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Of all the experiments that were ever made upon public and paper credit, metallic currency and paper circulation, as well as the immediate object of banking, none have been so remarkable, or attended with such decisive consequences, as the restriction imposed by Parliament on the Bank of England in 1797. None could at the moment excite a greater alarm; none was ever more deprecated; none ever occasioned such express prophecies of national bankruptcy and ruin. But 18 years (with a short interval) of a war the most extensive, and the most expensive that ever was waged, immediately followed this astonishing transaction, and in defiance of every prediction, the nation increased throughout that period in a nearly uniform progress of real wealth, power, and prosperity. And the politician who examines the progress and event of all the former wars carried on by this kingdom, and which were uniformly terminated by a failure of resources, not to say by national poverty, will most readily agree, that this great experiment can alone be resorted to, to account for the amazing contrast. The event was so new, and in such direct hostility to all former theories, and to every received opinion, that it demanded many years before the public mind could be sufficiently enlightened upon it; and unfortunately we have too much reason for perceiving that to this day it is not yet fully enlightened; or it would be impossible for such a recommendation as that of the Bullion Committee to have been carried to the House; and equally impossible to hear the demands lately made for resuming cash payments; these, however, should not surprise us so greatly as the apparent timidity of Government, in a sort of promise that this fatal step may ere long be expected. We shall then exchange a currency in every respect superior to any metallic one, for that of gold at the expense of above 40 millions sterling. It would be great injustice to the singular penetration of an individual, not here to refer to the masterly production entitled " Guineas a useless Incumbrance," and printed so long ago as 1802, which pointed out the immense superiority of paper in every respect that ought to determine the question; and expressly proposed the permanency of the measure. He was afterwards followed with much ability
1" Since metallic money ceased to be common, we have passed triumphantly through difficulties and dangers of unprecedented magnitude; and the increase in commerce, manufactures, agriculture, with all their relative addenda of shipping, machinery, canals, roads, bridges, &c. is equally beyond all precedent. From which we infer confidently, that paper credit has not produced the ruinous effects which theorists prognosticated." (Guineas an unnecessary Incumbrance, &c. p. 103.) If this could with truth be asserted in 1802, how much more striking must the same truth be esteemed in 1813! Suppose thirty millions in coin necessary for the circulation of Great Britain and Ireland, in the event of repealing the restriction bill; and it
by Mr. Walsh, who explained the proper attendant precau
For many years past there did not occur any political controversy so hotly agitated in numerous publications as the question of Bullion; they did not amount to fewer than eighty. But unfortunately, when any such discussion is pursued with great animation, party and prejudice are much too apt to make decided inroads upon the question, tending to confound the judgment of those who seek only for the truth. Unfortunately the public mind becomes sick of the subject, just when a cool examination of the facts produced, would best enable a writer to enlighten the judgment of his readers. In the tracts published on the Corn Bill, some facts appear which demand notice.
But, before I insert them, it is necessary for the reader to recollect, that so far as depreciation of the currency of any kingdom is marked only by a great rise of prices, there can be no question of the general fact, because I have already proved that this rise has been general in Europe: it is a depreciation in the value of coin, as much as of good paper; it is a depreciation in the value of the current medium of Europe, let that medium be what it may. The great error of many speakers and writers upon the question of Bullion was, that of assigning a general effect, peculiarly to the bank-notes of England. Of all the triumphs that time and facts have assigned to those who embraced a particular opinion, none was ever so complete as that which must now be admitted to belong to the men who opposed the opinions of the Bullion Committee. Upon this subject, Mr. Jacob observes with peculiar propriety: "In spite, however, of the doctrines of the Bullion Committee, in spite of the prophetic denunciations which enforced them, the Legislature was not terrified; they left the plain plodding Directors of the Bank to follow their accustomed course, without recommending any submission to the theorists; and now, strange as it may appear, in the end of the year 1814, two years after the period pointed out for the reduction of the paper medium, and the
is difficult to estimate it so low; but supposing, for the sake of argument, that thirty millions would be sufficient, the amount of such a sum, merely at compound interest of five per cent., in the course of one century would exceed three thousand nine hundred and forty-five millions sterling! The waste would add thirteen hundred and five millions. If employed in national industry, at a profit of only seven per cent., the amount would be above thirty-two thousand millions sterling. If, therefore, the creating and maintaining only thirty millions of metallic money, inevitably entails so ruinous an expense, can we wonder at the irreparable disorder of the finances of France, compelled, by her want of public credit, to maintain a eirculation of specie of more than ninety millions?" Letter to Lord King, by Henry Boase, Esq. p. 43, 49.
converting of it into specie, the issue of Bank paper has been nearly doubled, the exchanges with all countries have become rapidly less unfavorable, the relative value of gold, and especially of silver, to paper, is nearly equal."-Protection of British Agriculture, p. 193.
Those Bullionists who declare that the events which have taken place since the publication of their Report, tend only to confirm their opinion, must have nerves of no ordinary tension; and great as their abilities may be, they ought to have a very bank of talents to draw on, far surpassing the common extent of human genius. But whether they are right, or wrong, in this firmness of their nervous system, is now a question of little importance, compared with that which attends the immense object of securing a great and extensive circulation of the current medium. This at present is of all others the most important object that demands the attention of the public: no week has passed without a cry being raised in Parliament for resuming cash payments at the Bank. Let that day come, and the farmers of the kingdom will receive a far more deadly shock than any in the power of ill-directed eloquence to
There is not, perhaps, a principle of political economy more clearly deducible from facts, than the direct connexion between a general rise of all prices, and the national prosperity of any country; nor shall we follow an unsafe guide, when we connect such prosperity with the consequent exertions of animated industry.
