the price of 
 corn in Spain at a particular market, cannot by 
 any means enable us to judge of its average 
 price throughout the country. 
 
 In no country in Europe are there such fluc- 
 tuations in the markets as in Spain. The trade 
 of corn merchants and middlemen being in a 
 manner unknown, there is little providence used 
 in the distribution of the crops. Large landed 
 proprietors and government frequently purchase 
 and store up corn, which they again sell to the 
 people, when the price has risen sufficiently high 
 to tempt them to part with it. These purchases, 
 however, are not made when corn is plenty, but 
 when there are strong grounds to believe the 
 crop deficient ; and this circumstance quickening 
 the apprehensions of the people, the very methods 
 taken to prevent a famine, tend to increase alarm, 
 and to bring it on. Mr Townsend mentions, 
 that in 1652 wheat sold in Seville at 15s. Sd. a, 
 bushel, and in 1657 so low as Is. 4d. * In May 
 1 800, wheat sold at Medina de Rio Seco at about 
 28 reals the fanega ; and in May 1804, it brought 
 no fewer than 155 reals, f Such sudden varia- 
 tions are alike prejudicial to the agriculturists 
 and consumers, ruin frequently assailing the one* 
 and famine the other. 
 
 * Townsend, vol. ii. p. 220< 
 
 t App. Bull. Rep. 
 
97 
 
 There is a still more disgusting feature in the 
 internal policy of Spain. The proprietors of 
 the great sheep flocks called the Mesta , in many 
 provinces entirely prevent any pasture land from 
 being converted into tillage ; and not satisfied with 
 a monopoly of the grass, they even prevent the 
 crop lands from being enclosed , lest the migra- 
 tions of the flocks should be obstructed. * It is 
 a necessary consequence of these absurd regula- 
 tions, that unless the com raised on the lands 
 formerly in cultivation is adequate to supply the 
 increased population with food, its price must 
 rise in order to induce a greater importation. 
 
 It was not, therefore, requisite to suppose a 
 depreciation in the value of money to explain 
 any increase that may have taken place in the 
 price of corn in Spain. The fact of its popula- 
 tion having of late considerably augmented, and 
 of the existence of those obstacles to agricultu- 
 ral improvement we have cursorily noticed, are 
 of themselves fully sufficient to account for the 
 rise. 
 
 Among the valuable tables printed in the Ap- 
 pendix to the Bullion Report, is one of the prices 
 of wheat at Seville from 1675 to 17 64> inclusive, 
 and during that period there is no rise . It is 
 
 * Jovellanos’s Essay. — In 1788, the government authorised 
 the enclosing of kitchen-gardens, and lands appropriated to 
 the culture of vines and seeds. 
 
 G 
 
98 
 
 much to be regretted that this table has not been 
 continued to a later date, as it would have shewn 
 us the exact rise since 1764 at a single point, 
 which, from the circumstances already mention- 
 ed, cannot be learned by a comparison of the 
 prices in any other market since that date. The 
 tables of the price of wheat in Castile, Estrema- 
 dura, Andalusia, &c. from 1788 to 1792 inclu- 
 sive, indicate a fall in that period : and if any 
 inference could be drawn from the prices in the 
 market of Medina de Rio Seco* from 1793 to 
 1801 inclusive, as compared with any of the 
 above, it would shew a still greater fall. 
 
 Mr Jacob states, “ That taking two averages 
 in Spain from 1793 to 1798, and from 1799 to 
 1 804 inclusive, the average price of wheat of the 
 latter period above the former was about 58 per 
 cent., and in barley 40 per cent.” f — This is a 
 rapid fall indeed in the value of money, and 
 ought to have stimulated the gentlemen who 
 have reasoned from it to inquire, whether there 
 was no other circumstance that could explain it. 
 Bourgoing informs us, that the years 1803 and 
 
 * From 1793 to 1801 inclusive, prices have somewhat fal« 
 len in this market : The average price of the fanega of wheat 
 in the month of May in that interval was 39 reals vellon : in 
 Old Castile from 1788 to 1792 it was 45 reals, and in Estre- 
 madura for the same period, 42.17 — App. to Bull . Rep . Nos. 
 31, 32. 
 
 f Quoted by Mr Young in his Inquiry , 
 
99 
 
 1 S 04 < were anomalous in the annals of Spain : 
 Contagious diseases, the inclemency of the hea- 
 vens, and famine, laid waste the whole country : 
 above nine millions of fanegas of wheat were im- 
 ported from abroad, and the price of corn rose 
 to six or seven times its mean price.* — Mr Jacob 
 was not surely ignorant of these facts, and he 
 ought to have made allowance for them. He 
 must know, that unless deduction is given for 
 years of absolute famine, in the striking of ave- 
 rages/or short periods, they can communicate no 
 information as to the state of prices at different 
 epochs. 
 
 In estimating the rise of prices in Spain, the 
 various alterations in the weight and fineness 
 of the coin must be carefully kept in view. A 
 real, such as now circulates, is valued in money 
 tournois by Laborde at 5 sous, and one of the 
 old reals, or such as circulated previously to 1772, 
 at 6 sous 3 deniers : This will explain a rise in 
 the money price of corn since that time of twenty- 
 
 jive per cent, f 
 
 / 
 
 * Bourgoing, tom. ii. p. 162. 
 
 t In Spain the coin has been debased to a greater extent than 
 in any other European state. The maravedi, which is now only 
 equal to about T 4 T J T of an English penny, in 1220 weighed 84? 
 grains of gold, and of course was as valuable as 14s. of our 
 present money. (Lord Liverpool on Coin, p. 111.) Had La- 
 borde been aware of this fact, he would not have stated as an 
 example of the former low price of grain in Spain, that in 
 
100 
 
 On the whole, it appears certain, that from 
 17 86, when Mr Townsend travelled in Spain, up 
 to the commencement of the late convulsions, 
 there had not been any rise of prices there ; and the 
 previous rise, which is but inconsiderable, is suf- 
 ficiently explained, from the peculiar political cir- 
 cumstances of the country, and from the lower- 
 ing the value of the coin. 
 
 Italy — In Italy the price of wheat has con- 
 siderably increased during the last thirty years ; 
 but this is an effect of the free corn trade lately 
 enjoyed by that country, allowing its produce to 
 find its level in the European market. Were the 
 exportation of corn from Dantzic forbidden, its 
 price would fall ; but no person would, therefore, 
 say that money had risen in value ; repeal the 
 restriction, and it would again rise, but the value 
 of money would not on that account be diminish- 
 ed. The fact that in ordinary years, Italy exports 
 large quantities of corn to Marseilles and Barce- 
 lona, where the price has been stationary, proves 
 that the increase of its home price is not owing 
 to any fall in the value of money, but solely to 
 an extension of the demand. 
 
 If the gentlemen, who so charitably endea- 
 vour to console our starving manufacturers for 
 
 1280, during a season of scarcity, wheat sold at 12 maravedis 
 the fanega. 
 
101 
 
 the high price of corn in Britain, by telling them 
 it has also risen in Italy, could prevail on Par- 
 liament to throw open the corn trade, it would 
 then be seen that the cases are totally dissimilar. 
 Our prices would fall to the level of the Euro- 
 pean market, because they are kept up by a 
 fictitious system. In Italy the prices rose to 
 that level, because they had been fictitiously de- 
 pressed.* 
 
 Sismondif informs us, that the law against 
 the exportation of corn, framed by the first grand 
 Dukes of the Medici family, entirely ruined the 
 agriculture of Tuscany, which previously pro- 
 duced four times as much grain as was necessary 
 for the consumption of the inhabitants; after 
 the repeal of this prohibition by Leopold in 1775, 
 agricultural improvement of all kinds made asto- 
 nishing progress, and in the course of a few years 
 the whole country exhibited a different appear- 
 ance. During the French domination in Italy, 
 the corn trade was unrestricted. £ 
 
 * The first part of Filangierfs excellent work was publish- 
 ed in 1780 ; and he affirms that grain then sold in Italy for 
 only the half, or the third of its price in England. Tom. i. 
 p. 293, Filadelfia (Leghorn) 1807. 
 
 + Tie la Richesse Commerciale, tom. ii. p. 129. 
 
 * I regret much that the nearly total want of Italian works 
 in this place, and the difficulty and expence of procuring 
 them, has prevented me from obtaining any late accurate in- 
 formation respecting the state of agriculture, manufactures, 
 &c. in that country. Mr Young is almost the only English 
 
102 
 
 Austria. — The late comprehensive and excel- 
 lent work of Marcel de Serres, * furnishes satis- 
 factory and authentic evidence of the rapid im- 
 provement of agriculture and manufactures 
 throughout every part of the Austrian dominions. 
 Our limits will only permit us to notice a very 
 few of the most interesting of its varied details. 
 
 In Austria Proper, manufactures have impro- 
 ved more rapidly than agriculture. Cotton fac- 
 tories have been built in various parts of the 
 country. One at Pottendorff, erected in 1802 , 
 is minutely described by Serres, and is on a very 
 large scale. Many others are mentioned, whose 
 machinery is said to be excellent. They are ge- 
 nerally managed by Englishmen, and afford a 
 convincing proof of the folly of trusting to the 
 comparative ingenuity of artificers, to preserve to 
 any country its superiority in manufacturing, 
 against all other disadvantages. 
 
 The linen manufacture is in a more flourishing 
 state in Bohemia, than in any other part of the 
 Austrian empire, or perhaps of Europe. Count 
 Hatzfield, Minister of Maria Theresa, and Jo- 
 seph II. contributed greatly to its improvement, 
 
 traveller who has paid any attention to these subjects ; the 
 rest have generally been contented with describing churches, 
 antiquities, &c. which had been a hundred times described 
 before. 
 
 * Voyage en Autriche, ou Essai Statistique, &c. sur cet 
 Empire. 4 tomes, 8vo. Paris 1814. 
 
103 
 
 by bringing skilful workmen from Silesia, Saxo- 
 ny, &c. who instructed the Bohemians, and ac- 
 celerated their progress to the state of perfection 
 they have now attained. The following state- 
 ment of the pieces of linen cloth manufactured 
 and sold at Trattenau, from 1805 to 1809 inclu- 
 sive, shews at once the astonishing extension 
 both of the supply and demand for this article : 
 
 Exported to Exported to Sold in 
 
 Years. Silesia. other countries. Bohemia. Total. 
 
 1805 . . . 11,145 . . . 5,800 . . . 2,626 . . . 19,571 
 
 1806 . . . 16,837 . . . 6,660 ... 14-6 .. . 23,643 
 
 1807 . . . 15,525 . . . 8,463 . . . 3,350 . . . 27,338 
 
 1808 . . . 10,448 . . . 12,024 . . . 4,978 . . . 24,448 
 
 1809 ... 400 .. . 31,865 . . . 1,256 . . . 44,421 * 
 
 The Bohemian woollen manufacture is of con- 
 siderable importance, and is in a state of rapid 
 improvement. In 1809, about 50,000 persons 
 were employed in the spinning of wool, and the 
 exported cloth was equivalent to a considerable 
 sum. 
 
 The cotton manufacture has lately been intro- 
 duced, and is now firmly established in this coun- 
 try. In 1808, seven large factories were erected 
 at Prague on Arkwright’s principle ; and this 
 city employed 5,830 looms, and 8,764 weavers in 
 that branch of industry. 
 
 Serres estimates the total number of weavers 
 in Bohemia in 1810 at 223,000 ; f and as about 
 
 * Tom. iii. p. 83. t Tom. iii. p. 74. 
 
104 
 
 322,000 individuals* were then employed in 
 spinning flax, f above 400,000 must have been 
 employed as spinners in all the different manu- 
 factures. 
 
 Bohemian agriculture sustained a check by the 
 restrictions imposed on the importation of its 
 corn into Prussia and Saxony ; but, owing to the 
 extension of the home demand, and to the ineffi- 
 cacy of the prohibitions themselves, this check 
 was only temporary. J 
 
 Education, and the culture of the mind, have 
 not been neglected in Bohemia. In 1810, there 
 were in that kingdom 2,544 primary schools, 54 
 secondary schools, 29 principal schools, and one 
 Normal school established at Prague. 
 
 Agriculture has been exceedingly improved in 
 Moravia ; and Serres assures us, that in this cen- 
 tury it produces at least one-fifth part more than 
 in the last. In manufactures of every kind, im- 
 provement has not been less marked. There is 
 not a single town in which the number of artizans 
 has not greatly increased ; and the weavers have 
 at least quintupled throughout the province in 
 the course of these few years. The nobility en- 
 
 * Tom. i. p. 347. 
 
 t Only 249,540 were so employed in 1782. Hoeck Aper- 
 $u Statietique d’Allemagne. 
 
 X In 1771, Bohemia contained 2,451,848 inhabitants, 
 (Hoeck). In 1810, it contained 3,142,297- 
 
105 
 
 courage and patronise manufactures, and have 
 founded schools where young people are instruct- 
 ed in different trades. The most improved ma- 
 chinery is every where to be met with, and the 
 exportation of every species of woollen cloth has 
 vastly increased. Nine cotton factories had been 
 erected in Moravia in 1810. One at Lettowitz 
 employed above 2000 individuals, and several of 
 the others were not inferior. Hungary, Lower 
 Austria, Italy, and the Levant, are the principal 
 markets for the manufactures of this flourishing 
 district. 
 
 The vassalage, or rather slavery, existing in 
 Hungary, and the privileges of the higher classes, 
 oppose powerful obstacles to the advancement of 
 industry. The example of the neighbouring 
 provinces, and the late encouragement of the go- 
 vernment, have, however, had some effect in 
 opening the eyes of the Hungarian nobles to their 
 real interests. Mr Town son estimated the ordi- 
 nary price of wheat in Hungary, in 1793, at less 
 than 16s. per quarter.* In one good year the 
 inhabitants often reaped as much as was necessa- 
 ry for the consumption of two, but the want of 
 a market effectually prevented any improvement 
 in their agriculture. It is pleasing to have to 
 add, that the ruinous restrictions on the export 
 
 * Travels in Hungary, p. 142. 
 
106 
 
 of Hungarian wines and other produce, were fi- 
 nally abolished in the diet held at Presburg in 
 1801 . * 
 
 Since Austria acquired possession of Gallicia, 
 the state of the peasants, and consequently of 
 agriculture, have been singularly ameliorated, f 
 The regulations of Joseph II. in favour of the 
 oppressed peasantry, — his institutions for promo- 
 ting education, — and the example of the nume- 
 rous German colonists settled in different parts 
 of the country by his truly great munificence, 
 have all had the happiest effects. 
 
 According to Serres, the present population of 
 the Austrian empire, including the Venetian ter- 
 ritories, but exclusive of the Milanese, will a- 
 mount to about 27 millions. J 
 
 The immense issues of paper during the war, 
 expelled almost all the coin from Austria, and 
 caused a proportional fall in the exchange. § 
 Great and meritorious exertions have, however, 
 been lately made to withdraw this paper from 
 circulation ; and they have had the effect of im- 
 proving the exchange, of reducing the paper price 
 of commodities, and of determining a current of 
 specie into the country 
 
 Serres does not mention any rise of prices in 
 
 * Bibliotheque de Voyages, tom. ii. p. 285. 
 
 t Malte Brun. Tableau de la Pologne, p. 352. 
 
 J Serres, tom. i. p. 25. $ Id, tom. i. p. 287. 
 
107 
 
 Austria, though it is certain that the nominal 
 price of all commodities, bought with the depre- 
 ciated paper money, was proportionally raised. 
 But the circumstance of this empire exporting 
 an immense quantity of corn to Saxony and Si- 
 lesia, countries i*i its* immediate neighbourhood;* 
 and to remote countries, by ithje distant ports of 
 Dantzic, Trieste, and Odessa;, renders it certain 
 that bullion prices there, are yet far below the 
 level of the greater part of the continent. 
 
 Prussia. — The rendering Prussia as much as 
 possible independent of foreign countries, for 
 various species of manufactures, was a lead- 
 ing object in the domestic policy of Frede- 
 rick the Great. In order to accomplish this, he 
 loaded many foreign commodities with heavy 
 duties, and established monopolies in several 
 branches of commerce. But the rigid and admi- 
 rable economy of that Prince, lessened the ill 
 effects of these impolitic regulations ; and al- 
 though trade has not hitherto made a very rapid 
 progress in Brandenburg and some other parts 
 of Prussia, the country has been considerably 
 improved, and the population augmented. 
 
 The linen manufacture of Silesia, long famous 
 throughout the world, has been prodigiously ex- 
 tended since Prussia obtained possession of that 
 
 * Riesbeck Voyage en Allemagne, tom. ii. p. 1 31 . 
 
108 
 
 province. The value of the linen exported from 
 Silesia in 1740, did not exceed three millions of 
 rixdollars.* In 1796, 26,456 looms, and 40,603 
 workmen, were employed in this branch of in- 
 dustry, whose manufactured produce was valued 
 at 8,852,678 *rixdoll'ars, the exports amounting 
 to 6, 748,029. f The neutrality enjoyed by Prus- 
 sia during* a great part, of the late war, was ex- 
 tremely favourable to’ this manufacture ; and in 
 1805, previous to the unfortunate campaigns with 
 the French, the value of the exported linen had 
 increased to between 16 and 20 millions of rix- 
 dollarst 
 
 At Grunberg, and other towns in Silesia, the 
 broad cloth manufacture is carried on to a consi- 
 derable extent. The finest kind of cloth is said 
 to look equally well with that of England, and 
 to be about fifty per cent . cheaper. || 
 
 Although Silesia is an inland province, it is 
 well situated for commerce. The Oder running 
 through it in a longitudinal direction, affords a 
 cheap conveyance for its produce to the Baltic ; 
 and the canal joining the Oder and the Elbe, 
 brings its manufactures to Hamburgh, from 
 whence they are exported to the Mediterranean, 
 
 * Oddy’s European Commerce, p. 217. 
 
 + Hoeck Apergu Statistique d’Allemagne. 
 } European Commerce, p. 217. 
 
 || Adams’ Letters on Silesia, p. 18. 
 
109 
 
 to North and South America, and the other quar- 
 ters of the globe. The low wages of labour, the 
 great industry of the inhabitants, and the cheap- 
 ness of provisions in Silesia, will insure the 
 prosperity of its manufactures in a season of ge- 
 neral tranquillity. * 
 
 In 1791, the inhabitants of Silesia amounted 
 to 1,747,06.5, f and in 1805 to 2,065,435 ; t a 
 rate of increase, Mr Adams observed, as extra- 
 ordinary for its rapidity in Europe, as it would 
 be for its slowness in America. 
 
 In the department of Posen, and in the whole 
 of that part of Prussian Poland contiguous to 
 Silesia, manufactures have been successfully in- 
 troduced ; and the condition of the peasantry 
 has been greatly improved since the partition. [| 
 The greater part of the com exported from 
 Prussia, as well as from the whole of the im- 
 mense country traversed by the Vistula, is shipped 
 at Dantzic. We shall mention its price at diffe- 
 rent epochs, after inquiring into the progress of 
 industry, and the value of money in Russia. 
 
 In 1805, the entire population of the various 
 provinces comprised in the Prussian monarchy 
 
 * An interesting account of the Silesian system of educa- 
 tion, may be found in Mr Adams’ work, or in the Edinburgh 
 Review, No. 9 . 
 
 t Hoeck. 
 
 J Annales des Voyages, tom. i. p. 254*. 
 
 |1 Tableau de la Pologne, pp. 115, 352. 
 
