§ The House having resolved itself into a committee on the Bank Cash Payments Acts,
The Chancellor of the Exchequer
said, that, by the bill of 1819, the Bank of England were entitled, at their option, to issue gold coin on the 1st of May, 1822, and were bound to resume Cash Payments on the 1st of May 1823. Now, the object of his motion was, that this optional power, instead of remaining over until May, 1822, should be brought into practical operation, if the Bank directors thought fit, on the 1st of May, 1821; leaving, of course, both the proportion and mode of issuing the cash payments at that time entirely to themselves; He looted upon the measure which he now proposed as affording a more easy and gradual preparation for the final resumption of; cash payments. But it was not intended by that measure, to restrict the Bank of England as to the circulation of a single pound note—that was to be left to the sole discretion of the Bank. The right hon. gentleman next observed, that by the drain which was made by the Bank on other countries for the precious metals, in order to enable the country to resume cash payments, an effect was produced unfavourable to commerce; because that drain rendered the circulation of other countries more restricted. Instead of the productions of foreign countries, large quantities of Bullion had been lately imported as so much merchandize in exchange for our produce. It would be seen, by the accounts on the table, that the Bank had carried into execution the suggestions made by the committees of both Houses in 1819. In June, 1819, the issues of the Bank amounted to 25,600,000l. In the half year ensuing, it was reduced to 24,700,000l. In June following, it was reduced to 24,000,000l. Thus it appeared, that the Bank had in one year withdrawn nearly two millions from circulation. The circulation at present was far from being abundant; it might, indeed, be true that the circulation of country paper had diminished in a greater proportion than the circulation of the Bank. As the law stood, the 1st of May 1822, was the earliest time at which the Bank were to be called upon to commence the gradual payment of their 1316 notes in specie. But their accumulation of treasure had become so rapid, that it was advisable they should be permitted to pay in cash, if they pleased, on the 1st of May of the present year. There was another circumstance which justified the anticipation of the period when the Bank was to resume cash payments. He alluded to the arrangements which had been carrying on by the commission appointed to inquire into the best means of preventing forgeries. If the result of that inquiry had been more satisfactory, it perhaps would be doubtful whether they should alter the plan so specifically laid down in 1819. But, from the proceedings under the commission, he was painfully obliged to infer that the persons engaged in conducting it, had no reason to expect their measures were about to terminate in an immediate favourable result. He was, however, not without a hope that they would eventually succeed, in producing a note capable of defying the imitation of the forger; The speady and progressive substitution of the coin of the realm for Bank notes must necessarily diminish the crime of forgery. His present proposition did not interfere with the circulation of the Bank of England any further than by giving the directors the power to do in May, 1821, that which they were, as the law stood, bound to do in 1822. While he was upon this subject he might be permitted to touch on the repayment of the debt of ten millions due by government to the Bank. The instalments had been hitherto regularly paid, nay, even anticipated; and he hoped, by the 5th of April, the last instalment would be paid. Something had occurred on a former occasion from which it might be inferred that he ought to explain whether he contemplated any measure for making silver a legal tender. A diversity of opinion, he knew, prevailed upon this question; and many thought that the advantages to be derived from it were not sufficient to induce a departure from the system already laid down for the coinage of the country. Although he could not say he entirely concurred in this opinion, yet he was ready to avow that he did not contemplate at present any alteration in the legal tender so long acted upon. It only remained for him to state, that he meant to follow up the new regulations for the Bank of England, with a similar alteration for the Bank of Ireland. The right hon. gentleman then moved, that the 1317 chairman have leave to bring in a bill for making further provision for the gradual resumption of payments in cash by the Bank of England?
