LI B R.AR.Y OF THL U N 1 VLR.SITY or ILLINOIS e>&75 y.l7 i V \ CONSEQUENCES ^ OF RETURNING TO THE OLD STANDARD OF THE CURRENCY: WITH REMARKS ON TiiE EVIDENCE PUBLISHED BY THE SECRET COMMITTEES OF THE TWO HOUSES OF PARLIAMENTi, INCLDDING THE ^\^^ SIIBSTAMJli OF TWO LETTERS, Dated April 3d and 10th, to the Right Hon. THE CHANCELLOR OF THE EXCHEQUER AND ALSO OF A PAPER, PRESENTED MAY 21st, TO THE EARL OF LIVERPOOL. BY PHILOPATRIS VlGORiNIENSIS. LONDOS : _ PRINTED FOR LONGMAV, JIURST AND CO. AND \\y\. WALCOTT, WOROtSTER. i8iy. Printed -y^ B. TYMBS, Journal Omce, High-Street, Worcester. TO THE PUBLIC. Some apology may he thought necessary for publishing a pamphlet on the Resumption of Cash Payments, when the Resolutions, unanimously passed by the two Houses of Parliamejit would seem to have rendered all further discussion on the subject unseasonable and useless. The truth is, that this Tract would have been published sooner, but for the advice of a Gentlpmnn, whose ojnnion must ahvays have some weight with me, '" that I " would publish nothing, unless it would tend to " dispel alarm." But if the measures expected to be adopted, in regard to the Bank, be dangerous, it must be useful to point out that danger ; and, if there be no danger, any alarm excited by this, or any other similar publication, will soon subside. THE AUTHOR. WORCESTER, June 3d, J.8I9. V^-'O I o.\7 CONSIDERATIONS, &c. npHE origin and early history of the Public Debt or, as it has been called by some, of the Fund- ing System, of Great Britain, have been so clearly traced and so faithfully recorded,* and the evils and dangers of such a system have been so ably and so frequently exposed,f that I shall not waste the time of my readers by any attempt to shew, generally, either the commencement and progress of the system or its pernicious ten- dency. My object, more particularly, is, to shew the injustice and danger, in the present stage of the system, of endeavouring to revert to that standard of value, which existed, not in words only but in practice, previously to the Re- striction Act of 1797. And, in doing this, I shall not stay to incjuirc, although such an inquiry would be highly curious in itself and might be * See Smith's Wealth of Nations. + Hume's Essay on Public Credit ; Smith's We:ilth, &c. and numerous other Works. 8 eminently useful^ whether that Restriction was the effect of large remittances sent by the Go- vernment of this Country, in the shape of subsi- dies, to Foreign Powers, or whether, which is my own opinion, it was not rather the natural con- sequence of increased Debt. It is certainly probable, if not certain, when the Restriction was first adopted, that its full con- sequences, with respect either to national or in- dividual interests, were not foreseen. The ex- periment was new ; and, was had recourse to, in order to avert immediate dansjer, arising from the demand for specie at the Bank. But, whether foreseen or no, its effects, both on the Public and on individuals, have been, and still are, most important and striking. No longer under any obligation to pay its notes in gold, the Bank at once found itself relieved from all apprehensions of danger resulting from its advances to Govern- ment. Such advances were highly profitable to the Bank ; and, it now seemed, that they could be made without risk. Besides which, the Bank Directors could not, even if they had felt inclined, well refuse to accommodate a Minister who had shewn himself equally able and willing to protect them. But the Restriction was to last only fifty- two days ;* — from May 3d to June 24tli! The Di- rectors, therefore, did not feel quite secure : and, accordingly^ we find, that shortly after the stop- page of Cash Payments first took place, the Bank, instead of increasing, had actually dimi- nished its advances.f This timidity, in making- advances to Government, continued for some time. But when, in 1803, after the Restriction had been renewed five successive times, an Act was passed on the 15th December, to continue it in force till six months after a Definitive Treaty of Peace,J the Bank no longer hesitated to olDlige the Minister. From December, 1803, to August, 1814, the advances of the Bank to Government gradually increased, with some slight alternations, from £13,635,239, to £35,814,539.§ But, whilst the Restriction thus enabled the Bank to make these advances and to give this acconmiodation to Government, there were other effects, not perhaps at first so obvious, but far more momentous, which resulted from it. * 37 Geo. 3, c. 45. + See Appendix, \o. 3, to " Second Report from Secret Coiu- mittce." t 41 Geo. 3. S Appendix, \o. 3, to " Second Report." 10 From the year 1792 to 1797, the number of Bank of England Notes in circulation va- ried from £8,601,964, to £13,.539,163.* After the Restriction, the number was increased, be- tween August, 1797, and August, 1815, from £10,568,216, to £30,099,908! But this is not all. Before the Restriction, the number of Coun- try Bankers was 230.f In 1810, the licences for the issue of promissory notes in England and Wales amounted to 782 ! And, in 1814, the number granted was 940 !| This increase, in the luimber of Country Banks, is easily accounted for, if we consider that, previous to the Restriction, all notes issued by Country Bankers were obliged to be paid, if demanded, in gold. But, when Bank of England notes became a legal tender, this restraint on the issue of Country Bank notes was removed. Country Bankers could then only be called upon to take up their own notes in Bank of England notes ; and, as the Bank of England gradually lost all fear of being obliged to * Appendix, No. 10, to " Second Report." + See Report of the Bullion Committee. ^ Appendix, No. 35. 