110 
 
 amounted, according to Krug, to 9,640,000. * 
 Since that period, Prussia has ceded part of her 
 Polish acquisitions to Russia ; but this loss has 
 been compensated by her obtaining possession of 
 extensive districts in Saxony. 
 
 Russia. — The progress of civilization in Rus- 
 sia, though considerable, has not been so rapid 
 as might have been expected. A miserable state 
 of vassalage still exists in almost every province 
 of that vast empire. The peasants are not even 
 adscripti glebce, but are as much at the disposal 
 of their master as implements of husbandry, or 
 as herds of cattle. The fortune of a Russian 
 nobleman is estimated chiefly by the number of 
 his boors, f A portion of land is allotted to each 
 family, and they are obliged to pay a certain 
 sum to their master as rent or tax. If they cul- 
 tivate and improve the land, their rent is imme- 
 diately raised, or what more commonly happens, 
 a portion of their farm is assigned to another 
 family. The boors are not, therefore, interested 
 in the improvement of the soil ; and, as any ca- 
 pital they acquire by their industry, may be seiz- 
 ed by their masters, if they happen to make any 
 
 * Annales des Voyages, tom. i. p. 217. 
 
 + Clarke’s Travels, 8vo. edit. vol. i. p. 217 ; Malthus’ Essay 
 on Population, vol, i, p, 368. 
 
 
Ill 
 
 money, they trust it to earth, and conceal the 
 precious deposit with the utmost care. * 
 
 Atliough these facts ought to make us receive 
 with extreme caution, the exaggerated and in- 
 flated accounts of the improvement and increas- 
 ed population of the Russian Empire, published 
 by foreigners more with a view to ingratiate 
 themselves with the government, than from a 
 regard to truth ; still, it must be allowed, that a 
 decided improvement has taken place, and that 
 liberal ideas are gaining ground. 
 
 The late Empress gave great encouragement 
 to Germans to settle in her territories, and seve- 
 ral thousands emigrated thither. This measure 
 has been attended with the best effects. An ex- 
 ample of improved cultivation being set before 
 the nobles and their vassals, many of both orders 
 became sensible to its advantages ; and, as old 
 prejudices decay, its influence will be more wide- 
 ly felt. 
 
 No circumstance shews better the change of 
 opinions amongst the Russian nobles, than the 
 late emancipation of the boors in Esthonia and 
 Livonia ; a measure said to have been taken by- 
 Alexander, at the request of the nobles them- 
 selves. 
 
 Boetticher estimates the population of Old Rus- 
 sia, in 1790, at 25 millions; and adding 7 mil- 
 * Coxe’s Travels, vol. iii, pp. 154 >, 157. 
 
112 
 
 lions as the population of the annexed Polish 
 territories, Taurida, Finland, &c. ; and 3 millions 
 as the probable increase of the former popula- 
 tion since 1790, the total of the present inhabit- 
 ants of the Russian empire will be about 35 mil- 
 lions. Mr Coxe’s estimate is not very different. 
 (33,863,360.)* 
 
 In a country like Russia, but lately emerged 
 from perfect barbarism, and now possessed of a 
 considerable trade, it would certainly be very ex- 
 traordinary if the price of exchangeable produce 
 had not risen. Bullion must always, in traffick- 
 ing with poor nations, be one of the most advan- 
 tageous articles of export. The low wages of 
 labour, and the cheapness of commodities, ren- 
 ders specie there doubly valuable ; for the value 
 of produce being low, that of money is high, 
 and vice versa. This circumstance has so long 
 kept up a demand for specie in the India trade. 
 The wages of labour were there so small, and 
 the manufactures necessary for the inhabitants 
 prepared at so little expence, that the nations of 
 Europe could scarcely export any produce, w hose 
 money price was not too high for the market ; 
 they, therefore, exported their cheap bullion, and 
 have in that way carried on a commerce equally 
 
 * Messrs Tooke and Hermann reckon the population of the 
 JRussian Empire at above 40 millions ; the gross exaggeration 
 of their estimates, has, however, been repeatedly pointed out. 
 
 1 
 
113 
 
 fbr the advantage of all parties. The same is 
 the case with Russia, except that the inferior 
 skill of its inhabitants, and the want of proper 
 machinery, render them dependant for a supply 
 of many necessary articles, on their more ingeni- 
 ous and wealthy neighbours. Still, however, 
 much of her exports are paid with bullion ; it is 
 the most desirable commodity her merchants can 
 import, as the demand for it is steady and per- 
 manent. 
 
 In Mr Oddy’s table of the exports "and im- 
 ports of Russia by the Baltic, for the year 1802,* 
 we find an importation of gold and silver to the 
 amount of upwards of four millions of roubles, 
 which, valuing the rouble at 3s. f is above 
 L. 600,000 sterling; and, in the same year, the 
 importation of these metals by the Black Sea, is 
 estimated at 183,989 roubles. As a considerable 
 quantity of specie must have entered the empire 
 by other channels, and by the imports of indi- 
 viduals that do not appear in the custom-house 
 books, we cannot value its annual influx into 
 Russia, (exclusive of the produce of the mines) 
 
 * European Commerce, p. 111. 
 
 t Previous to 1778, the rouble was worth 4s. sterling. Its 
 value has since been lowered ; and, according to mint assays, 
 the rouble is now only worth 3s. 2d. This circumtances must 
 always be attended to in estimating the rise of prices in Rus- 
 sia. See Advertisement to 5th edit, of Coxe’s Tarvels, 
 
 H 
 
114 
 
 at a less sum than One million sterling ; or at 
 nearly on e-ninth part of the produce of the Ame- 
 rican mines, when at its maximum. 
 
 This influx of bullion has undoubtedly stimu- 
 lated the industry of the Russians. They are 
 daily becoming more accustomed to an inter- 
 course with foreigners, more sensible of the im- 
 portance of commerce, and a greater production 
 of commodities is taking place. In Siberia it- 
 self, civilization has made some progress ; Latin, 
 French, Geography, &c. are taught at Tobolsk ; 
 and Kotzebue was present at the representation 
 of a play in that city. 
 
 After all, the price of corn in Russia, (and 
 
 every thing now stated applies with almost equal 
 
 effect to Poland) is very considerably below its 
 
 price in more civilized states. “ At Archangel,” 
 
 says Mr Oddy, “ the average price of wheat has 
 
 been for the last fifteen years, only about 26s. 
 
 the quarter ; some years it has been about 20s. 
 
 per quarter, but then its quality is very inferior. 
 
 In other parts of Russia, it has been much the 
 
 same in price, but of better quality, although 
 
 these supplies were rather higher by way of the 
 
 Baltic ports. At Dantzic, the Poles reckon that 
 
 they cannot bring down their wheat to pay them, 
 
 unless they obtain about 32s. 6d. per quarter, and 
 
 19s. per quarter for rye ; and the quality of the 
 
 wheat is such, that the better sorts sell nearly as 
 i 
 
115 
 
 high in our markets, as our own better sorts. 55 * * * § 
 Mr Oddy’s work was published in 1 805 ; and 
 Mr Malthus, in a pamphlet published in 1814, f 
 informs us, that the price of wheat at Dantzic 
 had not increased in the interval, and that it 
 might still be had on the terms mentioned by 
 Mr Oddy. 
 
 In a pamphlet printed at Warsaw in 1807, it 
 is stated, that the price of wheat in Poland has 
 doubled every 50 years of the last 150, and that 
 a korzec of oats, which only cost 2i florins pre- 
 vious to 1700, cost 12 florins in 18004 But in 
 this statement, no allowance is made for the suc- 
 cessive and multiplied degradations of the coin ; 
 and as it is certain that in 1650, a florin con- 
 tained four times as much silver, or was intrin- 
 sically worth four times as much as a florin of 
 the present day ; $ it is clear the oats which cost 
 12 florins in 1800, would have sold for at least 
 nine florins of equal weight and fineness in 
 1650. 
 
 The excess of circulating paper in Russia, and 
 the absurd principles on which its whole bank- 
 ing system is conducted, have at particular pe- 
 riods rendered its nominal exchanges very un- 
 
 * European Commerce, p. 51 6. 
 
 ■+ Observations on the Effects, &c. p. 17. 
 
 * Annales des Voyages, tom. i. p. 41& 
 
 § Tableau de la Pologne, p, 99. 
 
116 
 
 favourable, and have produced a great agio or 
 premium in favour of gold : Hence, in calculating 
 the price of Russian produce, this agio must al- 
 ways be taken into account, the price being so 
 much more or less according as the payment is 
 made in depreciated paper, or in specie. 
 
 Mr Young estimates the rise on Russian wheat 
 from 1794 to 1805, compared with the period 
 from 1781 to 1798, at 37 per cent. ; but Russian 
 paper money in 1795 and 1796 was depreciated 
 49 per cent., and in 1799 no less than 58 per 
 cent ;* and as Mr Young does not seem to have 
 been at all aware of this fact, and does not make 
 any allowance for it, his estimate is evidently 
 without any weight, though probably true to a 
 certain extent. In 1800 and 1805, the crop in 
 the Crimea was so very abundant, that half the 
 produce was given to those who gathered in the 
 other half :f The rise, therefore, of 83 per cent, 
 mentioned by Mr Young as having taken place 
 in the price of wheat there, between 1813 and 
 1815. must doubtless be ascribed to a failure in 
 the crops ; an event, owing to the sudden changes 
 of the weather, of very frequent recurrence in 
 that peninsula. 
 
 The Empress Catharine’s conquests from Tur- 
 
 * European Commerce, pp. 173, 198. 
 
 t Thomson’s Annals of Philosophy, vol. iii. p, 271. 
 
117 
 
 key, though attended with unheard of devasta- 
 tions and cruelties, by securing the unmolested 
 navigation of the Don, Dnieper, Dniester, and 
 other rivers, and a free passage from the Black 
 Sea to the Mediterranean, have been of infi- 
 nite advantage to the southern provinces of the 
 Itussian empire. Nicholaef, and Odessa, have 
 arisen with nearly the same rapidity as Peters- 
 burgh. In the latter, so late as 1 795 , only a very 
 few houses were built; but in 1804 , it contained 
 nearly 3000 houses, and about 15,000 inhabi- 
 tants.* The principal exports consist of corn, 
 salt-beef, timber, &c. The important improve- 
 ments lately made in the navigation of the 
 Dniester, have induced the Poles to send a consi- 
 derable portion of their produce down that river, 
 whence it is conveyed by lighters to Odessa, and 
 
 * European Commerce, p. 169. — “ Odessa continues year- 
 ly to flourish, and that port will become as important for the 
 commerce of the southern provinces of the empire as Peters - 
 burgh is for the northern. In this year ( 1816) up to the 28th 
 of June, 498 ships had entered Odessa, bringing merchandise 
 to the value of 1^ millions of roubles, besides a very large 
 quantity of specie. During the same period there sailed 24 6 
 ships laden with Russian produce to the amount of 15,220,000 
 roubles, including above 450,000 tschetverts (524,000 quar- 
 ters) of wheat. Odessa at present contains 35,500 inhabi- 
 tants, and seven churches.” — Literary Panorama, vol. iv. No. 6. 
 Some interesting details respecting the trade of the Black Sea 
 in general, and of Odessa in particular, may be found in an 
 “ Essai sur le Commerce, &c. de la Mer noire,’* Paris, 180,1 
 
118 
 
 then shipped for the various markets in the Le- 
 vant and the south of Europe. 
 
 The increasing price of produce in Russia does 
 not indicate a fall in the value of money in other 
 countries. It is in the natural course of things 
 that money should constantly tend to a level, or 
 commodities to an equality of price amongst na- 
 tions trading together. If a perfect freedom of 
 commerce were established, this equalization 
 would be more speedily brought about ; all na- 
 tions would then have it in their power to pur- 
 chase in the cheapest market, and the extended 
 demand would continue till prices there rose to 
 the same height as in other places. The prohi- 
 bitive system has but little ultimate effect on this 
 principle. No person believes that if Britain 
 can continue to supply Europe with cottons of 
 equal quality cheaper than France, America, or 
 any other country, she will cease to preserve 
 her superiority in the market. The case is ex- 
 actly the same with the corn, the flax, and the 
 tallow of Russia : While other states can pur- 
 chase these commodities cheaper from her than 
 they can raise them at home, they will, generally 
 speaking, be her customers ; and the demand for 
 these products will only cease, when their price 
 equals the cost of home production, or when a 
 cheaper market is discovered. 
 
 If no fresh supplies of specie were annually 
 
119 
 
 dug from the mines, it is certain that the price 
 of commodities would fall in the early civilized 
 states of Europe, because of the demand for bul- 
 lion in the many countries rapidly emerging from 
 barbarism ; and this is the main circumstance pre- 
 venting the new supplies from sinking the value 
 of the whole. When Dr Smith shewed that the 
 value of money had not fallen in Europe in the 
 interval between 1640 and 1775, he only referred 
 for a proof of this fact to Britain and France. 
 He did not allude to the state of prices in Po- 
 land or the Crimea : He knew it was an invari- 
 able law, that the prices in such countries should 
 tend to equalization with those in a more advan- 
 ced state ; and he justly considered, that the fact 
 of there having been no depreciation of money 
 in the highly civilized states, was alone decisive 
 of the question. 
 
 From this short inquiry into the progress of 
 industry, and the state of prices since 1775, many 
 important conclusions may be drawn. — The facts 
 established respecting the rapid improvement of 
 manufactures in the United States, and in al- 
 most every district of the continent, while they 
 alone can account for the diminished demand for 
 our products, exhibit the absolute necessity of 
 greatly reducing the burdens affecting the in- 
 
120 
 
 dustrious classes in this country, if we would 
 prevent the total exclusion of their manufactures 
 from the foreign markets. In regard to the rise 
 of prices, or depreciation of money, it appears : 
 That a greatly increased production of com- 
 modities has taken place throughout the civilized 
 world; and that consequently, a greater quan- 
 tity of currency must now be necessary to cir- 
 culate this increased produce at its former value, 
 than was required at any previous period. And 
 that although the produce of the mines has been 
 much augmented since 1772, and although pa- 
 per has been made to perform the functions of 
 coin to a considerable extent, still it is certain 
 that the value of money has not fallen, or the 
 money price of wheat increased since that epoch : 
 For, 
 
 1st, In France, the most civilized and impro- 
 ved of the continental states, there has been no 
 rise in the price of corn, nor any fall in the value 
 of money, since 1760: and in ordinary years, a 
 quarter of wheat may be purchased in that king- 
 dom for 4?0s., or less. 
 
 2d, The rise of price in Italy, is an effect of 
 the free corn trade which now permits the pro- 
 duce of that country to seek a better market, or 
 to attain the general level of European prices, — 
 And, 
 
 3d, The trifling rise of prices in Russia and 
 
121 
 
 Poland, is a necessary result of the improvement 
 of these countries, and of the commercial inter- 
 course between them and the richer nations of 
 Europe ; and does not indicate the least fall in 
 the value of money. 
 
 If these conclusions are well founded, they af- 
 ford incontrovertible evidence to shew that the 
 rise of prices in Britain, during the last twenty 
 years, has been altogether local ; and that con- 
 sequently it has been caused, not by any general 
 fall in the value of money, but by the nature of 
 our domestic policy. To be convinced of this fact, 
 we have only to recollect, that the expence of 
 importing a quarter of wheat from France or the 
 Netherlands, inclusive of freight, insurance, im- 
 porters’ profits, &c. is not more than 5s., and, 
 therefore, if our currency was not depreciated , and 
 if a free trade in corn was allowed , the home 
 price of our wheat could not, in ordinary years, 
 exceed 45 s. or 47 s. a quarter, the average price 
 of the period from 1770 to 1794. 
 
 We shall inquire into the principles, and effects 
 of the corn laws, in the following Section. 
 
122 
 
 SECTION FOURTH. 
 
 Price of Corn in this Country fictitiously kept up 
 by the Corn Laws — Such advancement of Price 
 prejudicial to the Manufacturers , without being 
 advantageous to the Agriculturists — Famine and 
 scarcity , generally caused by Restrictions on the 
 Corn Trade . 
 
 The important facts established in the prece- 
 ding Section, conclusively shew the fallacy of the 
 reasoning by which several otherwise well in- 
 formed writers, * who admit the depreciation of 
 our paper currency, contend for a fall in the 
 value of gold and silver since 1760, by referring 
 to the rise in the bullion price of corn in this coun- 
 try subsequent to that era. But as soon as our 
 consumption of grain began to exceed the supply, 
 an advance in the home price was unavoidable, 
 in order to cause an importation from foreign 
 countries, to which we had previously been in 
 the habit of exporting. The restrictions on im- 
 porting foreign grain imposed in the reigns of 
 Charles II. William III. and Anne, could not, 
 while the supply was more than equal to the 
 demand, cause any rise on the home prices. The 
 
 * Edinburgh Review, No. 51, p. 140; Mr Buchanan's sup- 
 plementary volume to the Wealth of Nations , p. 83, &c. 
 
123 
 
 case, however, was very different when the supply 
 became deficient, and the bad seasons, of which 
 
 Dr Smith speaks as previous to 1775, combined 
 with the extraordinary increase of population af- 
 ter the peace of Paris in 1763,* raising the home 
 price to an unusual height, rendered frequent sus- 
 pensions of the restrictions necesssary. In 1773, 
 in order to put an end to these temporary expe- 
 dients, a total change was effected in the previous 
 
 system of corn legislation, and a new law was en- 
 acted, allowing the importation of foreign wheat 
 free of duty, whenever the home price reached 48s. 
 a quarter. The object of this act, (which ought 
 not to have been altered, unless to render the 
 
 trade perfectly free,) was to give a stimulus to 
 British agriculture, by keeping foreign grain out 
 
 * The following Table of the population of Great Britain, 
 in every tenth year of the last and present century, is extract- 
 ed from Parliamentary papers, and understood to be pretty 
 correct. 
 
 Years. England and Wales. 
 1700 ... . 5 , 475,000 . . 
 1710 ... . 5 , 240,000 . . 
 1720 ... . 5 , 565,000 . . 
 1730 .... 5 , 796,000 . . 
 1740 ... . 6 , 064,000 . . 
 1750 ... . 6 , 467,000 . . 
 1760 ... . 6 , 736,000 . . 
 1770 .... 7 , 428,000 . . 
 1780 .... 7 , 953,000 . . 
 1790 .... 8 , 675,000 . . 
 1801 .... 9 , 163,000 . . 
 1811 .. . 10 , 488,000 . 
 
 Scotland. Total. 
 
 . 1 , 048,000 .... 6 , 523,000 
 . 1 , 270,000 .... 6 , 510,000 
 . 1 , 390,000 .... 6 , 955,000 
 . 1 , 309,000 .... 7 , 105,000 
 . 1 , 222,000 .... 7 , 286,000 
 . 1 , 403,000 .... 7 , 870,000 
 . 1 , 363,000 .... 8 , 099,000 
 . 1 , 434,000 .... 8 , 862,000 
 . 1 , 458,000 .... 9 , 411,000 
 . 1 , 567,000 . . . 10 , 242,000 
 . 1 , 649,000 . . . 10 , 817,000 
 . 1 , 865,000 . . . 12 , 353,000 
 
 a 9 
 
124 
 
 of the market till the price was somewhat high- 
 er than in the rest of Europe, and, at the same 
 time, not to lay the manufacturers or trading 
 part of the community under great comparative 
 disadvantages. Subsequently to the American 
 war, the discoveries of Arkwright bringing the 
 cotton manufacture to a state of great perfec- 
 tion, an increased demand was experienced for 
 labourers, higher wages were given, and the po- 
 pulation of the country increasing faster than its 
 agricultural produce, notwithstanding of an as- 
 tonishing improvement in every species of rural 
 economy, the imports, though not the price of 
 corn, * became considerably greater. In 1791, 
 the same sophistical arguments were used, to 
 prove the necesity of further restricting the trade 
 in corn that have since been so very efficaciously 
 brought forward, and an act was passed, pre- 
 venting the import of foreign wheat till the 
 home price reached 52s. 6d. 
 