The following remark of an able writer bears immediately on this interesting point: "This increase of expense, which may perhaps be owing to the gradual depreciation of money which accompanies the growing prosperity of every nation, has been uniformly progressive."-Review of the Bullion Controversy, p. 34. This idea demands at the present moment peculiar attention; and I shall connect it with another observation from an eminent writer, whose name will give much authority to his opinion: "The quantity of produce permanently consumed at home, is perhaps the most certain criterion of wealth to which we can refer. It can scarcely be doubted, that one of the main causes which has enabled us hitherto to support with almost undiminished resources, the prodigious weight of debt which has been accumulated during the last twenty years, is the continued depreciation of the measure in which it has been estimated, and the great stimulus to industry, and power of accumulation, which have been given to the industrious classes of society by the progressive rise of prices." Malthus, Grounds of an Opinion, &c. p. 33, 38. "Indeed if the measure of value was really to fall, (by a general fall of prices,) as we have supposed, there is great reason to fear that the country NO. XI. VOL. VI.
would be absolutely unable to continue the payment of the present interest of the national debt."—Ib. p. 40.
Consistently with this, "In reference to the revenue, where heavy debts are incurred and must be paid, ruin is inevitable if money becomes scarce and dear, and at the same time the State is compelled, as its only resource, to levy it upon those who have been deprived of the means of procuring it."-Duppa on the Price of Corn, 1815, p. 21.
"What good end, let it now be asked, is to be answered by raising the value of our currency to the continental standard? Were it calculated to increase our national resources, and relative strength in respect of the continental powers, it would indeed demand all the attention of Government: but the direct contrary has been shown to be its immediate effect on the produce of the taxes; and in our political relations with foreign powers, it is evident that our comparative wealth and strength are proportionable to the amount of our circulating medium, and in every era it must give us a decided advantage as to the means either of subsidizing our allies, or maintaining our own troops on the continent." -Address to Parliament on Corn, 1815, p. 12.
If we find on one hand that the depreciation of the currency, and the high prices which are consequent upon it, are singularly advantageous to the progress of industry; so if we reverse the medal, we shall find numerous evils certain to attend a low price of corn, engendering, as it is sure to do, a fall in many other commodities. The mischiefs thus ensuing do not affect merely the industry of individuals, but the public is wounded in a vital in
Should any persons be so ignorant as to suppose that half the farmers in the kingdom could be ruined without the misery in a great measure becoming general, they must have considered with very insufficient attention the great importance of land produce: and when the amount is measured with that portion of manufactures affected in their foreign export by the competition of foreigners, the superiority of the home consumption must be decisive.
Mr. Malthus has on this subject the following remark: "In the course of twenty years the Government borrowed near five hundred millions of real capital, for which, on a rough average, exclusive of the sinking fund, it engaged to pay about 5 per cent. But if corn should fall to 50s. per quarter, and other commodities in proportion, instead of an interest of about 5 per cent., the Government would really pay an interest of 7, 8, 9, and for the last two hundred millions 10 per cent."-Malthus, Grounds of an Opinion, c. p. 38.
Mr. Spence has also treated this subject, of the consequences of a general fall of prices in relation to the weight of taxes, and that of the national debt with much clearness and ability.-Objections against the Corn Bill Refuted, P. 44.
"Those immediately engaged in foreign trade, and who would be benefited by the low price of corn, are not above a seventh, or an eighth in point of property, of the total who live on the profit of stock."-Malthus, Grounds of an Opinion, &c. p. 32.
"Those who derive their subsistence from the land, and its cultivation, expend in British manufactures full seven times as much as the whole of our exports to all the markets of competition amount to."—Jacob's Letter to Whitbread, p. 21.
The distress now met with in towns, in consequence of that of the surrounding farmers, is well known.
"I have examined into the receipts of trade since the reduction of the price of wheat; and in the city of Hereford I find that the receipts and profits of trade of every kind, as well as of the liberal professions, have diminished in all cases a third, and in many much more, which is obviously the consequence of the farmer losing his means to encourage trade, which before were afforded him from the cheapness of money, and the high price of his produce: so that what an inhabitant of that city now gains in his baker's bill, he loses ten-fold in the diminution of his business. This defalcation will probably be felt in the receipt of the assessed taxes, not only in Herefordshire, but generally throughout the kingdom."-Duppa on the Price of Corn, 1815, p. 13.
Many instances have been noticed in the north of England, that speak the same language. The shop-keepers and tradesmen in the towns of Suffolk, I am well informed, are in the same situation; and those who petitioned against their best customers, amply merit all they can meet with.
But the gentlemen who pleaded against the Corn Bill, and crowd of writers and petitioners, were loud in their denunciations of ruin to manufactures, if the price of corn should be raised in consequence of the measure: the vague suppositions which have been worked into a chain of consequences upon this subject, and which are wrought from the theory that the price of manufactures depends on the price of labor, and the price of labor on that of food, is a theory contrary to the opinions of the best commercial writers, who have uniformly contended for that price of corn being most beneficial, which requires six days' labor from working hands; that if four days' earnings will support a family through the week, the work of four only will be performed; and that drunkenness is most common when provisions are the cheapest. It may be well for the reader that I write this paper at a distance from my library, which would have afforded me quotations without end, to prove these facts on commercial authority. The real truth is, that the
1 Simpson's Letters to the Bishop of Durham, &c.