11 pay its notes in gold^ it was perfectly natural for the Directors to be more liberal in acconniiodatiiig the Public. But, even if they had not, so long as Bank of England notes, through the medium of the Government expenditure, found their way in large quantities into the hands of private Bankers in London, no Country Banker, who possessed property, found any difficulty in obtaining what- ever Bank notes he wanted. If a run, as it is called, took place on his Bank, he had no fears, provided his property was greater than, or even equal to, the amount of his notes, of being able to meet such run. Hence, not only the number of Country Banks prodigiously increased, but each individual Banker found it his interest, as far as possible, to increase and extend his circu- lation. The natural consequence was, a general rise in the monied prices of things. Scarcely any purchases were made, or any speculations entered into, but what yielded a profit : enterprise, there- fore, was encouraged, and industry invigorated. Tiie advance in the prices of the necessaries of life was not, in the hrst instance, as is maintain- ed by Dr. Coppleston,* any hardship upon the * See " Letters to the Right Hon. 11. Peel." 12 labouriug; class; since a more than equal advance, the necessary effect of augmented capital and in- creasing profits, took place in the wages of la- bour. If tlie eflect of an increase of the circulat- ing medium was, to depress the condition of the labouring poor, how happened it that, after the Restriction, the population rapidly increased? That the population did increase, the Doctor will hardly deny. But to admit this fact, and at the same time to assert that the demand for laboiu' was not increased, and that the wages of labour were not rcalli/ advanced ; in other words, that the condition of the labouring poor was not im- proved, is to suppose an effect without a cause. But to retm-n. The increase of the amount of circulating medium not only produced a rise in the necessaries of life and in the wages of labour, but in the price of gold. That paper, in re- ference to gold, became depreciated, is a fact now so generally admitted, that it would be idle here to endeavour by argument to establish its truth. If, however, there should still be any \^ho \m\e doubts upon this point, they will do M ell to examhie the '' Appendix" annexed to the Evidence published by the Secret Committee of If) o tlie House of Coinmons. In tliat "" Appendix" is a " Weekly Account of the market prices of gold, '*^from January, 1790, to January, 1819 ;" and it appears, that, from 1790, to Au<;ust, 1797, a pe- riod of seven years, the market price of standard gold, in bars, never exceeded £3. 17s. (id. per oz. But that, from 1797, the first year of the Re- striction, to 1813, it rose to £b. 10s. per oz. ; — between 40 and 50 per cent. ! From the same account, it is seen, that in 1816, wlien the general currency of the Country, owing- to the numerous failures which happened amongst the Country Bankers, was greatly diminished, the price of gold fell to £3. 18s. 6d. ; and, from the evi- dence, it appears, that it would have been lower still, but for the purchases made by the Bank.* In 1817 and 1818, when the issues of paper had increased, the price of gold again ad\anccd to £4. 3s. per oz.f Another effect arisini»; from the Restriction, was, a virtual diminution of the National Debt. The interest remaining at the same nominal * Sec Minutes of Evidence, t Appendix, No. 14. 14 amount, it is evident that, the currency in which it was paid being depreciated, at one time from 10 to 20, and at another from 20 to 30 per cent, the sum paid in the sliape of interest was in fact lessened, at one time I -10th, and at another l-5th and even l-3d. The National Debt was in truth diminished in the same proportion. In the same manner, taxes of all kinds, afthougli nominally the same, were paid in a depreciated currency. It must be admitted, that some injustice was in this way done to the Public Creditor, and in- deed to all those individuals whose incomes w ere fixed.* But the national prosperity was pro- moted and advanced. No person j^osscvssed of property, or whose character, although his pro- perty was small, was established for industry and integrity, found any difficulty in procuring the representative of property. In a vast majority of * Because no complaint was at the time made by this class of persons, 1 should be sorry to argue that they had therefore no ground for complaint. Much less would I contend that, because it is now generally known and acknowledged that the currency has been greatly depreciated, tho e individuals who, since the Re- striction, have either granted annuities, borrowed money, or lakea leases, did it " with their eyes open ;" and with a knowledge that money would be restoried to the old standard. r5 instances, the capital thus obtained, was employed beneficially for the individuals to whom it was ad- vanced, and of course for the Community. There soon appeared, all the marks of increasing wealth. Houses were built; — canals cut;— bridges erected; — roads improved ; — and land cultivated. Taxes were scarcely felt ; and the Nation was carried, triumphantly, through the most desperate war in which it was ever enoajred.* It is indeed ad- mitted, that the paper system saved the Coun- try, f And if, on the return of peace, the cir- culating medium had not been suddenly and forcibly reduced, the national prosperity would have gone on increasing ; — the property tax might have been continued, for the Country would have been able to bear it; — and o'.ir fi- nances would, by this time, have been upon a solid and secure footing. But, as if the Restriction had been imposed and continu- ed by Government merely for its own ac- * Whatever difference of opinion may exist, as to the policy or impolicy of entcrinff on the War originally, all must agree, that, for some years l)efore its termination, it was a Hlrnggle, on our part, for political existence. f In s;i}iiig this, it is l)y no iixsms intended, to detract either from the merits of Ministers or (roni llie hravcrv and skill of Ins Majesty's Fleets and .\rinits. .Much less, not to acknowledge the goodness and iiierc\ ol' Divine I'rovidcncc. 