 In 1797, the Bank being restricted from pay- 
 ing in specie, the high prices of 1800 and 1801 
 were partly owing to the increased issues of pa- 
 per. The profits then made by landlords and 
 
 * It deserves particular attention, as we have already no- 
 ticed, that from 1770 to 1794 there was no rise whatever in 
 the price of corn ; and though occasionally higher, the ave- 
 rage price of that period was from 3s. to 4s. a quarter below 
 the price at which the duty, on importing, ceased by the act 
 
 1773. 
 
fanners, (at the expence of the other classes,) 
 notwithstanding of the deficient crops, were im- 
 mense ; and thinking to secure their continuance, 
 in 1804, when the price of wheat was above 50s. 
 a quarter, they procured to themselves a mono- 
 poly of the home market till the price should 
 rise to 66s. ; or until grain in Britain should be 
 double its price in Poland, and a half more than 
 its price in France. 
 
 While such laws regulate our corn trade, it is 
 obvious we can form no certain conclusion as to 
 the general value of gold and silver from the 
 state of our home prices. We might just as 
 well deduce inferences respecting the mildness 
 and salubrity of our climate, from observations 
 made on a Thermometer kept in a hot- house. 
 
 To prohibit importing the necessaries of life 
 into any country where the supply is short of the 
 demand, till prices have risen to a certain height, 
 has a direct tendency to raise them still higher. 
 British merchants would not at present order fo- 
 reign grain, if the home price was steady at 
 about 80s. It could not, in fact, be imported to 
 any extent, unless the price was considerably 
 higher, because it is certain, that the dreaded 
 effect of a large importation would of itself suf- 
 fice to sink the market price, and would conse- 
 quently put a stop to the influx. In 1805, the 
 crop was very considerably deficient, and the ave- 
 
126 
 
 rage price of that year was about 22s. above the 
 price at which importation was allowed by the 
 act of i 804. The depreciation of paper compa- 
 red with bullion, being at that time about 4 per 
 cent, the high price of that year must have been 
 owing to the operation of the new corn law pre- 
 venting any import of foreign grain till the home 
 price was high, and then cramping mercantile 
 operations ; and to the war rendering the cost of 
 importation unusually great. In 1806, 1807, 
 
 | and 1808, the depreciation of paper compared 
 with bullion continued at nearly 4 per cent, and 
 the price of wheat in these years being generally 
 from 66s. to 75s. a small importation only took 
 place. From autumn 1808 to spring 1814, the 
 depreciation of our currency was rapid beyond 
 all former example, and several crops in that in- 
 terval being likewise deficient, the money price 
 of corn, influenced by both causes, rose to a sur- 
 prising height. The following is a statement 
 of the money or paper price, and the bullion price 
 of corn, from 1809 to 1814 inclusive. 
 
 Paper Price per Quarter. Bullion Price per Quarter. 
 
 1809 95s. 7d. 1809 ...... 81s. 
 
 1810 106s. 1810 88s. 6d. 
 
 1811 ...... 9*s. 1811 74s. 
 
 1812 U5s. 1812 90s. 
 
 1813 Ills. 1813 74s. 
 
 1814 74s. 1814 56s. 6d.* 
 
 * Edinburgh Review 3 No. 51. p. 144. 
 
127 
 
 The crops of 1809 and 1810 were much below 
 an average, and the bullion price of these years 
 is a good deal higher than the importation price 
 of 1804. This excess is to be ascribed partly to 
 that law, and partly to the extraordinary difficul- 
 ties then thrown in the way of importing grain. 
 At that time no vessel could be loaded in any 
 European state for England without purchasing 
 a licence, and the freight and insurance were at 
 least four times as high as during peace. The 
 same causes operated in 1812; but in the au- 
 tumn of 1813, the destruction of Bonaparte’s 
 anticommercial system having increased the fa- 
 cilities of importation, a large quantity of corn 
 was poured into the kingdom, and in 1814 its 
 bullion price was reduced below the point at 
 which importation was allowed. 
 
 The particular circumstances of Europe at the 
 time, throwing the commerce of the world into 
 the hands of our merchants and manufacturers, 
 prevented the ill effects resulting from a high 
 price of corn, and a high price of labour, from be- 
 ing immediately felt as they would otherwise 
 have been. As soon, however, as the unnatural 
 state of things passed away— when peace had 
 restored a free intercourse among nations— when 
 the cotton of Carolina was imported direct to 
 France — and when the vessels of every state 
 could perform voyages without any interruption, 
 
128 
 
 then the real nature of our domestic policy be- 
 came obvious. When our manufacturers flat- 
 tered themselves they would have the entire of 
 Europe and America for their customers, they 
 found, that without a diminution of the cost of 
 manufacturing, they would not be able to sell 
 any thing abroad with sufficient profit, and that, 
 eventually, they would be excluded from every 
 foreign market. 
 
 We must particularly observe, that supposing 
 the home supply of corn in this country to have 
 been fully adequate for the demand at the time 
 the last corn law was enacted, still its necessary 
 effect must have been to keep prices higher here 
 than in any neighbouring nation. Previous to 
 1815, the high price of corn had continued so 
 long, that the price of labour, and almost every 
 species of manufactured produce, not to mention 
 taxation, had attained a corresponding level. 
 Time had been given to complete the effects of a 
 rise in the price of corn, and landlords and farm- 
 ers were beginning to be satisfied, that their si- 
 tuation was fully as comfortable when they only 
 got 50s. for a quarter of wheat, as it had since 
 been when they got 100s. per quarter. But if 
 we suppose that when things were thus situated, 
 and the home supply commensurate with the de- 
 mand, an introduction of foreign grain, or a pe- 
 culiarly abundant crop, had taken place, it is cer~ 
 
129 
 
 tain the fail of prices consequent on either event 
 would have thrown poor land out of cultivation, 
 and would have involved the whole body of agri- 
 culturists in much distress. But when a prohibi- 
 tion against the import of foreign grain exists, 
 the effect of a luxuriant crop in reducing the 
 price df corn, by its lessening the quantity sown 
 next spring, is rendered of extremely short dura- 
 tion ; and it has been well observed, that in a 
 country placed under the restrictive system, a 
 very great abundance in one season is generally 
 a forerunner of famine in the next. The reason 
 of this is obvious. Although the price of labour, 
 and of every kind of produce, is ultimately de- 
 pendent on the price of the necessaries of life, 
 they are not immediately regulated by them. A 
 considerable time is required when grain is rising 
 in price before other products come to an equali- 
 ty, and the same thing happens when it is falling. 
 The wages of labour, the price of manufactures, 
 &c. are not reduced with the same rapidity as 
 the price of corn. The equilibrium, though ulti- 
 mately perfect, is not instantaneously obtained ; 
 and during the interval, the agriculturists are al- 
 ways exposed to much hardship. It is, therefore, 
 entirely erroneous to imagine, that a corn law 
 has no effect in keeping up prices but where the 
 supply is short of the demand ; it has such an 
 
 i 
 
130 
 
 effect wherever it prevents a fictitious system 
 from being disturbed, wherever it prevents agri- 
 cultural products from finding their general level, 
 in short, wherever it prevents the consumers pur- 
 chasing in the cheapest market. * 
 
 When the fall of prices took place in 1814, the 
 proper and only effectual mode of really relieving 
 the landed interest, was to have proportionally 
 reduced those burdens which had been imposed 
 on them, not only according to the increase of 
 the real price of corn, but also according to the 
 increase of its nominal price caused by the de- 
 preciation of paper. Had the new taxes, di- 
 rectly and indirectly affecting the landlords and 
 farmers, been co-existent with the high prices, a 
 fall in the price of corn could only have occa- 
 sioned them very temporary difficulties. The 
 rents of the latter must soon have been equalised 
 with the reduced prices, wages could not long 
 have continued high ; and in a short time their 
 situation would have been nearly the same as be- 
 
 * If Mr Wilson had adverted to these circumstances in his 
 late pamphlet, he would not certainly have contended, that al- 
 though the burdens affecting the agriculturists are now near- 
 ly three times as great as in 1794^ they could still afford to sell 
 their produce as cheap as in that year. No reduction of rents 
 could effect this object. Taxes of every kind must also be re- 
 duced to their former amount, otherwise much poor land pre- 
 sently cultivated would not pay the expence of labour. 
 
J 31 
 
 fore. This relief was of that kind, which could 
 not depress, but benefit, the other industrious 
 classes of society : it merely required the govern- 
 ment of the country to economise, to reduce the 
 interest of the national debt, to make their ex- 
 penditure quadrate with their diminished income, 
 and to shew an energy in taking off taxes as 
 prices fell, corresponding to that which they had 
 exhibited in imposing them when they rose. How- 
 ever, nothing of this kind was attempted; no 
 retrenchments of any sort were made ; * but, in 
 1815, in order to support the agriculturists, and 
 regardless of the sufferings of the manufacturers, 
 a new corn law was enacted, preventing the use 
 of foreign corn till the home price reaches 80s. 
 a quarter : which, if the currency is not again 
 depreciated, and if the enactment shall have its 
 full effect, will keep the real price of corn nearly 
 as high as in the five dear years ending 1813. 
 
 The supporters of this part of our fictitious 
 system argue, that the price of labour has no 
 connection with the price of food, and that the 
 former being regulated solely by the state of the 
 supply and demand, the enhancing the price of 
 corn in the home market does not necessarily 
 
 * Any retrenchments made since the peace, were effected 
 in the last session of Parliament. 
 
132 
 
 cause any increase in the wages of labour, and 
 consequently is not injurious to our foreign trade. 
 In a manufacturing country, for short intervals, 
 and to a limited extent , this statement is consistent 
 with fact. A stagnation may take place in trade 
 at the very time that corn is rising, and the la- 
 bouring class may at once experience an increase 
 in the price of provisions and a fall of wages. If, 
 however, this rise in the price of corn is of a per- 
 manent nature, and if manufacturers cannot al- 
 low a corresponding rise in the price of labour, 
 the principle of population will begin to operate, 
 and by lessening the supply of workmen, will 
 ultimately reduce the price of corn, and raise 
 wages to their proper level. 
 
 It may perhaps be objected, that this is too 
 rigorous a view of the matter, and that in coun- 
 tries where labour has been well rewarded, and 
 where not more than one-third or two-fifths of 
 the wages of workmen has been directly expend- 
 ed in the purchase of corn, an increase in the 
 price of bread and meal would rather serve as an 
 inducement to retrench from what was not es- 
 sentially necessary, than to lessen the supply of 
 hands. It would, however, be most detestable 
 policy, waving the question of practicability, to 
 attempt to reduce the labouring classes to a scan- 
 ty supply of the mere necessaries of life. The 
 experience of all ages has shewn, that a needy 
 
133 
 
 starving populace, lose a just sense of their dig. 
 nity and rights as men, and become depraved and 
 enslaved. It is in vain to expect industry where 
 it does not meet with a suitable reward ; men 
 will not submit to privations and labour, but in 
 the hope of securing corresponding comforts. 
 
 It may also be observed, that a fictitious in- 
 crease] in the price of corn directly raises the 
 price of butchers meat, cheese, butter, and other 
 agricultural products. When more money can 
 be made by grazing than cropping, land is imme- 
 diately taken from the latter species of industry 
 to be employed in the former, and an equilibrium 
 of profit is attained. On the same principle, 
 when the price of corn is raised by violent means, 
 pasture land is ploughed up, and the price of 
 cattle is soon made to correspond with that of 
 corn.* 
 
 It is a common and hackneyed complaint, 
 which the interested views of master manufac- 
 turers, and fanatical declamation, have contri- 
 buted to make too much believed, that when the 
 wages of workmen are high, they spend a great 
 part of their earnings in riot and debauchery, 
 
 * The remarks of Mr Malthus on that part of the evidence 
 taken before Parliament in 1814, in which several of the wit- 
 nesses, notoriously biassed in favour of the corn laws, endea- 
 voured to support the doctrine, that there was no connection 
 between the price of provisions and the rate of wages, are at 
 once liberal, judicious, and conclusive . — Essay on Rent, p. 48 
 
134 
 
 alike hurtful to themselves and to the morals of 
 the state. It is, indeed, true, that in every so- 
 ciety, some of its members are always careless of 
 the future, and attentive only to present enjoy- 
 ment : But are we to judge of the great body of 
 the people from such instances ? Were not the 
 desire of accumulating profits superior to every 
 other in the lower classes generally considered, 
 they would not be found to become more rich, 
 and to augment their little capitals in every 
 country where the real wages of labour are in- 
 creasing. In the United States, where labour is 
 extremely well rewarded, the lower classes are 
 universally industrious : in this country, after the 
 American war, the unusual demand for labourers 
 infused a fresh spirit of exertion into the lower 
 classes ; and in France, every well-informed tra- 
 veller informs us, that the rise on the real price 
 of labour, which has taken place since the Re- 
 volution, has had precisely the same happy ef- 
 fects.* 
 
 According to Mr Young, to whose meritori- 
 ous exertions we are indebted for much valuable 
 and accurate information respecting political and 
 rural economy, the mean price of agricultural la- 
 bour in 1767, 1768, and 1770, was about 7s. 6d. 
 per week, or Is. 3d. per day. Mr Young further 
 
 * For a confirmation of what is here stated, see Wealth of 
 Nations, vol. i. pp. 119 . 124 . &c. and Say, tom. ii. p. 91* 
 
135 
 
 states the mean price of labour in 1810 and 1811 
 at 14s. 6d. per week, or 2s. 5d. per day, being a 
 rise of nearly cent, per cent, on the former period. 
 But he estimates the average rise on bread, 
 meat, butter, and cheese, during the same inter- 
 val at 135 percent.; and consequently wages 
 were really higher in 1770 than in 1810 by the 
 difference, or 35 per cent. Since 1813, the price 
 of corn has fallen, but it is still double its price 
 in 1770, and the average price of labour being 
 now less than its then price, the situation of the 
 independent poor is evidently altered very much 
 indeed to the worse. 
 
 It may perhaps be thought, that this fact con- 
 tradicts the arguments by which we have endea- 
 voured to prove the equality of prices and wages. 
 But the increased price of commodities in this 
 country, during the war, was prevented from 
 having its full effect in raising wages, by the 
 operation of the Poor Laws. Labourers were 
 not deterred from marrying when they knew 
 that a fund was by law set aside for their sup- 
 port, and when they were certain that if the 
 wages of labour would not suffice to rear a fa- 
 mily, the deficiency would be made up by the 
 parish. The comparative cheapness of labour, 
 therefore, has not redounded in the smallest de- 
 gree to the general advantage of the employers 
 of workmen ; but as Mr Birkbeck has justly ob- 
 
136 
 
 served, the expence of labour in England is sq 
 much the greater, as it always costs more to 
 maintain a pauper than to preserve an indus- 
 trious man from poverty. 
 
 The pressure of the poor rates has, indeed, be- 
 come almost intolerable ; but heavy as the bur- 
 den is, it must be borne while the fictitious sys- 
 tem is persevered in. * If we will forcibly raise 
 the price of the necessaries of life, we must ex- 
 pect to see the price of labour, and all other com- 
 modities, proportionally rise. We cannot per- 
 manently reconcile things altogether incompa- 
 tible^ — a high price of provisions and a low price 
 of labour. The order of nature opposes such an 
 iniquitous design. If workmen are not able to 
 live in this country as comfortably as in others, 
 they will emigrate ; and by so doing, contribute 
 to increase the ingenuity of foreigners, and the 
 wages of such as remain. And this, as ’well as 
 every other deviation from liberal policy, will as- 
 suredly provide its own severe corrective. 
 
 The supporters of the corn laws are excessive- 
 ly inconsistent : They tell us at one time, that 
 they have no effect in raising wages ; and again 
 they tell us, that to repeal them would reduce 
 
 * In 1776, the total expenditure on account of the poor 
 amounted to £ 1,530,804? ; in 1803, to £ 5,348,2 05 ; and last 
 year the expenditure was reckoned at about eight millions. 
 This is a short, but pretty intelligible commentary on our fic- 
 titious system. 
 
the price of labour, and be injurious to the lower 
 classes. Both these assertions are alike false 
 and unfounded. A fall in the wages of labour, 
 arising from a fall in the necessaries of life, does 
 not lessen the comforts of the lower classes ; on 
 the contrary, it is really advantageous to them ; 
 for by increasing the demand for their products, 
 and consequently for labour, it contributes power- 
 fully to raise the real wages of workmen ; or it 
 enables them to exchange their services against 
 a greater quantity of commodities. 
 
 Assuming it, therefore, as proved, that every 
 increase in the price of the subsistence of labour- 
 ers, must in the end be accompanied with a cor- 
 responding increase in their wages, we at once 
 perceive, that although the corn laws should not 
 injure our foreign trade, they cannot permanent- 
 ly improve the condition of our agriculturists. 
 We must distinguish between a rise of nominal 
 and real rent. Two individuals living in sepa- 
 rate countries, are in precisely the same situation, 
 although the one should have L. 1000 per an- 
 num, and the other only L. 500, if the latter in- 
 come will purchase as many commodities as the 
 former. A real rise of rent, can alone invest the 
 proprietor with an augmented power over the 
 necessaries and luxuries of life : It results from 
 an improved mode of cultivation, from a saving 
 of labour, and from a greater effective demand 
 
138 
 
 for agricultural produce caused by the general im- 
 provement of society. A forced rise in the price 
 of corn being attended with a corresponding rise 
 in the price of labour, must equally augment the 
 price of almost every article the farmers pur- 
 chase. Their situation, after a short interval, 
 becomes the same ;* they receive more money 
 with the one hand, but they are forced to pay 
 away more with the other. 
 
 The corn laws, therefore, cannot be of any 
 really permanent utility to our agriculturists ; and 
 whatever ill effects they may have on our com- 
 merce, seem not to be compensated by any cor- 
 responding advantages. 
 
 The advocates for the corn laws indeed tell 
 us, that the procuring a certain and adequate 
 supply of food for our inhabitants, is an object 
 of paramount importance to every other, and 
 that this cannot be effected without the restric- 
 tive system. But it is one thing to make an asser- 
 tion, and another thing to bring forward satis- 
 factory proofs of its truth : In this case a very 
 few words will suffice to shew, that the prohibi- 
 
 * This is not exactly true : The situation of the agricultu- 
 rists is altered to the worse: the enhancement in the price of 
 their produce lessening the demand, their real wealth is con- 
 sequently diminished. This will be more fully explained af- 
 terwards. 
 
tive system cannot have any such effect, and that 
 its tendency is altogether opposite. 
 