16 commodation, and as if its effects on the Debt and Taxes, and on the National Industry, had been totally unobserved,* no sooner was peace siaiied, than means were taken to diminish the amount of the circulating medium. In August, 1814, the Bank Notes in circulation were £•28,979,876. In February, 1815, they were reduced to £26,673,370 ; and, in February, 1816, to £25,680,069 ;t— making a reduction, compared with 1814, of £3,299,807. During the time that the circulating medium was increasing, Agriculture was in the highest degree encouraged and extended. The produce of the land was sold at prices which not only af- forded a profit to the Farmer, but stimulated him to the greatest exertions to bring all the land he possibly could into cultivation : an immense quantity of waste land was enclosed, and sub- jected to the plough ; and the old enclosed land w^as cultivated in the best manner. But, when peace came, the obstacles to the importation of grain and other necessaries, which existed * The ((uestion of the currency seems always to have been re- gar ed b Ministers as a mere question of finance. t Appendix, No. 10, to " Second Report," &c. 17 dui'ino^ the war, were removed. Nor did Go- vernment any longer make purchases to the same extent for the army and navy. A serious fall hap- pened in the prices of agricultural produce. Country Bankers, who had found it their interest to make advances to Farmers, not only to ena- ble them to hold their stock of grain and cattle, in the expectation of a better market, but occa- sionally for the purchase of land, became alarmed. From their Bankers in London, they learnt that money was no longer plentiful : they diminished their issues ; and endeavoured to call in their ad- vances. But, thus suddenly called for, re-payment was in most instances distressing and difficult ; and in many impracticable. Sales of property were made at immense loss. The alarm now be- came general ; and distress was aggravated by panic. A run on the Country Banks was the con- sequence ; and upwards of two hundred were obliged either to suspend payment or to relin- quish business. Distress and ruin spread on all sides. In the Cotton, the AVooUcn, the Iron, and the Silk Trades, business was eitlier much lessened or wholly at an end. Thousands of persons were thrown out of employment, and 18 compelled either to ask alms or to take refuge in tlie work-house. Rents could no longer be re- ceived ; and the public revenue was alarmingly deficient. To console us, indeed, under these evils, the market price of gold fell to the mint price ; and the exchanges were restored to par ! But, whatever advantage it may have been to certain merchants to lower the price of gold and restore the balance of exchange, the want of employ- ment amongst the labouring class still continued; nor did poverty and misery and discontent, in any degree diminish. To alleviate calamities, now become of frightful magnitude. Ministers at length determined to increase the amount of the circulating medium. Accordingly, nine millions were borrowed from the Bank ; — and the march of Desolation was stayed. In the following year, 1817, when the money thus borrowed had got ge- nerally into circulation, the prices of commodities began to rise ; — a fresh stimulus was given to in- dustry ; — agriculture and manufactures revived ; — and the labourer again found employment. In 1818, evefy thing was prosperous : capital em- barked in trade once more yielded profit ; — land, which had been almost unsaleable, increased in 19 value, and again became sought after; — the wages of labour rose ; — discontent and disaffection va- nished ; — and the revenue was greatly augment- ed. But alas ! the price of gold again rose ; and again we lost the balance of exchange ! It must indeed be admitted, how prudent soever the conduct of tlie Bank Directors in this respect may generally have been, that, in two instances, they have, by an over issue of their notes, most materially, though certainly unin- tentionally, injured the public weal. From Oc- tober, 1811, to October, 1814, the number of Country Banks increased from 779 to 940 !* But, independent of this great increase in the number of Country Banks, the quantity of notes issued by each Banker had for some time been increas- ing. The amount of Coimtry Bank notes, as long as they arc payable at the option of the holder, in notes of the Bank of England, must, on an average of some years, be limited ])y the amount of Bank of England issues. If these latter be diminished. Country Bank notes must * Appendix, No. 35, to " Second Report." 20 also be diminished. But^ in seasons when con- fidence aiid credit run high, a much less amount than at other times, of Bank of England notes will keep in circulation a given quantity of Country Bank notes. When things go on smoothly, no Country Banker will think it ne- cessary to keep by him the same quantity of Bank of England notes as in times of alarm. But credit and confidence never were higher than from 1811 to 1814; and yet the Bank of England, in defiance of the market-price of gold, which in those years varied from £4: 15s, to £b} 10s. and in defiance also of the state of the exchanges, increased its issues npwards of five millions !* In excuse for such conduct, the Bank will probably say, that the necessities of Government at this time required large advances : and there may be some truth in this ; for, on examination, we find, that, from 1811 to 1814, the advances to Government were increased from £18,068,439 to £35,814,539 ;— an increase of £17,746,100 in three years If Why then, let us * Appendix, No. 10, to " Second Report," &c. + Appendix, No. 3, to " Second Report.*' hear no more of " over- trading" as the cause of over-issues. " Over-trading" has no doubt been one of the bad effects resulting from such im- prudent conduct on the part of Ministers and the Bank ; but, it is important to keep in mind, that it has in no way been the cause* Again, between the months of February and August, 1817, the Bank increased its notes from £27,058,578 to £39,099,908. The Directors must have known that the qaantity of Country Bank notes was also increased and increasing. Yet in the face of this, with the market price of gold considerably higher than the miiit price and with the exchanges against us, they began to issue gold at the mint price ! In exporting * The distresses of 1816 were said, by Mr. Brougham, to arise from " over-trading ;" and Mr. Ellice, Hiiothtr Aiember ol Iho Opjosilioii, has attributed the present mercantile embarrassments t<» llie SHine cause. This is something like s ^ying, that shipwrecks are the eifect of over-voyaging. True it is, th;il if no voyages were made, no ships would be lost. In like manner, if no ;oods h;'.d been ni.viu- facturcd, nor purchases made, nor cngagcmeiits entered into, we should not bear of so much misery and rum from the alteratiuus in the currency. Those Gentlemen, who f.inc) that Governntetit could manage the private r<»i cen.s of indi\iduaU better ihan lljcy can themselves, would do well to lecollett the Ircuch sa^ioff, " Laissez nous f aire .''' 22 this g'old^ merchants merely acted upon the principle by which they nmst always be influ- enced — their own interest. But what was the effect upon the Country ? Gold, being- the cheap- est article in the kingdom and being also readily obtained from the Bank, was exported ; and, in its steady we had imported corn ; w hich, our har- vest being unproductive, it was expected would pay the importer better than any thing else. Making, as it is said, a profit of 8^ per cent, on the gold, the merchant was induced to run the risk of any profit on the article he took in lieu of it. Of course, the foreigner could not purchase our gold without paying for it ; and he paid in that article which the seller of the gold preferred, as the most likely to pay a profit. Our ports, therefore, were filled with foreign corn ; and the British farmer, who, with a crop com- paratively unproductive, had a right to expect a good price, could scarcely sell his corn at all. But;^ if a farmer cannot sell, he cannot buy. Hence, in addition to the injury sustained by our manufactnrers from the exportation of gold instead of manufactured goods, the home demand fell off The consequence is^-— 23 warehouses full of goods and no demand for thein. It was at this critical period, when, owing to the impolitic conduct of the Bank, both agri- culture and manufactures were severely suffering, and when merchants, from tlie high state of credit and the cheapness of money, in the latter part of 1817 and the beginning of 1818, had been induced to give large credits, for which they had not yet received any return proceeds, that Government found itself obliged to consider the expediency of the Bank resuming Cash Payments. Whatever motives may have actuated the Opposition, they had, by their speeches in Par- liament, for several years, endeavoured to bring the Bank into disesteem. It was represented as " fattening" on the public ; as dividing immense profits ; and as having in view not the public interest but its own.* The executions for for- * It is curious, that, when Mr. Miiiinin;^, on the Debate on Mr. Peel's " Resolutions," sliewed, lliat llie Bank liail. ia some instances which Ik; named, coiisulled the i»ul)lic interest at the expence of its own. bolii h;: and liis brother Dire clors were ridiculed by Mr. Uicardo, as bein» fond of " acting as Ministers." They were told also, 24 gery were continually brought in view ; and the Bank Directors were almost openly charged with being the cause of them. Representations of this kind were industriously repeated out of doors ; and the public mind was by this means agitated and inflamed. To withdraw from circu- lation^ therefore, small Bank notes, and to pay in gold, became extremely popular. But this hostile feeling towards the Bank was not merely confined either to party circles, or uneducated prejudice : it prevailed amongst the pious and humane ;* and reached the seats of learning and retirement. f Independent, indeed, of the necessity there was thoroughly to investi- gate the question of the Bank Restriction, it is not improbable that Ministers were themselves divided in opinion on the subject. The Prime Minister was supposed to entertain sentiments nearly allied to those published by his father ; J " that it was their duty to attend solely to the interests of the '■ Bank." — See Parliamentarif Debates. * See accounts in the newspapers, of public meetings to petition the Legislature for a revision of the Criminal Code. t " Letters to the Rt. Hon. R. Peel, by one of his Coutituents." % See " Letter to the King," by the late Earl of Liverpool. 2b ''that 'the extent to which paper currency had been carried, was the first and principal, though not the sole cause, of the many difficulties to which the Bank of England was then/' speaking of 1797, '' and had been, from time to time^ exposed." On the other hand, the Chancellor of the Exchequer had given the world the strongest reasons for believing, that he thought there had at no time been an over-issue of paper. Whether this difference of opinion existed or not, an in- quiry Avas resolved on ; and Secret Committees were appointed of both Houses of Parliament. In the mean time, no impression at all corre- sponding to the magnitude of the occasion was, by the appointment of these Committees, made on the public mind. The Restriction had been so often renewed and had existed for so many years ; — the relations between property and money had so completely formed themselves upon it ; — and the inconveniences, which would result from its not being contiimed, were so weighty and numerous, that hardly could a pcrsou be found in the country, who believed Parliament to he in ear- nest. A l)cli('f ill fact prevailed, that Cash Pay- D 26 meiits would never be resumed. No preparations^ therefore^ were made to meet such a blow. But the '' First Special Report" in some mea- sure dispelled this illusion. A great fall took place both in the Public Funds and in the prices of all articles. Bankers took the alarm ; and beg'an quietly to withdraw their advances. Sales of colonial and manufactured produce were almost entirely stopped. Every prudent man began to examine his affairs and to curtail his business. Still people, generally speaking, would not