 A general failure of the crops in an extensive 
 kingdom, is a calamity that but seldom occurs. 
 The weather that is unfavourable to vegetation 
 in one species of soil, is frequently advantageous 
 to it in another. If moist clayey lands suffer 
 from a wet summer, the crops are rendered more 
 luxuriant in dry rocky districts : The excess of 
 produce in one province compensates for its de- 
 ficiency in another, and except in anomalous 
 cases, such as the present season, the total sup- 
 ply is nearly the same. If this be generally true 
 of a single nation, it is always true in reference 
 to the world at large. No one instance of uni- 
 versal scarcity blackens the history of mankind ; 
 but it is constantly found, that when the crops 
 of one country fail, plenty reigns in some other 
 quarter. A freedom of trade is alone want- 
 ed to guarantee a country like Britain, abound- 
 ing in the varied products of industry, in mer- 
 chandise suited to the w^ants of every society, 
 from the possibility of a scarcity. The nations 
 of the earth are not condemned to throw the dice 
 to determine which of them shall submit to fa- 
 mine. There is always abundance of food in the 
 world : To enjoy a constant plenty, we have only 
 to lay aside our prohibitions and restrictions, and 
 
140 
 
 to cease to counteract the benevolent wisdom of 
 Providence. 
 
 * 
 
 The case of Holland strongly corroborates the 
 truth of all we have now stated. In the days of 
 her greatest prosperity, she was chiefly fed with 
 imported corn, and the prices there were extreme- 
 ly moderate, and what is of infinite consequence, 
 were more steady than in any other country of 
 Europe. 
 
 There is no danger that a free corn trade once 
 established, would be violently put an end to by 
 foreign governments. When one nation has been 
 for a series of years in the habit of importing 
 corn from another, she has exported some more 
 acceptable produce as an equivalent : The bene- 
 fits are, therefore, reciprocal, and the foreigners 
 will be equally with ourselves interested in a 
 continuance of the traffic. “ When we consider,” 
 says Mr Ricardo, “ the value of even a few weeks 
 consumption of corn in England, no interruption 
 could be given to the export trade, if the con- 
 tinent supplied us w ith any considerable quan- 
 tity of corn, without the most extensively ruin- 
 ous commercial distress — distress which no sove^ 
 reign, or combination of sovereigns, w ould be 
 willing to inflict on their people: and, if willing, 
 it would be a measure to which probably no peo- 
 ple would submit. It was the endeavour of Bona- 
 parte to prevent the exportation of the raw' pro- 
 
141 
 
 duce of Russia more than any other cause, which 
 produced the astonishing efforts of the people 
 of that country against the most powerful force, 
 perhaps, ever assembled to subjugate a nation.”* 
 
 It is no answer to this reasoning to say, that 
 in 1812, with the price of corn at 126 s. we could 
 only import 100,000 quarters. An unprecedented 
 combination of circumstances at that time in- 
 creased the difficulties of importation. Nothing, 
 however, can be more foolish than to imagine 
 that such events will be of frequent recurrence, 
 and to give up the advantages resulting from a 
 low price of grain, and a free trade, to guard 
 against visionary dangers. 
 
 The principal difficulties we at any time ex- 
 perience in the importing of corn, result in fact 
 from the varying nature of our own laws re- 
 specting it. Perpetually fluctuating between 
 bounties, restrictions, and prohibitions, no con- 
 tinental nation can calculate on our exporting 
 their com for two successive years. No addi- 
 tional quantities are raised to supply our mar- 
 kets, which would be the case if the corn trade 
 was perfectly free; but whatever supplies we 
 may procure, being withdrawn from the ordinary 
 stock, speedily raises prices abroad, and perhaps 
 induces the foreign governments to check expor- 
 tation altogether. 
 
 * Essay on the Profits of Stock, p. 29. 
 
142 
 
 Most foreign states have indeed fixed a statu- 
 tory price at which exporting shall always cease. 
 But this price is much higher than the average, 
 and it is almost certain, that if our corn trade 
 was unrestricted, the importations into this coun- 
 try would have very little effect in raising prices 
 abroad, as a greater production would universal- 
 ly take place ; and foreign powers becoming sen- 
 sible of the advantages of a perfectly free trade, 
 would soon repeal this limitation. 
 
 When a merely temporary liberty is granted 
 to import, the operations and the enterprise of 
 merchants are alike cramped. They cannot or- 
 der corn from distant countries, lest the price 
 should have fallen before it arrives, and the ports 
 be shut. They are compelled to have recourse 
 to countries in our immediate vicinity, their or- 
 ders must be given on the spur of the moment ; 
 and all that consideration and combination, ne- 
 cessary to ensure the success of every complex 
 transaction, are unavoidably excluded. 
 
 The most plausible defence of our corn laws 
 rests on the ground, that since exclusive advan- 
 tages are granted to different manufactures, agri- 
 culture ought, in strict justice, to be placed in 
 the same favoured situation. There is not, how- 
 ever, any truth in political economy better esta- 
 blished than this, that it cannot possibly be the 
 interest of any state to manufacture at home, 
 
143 
 
 what it might purchase cheaper abroad. If, 
 therefore, any of our manufactures, as that of 
 silk, * could not exist if a free trade were allow- 
 ed, it would be for the general advantage that 
 they were given up, and the capital vested in 
 them employed in some other species of industry. 
 The manufacturers of Gloucestershire, in their 
 excellent resolutions against the late corn bill, 
 expressed, in the strongest manner, their acquies- 
 cence in the doctrine of a free trade, and stated 
 their perfect willingness to sacrifice any exclusive 
 privileges they might enjoy to the attaining that 
 desirable object. It is indeed beyond all ques- 
 tion, that a free trade would be prodigiously for 
 the advantage of those manufactures, part of 
 which are presently exported. The fall that 
 would then take place in the price of provisions 
 and of labour, would much more than compen- 
 sate any disadvantage the woollen manufacturers 
 might experience from a rise in the raw material; 
 and in the cotton manufacture, the advantages 
 
 * The silk manufacture has been the source of much loss 
 to this country. In order to protect it against foreign com- 
 petition, or rather in order to raise its price to the consumers, 
 French and other foreign silks were burdened with heavy 
 duties. The consequence has been, that since we would not 
 take French silks, they would not take our cottons; and ha- 
 ving built cotton mills for themselves, they are now disputing 
 with us the possession of a branch of industry of real advan- 
 tage. Such, and such only, are the fruits of the fictitious sys- 
 tem. 
 
144 
 
 would not be counterbalanced in the slightest 
 degree. 
 
 In treating of exchange, we have shewn, that 
 it is quite absurd to imagine any ill effects can 
 result from sending abroad our specie as an arti- 
 cle of commerce. It would be useless again to 
 repeat that reasoning here ; but it affords a con- 
 clusive answer to the arguments brought forward 
 to shew, that the freedom of the com trade 
 would be injurious, by draining us of our cash. 
 
 It may perhaps be said, that if the com trade 
 was perfectly free, if an unbounded liberty was 
 given to import foreign grain, the agriculture of 
 no country could derive any particular benefit 
 from the possession of a great manufacturing po- 
 pulation. Admitting this to be the fact, it cer- 
 tainly affords no reason why one part of society 
 should be compelled to pay a monopoly price for 
 their food, in order to enhance the profits of the 
 other part. Such a proceeding, independently of 
 its impolicy, is manifestly unjust. But the ob- 
 servation respecting the effects of importation, is 
 entirely unfounded. Land lets for a higher rent 
 in the neighbourhood of every great city, than at 
 a distance, from the single circumstance of its 
 contiguity to market. On the very same prin- 
 ciple, in a highly populous and importing coun- 
 try, the home price of corn must always be high- 
 er than in the countries from which supplies are 
 5 
 
145 
 
 brought, by a sum equal to cover the expence of 
 carriage, and to afford the ordinary profits of 
 stock to the importer : and consequently the home 
 grower is sure to receive a higher price for his 
 crop than any foreigner, while his being on the 
 spot, guards him against various losses to which 
 the other is exposed. Estimating the annual 
 consumption of the various kinds of grain in 
 Great Britain at 2 4t millions of quarters, and ave- 
 raging the expence of bringing a quarter of fo- 
 reign grain of every description to market here at 
 5s., it is obvious that, on the principle of a free 
 trade, the home growers would receive 5s. more 
 than the foreigners for every quarter they sold ; 
 and supposing them to raise 20 millions of quar- 
 ters for sale, they would realise not less than four 
 millions sterling annually of fair profit, by the 
 excess of the home price above that of surround- 
 ing states. 
 
 It is certainly true, that the abolition of the 
 prohibitive system would be attended w ith a good 
 deal of temporary distress and inconvenience. 
 That, however, is no reason why it should not be 
 abandoned. It might, with as much propriety, 
 have been objected to the introduction of the 
 steam engine, and of Sir Richard Arkwright’s 
 cotton mill, that the use of them would entirely 
 supersede the old clumsy machinery. Private 
 
 K 
 
146 
 
 interests must, in such cases, give way to the ge- 
 neral good. But, in order to give time to with- 
 draw capital from the cultivation of poor soils, 
 and to invest it in more lucrative employments, 
 a gradually diminishing scale of duties might ea- 
 sily be adopted. The price at which foreign grain 
 should be admitted duty free, might be made to 
 decrease from 80s. its present limit, by 4s. or 5s. 
 a quarter annually, till it reached 50s. when the 
 ports could safely be thrown open, and the re- 
 strictive system for ever abolished. 
 
 When this happy event shall have taken place, 
 it will be no longer necessary to force nature — 
 we will only second her efforts. The capital and 
 enterprise of the country will be turned into those 
 departments of industry, in which our physical 
 situation, national character, or political institu- 
 tions, fit us to excel. The corn of Poland, and 
 the raw cotton of Carolina, will be exchanged for 
 the muslins of Glasgow and the wares of Bir- 
 mingham. The genuine commercial spirit, that 
 which permanently secures the prosperity of na- 
 tions, is altogether inconsistent with the dark and 
 shallow policy of monopoly. The nations of the 
 earth are like provinces of the same kingdom, — 
 a free and unfettered intercourse, is alike pro- 
 ductive of general and local advantage. 
 
 In the following Section we shall endeavour 
 to explain the operation of the corn laws, and 
 
147 
 
 of taxation on manufactures ; but Jirst it will be 
 proper to obtain a correct view of the real im- 
 portance of our foreign trade. 
 
 SECTION FIFTH. 
 
 Estimate of the Number of Individuals in Great 
 Britain directly supported by Foreign Trade — • 
 Effects of a great relative Taxation on Manu- 
 facturing Industry — Difference of the State of 
 Great Britain in 1783 and 181 5 — And Confu- 
 tation of the Reasoning of Dr Colquhoun and 
 others, who attempt to prove that a large Na- 
 tional Debt is not injurious to a State. 
 
 It is not probable that so many laws would 
 have been made tending to increase the price of 
 provisions, or that so many writers would have 
 been found to maintain that the wealth and 
 power of Britain would not be impaired by the 
 loss of her foreign commerce ; if either the fra- 
 mers of these laws, or the propagators of this doc- 
 trine, had been sufficiently aware of its immense 
 importance. However much the economists and 
 their followers may exaggerate the comparative 
 productiveness of agriculture over every other 
 species of industry, it is a fact, of wffiich there 
 
148 
 
 can be no doubt, that the nett rent of all the land 
 in Britain would not have supported the expence 
 of a single campaign in the contest just termina- 
 ted. It was the commercial and manufacturing 
 enterprise of the nation that alone enabled the 
 Government to carry on the war in the manner 
 they did. Had there not been an immense sur- 
 plus produce in the country, that could be ap- 
 plied to the service of the state, the subsidies to 
 foreign powers, and the expence of maintaining 
 armaments abroad, could not possibly have been 
 paid. Our foreign trade made all the nations 
 with whom we had any commercial transactions 
 contribute effectually to our support : They sa- 
 laried our workmen, they afforded profits to our 
 merchants and capitalists, and enabled them to 
 meet the constantly increasing and rapacious de- 
 mands of the treasury. The foreign trade en- 
 hanced the value of agricultural produce, by sup- 
 porting and enriching an increased quantity of 
 consumers. It infused new energy and indus- 
 try into the people, and counteracted, to a con- 
 siderable extent, the pernicious and enslaving 
 principles of the poor laws. 
 
 That this statement is in no degree exagge- 
 rated, may be shewn in a very few words. The 
 official value of woollens exported from Great 
 Britain in the years 1810, 1811, and 1812, was 
 L. 5,773,244, L. 4,376,545, and L. 5,084,991 re- 
 
149 
 
 spectively. * As this estimate is more than 50 
 per cent, below their real value, the exports in 
 these years must have amounted to about nine 
 millions ; and deducting a third from this sum 
 for the value of the raw material, we shall have 
 six millions as interest on capital and wages of 
 labour entirely paid for by foreigners. Now, 
 supposing the manufacturers’ profits and the in- 
 terest of capital to be 18 per cent, f that will 
 amount to L. 1,080,000, which, deducted from 
 L. 6,000,000, leaves L. 4,920,000 as the gross 
 amount of wages ; and assuming each workman 
 to earn L. 22, $ the total number employed in this 
 way will be about 224,000. 
 
 The woollen manufacture, formerly the princi- 
 pal of those in England, and still, as we have 
 just seen, a great source of national opulence, 
 has been surpassed in value by that of cotton, of 
 comparatively recent origin. After the peace of 
 Paris, in 1763, public attention was first turned 
 towards this branch of industry ; and in 1767 the 
 machines called spinning jennies were generally 
 
 * The exports of these years were reduped below their 
 previous amount, by the interruption in the American trade. 
 
 + Mr Grellier only allows 10 per cent, as manufacturers 
 profits and interest of capital, which is certainly too little ; 
 but Mr Stevenson's allowance of 20 per cent, appears, on the 
 other hand, to be somewhat too high. I have been assured 
 that 1 6 per cent, is near the average. 
 
 + Mr Stevenson supposes the average of the wages to be 
 only £ 20 .— Edinburgh Encyclopaedia , vol. viii. p. 7 54. 
 
150 
 
 introduced. * At this period, the value of all 
 the cotton goods manufactured in the kingdom 
 did not amount to more than L. 200,000, and not 
 more than 50,000 spindles were employed. In 
 17 69, the ingenious Sir Richard Arkwright, by 
 a happy invention, contrived to turn thousands 
 of spindles by a water wheel ; and in that way 
 saving a vast deal of labour and expence, vastly 
 increased the consumption of cottons by redu* 
 cing their price, and enabling a much greater 
 number of individuals to purchase them. As 
 soon as Sir Richard’s patent expired, factories 
 were established in various parts of the king- 
 dom; and in 1787, the value of prepared cottons 
 amounted to L. 7,500,000. f Since this last 
 epoch the progress of the cotton manufacture 
 has been equally rapid. In 1787, the number of 
 spindles worked by machinery and the hand 
 throughout Britain, amounted in all to about 
 1,700,000; in 1804, there were in Manchester 
 itself, and its immediate vicinity, about 1,500,000 
 in full operation : and the value of cotton goods 
 manufactured that year was greatly more than 
 double their value in 1787. Dr Colquhoun es- 
 timates the entire value of the different cotton 
 
 * Jennies were invented by Richard Hargreaves, weaver 
 in Lancashire, who, to the disgrace of his age and nation, 
 was suffered to pass his days in obscurity and poverty. 
 
 f M'Pherson’s Annals of Commerce , 1787. 
 
151 
 
 goods manufactured in Great Britain in 1810, 
 1811, and 1812, at the enormous sum of 29 mil- 
 lions annually ; * and the average annual expor- 
 tation, including cotton yarn, &c. for the same 
 time, was upwards of sixteen millions. Accord- 
 ing to the same authority, the value of the raw 
 material in the exported cottons does not amount 
 to 3 \ millions : f but this is perhaps too low an esti- 
 mate; and taking it at four millions, we shall then 
 have 12 millions as the nett value of the exports. £ 
 Now, supposing the rate of manufacturers profits 
 and interest on capital to be 20 per cent., or two 
 per »cent. more than in the woollen manufacture, 
 on account of the greater tear and wear of ma- 
 chinery, that will amount to L. 2,400,000, leav- 
 ing L. 9,600,000 as wages of workmen, which, 
 considering there are many women and children 
 employed, may be reckoned on an average at about 
 L. 1 6 each person ; and, consequently, the foreign 
 trade in cottons alone may be supposed directly to 
 employ 600,000 labourers, besides requiring a great 
 
 * Mr Stevenson, in his excellent treatise on English statis- 
 tics, ( Edinburgh Encyclopaedia, vol. viii. p. 780. ) states the 
 real value of cotton goods manufactured in the cotton district 
 of England , in 1809 and 1810, at about 29 millions each 
 year. 
 
 t Colquhoun on the Wealth and Resources of the British 
 Empire, 1st edit. p. 91. 
 
 t The official and real value of cottons exported nearly cor* 
 respond. 
 
 4 
 
152 
 
 tonnage, and several thousand seamen to convey 
 the raw material and manufactured goods to and 
 from the country. 
 
 In the woollen manufacture, neither children 
 nor women are employed to the same extent as 
 in the cotton manufacture ; and we may safely 
 assume the number of individuals supported by 
 the foreign trade in that branch to be double the 
 actual amount of workmen, or 448 , 000 . In the 
 cotton manufacture, supposing only an addition- 
 al third to be supported by the industry of those 
 actively engaged, that will bring the whole to 
 800 , 000 ; which, added to the former, makes a 
 grand total of 1 , 248,000 of the inhabitants of 
 Great Britain, maintained directly by these two 
 prime sources of our national wealth and prospe- 
 rity. 
 
 We would, however, form but a very inade- 
 quate opinion of the importance of our foreign 
 trade, if we should imagine it confined to the ex- 
 port of woollens and cottons. The population 
 of Birmingham, and the district in its immediate 
 vicinity, amounts to upwards of 400 , 000 , and at 
 least one half of the hardware manufactured 
 there is destined for exportation. The same is 
 the case with Sheffield, and generally with all 
 the principal ironworks throughout the country. 
 The export of manufactured leather goods, of 
 
153 
 
 earthen ware, of jewellery, and of many oMier 
 kinds of produce, is very considerable, and gives 
 employment to an immense body of people. 
 
 From this view of the subject, we may justly 
 consider at least two millions of the inhabitants of 
 Britain as having been constantly engaged in 
 manufacturing for the foreign market, or as ha- 
 ving directly depended on it for support. 
 
 By the returns of the population act of 1811, 
 the total of families in Great Britain engaged in 
 agriculture, and of those depending on the pro- 
 fits of stock, rent of land, literary professions, 
 civil employments, &c. amounted to 1,415,166; 
 and by the same act it appears, that the total 
 aggregate amount of families actively employed 
 in trade, manufactures, handicraft, &c. was 
 1,129,049, or above Jive millions of individuals . 
 In a country where the division of labour is car- 
 ried to such an extent as in Britain, and where 
 jnachines of every kind are so generally in use, 
 it is certain, that the artizans and handicrafts- 
 men necessary for the preparation of manufac- 
 tures for home consumption must bear but a ve- 
 ry small proportion to the other classes of the 
 community. If we suppose three millions of 
 workmen and merchants (including their fami- 
 lies) to be engaged in manufacturing and circu- 
 lating the commodities necessary for the con- 
 sumption of this nation, whose entire population 
 
154 
 
 cannot much exceed 12 millions, we shall surely 
 make a great deal too liberal allowance ; but, 
 even on this hypothesis, above two millions of 
 merchants and artizans would remain to be pro- 
 vided for by foreign trade. 
 