be- lieve, that it could seriously be intended to resume Cash Payments. The uncertainty, however, of the 'thing, and the length of time, no doubt unavoidable, which elapsed between the appear- ance of the ''First" and '' Second Report," caused trade to languish ; and produced the worst effects. At length, the " Second Report" appeared ; and the intentions of Ministers could no longer be doubted. Having given this short history of the Re- striction, and of the effects it has produced, which it was perhaps in some degree necessary to do in order to understand the nature and probable con- 27 sequences of the measures recommeucled to be taken for the Resumption of Cash Payments, I proceed to shew, which indeed is the principal, if not the sole object of this tract, the injustice and danger of endeavouring-, in this stage of the Funding System, to revert to that standard of value which existed, not in words only but in practice, previously to the Restriction ; and, in doing this, I shall take occasion to make a few remarks on a certain learned author, and on the " Minutes of Evidence" taken before the Secret Committee of the House of Commons ;* and shall also advert to some of the speeches delivered on the subject, in the two Houses of Parliament. From the evidence published by the Secret Committee, it appears, that the Bank cannot re- sume Cash Payments with safety, unless the exchange be in favor of this country ; nor unless the market price of gold be the same, or nearly the same, as the mint price, f And that, in order to bring the exchanges to par and the market * I confine myself to the " Commons' Evidence ;" simpl> be- cause I have not that of the " Lords'' by nic. t Sec " Minutes of Evidence," passim. 28 price of g-old to the iniiit price, the Biitik must diminish its issues of paper. * From the same evidence, it also appears, that no diminution of the present amount of the circulating medium can take place without di- minishing the trade and manufactures of tlie country ; nor without lowering the nominal rates of all things except debts and taxes. It is stated by Mr. lialdimand/j" that in his opinion a diminution of the circulating medium, in reference to the desired alteration in the price of gold and the exchanges, would occasion a fall in the prices of commodities generally of about six per cent. And Mr. Ricardo being asked, " If it would not be necessary to raise the same nominal amount of taxes to defray all that portion of the public expenditure which is applied to the payment of the public creditor?" says, "Un- doubtedly." And being asked, " Wouk] not the increased burthen of such taxes upon the people be in proportion to the increase in the value of the money?" replies, "' Certainly." J *" Minutes," &c. pp. 54,71,83,95. f Ibid. p. 56. :}:Ibid. p.l38. 29 Supposing therefore Mr. Ilaldiinand's opi- nion, as to the degree in which prices will fail, to be correct, although it could easily be shewn that it will be much greater ; and taxes, although nominally the same, in reality increased in the same proportion, the loss on all income, the amount of which is not fixed, will, so fiir as re- gards the payment of taxes, be 12 per cent. In other words, an addition will be made of 12 per cent, on all the taxes we now pay ! But, be- sides a diminution of income and an increase of taxation, the loss of capital, arising from the fall of all goods and stocks on hand, amounting in many instances to 20 or 30 percent, is dreadful. In addition to which, the losses to merchants and traders from bad debts, must be innnense. But why do I mention persons in trade, as if ihey alone are sufferers ? * By returning to the standard of 1797, all the existing relations be- tween property and money will be disturbed. The man who has bought land and borrowed * It has of late been the fashion vilh some, to speak of Iradc, in a national point of view, with slij^ht; and, in conipniison with it, to extol agriculture. No doubt, agriculture is higlily important ; Imt I should be glad to know, whether land would coiilinuc long at its present value, if trade and manufactures should fall intq decay ? 30 part of the purchase money, will, in many in- stances, find, that his whole estate will not pay off the mortgage. Leases, taken when money was 10 to 20 per cent, cheaper than it will soon be, will ruin the lessees. All monied contracts and engagements for time must seriously injure the payers. Above all, the price of labor, it is to be feared, must fall much lower than it now is.* Extraordinary as it may seem, it is no less true, that little or no evidence, further than very loose and general, has been adduced as to the actual state either of the agriculture, trade, or manufactures of the country. Nor is there scarcely any notice whatever taken of the National Debt and the amount of taxes ; nor any inquiry made how far the country, with a reduction of its capital, which, it is admitted in the evidence, will cripple its trade and manu- factures, reduce the rents of land, and occasion heavy losses on all goods and merchandize ; that is, with means of paying infinitely reduced, can bear an addition of 6 per cent, on that large * It may be said, the necessaries of life will fall with the price of labour. How, then, are rents and taxes to be paid ? 81 proportion of its taxes Avhich goes to defray the interest of the National Debt. A learned author, whose writings in recom- mendation of the Resumption of Cash Payments have made a considerable impression on the minds of some, says, " No doubt there will be a collapse of the public securities."* And again, " The prices of all commodities will of course fall, and a reaction take place upon all those interests which have been improved by a depreciated cur- rency. All subsisting contracts for future pay- ments, instead of being advantageous as hereto- fore, will be found detrimental to the payer — goods will be sold at less than they cost, and debts will be found heavier than when they were first incurred — trade will be cramped — the reve- nue abridged — and more than all, agriculture checked, and the demand for country labour of course diminished* The fact is demonstrable." f And, soon afterwards, " The worst land, which employs most labour, will be the lirst to go out * " First Lcllcr to Ihe Ki-rlil iloii. Robcrl reel." I Iiave not llio " First Letter' by me, and Ihcrefore quote from iiuinorx ; but I liiive no doubt of liaviiig quoted torrcclly. + " Second Letter to the Right Hon. Robert Feci," pages 7, 3. 32 of cnKivation — and thus the demand for hibour will be lessened in a greater ratio even than the amount of produce."* In the next page^ the same author says^ " Our main object should be, not to sustain them all (prices) or any of them at this level, (for descend they must sooner or later,) but to contrive that they shall all descend as equably as possible." f And again, " They (Mi- nisters) yield to the representations of the Bankers, that, if Cash Payments are resumed, they must be ruined. But why must they be ruined ? For the same reason that every man w ho has pledged himself to payments beyond his means nlust be ruined." J Will it be believed, that the learned person who published these sentiments, has not said a word about taxes ? That he has not breathed a thought about lowering the interest of the Na- tional Debt ? That one so anxious of " preserving mutual relations undisturbed," should not have said a syllable of the justice of revising all con- tracts entered into in a depreciated currency ; or * " Second LeLter to the Right Hon. Robert Peel," p. 7, 8. t " Second Letter," &c. p. 10. X Ibid. 33 o*' rej^ayiwjj' those unfortunate persons who, in the expectation that things would go on as usual _,* purchased Jand whicli the measures he recom- mends will throw " out of cultivation V' But the opinions of this, learned person, howevei' erroneous in themselves or whatever weight they may have with some, are of little moment, compared with the sentiments of per- sons high in his Majesty's Government ; — or with t^ie views of those whose voice has weir^t and influence in die Legislature. TJiat every nation slioitld liave a standard of value, Ijy which commodities are measured, is a position not to 'be disputed ; and that any, even a slight, deviation from such standard will sooner or later be productive of inconvenience, will be generally acknowledged : nor can there be any doul)t, that a metallic standard is preferable to * The great mass of mankind have neither ioisiire nor ability to e^Eamine sucji (tqhje^lH. fThey are contented ;tu take things upua aulliority. And when persons, supposed to he conversaiit on such matters, declared from lime lo lime, that there was no depreciation, u fortiori wUen Parliament itself solemnly jiJissod liesolulions lo ilie same effect, people nalnraily helieved it. — Sec jiubulcs on Ihe Bullion Report, and Mr. ransittart x famous liesolutionsf E 34 any other.* These are truths in which all are agreed. The only question on which there can be any debate^ is^ the practical / application of these principles. The grand problem, on the just solution of which so much depends, is. How, having departed from these principles for twenty- two years, we can reduce them to practice, with- out breaking up the existing relations between property and money ; — without producing general impoverishment and distress, and without render- ing us,^ unable to pay the public creditor. Is it either just or safe, to destroy a large portion of the capital, and to diminish the income of the industrious ai\d productive classes of society, and to leave debts and taxes as they are ? But, why do I say, as they are ? It is acknowledged, that Ihe measures in contemplation will, virtually, in- crease taxes and debts 6 per cent. ; — whilst the means of paying will be diminished in at least an equal proportion ! That is, supposing the taxes now levied to be fifty-four millions, an addition will be made to them of 12 per cent, or nearly six and a half millions ! The proposition is monstrous. * Sec Lord Liverpool's Speech. 35 But then, it is saicl_, we must keep faith with the Public Creditor; aiul, in order to induce us to consent to a restoration of the standard, we are reminded, in lofty and magnificent language^ of the conduct of Queen Elizabeth.* Why, really, this is too much ! The difference between her time and the present is, to use a figure of Mr. Canning's, " as a million to zero." The re- semblance is so slight, that any comparison is ridiculous. In her days the currency was wholly metallic. Commerce was in its infancy. Con- tracts for time were few. The number of per- sons employed in manufactures was small. The system of Poors' Rates was but just introduced. f * In saying this, I mean no disrespect to Mr. PccI. That Right Hon. Gentleman's Speech was heard by me with pride and pleasure. But, whilst I admire his eloquence, and am proud of having for a countryman one whose feelings and sentiments are alike liberal and magnanimous, I consider his views upon this question erroneous ; and the measure he recomiuends, perilous and unjust. + Before the time of Elizabeth, several Acts had been passed for bettering the condition of the poor. — See Slat, iilh and 6th of Edward VI. It may not be amiss to notice here an attempt made by the Edinburgh Keview, and repeated i)y Doctor Cuppleston, to induce a belief, that the introduction of the poor laws was the cfiect not of a dissolution of the monasteries, but of the depreciation of money. But how can this b(! reconciled with lacts ? The coin, which had been debased by her father, was, by Eiizabelh, restored to its just value iu the tecond year of her reign ; whilst the Act giving the iu- 36 But, above all, there was iio National Delil !