 France, before the revolution, possessed a con- 
 siderable commerce, and her inhabitants lived 
 more comfortably, and enjoyed more of the pro- 
 ducts of industry, than any other continental 
 state. But machinery was not there used to 
 nearly the same extent as at this day in Britain, 
 and of course the artizans employed in manufac- 
 turing for the home market in that country must 
 have been proportionally more numerous. Ta- 
 king, however, the then population of that king- 
 dom at 26 1 millions, the agriculturists were esti- 
 mated at eighteen millions,* and consequently 
 the whole of the other classes, including the 
 priesthood, people in civil employments, &c. on- 
 ly amounted to 8| millions, or scarcely to one 
 half of the agriculturists ; while, on the contra- 
 ry, the agriculturists of Great Britain, which is 
 much better cultivated than France in 1789, do 
 not amount to more than one third of the whole 
 population. 
 
 There is, therefore, very great reason to be- 
 lieve, that our estimate of two millions is much 
 
 * Ganilh Theorie de PEconomie Politique, tom. i. p. GO. 
 Say, tom. ii. p. 163. 
 
155 
 
 under-rated ; and it is only when we take into 
 view the reflex effect which the expenditure of 
 the income of this population must have on th^, 
 wealth and happiness of the other classes, that 
 we obtain something like a just conception of the 
 advantages of commerce. The entire population 
 of Great Britain being nearly 12 millions, about 
 one-sixth part of the whole is directly supported 
 by our foreign trade; an equal portion of our 
 agriculturists are engaged in raising provisions 
 for this enlarged population, and an immense 
 and steady market is created for their produce ; 
 and, lastly, an equal portion of the home manu- 
 facturers evidently depend for their existence on 
 the same fruitful source of riches. 
 
 The wages of our workmen cannot be raised 
 much higher than in surrounding states, without 
 fundamentally endangering our commercial pros 
 perity. We need not flatter ourselves, that the 
 superior excellence of our machinery will com- 
 pensate disadvantages of this kind. Discoveries 
 in the mechanical arts cannot be monopolised by 
 any one country; and we have already shewn, 
 that the cotton factories of France, Germany, 
 and America, are, in respect of machinery, near- 
 ly on a footing with those of England. If a tax 
 of Is* per yard were imposed on all kinds of cot- 
 
 i 
 
156 
 
 tons, no person would be found stupid enough 
 to maintain, that this tax would not hurt their 
 sale abroad, if taxation there was not carried to 
 the same extent. The case cannot surely be al- 
 tered, if the same rise is brought about by indi- 
 rect taxation, by raising the price of labour, the 
 cost of machinery, the price of provisions, &c. 
 The cause may not at first view be so very evi- 
 dent, but its effects will be found to be precisely 
 the same. 
 
 “ There seems,” says the most illustrious of 
 modern philosophers, ** to be a happy concur- 
 rence of causes in human affairs, which checks 
 the growth of trade and riches, and hinders them 
 from being confined entirely to one people ; as 
 might naturally at first be dreaded, from the ad- 
 vantages of an established commerce. When 
 one nation has got the start of another in trade, 
 it is very difficult for the latter to regain the 
 ground it has lost ; because of the superior skill 
 and industry of the former, and of the greater 
 stocks of which its merchants are possessed, and 
 which enables them to trade for much smaller 
 profits. But these advantages are compensated, 
 in some measure, by the low price of labour in 
 every nation which has not an extensive com- 
 merce, and does not very much abound in gold 
 and silver. Manufactures, therefore, gradually 
 shift their places, leaving those countries an^ 
 
provinces which they have already enriched, and 
 flying to others, whither they are allured by the 
 cheapness of p?'ovisions and labour ; till they have 
 enriched these also, and are again banished by 
 the same causes.” * 
 
 * Hume’s Essay on Money .-— We are not to conclude from 
 what Mr Hume has here so ably stated, that commerce and 
 manufactures are comparatively insecure foundations of na- 
 tional prosperity. The very same causes that bring on the 
 ruin of manufactures and commerce, as certainly draw on 
 that of agriculture. The connection between the two species 
 of industry is indissoluble. Destroy the manufacturers of 
 any country, and the market for its agricultural produce be- 
 ing cut off, rural industry of every kind must equally suffer. 
 History has been appealed to, and we have been told again 
 and again, that the glory of Tyre, and the power of Car- 
 thage, — the wealth of Holland and Geneva, — vanished like 
 the airy visions of a dream, or as volumes of aerial smoke : 
 That Pisa, Florence, Genoa, and Venice, are no more; and, 
 by their fall, prove to the world, that nothing but a respect- 
 able agriculture can give to any state permanent power, and 
 solid greatness. We too might appeal to history, and ask. 
 Have nations, chiefly supported by agriculture, and in whom 
 manufactures were but slightly introduced, had a longer po- 
 litical existence ? Where are the Assyrian, the Babylonian, 
 the Median, the Persian, the Egyptian, and the Macedonian 
 empires ? The single city of Tyre, by her colonies and her 
 commerce, contributed more to the civilization and lasting 
 improvement of mankind than all these boasted states. The 
 wealth of the merchants of this city, and the comparative 
 comforts and ease Uijoyed by the inhabitants as the just re- 
 ward of their industry and ingenuity, have been celebrated 
 in all ages. They were not, however, enervated by luxury ; 
 for it is certain, that the inhabitants both of old and new 
 Tyre, when attacked by the most powerful monarchs of anti- 
 quity, displayed a degree of courage and of true heroism that 
 has never been surpassed. When the dastardly agriculturist* 
 
158 
 
 It is impossible to doubt the accuracy of this 
 reasoning ; its justness has been admitted by al- 
 most every political economist, and may be de- 
 monstrated by the history of almost every com^ 
 mercial country in the world. What, therefore, 
 
 of Asia submitted without a struggle to the yoke of Alexan- 
 der, the Tyrians alone opposed a determined resistance to 
 that conqueror. They were not successful in the unequal 
 contest ; but they shewed, ( what was afterwards more fully 
 exemplified in the case of the Athenians and of the English)^ 
 that the commercial spirit is not inconsistent with a warm 
 love of independence. 
 
 Every person knows the vigorous resistance the Carthagi- 
 nians opposed to the insatiable ambition of Rome. But the 
 whole power of that people being derived from commerce, in 
 place of saying it was the cause of their decline, it will be 
 more consistent with truth to ascribe their existence, as an 
 independent state, for so long a period, solely to its powerful 
 and invigorating support. The Roman empire itself, — that 
 huge colossus, which stretched from the Euphrates to Britain, 
 and from Atlas to the Rhine, — whose inhabitants despised all 
 other industry but agriculture, — after quietly suffering every 
 species of cruelty and oppression the most odious of tyrants 
 could inflict, fell a helpless and easy prey to the attacks of 
 rude but unenslaved barbarians. Immortality is denied to 
 the institutions of men, but it does not appear that commer- 
 cial states are necessarily of shorter duration than others. 
 
 Commerce raised Venice from the bosom of the deep ; and 
 though the errors of her rulers, combined w r ith the revolution 
 in the India traffic, have diminished her trade, she is still a 
 considerable city. The funding system , w[f the fluctuation of 
 commerce, ruined Holland : And if we disregard and despise 
 the lessons of experience, — if voe impose taxes and burdens 
 sufficient to expel commerce from this country, — the baneful 
 consequences inseparable from its decline must be solely as- 
 cribed to our wretched policy, and not to the instability of 
 commerce itself. 
 
159 
 
 should be thought of a policy that, in a nation 
 Supported to such an extent as Britain by com- 
 merce and manufactures, should labour to place 
 them under great relative disadvantages ? That, 
 instead of attempting to counteract the ordinary 
 causes of their decline, and to perpetuate the na- 
 tional power and welfare, should endeavour to 
 accelerate their ruin ? That should increase 
 taxation beyond all comparison, and enact laws 
 violently to enhance the price of the indispen- 
 sable necessaries of life ? 
 
 If such a policy would be pregnant with ruin 
 at any period, it must be doubly so at present. 
 We have sufficiently explained the rapid pro- 
 gress the continental nations and the Americans 
 arc making in manufacturing industry. The 
 fictitious and exclusive advantages we enjoyed 
 during the war are now done away. Cotton will 
 no longer sell for 6s. or 7s. at Amsterdam, when 
 it brings only 2s. at London. The raw material, 
 in a season of peace, must be as cheap in other 
 countries as here ; and it is only the power to 
 undersell foreigners in their own markets, on the 
 principle of a fair competition, that can possibly 
 preserve our manufacturing pre-eminence. 
 
 The unprecedented emigration of all ranks of 
 people since the return of peace, affords a too 
 practical proof of the decidedly pernicious effects 
 of our fictitious system. It is ridiculous to be per- 
 
160 
 
 petually boasting about the superior excellence 
 of our artizans, at the very moment that blasting 
 poverty is forcing thousands of them out of the 
 country : Were their ingenuity a hundred times 
 greater than it is, it will not long be of any par- 
 ticular service to us, unless a radically different 
 system of policy is adopted. 
 
 To suppose that floating capita:l, or capital that 
 can be disengaged without much loss, will re- 
 main in any state when it might be elsewhere 
 vested more advantageously, is an idea contra- 
 dicted by universal experience, and inconsistent 
 with the fundamental maxims of political eco- 
 nomy. A merchant uniformly employs his stock 
 in that trade, and in that country only, where it 
 yields him, all things considered, the largest re- 
 turn. The transference of capital from one state 
 to another is not generally so perceptible as that of 
 artizans ; but when the latter find it for their ad- 
 vantage to go abroad in multitudes, the other, 
 we may rest assured, will not be long in follow- 
 ing. 
 
 If the fact of a great emigration of capitalists 
 and of people of fortune had not otherwise been 
 sufficiently well known, no doubt could exist on 
 the subject after the statement made in Parlia- 
 ment last session, that a considerable revenue 
 might be raised by imposing a tax on the pro- 
 perty of persons residing abroad. This allega- 
 
161 
 
 tion was not contradicted by the minister, who 
 expressed his approbation of the principle of such 
 a tax. It appears certain, however, that a tax 
 of this kind, if carried |into effect, would, inde- 
 pendently of its being oppressive and arbitrary, 
 accelerate the transference of capital, and be al- 
 together inefficient as a source of revenue. A 
 few proprietors of entailed estates might, per- 
 haps, be induced to remain at home ; but on the 
 mercantile part of the community, who may be 
 inclined to emigrate, it can have no effect but to 
 stimulate them to take their entire capital along 
 with them. 
 
 If the oppressiveness of taxation forces people, 
 brought up in this country from their infancy, to 
 go abroad, it must, unless^ reduced, oppose an im- 
 penetrable barrier to the return of their families. 
 Their children, familiar only with foreigners, will 
 entirely forget they are descended from Britons : 
 France or America will be to them their native 
 countries, and their capital, their ingenuity, and 
 their industry, will permanently belong to the 
 one or the other, 
 
 Admitting, however, that it is possible to pre- 
 vent the efflux of our capital by restrictive mea- 
 sures, that circumstance will not materially re- 
 tard the progress of manufactures abroad. The 
 want of the raw material, not the want of ca- 
 pital, was, as we have already observed, the 
 
 h 
 
162 
 
 chief cause that prevented the successful compe- 
 tition of the French and Germans during the late 
 war. We judge of the wealth of foreigners 
 by referring to our own ideas of riches, and 
 we forget that an individual with L. 700 or 
 L.800 in France, Bohemia, or Saxony, is really 
 as rich, or can command as much labour and com- 
 modities, as he could do in Britain with L.1800 
 or L.2000. A manufacturer in those countries 
 might consequently trade as extensively as ano- 
 ther in Britain, though his nominal capital was a 
 half less ; and if the nominal capitals of both 
 were the same, the profits of the former would 
 evidently amount to the double of the latter. The 
 advantages on the side of the foreigners are, 
 therefore, altogether preponderating, and must, 
 without a very great fall in the expence of ma- 
 nufacturing in this country, ultimately turn the 
 balance in their favour. 
 
 Such a fall can only be brought about by a re- 
 duction OF TAXATION, AND A MODIFICATION OF 
 
 the corn laws. We must cease to believe in 
 the efficacy of bounties and drawbacks, and all 
 such miserable expedients. If we pay foreign- 
 ers for buying our high-priced goods, we will 
 make but a sorry profit on their sale : and if we 
 afford them cheaper to others than to ourselves, 
 by taking off the duties on them when exported, 
 we must, by so doing, increase the relative ex- 
 
163 
 
 pence of living at home, and stimulate emigra- 
 tion. 
 
 Of the many groundless opinions entertained 
 respecting our manufactures, none seem more 
 destitute of foundation, than the idea, that al- 
 though we should be excluded from our present fo- 
 reign markets by the increased expence of manu- 
 facturing, new ones would be found, such as South 
 America, &c. that would compensate for their 
 loss. But countries in an inferior stage of civili- 
 zation are surely less able to purchase costly 
 goods, than those that are richer and in a more 
 improved state. It is only the absence of compe- 
 tition that could make those goods be bought by 
 poor customers, which, on account of their price, 
 had been refused by nations abounding in wealth: 
 As soon as a competitor appeared, who could af- 
 ford the same goods at a cheaper rate, this mar- 
 ket, like every other, would be lost to the high- 
 priced articles. We must have formed a very 
 incorrect opinion, indeed, of the ambition of the 
 French and the Americans, if we imagine they 
 would be satisfied with underselling us in their 
 own markets, and would not attempt to do the 
 same thing in every market of the globe. If the 
 manufactures of a country are adequate for the 
 home consumption, they naturally seek an ex- 
 tension in the supplying of foreigners. It is easy 
 ts augment the quantity in proportion to the de- 
 
164 
 
 mand ; and the extension of the demand itself 
 enables the goods to be sold cheaper. 
 
 We shall not insist on the irretrievable ruin of 
 agriculture, which must inevitably follow the loss 
 of our foreign trade. By experience it is found, 
 that corn laws are of no service where the con- 
 sumers are not able to pay the high prices. It 
 is not much for a landlord’s advantage that the 
 restrictive system increases his rents 20s. or 30s. 
 an acre, when it increases pauperism and the poor 
 rates, in an equal or greater proportion. An ef- 
 fective demand for the products of agriculture, 
 arising from the possession of a large body of 
 manufacturers and merchants in easy circumstan- 
 ces, is its only real and permanent support. 
 
 The agriculturists labour under a gross delu- 
 sion. They never reflect, that the price of every 
 commodity into which the labour of man enters, 
 must correspond with the price of the essential 
 necessaries of life : and that whatever they may 
 gain from an increase in the price of their produce, 
 is compensated by the rise in the wages of la- 
 bour, and of all kinds of manufactured goods. 
 By disabling our manufacturers from competing 
 with foreigners, the corn laws sacrifice the last- 
 ing advantages resulting from the possession of 
 a great surplus industrious population, for the 
 sake of a small temporary benefit. Whatever 
 relief the agriculturists derive from them must, 
 
165 
 
 therefore, be fleeting and illusory : It must arise 
 from the depression and ruin of that class with 
 whose welfare their own is intimately and inse- 
 parably connected : It is precisely the same with 
 the relief a patient receives from a medicine, that 
 expels a curable, to leave an incurable disease in 
 its room. 
 
 The encouragement given to smuggling by our 
 fictitious system, is not the least of the number- 
 less evils attending it. When the most necessary 
 commodities are loaded with excessive duties, it 
 is certain an illicit trade will be carried on. The 
 temptation L too strong to be effectually resisted, 
 more especially t when it is shrewdly suspected that 
 the price is improperly enhanced, or the duties 
 unnecessarily imposed. It is ridiculous to think 
 of repressing these evils by other means than by 
 removing the real cause. As soon as the profits 
 of the fair trader are nearly equal to those of the 
 smuggler, the latter will relinquish his hazardous 
 profession. But an army of excise officers, back- 
 ed by all the indiscriminating and absurd severi- 
 ty of the revenue laws, will be inadequate to re- 
 press this traffic, while other laws give it direct 
 encouragement, or while the high duties are con- 
 tinued. A contempt of oaths, a contempt of all 
 law, accompanied with the universal demoraliza- 
 tion of the lower classes, are the necessary and 
 baneful results of this system of policy. 
 
166 
 
 There is, unfortunately, nothing of hypothesis 
 in this statement. The increasing frequency of 
 crimes in this country, is a fact that can no long- 
 er be denied. And the pressure of taxation — 
 the intolerable burdens imposed on the middle 
 and lower classes, — fully warranted Say in point- 
 ing them out as the sole cause of the evil. * 
 
 The decline of our Navy will be a certain con- 
 sequence of a falling off in our foreign trade. 
 The one cannot be maintained without the other: 
 Commerce is alone the nursery of sailors, and to 
 say that the country can go on without trade, is 
 the same thing as to say that seamen may equal- 
 ly be dispensed with. Though the internal and 
 coasting traffic of France were far from inconsi- 
 derable during the late war, yet the want of fo- 
 reign trade, and the consequent inexperience of 
 her sailors, rendered them very inadequate oppo- 
 nents of the British. The victories gained by 
 Lords Howe and Duncan, were more keenly con- 
 tested than any of the rest, because the seamen 
 in the enemy’s squadrons had been trained in the 
 previous peace. The late contest with America 
 sufficiently proves the truth of this remark. It 
 will not be said that the bravery of the Ameri- 
 cans was greater than that of the French and the 
 Dutch ; their different success can only be ascri- 
 
 * De l’Angleterre, &c. p. 26 . 
 
167 
 
 bed to their superior seamanship, and to their 
 long training to nautical affairs. If, therefore, 
 we will not voluntarily consent to surrender the 
 trident of Neptune, to occupy the second in place 
 of the first rank among nations, to see our naval 
 laurels transferred to another country, — we must 
 support our foreign commerce and our manufac- 
 tures, for it is to them we solely owe our naval 
 and national pre-eminence. 
 
 But we again repeat, — the commercial spirit 
 cannot permanently remain in any particular coun- 
 try, under great comparative disadvantages. It 
 will, in peaceable and ordinary times, adapt itself 
 to that situation in which it may be exerted with 
 greatest freedom, and in which it is exposed to 
 fewest exactions. Hence the policy that persists 
 in maintaining a fictitious increase in the price of 
 provisions, or a great relative weight of taxation, 
 is, in a manufacturing nation, the very worst that 
 can be followed. It argues a total ignorance of 
 general principles, and a perfect blindness to the 
 most obvious and necessary consequences. It 
 directly counteracts the progress of real opulence, 
 and lasting improvement ; and for some trivial 
 good, or more generally to effect some sinister 
 and infamous purpose, forces industry to relax in 
 its efforts, to lose its proud and noble conscious- 
 ness of self-independence ; and finally produces 
 
163 
 
 poverty, wretchedness, and, worse than all,- 
 slavery. 
 
 The supporters of our fictitious system,— the 
 admirers of taxation,— dwell with extreme plea- 
 sure on the falsification of the predictions of im- 
 mediate ruin to our commerce, that were indulged 
 in by some writers at the end of the American 
 war : And they triumphantly ask, Is it possible 
 to imagine that similar conclusions, resting on no 
 better foundation, shall not again be equally dis- 
 proved ? There is here, however, an assumption 
 made of the very point which should have been 
 established. It must first be shewn that the pre- 
 sent relative situation of Great Britain is the 
 same as in 1783 ; and after that is done , the argu- 
 ment will apply, and some gasconading may be 
 safely indulged in. 
 
 During the American war, this country, far 
 from engrossing the commerce of the world, was 
 not able to preserve what she had previously pos- 
 sessed. The revolution in the colonial trade, 
 and the capture of several of our West India 
 islands, made us then sensible of the evils of war 
 while it was carrying on. No fears were enter- 
 tained at the return of peace, that we would lose 
 the trade we had kept during the Avar, but mere- 
 ly that we should not be able to recover our for- 
 
169 
 
 mer commerce to its full extent. America, at 
 the conclusion of the peace, did not manufacture 
 any goods for her internal consumpt ; the spirit of 
 her inhabitants was entirely agricultural, and it 
 was clear she must continue to import commodi- 
 ties from Europe. Many, indeed, apprehended 
 she would be able to purchase them at a cheaper 
 rate from France or Germany ; but most oppor- 
 tunely, the discoveries of Sir Richard Arkwright 
 at that critical juncture, gave us a decided supe- 
 riority in the cotton trade, and enabled us, till his 
 inventions became generally known, to bear down 
 all opposition. The present situation of Ameri- 
 ca, and this country, and Europe, is quite chan- 
 ged. Manufactures have now struck a firm root 
 in the United States, the most improved ma- 
 chinery is introduced, and the people and govern- 
 ment of that country are fully impressed with 
 their importance, and are not dependent for a 
 supply of necessary articles on any European na- 
 tion. 
 
 From 1775 to 1783 inclusive, the average price 
 of wheat was about 44s. a quarter. No new corn 
 law was enacted when the treaty of peace was 
 signed, and the price did not decline subsequent- 
 ly to that event. It is needless to say how very 
 different was the state of things during the late 
 war : but it is of the utmost importance to re- 
 mark, that, as the price of corn in France and 
 
170 
 
 other nations of Europe has not risen since 1 785, 
 the expence of living, and consequently of la- 
 bour, in Britain, compared with the continent, 
 must now be about double what it was at that 
 period. 
 
 In 1798, Mr Pitt estimated the nett rent of 
 Great Britain, or the portion of the produce ac- 
 cruing to the landlords, at 2 6 millions sterling; 
 and supposing the rental to have increased one- 
 third between 1798 and 1783, that would give 
 16f millions as the nett rent at the latter period. 
 In 1783, the interest of the national debt, and 
 the charges of management, were together be- 
 tween eight and nine millions, or were nearly 
 equal to one-half of the rental. In 181.5, howe- 
 ver, the total nett rent of Britain did not cer- 
 tainly exceed 27 millions, * while the interest of 
 the debt, jand its attendant expences, amounted 
 to the enormous sum of Forty-five Millions, 
 or to two-thirds more than the rental. 
 
 * The nett rent of England and Wales was reported to Par- 
 liament, by the commissioners of the income tax in 1810, as 
 being equal to 29f millions ; and the tenants’ profits, (esti- 
 mated in every case, even where the tenant was losing, at 
 3-4ths of the actual rent ; and in other cases of old leases. & c. 
 at 3-4ths of the valued rack rent ,) amounted to almost exactly 
 the same sum. The rent of Scotland, at the same period, 
 amounted to about four millions ; but the tenants* profits 
 were not estimated in the same proportion to the rent as in 
 England. There was no increase of rent between 1810 and 
 1813 ; but supposing the entire rent of Great Britain to have 
 
171 
 
 The average official value of the exports for the 
 three years ending with 1783, was L.13, 276,000; 
 which exceeds the interest of the then debt by a 
 sum equal to one-half its amount But the ave- 
 rage official value of the exports for the three 
 years ending 1814, did not equal the amount of 
 the present debt. 
 
 It were extremely easy to adduce additional 
 evidence to prove, that the relative situation of 
 Great Britain at the present day , is vastly diffe- 
 rent from what it was in 1783; but that is un- 
 necessary. The facts we have just stated, suffi- 
 ciently establish this unpleasant truth, and shew 
 the rapid progress we have made towards na- 
 tional bankruptcy, the certain result, perhaps the 
 true euthanasia , of the funding system.; 
 
 In 1783, France groaned under an immense 
 debt, and under every species of feudal oppres- 
 sion. The revolution totally destroyed both, 
 and the industry and improvement of that coun- 
 try have since rapidly increased. It is true, that 
 
 at the latter period amounted to 36 millions, it is certain, from 
 the inquiries made by the Board of Agriculture, and other evi- 
 dence, that this rent is now reduced by at least 25 per cent., 
 (35 per cent, would be much nearer the truth) ; and, conse- 
 quently, the nett rent of Great Britain at this moment does 
 not exceed twenty-seven millions. And estimating the tenants* 
 profits at one-half the rent, it follows, that both do not a- 
 mount to above 40 J millions ; which is about 4|- millions less 
 than the interest of the national debt, and the expence of the 
 sinking fund. 
 
late events threaten to retard her improvement •, 
 but it is not possible to imagine, that the abuses 
 of the old regime, that the authority of mistresses 
 and priests, can be restored in their full extent ; 
 or that the stimulus given to industry by the re- 
 volution shall entirely lose its efficacy. 
 
 In Holland, notwithstanding of the economy of 
 the government, the public debt became so enor- 
 mous, that, in order to raise the sums necessary 
 to pay its interest, the most indispensible neces- 
 saries of life were heavily taxed. Flour and meal 
 paid a duty when ground at the mill, and bread 
 when it came from the oven. The country peo* 
 pie of Holland, in lieu of a part of these imposts, 
 paid an annual composition of so much a head, 
 according to the sort of bread they consumed. 
 Those who made use of wheaten bread paid 
 about 6s. 9^d., and those who lived on oats, rye, 
 &c. paid proportional sums.* Can we be sur- 
 prized, that such a system of taxation ultimately 
 ruined the greater part of the manufactures of 
 Holland, and vastly injured her carrying trade, 
 and her fisheries ? f 
 
 If prohibitions on the import of foreign grain 
 raise the price of corn in any country beyond 
 
 * Petty’s Pol. Arithmetic, 4th edit. p. 104. Wealth of Na- 
 tions, vol. iii. p. 340. 
 
 t Wealth of Nations, vol. iii. pp. 340. 3£)2. Raynal. Histoire 
 Philosophique, &c. Geneve, 1780, tom. iv. p. 310. 
 
173 
 
 its natural level, they must, to the consumers, 
 be exactly the same in their effects, as if they 
 paid a tax on com equal to the fictitious in- 
 crease. A British workman might, if the trade 
 were free, purchase a quarter of wheat for 50s. ; 
 but the restrictions — framed to enable the land- 
 ed interest to pay their taxes — by raising the 
 price to 80s., virtually make him pay a tax of 80s. 
 on every quarter he consumes ; and, averaging 
 the consumption at 3-4ths of a quarter per head , 
 they are really equivalent to a capitation tax of 
 22s. 6d. sterling.* 
 
 It will be very extraordinary indeed, if the 
 debts of this country do not cause an effective si- 
 milarity with Holland in more points than the 
 above; if the funding system shall be ruinous 
 in every other nation of the globe, and here alone 
 harmless or beneficial, f 
 
 * Dr Smith justly stigmatizes a taxation of this kind, as 
 being a curse equal to the barrenness of the soil, and the 
 inclemency of the heavens. Wealth of Nations , vol. ii. 
 p. 198. 
 
 t “ The practice of funding has gradually enfeebled every 
 state which has adopted it. The Italian republics seem to 
 have begun it. Genoa and Venice, the only two remaining 
 which can pretend to an independent existence, have both 
 been enfeebled by it. Spain seems to have learned the prac- 
 tice from the Italian Republics, and (its taxes bfeing proba- 
 bly less judicious than theirs) it has, in proportion to its na- 
 tural strength, been still more enfeebled. The debts of Spain 
 are of old standing. It was deeply in debt before the end of 
 
174 
 
 By proving, that a great relative taxation 
 must exert a deadly influence on the commerce 
 and prosperity of the country, we sufficiently es- 
 tablish its impolicy, and the necessity of its re- 
 duction. As the subject, however, is of vital im- 
 portance, we shall add a few additional observa- 
 tions, tending still more to strengthen these con- 
 clusions. 
 
 Dr Colquhoun, and other writers who have 
 laboured to prove, that an immense national 
 debt, or an immense taxation, (for the phrases 
 are synonymous,) is not injurious to the country, 
 assume, that the money borrowed by Government 
 is expended in the same manner as the sums bor- 
 rowed by a private individual. But a private 
 person will always attend more to his interest, 
 and have a clearer view of what conduces to his 
 advantage, than the agent of a monopolizing 
 company, and the latter than a servant of Go- 
 vernment. When the capital of the country 
 
 the sixteenth century, about a hundred years before England 
 owed a shilling. France, notwithstanding all its natural re- 
 sources, languishes under an oppressive load of the same kind. 
 The republic of the United Provinces is as much enfeebled 
 by its debts as either Genoa or Venice. Is it likely, that in 
 Great Britain alone, a practice which has brought either i weak- 
 ness or desolation into every other country, should prove al- 
 together innocent ?” — Wealth of Nations , vol. iii. p. 432. 
 
175 
 
 comes into the hands of the latter, it is morally 
 certain that it will be employed less judiciously 
 than if it had been distributed to individuals. 
 Responsibility, though lofty in its sound, and of- 
 ten employed to round a parliamentary period, is 
 but trifling security for good conduct, when com- 
 pared to self interest.* And if the funding sys- 
 tem had no other disadvantage than the counter- 
 acting of this principle, it would be condemnable 
 on the soundest policy. 
 
 It is here assumed, that the capital borrowed 
 by Government is spent productively ; and even 
 on this most favourable hypothesis, the transac- 
 tion is obviously hurtful. The fact is, however, 
 that not one thousandth part of the money bor- 
 rowed by Government is so expended. It is be- 
 stowed on supporting those who, if they were 
 annihilated at any given instant, would not leave 
 any capital behind them— nothing to represent 
 the immense sums that had been lavished on 
 their support. Their productions are properly 
 denominated immaterial, and consist almost al- 
 ways in moral results. It is no doubt necessary 
 for the state to maintain soldiers and sailors for 
 her defence ; and to think they could be entirely 
 dispensed with seems perfectly visionary. But 
 
 * “ Nul sentiment dans l’homme ne tient son intelligence 
 eveille, autant que l’interet personnel ; il donne de Pesprit 
 aux plus simples.”— Say, tom. i. p. 340. 
 
176 
 
 we must not be silly enough to imagine, that 
 whatever is consumed by them has as great an 
 effect in increasing national opulence as if it were 
 consumed in giving birth to new products. Fa- 
 shion renders coachmen and valets necessary to 
 people of fortune, but certainly they do not con- 
 tribute to increase their riches. Abstracting 
 from the security derived to the state, the con- 
 sumption of military is precisely the same in its 
 effects on industry, as if the same quantity of 
 produce they consume was purchased by Govern- 
 ment, and then cast into the ocean. Every thing 
 expended on them is just so much capital, so 
 much reproductive power , taken from the indus- 
 trious classes of society, and for ever lost to the 
 state.* 
 
 It is often stated, that taxation encourages 
 production, by increasing consumption ; and that 
 whatever sums the Government and its depend- 
 ants receive from the people, reverts back to 
 them in payment of their produce purchased by 
 the former. But, in the first place, the consump- 
 tion caused by taxation ought more properly to 
 
 * “ Smith appelle le eoldat un travailleur improductif : 
 Plut, a Dieu ! c’est bien plutot un travailleur destructif ; non- 
 seulement il n’enrichit la societe d’aucun produit, non-seule- 
 ment il consomme ceux qui sont necessaires a son entretien, 
 mais trop souvent il est appele a detruire inutilement pour 
 lui-meme, le fruit penible des travaux d’autrui/’— Say, tom. ii. 
 p. 26 %. 
 
177 
 
 be denominated a destruction . It does not arise 
 from an exchange of products, and consequently 
 can give no beneficial encouragement to produc- 
 tion. There is no reciprocity of advantages ; 
 gain is all on the one side, and loss only on the 
 other. The industry of an agriculturist will be 
 exerted, — he will endeavour to raise larger crops, 
 if he knows he can exchange his surplus corn for 
 manufactures, colonial produce, or any commo- 
 dity he may wish to acquire. But a totally op- 
 posite effect will be produced, by taking a half, 
 or a third of his earnings, to expend them in 
 supporting some useless regiment, some pamper- 
 ed sinecurist, or some profligate mistress. In the 
 second place, the money spent by Government, or 
 its servants, does not revert back to the people, 
 but on the same terms they obtain the money of 
 Spain or Portugal. The sinecurist receives his 
 salary without giving an atom in return ; but he 
 is much too wise to spend it in the same man- 
 ner. He receives money for nothing; but he 
 parts with it only for bread, beef, clothes, or 
 commodities possessed of real value. It is, there- 
 fore, perfectly absurd to imagine, that the indus- 
 try of a state can be in any respect benefited by 
 the expenditure of its government. If taxes are 
 reduced, the fortunes of the productive classes are 
 proportionally augmented. The same expendi- 
 
 M 
 
178 
 
 ture still takes place ; but it is under the gui- 
 dance of individual interest, and is effected by 
 a production and interchange of real equiva- 
 lents. 
 
 It is obviously the same thing, whether taxes 
 are paid in raw produce, manufactured goods, or 
 money. If they are paid in money, the money 
 itself must previously have been purchased with 
 some sort of produce really valuable. If a ma- 
 nufacturer is taxed to the extent of L. 500, he 
 must sell goods to raise this sum. After he has 
 paid his tax to Government or its dependants, 
 they may again transact with him, and purchase 
 goods with the money. But this circumstance 
 restores no part of the commodities to the manu- 
 facturer with which he really paid the tax. He 
 first gave commodities for a certain amount of 
 gold and silver ; he next paid this gold and silver 
 to Government; and if he now buys this mo- 
 ney back, it will be on the same terms he first 
 acquired it — by again parting with an equal 
 quantity of goods. It is astonishing how such a 
 simple transaction as this, could ever have been 
 rendered obscure by any species of sophistry. 
 Nothing can be more obvious: View the mat- 
 ter as we please, the manufacturer will be found 
 to have lost exactly the amount of his tax. We 
 must cease to deceive ourselves. There is no- 
 thing productive in taxation: nothing ad van* 
 
 \ 
 
179 
 
 tageous to the productive classes ; — it is an en- 
 gine of destruction, and nothing more. 
 
 The unavoidable necessity of supporting fleets 
 and armies, as it cannot be escaped, should be 
 rendered as light as possible. A rigid economy 
 is in a government the first of virtues, and the 
 most pressing of duties. A splendid and gor- 
 geous court, magnificent fetes, and pompous pa- 
 laces, are not only false and fallacious evidences 
 of national prosperity, but they are at once a 
 proof and a cause of its decline. Many comforts 
 must be wrung from, and much misery entailed 
 on, the lower and middle classes, to support this 
 glittering emptiness and ostentatious parade, no- 
 wise conducive to the real dignity of any nation. 
 It should never be forgotten, that the President 
 of the United States, the chief magistrate of one 
 of the most powerful nations of the world, has 
 not above L. 6000 per annum of salary. 
 
 We must also recollect, that this country has 
 been often saddled with the interest of loans sent 
 abroad. It is frequently forced to pay for, and 
 advance a capital to foreigners ; and when this 
 is the case, it is really a little too much to tell 
 us, we are only taking out of the right pocket 
 and putting into the left. 
 
 It has been contended, that every war ob- 
 structing the ordinary employment of capital, 
 and disengaging quantities of stock previously 
 
180 
 
 invested in a profitable manner, such portions of 
 the national capital naturally seek the service of 
 the public, “ and can be employed in no other 
 way * There is, however, much gratuitous and 
 unfounded assumption in this statement. If 
 some departments of industry suffer from a war, 
 advantages accrue to others. A greater demand 
 is experienced for military stores ; an impulse is 
 given to agriculture, by the purchases for the 
 fleet and army ; and, consequently, an addition- 
 al capital is required for these departments. It 
 is also certain, that when war enlarges foreign 
 trade, — when it puts a stop to that competition 
 which exists during peace, — and when it throws 
 the commerce of the world into the hands of one 
 of the belligerent nations, — its merchants may 
 profitably invest much larger capitals than be- 
 fore. It is, therefore, extremely doubtful, whe- 
 ther the funding system admits of any defence 
 on this ground; but assuredly, had no other 
 sums been borrowed by Government than those 
 alluded to, the magnitude of the national debt 
 would never have caused any uneasiness. 
 
 A bank is an entrepot for capital, not the pub- 
 lic funds as has been imagined. When a capital- 
 ist lends money to Government, he merely gets 
 in return an assignment on the revenues of the 
 
 Edinburgh Review, No. ix. p, 118 . 
 
181 
 
 country for a certain annual rent, till it be found 
 convenient to repay the principal, which is either 
 applied to the real service of the state, or squan- 
 dered away. The holders of these assignments 
 may, it is true, sell them at pleasure ; but the 
 original stock , with which they were first pur- 
 chased, has been consumed as revenue , — is ab- 
 stracted from the capital of the nation, and can- 
 not again reproduce itself. 
 
 The national debt gave birth to the nefarious 
 practice of stock -jobbing. It generated a spirit 
 of gambling, destructive of public morals, dis- 
 graceful to the state, and decidedly hostile to the 
 pursuits of sober industry. Capitalists were de- 
 terred from lending money to agriculturists or 
 manufacturers, because, when in their hands, 
 they had no opportunity of taking advantage of 
 the rise and fall in the price of the funds, of im- 
 posing on the simplicity of some, and the cupidi- 
 ty of others. And Government being absurdly 
 released from the operation of the usury laws, 
 contracted frequently for loans at a much higher 
 rate of interest than capitalists could legally have 
 exacted from other persons,* and obtaining mo- 
 
 * In 1781, ministers borrowed 12 millions; and for every 
 £100 of this sum, they gave £ 1 50 in the three per cents, and 
 £ 25 in the four per cents., with a bonus of lottery tickets. 
 The interest, therefore, which the public has to pay on this 
 loan amounts to above 5| per cent., exclusive of the bonus, 
 and the charges of management; and if the funds should bt 
 
18 c 2 
 
 ney in preference, engrossed the floating capital 
 of the country to the real prejudice of the pro- 
 ductive classes. These are not imaginary grie- 
 vances : During the latter years of the war, when 
 the loans to Government were largest, a very 
 great difficulty was universally experienced in 
 the borrowing of money even on the most unex- 
 ceptionable security. The expedient of redeem- 
 able annuities (loans at 12 , 15 , and 20 per cent.) 
 was generally resorted to by such as were not 
 fortunate enough to obtain loans from bankers. 
 The constant depreciation of the currency pre- 
 vented the miserable effects of this method of 
 borrowing from being immediately felt ; and the 
 late diminution of their usual discounts by the 
 country banks, while, by altering the value of 
 the currency, it ruined those who had previously 
 borrowed on the annuity system, has obliged 
 many industrious individuals, fully aware of its 
 injurious tendency, to have recourse to it. 
 
 It is perfectly illusory to say, that the money 
 drawn from the people by taxation would have 
 
 at par when it is paid, — (this consideration, I confess, need 
 give no serious alarm,) — it would require 21 millions to can- 
 cel it. In 1796, <£18,000,000 was borrowed as a loyalty loan ; 
 and for this sum, so loyally advanced. Government, besides 
 paying a large bonus, funded £20,124,843 in the five per 
 cents., mortgaging the revenue of the country for £ 1,006,243 
 of interest, exclusive of the expence of management, &c. — 
 Our funding system exhibits many similar instances of un- 
 measured prodigality. 
 