— '' Monetam ad jusiufn valorem restituere" was therefore, in lier time, although not easy, feasi- ble. The profligacy of her father, iu debasing* the coin to serve his own purposes, rendered tlio measures she took necessary ; and tlie pewtial hardships she inflicted by it w*ie arnpsy compen- sated by great general good. But what will be the eflect of the measure proposed by Ministers ? Will it, at the expence of trifling and partial hardships, promote the general good ? — No. The eflbct of it will be, if such a thing could be last- ing, to better the condition of the stock-holder at the expence, and in many instances the ruin, of the labouring and industrious classes. A life of iiselessness and inactivity to be supported and encouraged at the e:ipence of those that arc useful and active! If we must M^n-n to the standard of 1797, let there at least be «in iucjuiry made into the amount of debt contracted l>"ef6re that period and since. Every loan contracted for since then l.as been bonowed in a currency m(?>re or less deprecifited. Is It just, that the nation drgeDt poor a legal claim for sup^'rt, ^ras not pjis'sed till t'he 4Sd ; — that is, forty-one years after the tfl«y(?, Jis theiic wfiHiers faitfcy It, of the miSetable cbnditioti of the potir, had deascd tb ei-i'st .'! 37 should pay more than it has received? But, settjn*^ aside for a inoiueiit all considerations of justice, is it safe even for the stock-holder him- self? The Hon. Gentleman will not argue, to use the words of Hume, '' that no bounds ought ever to be set to national debts ; and that the public would bo no weaker"* if taxation were carried far beyond even what it is. Still less will he say, with the Edinburgh Reviewers, that, in a national point of view, there is no distinction between productive and unproductive labour, f Is it safe then at once to increase the Natiomd Debt in the manner proposed ? By so much ad- ditional taxation to oppress the productive classes for the support of the unproductive ? Is there no danger, that resistance may be made to the pay- ment of any taxes ; and that even the safety of the Funds may be hazarded ? God forbid, that such a state of things should ever happen. But if, in imposing burthens, no regard is j^aid to the ability to bear them, such a crisis may happen ; and those are to be blamed whose measures * " Uumc's Essay on Piil)!ic Credit." + The fallacy of this opinion is fully atid ahly exposed in Biichahah's Virion of " Smith's Wealth of Nations/' v«»l. 4, |>. ISI. 38 lead to such a misfortune^, — not those who fore- tel it. But;, if the Restriction be removed and the standard of 1797 reverted to, not only ought an inquir} to be instituted into every loan contracted for since that period, but a revision should be made of the Civil List, the Judges' Salaries, and of every other department under the Government. It is well known, that many grants have been made and many augmentations had, on account of the depreciation of money and the increased price of all coimnodities. If money, therefore, be restored to its former value, and the prices of all commodities fall in consequence, it is but fair to reduce all such augmented rates to their former level. But there is another consideration. What is to become of those thousands of wretched be- ings in our manufacturing districts, who have been forced into existence by the hot-bed of a paper currency ; when, no longer able to find employment, they are at once goaded by want * * Grain is now lower than it can be afforded by the farmer; yet the price of labor is such that the poor man is not able to buy bread enough for his support. 39 and infuriated by despair ? — Let Ministers be- ware. Having shewn both the injustice and the danger^ in this stage of the Funding Sys- tem, of returning' to the standard of vahie which existed previously to the Res^triction, I shall endeavour to clear those, who oppose tlie return to Cash Payments, from the misrepresen- tations which have been made both of their senti- ments and motives. I shall also endeavour to answer some of the objections which have been raised to an alteration of the standard ; and shall shortly remark on a few of those expedients which have been proposed in order to remove the acknowledged difficulties under which we labour. The advocates for the continuance of the Re- striction do notwish, that our currency should bcde- preciated in the degree in which it was from 1808 to the end of 1814; — still less, that paper should be issued without liujit or control. — By no means. But they were willing, notwithstanding the fatal errors which have been made, to continue to en- trust t\m currency to tlie discfetion of the Bank;* aided by the advice, and under the supervision and control of his Majesty's Ministers. And tliey coiifideiiily hoped^ that aft^r the experience of the last ten years and the new lights thrown upon the subject of currency gen-ei'ally/j* the eountry would not in future, either by an unad- vised increase or rieduction, at one time have its prosperity artificially raised and at another time depressed. They flattered themseives, that tho same fa>cilities would continue to be given to trade ; and that agriculture would uot be discourag-ed ; — that the very sources of national prosperity would not be dried up. It is admitted by all, that the great object, in resuming Cash Payments, is, efiectually to prevent an over-issue of paper. But, if Ministers cannot trust tiiem- selves and dare no longer trust the Bank, why not lower the standard, by raising the mint price of gold to 82s. or 84s. ? '' Oh !" exclaims one, '' you foi'get that this would be unjust towards tlie * No one can deny, that, the two instances, which have been mentioned, excepted, tiie vast power entrnsted to the Bank has been exercised with the greatest prudence and moderaLion. + See Ricardo. 41 public creditor?" — I answer, that abstract justice must yield to necessity. You cannot have more of a man than he has. The measure of payment must be limited by the measure of ability to pay. Besides, who are those that so object ? Are they the public creditors themselves? Why, then, has no such objection been made the last ten or fifteen years, during' all which time the dividends on funded property have been paid in a depre- ciated currency ? Besides, the public creditor knows well, that any attempt to oblige the nation to pay 20s. in the pound, in a currency restored to the old standard,* may risk the loss of his whole debt. Whenever it comes to be a question, and we seem approaching it, " Whe- ther public credit shall destroy the nation, or the nation destroy public credit," the event may be easily foreseen. " But then, the par of exchange?" Well, would not the par of exchange accommodate itself to the new standard as well as to the old? How then have things gone on for the last twenty-two years ? — Such objections are mere trifling. 