183 
 
 been spent by them as unproductively. Unless 
 taxation be altogether oppressive, — unless it 
 takes away a part of those necessaries and en- 
 joyments essential to all conditions of life, — this 
 consequence will not follow. The prospect of 
 enjoying increased comfort, and comparative re- 
 spectability and ease as the fruit of exertion, 
 must surely operate as a greater incitement to 
 industry and economy, than the desire of satia- 
 ting the all-devouring and thankless rapacity of 
 the tax-office. 
 
 “ Will it be said,” asks Say, “ that the neces- 
 sity of paying taxes obliges the industrious class 
 to redouble their efforts, and that consequently 
 there is an increase of production ? But, in the 
 Jirst place, efforts do not suffice to produce : capi- 
 tals too are necessary ; composed of those very 
 products which the revenue seizes upon. In the 
 second place, who does not perceive, that that 
 produce which industry only raises in order to 
 pay taxes, does not enrich the state, since it is 
 taken and consumed unproductively ? To main- 
 tain that taxation contributes to enrich a nation, 
 because it abstracts a portion of its riches, is 
 plainly to maintain an absurdity ; and to have 
 made this remark would have been superfluous 
 and trivial, if the greater part of governments 
 had not acted on this pretended principle, and if 
 works, estimable both from the intentions and 
 
184 
 
 the talents of their authors, had not laboured to 
 prove it.” * 
 
 To ascribe the improvement of Britain, during 
 the last twenty years, to the increase of her debt, 
 is an error of the most miserable kind. Her im- 
 provement during that period was owing to the 
 perturbed state of the rest of Europe ; to her mo- 
 nopolizing the commerce of the world ; and to 
 other accidental causes already noticed.— She did 
 not improve because of the debt, but in spite of 
 it. 
 
 At no time was the progress of real last- 
 ing improvement more rapid in Britain, than 
 from the peace of Paris in 1763 to the war that 
 broke out in 1775; and in that interval the na- 
 tional debt was reduced , paper was convertible 
 into gold, and the price of grain did not rise. 
 Since the breaking out of the late war, the debt 
 of Ireland has increased even more rapidly than 
 that of Britain; and if the improvement and 
 happiness of nations were correspondent to the 
 extent of their burdens, she ought at this day to 
 be by far the most flourishing, and most happy 
 country in Europe. Her actual situation too flatly 
 contradicts this ridiculous theory ; and it appears 
 certain, that an oppressive taxation, operating on 
 an impoverished and starving populace, is the 
 real cause of her distress and irritation. 
 
 * Traite d’ Economic Politique, tom. ii. p. 29 
 
185 
 
 It is surely unnecessary to pursue this argu- 
 ment farther. Nations and individuals get rich 
 in the same manner. If M. Canard, Mr Spence, 
 and Dr Colquhoun, shall continue for a series of 
 years to live above their incomes, and prove to 
 the world that they became richer as their extra- 
 vagance and profusion increased, we may then be 
 inclined to suspect, that, though apparently in- 
 conceivable, there is some foundation for their 
 reasoning. At present, we can consider it as no- 
 thing better than ingenious trifling, — than so- 
 phistry, and groundless assumption, in place of 
 natural inferences from established facts. 
 
 SECTION SIXTH. 
 
 Propriety of Repealing the Restriction Act , and of 
 obliging the Bank of England to resume Cash 
 Payments. — Inexpediency of Cash Payments , 
 unless accompanied with a Reduction of the In- 
 terest of the National Debt — Proofs of the Ne- 
 cessity and Justice of this measure of Reduction . 
 — Expediency of applying the Sinking Fund to 
 the general service of the Stale . — Conclusion . 
 
 hile it is in the power of the Directors of the 
 Bank of England to regulate the currency of the 
 
186 
 
 country at their pleasure, no person can form a 
 prospective conjecture as to the value of his pro- 
 perty at any period but a little remote. The es- 
 tate that is purchased to-day for L. 10,000, and 
 reckoned a good bargain, may, by a change in 
 the Bank’s system of discounting, or by their 
 withdrawing their notes from circulation, be ren- 
 dered in a very short time not worth half this 
 sum : On the contrary, if they are more liberal 
 in granting discounts, and increase their notes, 
 either by accommodations to the state or to indi- 
 viduals, it might speedily become worth double 
 the paper it had been sold for. This artificial 
 and unnatural system, renders the money value 
 of all the property of the empire dependent on 
 the views and opinions of twenty-four indivi- 
 duals. Their fiat alone makes one transaction 
 good, and another bad. They hold the scale of 
 value, and change its graduation as they judge 
 proper. 
 
 Although we should, in a paroxysm of folly, 
 consent to sacrifice our foreign trade and our ma- 
 nufactures to preserve our present money sys- 
 tem, — although we should completely prevent 
 the import of corn and ail other products from 
 abroad, — although we should realize the idea of 
 Berkeley, and surround the country with a wall 
 of brass/ — the inherent defects of such a cur- 
 * Querist, No. 134. 
 
187 
 
 rency would compel us ultimately to aban on it. 
 In this state of things, there could be no limit to 
 the Bank issues from any fears the more enlight- 
 ened Directors might entertain of thereby en- 
 hancing the cost of labour and of manufacturing. 
 The depreciation of notes, compared with the 
 produce of the country, would be so much the 
 more rapid ; as they would never come into con- 
 tact with the currency of foreigners, and as we 
 would never be alarmed with the exchange be- 
 ing 20 or 30 per cent, against us. When a quar- 
 ter of wheat came to require double the number 
 of notes to purchase it, that it had done before 
 this system began, it would be sagely maintain- 
 ed, that the <c money unit could not depreciate,” 
 but that wheat had become more valuable. 
 Thus circumstanced, no person could dispose of 
 any property, even for what might be considered 
 at the time as an extraordinary price. No per- 
 son could lend money to another, or to the state ; 
 perpetual alterations would have to be made in 
 all kinds of salaries ; and doubt and uncertainty 
 would be intermingled with every transaction. 
 Men, in this situation, would again, from neces- 
 sity, have recourse to barter ; to the exchange of 
 real equivalents against real equivalents; and 
 the natural course of events, without the aid of 
 legislative authority, would of itself compell us to 
 l 
 
188 
 
 have recourse to a currency less fluctuating in its 
 nature. 
 
 These effects were felt to a considerable ex- 
 tent during the greater part of last war. An- 
 nuitants of all descriptions suffered much hard- 
 ship. The injustice that, in a different state of 
 things, would have been done to the public cre- 
 ditors, who had lent the country gold, or paper 
 equivalent to gold, by raising the denomination of 
 the coin, however gross and palpable, would not 
 have been greater than what was actually done, 
 in paying them with depreciated paper. The sa- 
 lutary practice, too, of granting long leases, was 
 well nigh put an end to. Landlords would not 
 let their farms to tenants for 20 or 30 years, 
 when they saw the rapid advance that was every 
 day taking place in prices. The length of leases 
 was frequently reduced to half the usual period ; 
 and clauses were introduced, giving the landlord 
 power to resume possession during its currency, 
 on certain conditions. Nothing but the prospect 
 of a continued rise in prices, or a continued de- 
 preciation of paper, could have induced tenants 
 to enter into such stipulations; they were alto- 
 gether inconsistent with a sober and steady spirit 
 of industry, and were solely fitted for the ficti- 
 tious state of thing in which they were adopted. 
 
 But there is one thing that deserves to be most 
 particularly attended to, for its consequences are 
 
189 
 
 at present severely felt. Although the Bank 
 may render its notes much less valuable than the 
 specie they profess to represent, it cannot render 
 them more valuable. If the state contracts a 
 debt when the currency is depreciated, when a 
 bank note is, perhaps, not worth more than 15s. 
 it still has the same nominal amount to pay, 
 when its value is at par. If taxation was carried 
 to an oppressive extent, to cancel the interest of 
 sums borrowed on the former footing, it becomes 
 almost insupportable on the latter : 25 per cent, 
 is virtually added to its amount ; and precisely 
 the same thing is done, as if the taxes had for- 
 merly been increased in that proportion. 
 
 On this account alone, it is of infinite impor- 
 tance to a state, that the value of its currency 
 should be as little fluctuating as possible. When 
 a public debt has been contracted, a depreciation 
 of paper induces what is really equivalent to a 
 national bankruptcy. It is certainly too much 
 to entrust any corporate body, hewever respecta- 
 ble, with the power of reducing the national cre- 
 dit to nothing, and of ruining all the classes liv- 
 ing on fixed incomes. It is still more dangerous 
 to entrust them with the power of enriching an- 
 nuitants and stockholders at the expence of the 
 industrious part of the community, — to arm them 
 with the prerogative of imposing taxes ; for they 
 exercise that power most effectually, when, by 
 
190 
 
 diminishing their paper, and consequently raising 
 its value, they reduce the price of commodities, 
 and oblige a farmer to sell two quarters of wheat 
 to pay the taxes for which one had formerly suffi- 
 ced. Such a power vested in the hands of a body 
 unknown to the constitution, and acting under 
 no responsibility, is perfectly anomalous in a free 
 country, and is totally at variance with a perfect 
 right of property. 
 
 If the Bank had, in the late session of Parlia- 
 ment, been obliged to pay its notes in specie, 
 which it might have done without any loss to it- 
 self, as the reduction of the paper of the country 
 banks had brought their value to a par with 
 gold, — the interest of by far the greater portion 
 of the national debt Contracted in the late war, 
 would have been raised .5, 10, 15, and even 30 per 
 cent. The country, without the dividends had been 
 reduced, would have been compelled to pay the im- 
 mense sums lent to it when paper was depreciated 
 much below its value in gold, with paper converti- 
 ble at pleasure into the precious metals. When the 
 real capitals of farmers and manufacturers were 
 daily getting less, (because of a falling off in the 
 demand for their produce, caused by foreign com- 
 petition,) their real burdens would have been as 
 constantly increasing. The least valuable class 
 of society would have been benefited at the ex- 
 pence and ruin of the rest. The taxation that 
 
191 
 
 has been so intolerably oppressive for the last two 
 or three years, must have been continued without 
 the possibility of its reduction. Capitalists and 
 labourers, deprived of every prospect of a diminu- 
 tion of their burdens, would have emigrated to a 
 greater extent than they have hitherto done; 
 and would have sought an asylum less exposed 
 to the ruthless attacks of the harpies of extor- 
 tion. 
 
 The Bank cannot, therefore, be called upon to 
 pay its notes in specie, without a reduction being 
 made in the interest of the national debt. This 
 measure must precede the other. The misery of 
 the last two years cannot always be borne. Ei- 
 ther the currency must be again depreciated, or 
 the debt must be reduced. Injustice may be 
 done as much by lowering as by raising the deno- 
 mination of money. All the arguments that have 
 ever been adduced to shew the injustice and impo- 
 licy of the one, apply with equal, or greater effect 
 to the other. To force an individual debtor to re- 
 pay 20s. with 25s., or 20 oz. of bullion with 25 oz. 
 >vould be gross and barefaced oppression. The 
 case is the same, or much stronger, with a na- 
 tion. The sufferings and wrongs of individuals 
 may not be attended to in a season of general 
 prosperity ; but general oppression and hardship 
 for the advantage of a few, will not be long en- 
 dured, in any country not perfectly enslaved. 
 
192 
 
 It is perfectly idle to talk of sensibly reducing 
 our burdens, of bringing taxation to a par with 
 the other countries of Europe, while an over- 
 whelming debt weighs down the state, and dead- 
 ens the springs of exertion. * While 45 millions 
 a-year have to be raised for paying the interest 
 of the debt alone, it is vain to think that any re- 
 trenchments in minor parts of expenditure can 
 afford any adequate relief to the distresses of the 
 country. A load of taxation nearly double the 
 rent of the whole land in the Empire, is a burden 
 so vast, that of itself it cannot fail to force capi- 
 tal and industry to emigrate, and must at no very 
 distant period destroy our commercial prosperi- 
 ty, and bring on a public bankruptcy, if not a re- 
 solution. 
 
 l^his immense debt is the real millstone that 
 overburdens and destroys the enterprise, the in- 
 dustry, and vigour of the people ; that multiplies 
 tax-gatherers, pauperism, crimes, and wretched- 
 ness throughout the land ; that prevents us from 
 
 • We are far from insinuating, that those measures of re- 
 trenchment adopted during last Session of Parliament were 
 improper. The sinecure system ought to be entirely rooted 
 out. While it exists, a powerful body, fed by taxation, will 
 always be ready to support and multiply every species of 
 abuse : And although the pecuniary advantages resulting from 
 its abolition would not be very considerable, still it would be 
 of infinite consequence, that this servile phalanx was for ever 
 dissolved. 
 
193 
 
 being happy in a state of peace, and that totally 
 unfits us for again entering upon war. Is it pos- 
 sible that we can hesitate about its reduction, as 
 far as that can be done with justice ? or that we 
 can turn a deaf ear to the well-founded com- 
 plaints of the country ? 
 
 It has been contended, that, if we are to re- 
 duce the interest of the national debt when mo- 
 ney rises in value, we ought, on the same prin- 
 ciple, to increase it when the value of money 
 falls ; and that, in this way, there would be no 
 end to legislative interference. This remark is 
 perfectly just, but is altogether inapplicable to 
 the present case. We do not propose to reduce 
 the interest of any part of the debt contracted 
 anterior to the depreciation of paper; but we 
 maintain, that it is manifestly unjust (waving 
 the gross impolicy of the measure) to compel the 
 country to pay depreciated paper , or paper per- 
 haps 20 per cent, less valuable than bullion, with 
 paper convertible at pleasure into the precious 
 metals. This is precisely the same thing as com- 
 pelling the industrious classes , (for it is on them 
 that every tax ultimately falls,) to pay the stock- 
 holders one hundred ounces of silver, when they 
 only lent eighty ounces — it is really equivalent 
 to raising the interest of the debt, and increa- 
 sing taxation. If, however, the interest of all 
 
 N • 
 
194 
 
 the loans made since 1 797, is now reduced ac- 
 cording to the depreciation of paper at the time 
 they were lent, and if the Bank is also obliged 
 to pay in specie, (and we hold the two measures 
 to be inseparable,) it is clear, that no reduction 
 whatever is made on the amount of bullion due 
 the stockholders. They receive back the nett 
 quantity of gold and silver they lent : We do not 
 reduce the interest, because the relative value of 
 gold and silver may happen to be increased ; but 
 we justly refuse to return a greater quantity of 
 the precious metals than was actually lent us. 
 
 It is, therefore, incontrovertibly just, that if 
 the dividends are now to be paid in undeprecia- 
 ted paper, they should be reduced by the diffe- 
 rence between the value of paper, and gold and 
 silver, at the time the loans were made. 
 
 This satisfactory conclusion, is altogether in- 
 dependent of any considerations respecting a mo- 
 dification of the corn laws , and of a fall in the 
 'price of grain . These considerations must not, 
 however, be overlooked ; they are of the utmost 
 importance, and would of themselves afford sub- 
 stantial reasons for reducing the interest of the 
 national debt. 
 
 Were the value of agricultural produce to be 
 lowered by legislative interference, by the repeal 
 or modification of the corn laws, the agricultu- 
 rists would surely have a just claim to demand 
 
a diminution of their burdens. They would 
 have an unquestionable right to require, that all 
 taxes imposed on land, when corn sold for 80s. 
 or 100s. a quarter, should be reduced in propor- 
 tion to the fall consequent on the act modifying 
 the restriction. If the burdens, however, that 
 manufacturers and capitalists now bear, by the 
 price of corn being fictitiously kept up, were 
 thrown upon them in the shape of taxes, their 
 situation, it is obvious, would not be at all bene- 
 fited. They would then pay directly to the 
 taxgatherer the same sums that now find their 
 way to him, by intermediately passing through 
 the hands of the farmer. In one circumstance 
 only their new situation would be different ; they 
 would have a more accurate, less confused idea, 
 than at present, of the real cause and extent of 
 their sacrifices. 
 
 The value of commodities may, in every case, 
 be said to measure the value of money : in pro- 
 portion as they are high or low priced, the hold- 
 ers of given quantities of gold and silver have a 
 less or a greater power over the necessaries and 
 luxuries of life. When accidental causes, or a 
 fictitious and destructive system of domestic eco- 
 nomy, enhances the prices of commodities in a 
 particular country, the value of money is propor- 
 tionally reduced ; and if the system is deliberate- 
 ly established, a flagrant injustice is done to the 
 
196 
 
 possessors of monied property. It is certain, 
 however, that after the fictitious system is once 
 established, every commodity in the state desti- 
 ned for home consumption assumes a correspond- 
 ing value ; every internal transaction is settled 
 with reference to the new order of things ; and 
 it is only in our transactions with foreigners, en- 
 joying the blessings of a free trade, or cursed 
 with restrictions of a different nature, that such 
 a system of policy is always ruinous. During 
 the last war, the combined effects of a deprecia- 
 tion of the currency, of the corn laws, and of 
 the difficulties in the way of importing grain, 
 raised the home price of corn to an unparalleled 
 height. This rise continued for so long a time, 
 that the prices of almost every other commodity 
 in the kingdom experienced a similar advance, 
 and the value of money a corresponding fall. 
 Every lease was granted, and every contract was 
 entered into, in the belief that the then value of 
 money was natural, that the depreciation had 
 been general, and that it would continue. * 
 
 From this statement it becomes obvious, that 
 any rise in the value of money, or any alteration 
 in the fictitious system, which would effect a re- 
 duction in the price of commodities, would fun- 
 damentally alter every one of the contracts en- 
 
 * See Sect. IV. p. 128 . 
 
197 
 
 tered into during the last twenty years. For ex- 
 ample, let us suppose that the state, in considera- 
 tion of sums advanced by a capitalist in 1812, 
 engaged to pay him for fifty years, an annuity 
 of L. 10,000: on referring to the price of corn 
 for that period, it will be found that it had really 
 in view to give him a power of purchasing an- 
 nually about 1 600 quarters of wheat ; but sup- 
 posing the price of wheat to be permanently re- 
 duced to one half of its then price, it is clear this 
 annuitant would be invested with a power of pur- 
 chasing 3200 quarters of wheat ; and would, un- 
 less the amount of the annuity were reduced, re- 
 ceive in all 80,000 quarters more than he was 
 justly entitled to, or than what entered into the 
 view of the parties at the time of the contract. 
 The case here supposed is entirely the same in 
 principle, with the real case of every stockholder 
 who has lent money to the country during the 
 late war. 
 
 If we abolish the fictitious system in one part, 
 we must abolish it in another. If we repeal the 
 corn laws, and thereby reduce the price of corn, 
 we must also reduce the interest of the national 
 debt contracted during the continuance of the 
 high prices. We must not gratuitously enrich 
 the stockholders at the expence of the other 
 classes ; they must not receive two quarters of 
 wheat when they are only entitled to one : If the 
 
198 
 
 power of their annuities is increased, though the 
 quantum be proportionally diminished, their situa- 
 tion will remain the same.* 
 
 When value is rendered for value, there is no 
 injustice ; but money is only so far valuable, as 
 it enables us to command the necessaries and the 
 luxuries of life. If the stockholder, therefore, is 
 paid with half the sum that he lent, when by a 
 change in the domestic policy of the country, 
 this half sum will purchase as many of these ar- 
 ticles as the whole sum did before, no injustice is 
 done him ; on the contrary, he is dealt with on 
 the clearest principles of equity. 
 
 It could not escape the penetration of Mr 
 Malthus, that if the price of corn should fall be- 
 low its price for the last twenty years, the stock- 
 holders who had lent money to the country du- 
 ring that period, would get an unjust and ruin- 
 ous advantage over the industrious classes of the 
 state. With his wonted perspicuity, and with a 
 spirit that does him infinite honour, Mr Malthus 
 has assigned the following unanswerable reasons 
 for this opinion : — 
 
 “ If the price of corn were now to fall to 50 s. a 
 
 * Their situation would in fact be much better: They 
 would have an increased security for their real debts ; and the 
 improvement in the economical situation of the country that 
 would follow a reduction of taxation, would greatly raise the 
 value of the funds and other government securities. 
 
199 
 
 quarter, and labour and other commodities near- 
 ly in proportion, there can be no doubt that the 
 stockholder would be benefited unfairly , at the 
 expence of the industrious classes of society, and 
 consequently at the expence of the wealth and 
 prosperity of the whole country. 
 
 “ During the twenty years beginning with 
 1794 and ending with 1813, the average price of 
 British corn per quarter was about 83 s. ; during 
 the ten years ending with 1813, 92s. ; and during 
 the last five years of the twenty, 108 s. In the 
 course of these twenty years, Government bor- 
 rowed near five hundred millions of real capital, 
 for which, on a rough average, exclusive of the 
 sinking fund, it engaged to pay about five per 
 cent. But if corn shall fall to 50 s. a quarter, 
 and other commodities in proportion, instead of 
 an interest of about five per cent, the Govern- 
 ment would really pay an interest of seven , eight , 
 nine, and for the last two hundred millions, ten 
 per cent 
 
 “ To this extraordinary generosity towards 
 the stockholders, I should be disposed to make 
 no kind of objection, if it were not necessary to 
 consider by whom it is to be paid ; and a mo- 
 ment’s reflection will shew us, that it can only be 
 paid by the industrious classes of the society and 
 the landlords ; that is, by all those whose nominal 
 incomes will vary with the variations in th§ plea* 
 
sure of value. The nominal revenues of this part 
 of the society, compared with the average of the 
 last five years, will be diminished one-half ; and out 
 of this nominally reduced income, they will have 
 to pay the same nominal amount of taxation. 
 
 “ The interest and charges of the national 
 debt, including the sinking fund, are now little 
 short of forty millions a-year, (they are now for- 
 ty-five or forty-six millions) ; and these forty 
 millions, if we completely succeed in the reduc- 
 tion of the price of corn and labour, are to be 
 paid in future from a revenue about half the no- 
 minal value of the national income in 1813. 
 
 “ If we consider with what an increased weight 
 the taxes on tea, sugar, malt, leather, soap, can- 
 dles, &c. &c. would, in this case, bear on the la- 
 bouring classes of society, and what proportion of 
 their incomes all the active industrious middle 
 orders of the state, as well as the higher orders, 
 must pay in assessed taxes, and the various articles 
 of the customs and excise, the pressure will ap- 
 pear to be absolutely intolerable. Nor would 
 even the ad valorem taxes afford any real relief. 
 The annual forty millions must at all events be 
 paid ; and if some taxes fail, others must be im- 
 posed that will be more productive. 
 
 “ These are considerations,” Mr Malthus just- 
 ly observes, “ sufficient to alarm even the stock- 
 holders themselves. Indeed, if the measure of 
 
201 
 
 value were really to fall as we have supposed, 
 there is great reason to fear that the country 
 would be absolutely unable to continue the pay- 
 ment of the present interest of the national debt. 
 And even if the price of corn he kept up by restric- 
 tions to 80s. a quarter , it is certain that the whole 
 of the loans made during the war just termihated , 
 will, on an average , he paid at an interest very 
 much higher than they were contracted for ; which 
 increased interest can , of course, only he furnished 
 by the industrious classes of society” * 
 
 To make any additions to what Mr Malthus 
 has here so ably stated, would be altogether su- 
 perfluous. There is but one alternative : We 
 must either reduce the interest of the national 
 debt, which impartial justice and sound policy 
 alike authorise us to do ; or we must continue to 
 give the stockholders an unfair advantage, at the 
 expence , and to the certain prejudice of the produc- 
 tive classes. If we adopt the latter line of con- 
 duct, the present enormous taxation, the corn 
 laws,- — in a word, the fictitious system, big with 
 irretrievable ruin to our manufacturers and our 
 commerce, must be persevered in. It is astonish- 
 ing this obvious consideration has not awakened 
 the stockholders themselves from their golden 
 dreams, — from their reveries about 10 per cent. — - 
 
 * Grounds of an Opinion, &c. p. 38, 
 
202 
 
 to a sense of their real situation ; and that they 
 have not voluntarily expressed a willingness to 
 relinquish their improper and exorbitant demands. 
 They must be certain, their dividends cannot 
 long be paid if the commerce of the country de- 
 cline ; and they must surely know, that by in- 
 creasing the burdens of the people, — by insisting 
 ©n a larger interest than they are justly entitled 
 to, — they contribute effectually to ruin trade, to 
 sap the very foundations of the national prospe- 
 rity, to hasten the dissolution of the funding 
 system, and to accelerate a national bankruptcy. 
 Were this last mentioned event to happen, the 
 total ruin of the stockholders would be its inevi- 
 table consequence. But the general mischief 
 that would ensue, — the danger resulting to every 
 part of our political system, — and the universal 
 confusion and multiplied misery it would occa- 
 sion, — must oblige every person who has the 
 good of his country at heart, — who does not fat- 
 ten on her distresses, — to regard with extreme 
 concern and uneasiness those measures which, by 
 oppressing the energies of the people, — by dis- 
 couraging their exertions, — and by applying the 
 fruit of their labours to support the proud and 
 the profligate, — must assuredly bring on this 
 awful catastrophe and its attendant horrors. 
 
203 
 
 The reasoning we have employed to prove the 
 justice and propriety of reducing the interest of 
 the national debt, contracted during the deprecia- 
 tion of our paper currency and the high prices, 
 may be also adduced to shew the propriety of re- 
 ducing the debts of one individual to another con- 
 tracted in the same period. The cases are pre- 
 cisely the same in respect of strict justice ; but 
 various circumstances would render it extremely 
 difficult to apply this measure to individual cases. 
 It would be next to impossible to ascertain the 
 dates, and other essential facts, regarding private 
 loans, and it might give rise to litigation and 
 subterfuges to avoid payments. The reduction 
 of the dividends, by lessening the pressure of 
 taxation, will be of real advantage to private 
 borrowers ; and the stockholders cannot certain- 
 ly object to the measure because it will have that 
 salutary consequence They will not seek to ex- 
 tend to others what they, however absurdly, 
 term a calamity. And, besides, it seems proba- 
 ble, that the stockholders would themselves suf- 
 fer equally with other individuals, if the reduc- 
 tion were extended to private debts. 
 
 It has been objected to a reduction of the divi- 
 dends, that as many of the original subscribers 
 for loans are not now the holders of government 
 securities, but have tranferred them to others, the 
 measure might not really affect those who had 
 
201 
 
 advanced the depreciated paper, but those who 
 had since acquired securities at second hand with 
 undepreciated paper. But it is certain that when 
 a contractor for a loan sells stock, he disposes of 
 it with all its advantages and defects. The pur- 
 chasers come in his place, they are his represen- 
 tatives ; the sale cannot invest them with any 
 better right to their dividends than was posses- 
 sed by the original contractor himself; and what- 
 ever measure was just in respect of the one, must 
 be equally so in respect of the other. 
 
 It is in vain to tell us about the distress and 
 confusion resulting from this measure ; they must 
 of necessity be very limited. There can be none, 
 no, not even the smallest comparison, between 
 the distress and misery produced by cutting off 
 20 or 30 per cent, from the dividends of a weal- 
 thy body of men, such as the stockholders, and 
 of adding a proportional sum in perpetuity to the 
 real taxes that bear so enormously hard on the 
 industrious manufacturers and agriculturists. 
 This is the true, the simple state of the matter. 
 And let us, therefore, be no longer insulted with 
 whinging ridiculous complaints, about the mise- 
 ries that would be suffered by the poor stock- 
 holders ! 
 
 Losing all hopes of interesting our sympathy, 
 the stockholders assume a loftier tone, and tell 
 us, that in our future wars we need not again 
 
M 
 
 205 
 
 attempt to borrow, and that no one will hereafter 
 be found to lend us a farthing’. It will, perhaps, 
 be generally thought that, were the matter to 
 turn out as they represent, no great disadvantage 
 would ensue. Cfi An extreme facility of borrow- 
 ing is a most dangerous power in the hands of 
 any set of men. It enables governments to en- 
 ter upon the most gigantic and exhausting en- 
 terprises, to purchase all that can be purchased, 
 even to the blood and the conscience of men : capi- 
 tal, industry, and good conduct, are thereby pla- 
 ced in the hands of ambition, of pride, and of per- 
 versity .” * Whether the borrowing and funding 
 system in this country has had any such effects, 
 we leave others to determine. But certainly it 
 has frequently induced our Government to make 
 war on insignificant and trivial grounds ; and by 
 removing the necessity of economy, it has encou- 
 raged a profligate and unmeasured expenditure in 
 our internal concerns. It is, therefore, unfortu- 
 nate that the consequence alluded to by the stock- 
 holders, should not follow the reduction of the 
 interest. The reverse, however, would certainly 
 take place. Our credit would improve, as our 
 debts would then bear some relation to our in- 
 come, which is hardly the case at present. 
 
 Thus, the more we reflect upon this measure 
 
 * Say, tom. ii. p. 368. 
 
 1 
 
206 
 
 of reducing the dividends, the greater the variety 
 of lights in which we view it, its justice and expe- 
 diency become more clearly apparent. Let us 
 hope it may be adopted from policy, and from a 
 due regard to the permanent welfare of the coun- 
 try, ere it is forced upon us by an uncontroulable 
 and overwhelming necessity. 
 
 Nothing contributed so much to increase our 
 national debt, as the belief that was for a long 
 time placed in the efficacy of sinking funds, of 
 compound interest, and of the smallest savings , to 
 clear off the largest incumbrances. It is indeed 
 astonishing how the sober sense of the nation 
 could be so long imposed on by such miserable 
 quackery ; and that it was not generally percei- 
 ved, that if ministers borrowed every year more 
 than they paid off, the effect of the payment was 
 merely as if they had borrowed a smaller sum : 
 Whatever financial subterfuges, and mystified 
 jargon, may be employed to conceal the real na- 
 ture of the transaction, this is precisely what it 
 amounts to— “ We are told,” says Dr Hamilton, 
 in that excellent work in which the effects of the 
 sinking fund were first clearly developed, “ that 
 the operations of the sinking fund have succeed- 
 ed beyond expectation, and that the whole debt 
 existing in 1786, amounting to 2 38 millions, is 
 
207 
 
 already paid off. This is altogether fictitious 
 and delusive. We may pay off as much debt at 
 anytime as we please by borrowing: But the 
 only real alteration in the state of our finance, is 
 the difference between the debt contracted and 
 the debt paid off ; and while the former of these 
 exceeds the latter, our situation is growing worse 
 to the extent of that difference. 
 
 “ A private gentleman whose estate is encum- 
 bered may, if he have any credit, pay off all his 
 debt every year, by borrowing from other hands ; 
 but if he spends more than his free income, his 
 embarrassments will continually increase, and his 
 affairs are so much the worse by being conducted 
 in this manner, from the fees he pays to his a- 
 gents. The absurdity of deriving any satisfac- 
 tion from this annual discharge of his debts, will 
 appear still stronger, if we suppose him, instead 
 of borrowing from other hands, only to renew the 
 securities to the same creditors annually, paying 
 a fee to the agents, and a douceur to the creditors 
 themselves on the renewal. All these observa- 
 tions are equally applicable to the debt of a na- 
 tion, conducted as ours is. It would not be im- 
 practicable, or very difficult, to redeem our whole 
 debt in any year, if the measures we follow be 
 redemption. It would only require a large loan 
 every month, and the large sums we were thus 
 enabled to pay would supply the funds for these 
 
208 
 
 loans. Our capitalists would be well pleased to 
 promote these loans, as they would derive a bo- 
 nus from each. Such a system would be ruinous 
 in the extreme ; and the system we follow is the 
 same on a smaller scale , and is, therefore, only per- 
 nicious in a less degree.” * 
 
 The excess of revenue over the total expendi- 
 ture, including the interest of the debt , is the on- 
 ly real sinking fund, the only means by which 
 one shilling of the public debts will ever be paid 
 off : All other schemes for discharging them, un- 
 less in so far as they are founded on this princi- 
 ple, are justly termed illusory, j* 
 
 The average amount of the entire revenue, per- 
 manent and annual, for four or five years past, 
 exclusive of the expence of collection, may 
 be taken at 66 millior/s. Deducting from this 
 sum 16 millions, as the amount of the income 
 tax and malt duty, so happily got rid of last ses- 
 sion, and seven :j: millions as the probable amount 
 
 * Hamilton on the National Debt, 2d edit. p. 191. 
 
 t Id. p. 44. 
 
 J Seven millions is a medium between the sum arising from 
 diminishing the interest of the loans contracted during the 
 war, (exclusive of the sinking fund,) according to the depre- 
 ciation of paper at the time they were lent. And the sum 
 arising from reducing the interest according to the average 
 prices of grain, for periods of five years, beginning with 1794, 
 compared with 50s. the price at which it would sell if the 
 corn laws were repealed, after deducting one half from this 
 sum, as a very liberal allowance for the price of those commo- 
 dities which may be supposed not effectually regulated by the 
 
209 
 
 of the taxes that will be rendered unnecessary 
 by the reduction of the dividends we have just 
 pointed out, there will remain forty-three millions 
 as the future entire revenue : So that after the 
 interest of the debt, including the sinking fund, 
 charges of management, &c. amounting (under 
 deduction of the above seven millions) to 38 mil- 
 lions, are paid, only Jive millions will remain for 
 the service of the state. A sum certainly in- 
 sufficient to cover the ordinary expences of Go- 
 vernment in the present state of the world, 
 though peace were to continue, and the most ri- 
 gid economy to be practised in every depart- 
 ment. 
 
 Supposing the expences of Government in a 
 peace establishment to be reduced to eight mil- 
 lions, it is obvious that unless three millions were 
 taken from the sinking fund and applied to the 
 service of the state, it would still be necessary to 
 negociate a loan to that extent every year, and 
 to continue to juggle the country with the des- 
 picable farce of borrowing money to extinguish 
 the national debt. 
 
 The substantial justice and sound policy of re- 
 ducing the sinking fund, seem alike unquestion- 
 
 price of corn. Mr Malthus, when the debt was much small- 
 er than it is now, estimated the reduction that should be made 
 in the interest, on the] supposition of corn selling at 60 s. at 
 about eight millions. 
 
 O 
 
210 
 
 able. If it was not constituted for the purposes 
 of deception and delusion, but if the payment of 
 the national debt was the real as well as the 
 avowed cause of its formation, it will certainly 
 effect that end more speedily by rendering loans 
 unnecessary, than by cancelling them after they 
 are contracted. To apply the sinking fund to 
 the service of the state, is not, therefore, to divert 
 it from its original destination ; on the contrary, 
 it effectually promotes its operation. 
 
 Mr Ricardo, in his ingenious Essay on the Pro- 
 fits of Stock, protests strongly against the injus- 
 tice of encroaching on the sinking fund, at the 
 same time that he fully shews the propriety and 
 justice of repealing the corn laws. But surely 
 the capitalist who had expended money in pur- 
 chasing and improving an estate, in the belief 
 founded on acts of Parliament , that no foreigner 
 would be allowed to compete with him till the 
 home price reached a certain sum, would have 
 an equal, nay, a much stronger ground of com- 
 plaint if these acts were rescinded, than the 
 stockholder can possibly pretend to have, when 
 the sinking fund is applied to the prevention of 
 Joans, 
 
 It would not, however, be sufficient to apply 
 three millions of the sinking fund to the service 
 of the state : There would still remain forty- 
 three millions to be annually provided for by 
 
211 
 
 taxes ; and a burden of that immense extent, far 
 exceeding the nett rent of the empire, and vastly 
 greater than what would affect any other coun- 
 try, by oppressing the people of Britain, and pla- 
 cing them in comparatively disadvantageous cir- 
 cumstances, would ultimately produce the same 
 effects, though in a slower manner, that we have 
 shewn must arise from our present taxation. It 
 would be imperatively necessary to apply an ad- 
 ditional seven or eight millions, or rather the 
 whole of the sinking fund, to general services, in 
 order that a corresponding amount of taxes might 
 be dispensed with. 
 
 The stockholders may indeed complain, that 
 an appropriation of the sinking fund to the dimi- 
 nution of taxation, not to the prevention of loans, 
 is an interference with its original destination, 
 and that the redemption of the debt must con- 
 sequently be retarded. The question for our 
 consideration, however, is not what particular 
 set of individuals may be benefited, but how the 
 nation at large, how the industrious classes, may 
 be relieved from the burdens that press them 
 down to earth, and threaten their total ruin. 
 But the stockholders are, in fact, as much in- 
 terested in the general prosperity as any other 
 class of society. While the debts of the nation 
 bear some proportion to its revenue, and while 
 its general situation is flourishing, the price of 
 
212 
 
 stocks will be comparatively high ; but all the 
 purchases that can be made by the Commission- 
 ers for managing the sinking fund, will have but 
 a poor effect in keeping up their prices, when 
 the revenue is loaded to the utmost, and when 
 the pressure of taxation causes industry of every 
 kind to languish and decline. 
 
 To conclude: In 1793, the conjoint expence 
 of the peace establishment, and of the interest of 
 the public debt, amounted only to about Jifteen 
 millions ; but now, supposing all the reductions 
 to be made which we have indicated, and the 
 whole of the sinking fund to be applied to the 
 service of the state, their conjoint expence would 
 amount to (at least) thirty-three millions.* 
 This difference is sufficiently striking, and is 
 certainly fully adequate to allay the interested 
 apprehensions of such as affect to see nothing 
 but ruin in a too rapid diminution of our bur- 
 dens. It is indeed true, that the kingdom is 
 now much better cultivated than at the former 
 era, and that we possess a greater manufactu- 
 ring population, and better machinery. But it 
 is also certain, that much of the poor land which 
 has lately been brought into tillage, ought never 
 
 * I suppose the present amount of the sinking fund to be 
 thirteen millions. 
 
213 
 
 to have been taken from pasture ; and that it 
 will return to that st^te as soon as a just policy 
 is adopted in the trade of corn, or as soon as our 
 manufacturers are permitted to purchase their 
 food in the cheapest market. And it is also cer- 
 tain, that the improvements in machinery have 
 not been confined to this country, but that their 
 beneficial influence is felt alike in all, and can- 
 not, therefore, redound to the particular advan- 
 tage of any. Considering these facts, and con- 
 sidering the dangerous competition in every spe- 
 cies of manufactures, to which a continuance of 
 peace will undoubtedly expose us, we must be 
 convinced, that all the measures now proposed 
 for the reduction of taxation — for relieving the 
 industrious classes, from whom alone the country 
 has derived all its power and glory, and by whom 
 it must be supported — are essentially necessary ; 
 and that their principal and radical defect, con- 
 sists in their not going far enough. 
 
 THE END. 
 
 Edinburgh : Printed by A. Balfour. 
 

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