42. But Mr. Ricardo's plan^* besides that pub- lic faith will be preserved, is, it is said, so gradual, that little or no inconvenience will be felt. Does Mr. Ricardo himself say so ? Being asked, '' Are you aware that there is at present (March 6) a considerable stagnation in trade, and that there has been a great reduction of prices in conse- quence V' He answers, " I have heard so ; but I am not engaged in trade, and it does not come much within my own knowledge." Again, " Would not the effect of the reduction of the issues of the Bank be a further reduction in the prices of commodities V' — '' I should certainly expect so."f But what does Mr. Irving, who is in trade, say ? '' \i I were to represent what the fact of the state of the market at present is, from one part of the kingdom to the other, I should say, that there is hardly any buying or selling by the mer- chant. "J — ^'^ Oh, but," says another, '" this incon- venience will be only temporary." Indeed ! I should be glad to learn, who knows that I Men, * The chief advantage of this gentleman's plan, is, that, by adopting it, the Bank may resume Cash Payments with a much less amount of gold, and also at a much earlier period than it could otherwise do. + " Minutes of Evidence," p. 137. % Ibid. p. 97. 43 who are in trade^ have serious fears, that tilings will not revive. But, supposing- they should, the increase of the debt and taxes is not tempo- rary. They must continue to be paid ; and will still press down industry and paralyze exertion. Again, it is proposed, that of the ten mil- lions to be repaid by Government to the Bank, w hich ten millions must of course be taken out of the circulation, seven or eight millions shall be re-issued by the Bank, either in discounting bills of exchange, or in the purchase of gold. Now, it is w ell known, that, by a large proportion of the Bank notes in circulation, viz. that part lent by the Bank to Government, not being under the • immediate control of the Bank^ but in the hands of private Bankers, great accommodation has been afforded to merchants and others in the dis- counting of bills of exchange, good in them- selves and drawn in consequence of i^cal trans- actions, but which bills do not come within the plan of limits prescribed by the Bank for them- selves in discounting. By the greater control also which will thus be obtained over its i.ssues, the power attributed to the Bank, of being able, at its pleasure, either to raise or depress prices^ and consequently to render contracts uncertain 44 and property insecure^ will be much increased. Nor^ on the plan of limits now observed by the Bank in discounting, can the eight millions, pro- posed to be re-issued in the shape of increased discounts, get into circulation ■ inasmuch as bills, of a description such as the Bank now discounts, will not be found sufficient to absorb so large a sum. Nor can such an amount be expended in the purchase of gold without raising its price ; — nor, therefore, without compelling the Bank, in order to keep down the price of gold and the rate of ex- change, to a fresh reduction of its issues. But in the sam€ proportion in which gold is drawn from foreign parts, the amount of circu- lating medium, consisting as it does, in such countries, chiefly of the precious metals, will be reduced ; nor will their inhabitants be able either to pay so well what they now owe us^ or to pur-, chase the same quantity of goods in future. A return to Cash Payments, therefore, will occasion (distress to pervade every country in the world :—- and this is known to have been the case, when the Bank were purchasers of gold and the amount of our circulating medium was reduced, in 181i^. 45 Whatever may be said to sooth the public mind^ either by denying" that there is any ground for alarm or by turgid declamation on the strength and extent of our resources^ it cannot be con- cealedj that the country stands on the brink of a precipice ; and that to save us from it there is required the greatest wisdom and virtue. That his Majesty's present Ministers are men of honour and integrity^ I have no doubt ; that they possess eloquence and abilities, none can deny. But, whether they have those commanding talents and that firmness and vigour which the present crisis so imperiously requires, remains to be seen. Ever since the peace, they have subsisted on ex- pedients ; and now, goaded on by the Opposi- tion, they are about to adopt measures pregnant with danger. Faith with the public creditor cannot, even in appearance, be kept much longer, unless great sacrifices be made by those who alone are able to make them ; — these are, the fund-holder and the land-owner. By re-enacting the Property Tax,* * The Properly Tax appears to me preferable to any other, not only because it more immediately falls on the rich, but because il taxes the debt itself. which would raise the income of the country to a level with its expenditure and leave the Sinking Fund to its full and free operation^ confidence in our finances would be restored. But even this would be of no avails unless both agriculture and commerce be supported and encouraged by keep- ing up the amount of the circulating medium to a level with their wants. In what I have said, let it not be supposed, that I have any wish to excite feelings of despond- ency. Our difficulties are great ; but so also, if wisely managed, are our resources. The nation is yet strong in courage and in character. And the dangers which now threaten us will, it is hoped, eventually be overcome ; — but, they are not the less likely to be so, from being pointed out in all their magnitude. THE END, Printed by H. B.I YMBS, Journal Office, Iligii ttred, Wnrcestej.