said, that as far as the limited measure now proposed went, he had no objection to it; for if the House were still persuaded that the steps taken for a return to the ancient standard were right, it undoubtedly would be prudent to give the Bank, in May next, instead of in 1822, the permission to pay in cash, instead of in bullion. But he thought it necessary to look at the general effects of the measures taken for the resumption of cash payments. It had now been seen that the paper currency had been brought back to the level of gold more rapidly than had been generally deemed possible—not more rapidly than he had thought possible, because he had always thought that the value of the Bank notes was in the hands of the Bank; and he had always thought gradual scales of payments of little importance. The right hon. gentleman had said, that the putting out of gold by the Bank of England would operate as a relief to the general circulation of the world. This would have been an important effect if it could be so produced; but he held it to be a mistake; for, just to the extent that gold was put forth by the Bank, they must withdraw paper; so that nothing would be diminished of the general mass of circulation. It was also remarked that the withdrawing in part, of the 1l. and 2l. notes would lessen forgery. This also he considered to be a mistake; for so long as these notes continued, whether they formed one-half or two-thirds of the circulation, facilities and temptations to forgery would still exist. But it was not with the details of the measure he (Mr. Baring) meant to cavil. He wished the principle upon which these details rested to be reconsidered. No man doubted that it was most desirable to return with as little delay as possible to cash payments. It was equally agreed, that a country could not encounter a greater misfortune than a constant variation of the principle which regulated its currency. If he did not therefore feel the subject to be one of the gravest nature, he would not now call upon the committee to reconsider the principle upon which parliament had been hitherto acting. He also begged to state, that all he wanted was the reconsideration of this principle: for if when they recon- 1318 sidered it, together with the proposition which he should have to submit, they should still persist in the principle now laid down, he should not disturb the practical execution of their plan, but leave it to try its effect upon the general business of the country; In looking at this important question, he thought it very material to consider what was the real cause of the present situation of the country in the sixth year of peace. Petitions came from all quarters, remonstrating against the state of suffering in which so many classes were unhappily involved, and none more than the agricultural class. When such a state of the country was manifest in the sixth year of peace, and when all the idle stories about over production and under consumption, and such like trash, had been swept away, it was natural to inquire into the state of a country, placed in a situation without a parallel in any other nation or time. No country before presented the continuance of so extraordinary a principle as that of living under a progressive increase of the value of money, and a depression of the productions of the people. It was, indeed, matter of some pride to Englishmen that no other country had ever before attempted to mount the up-hill work of returning from an unsound to a sound state of currency. It was quite clear that, in a long and extravagant war, the country, instead of spending its income, had been spending its capital. All had been squandered away; and if they would consider the effect which such a system must produce if pursued in any country town where they chanced to live, they might form a correct idea of its operation on the country at large; If they had got up to the top of the hill, that would be a good reason for not entering into any further inquiry; but he could not by any means admit that they had arrived at such a situation. It appeared to him that, by the operation of the altered currency, they had loaded themselves not only with an immense public debt, but also with an increased debt between individual and individual; which debt had been greatly varied—the weight of which continued to press on the country—and to the continuance of which pressure he could not at present, perceive any end. He would' ask, what had been the depreciation? and he did so, because this was a question on which gentlemen differed most materi- 1319 ally. He would say a word or two on the subject, because his sentiments with respect to it were at variance with those of his hon. friend the member for Portarlington. Now, he (Mr. B.) thought the estimate of the depreciation had been very much under-valued. The depreciation had, in his opinion, gone very much beyond what it had been estimated at. This was a mistake which gentlemen had made all a long in settling this subject. They thought the great difficulty was, to get into a course of paying in specie; in which for his own part, he saw no difficulty at all. The whole anxiety of those individuals pointed to the necessity of introducing a metallic instead of a paper currency, and to the difficulties which must be encountered in effecting that object; which difficulties, however, he repeated, had never been seen by him. The real difficulty was, to meet the increased amount of debt of every sort—to meet the altered pressure of those burdens of every description which affected the country, which must be produced by the change. It was an observation, than which nothing could be more true, that an alteration in the value of currency was what nobody, not even the wisest, generally perceived. Individuals talked of alterations in the price of bread and meat, and the different necessaries of life, always thinking that the standard by which those prices appeared to be regulated stood still; while on the contrary, it had been travelling to and fro, and the variations of price were not to be found in the articles themselves, but in the standard by which their value was estimated. That right hon. the chancellor of the exchequer, notwithstanding the resolution he had formerly prevailed on the House to sanction (and which, he hoped, would on some future day be expunged from their Journals), was now compelled to admit the truth of this doctrine. But he would call the attention of gentlemen more closely to the extent to which the depreciation had gone. When the committee formerly investigated this subject, they reported, that the difference between the mint and standard price of gold was only 6l. per cent., and the argument founded on this statement was, that as the two prices were so near as 6l. per cent., a very little effort would enable them to arrive at an equality. But gentlemen were not aware at the time, that the increased value of 1320 money was going on, and that, the different articles necessary for the support and convenience of life had not accommodated themselves even to the price at which they then stood. Therefore, to take the real depreciation at 4, 6, or 8 per cent., was, in truth, not to see the actual state of the thing. To what extent that depreciation really went it was impossible for any one to estimate exactly. In the first place, a great depreciation was occasioned in the value of gold and silver themselves, as applied to commodities: and that altered value of gold and silver, as applied to commodities, was to be added to the altered value as applied to paper, before they could come to the whole amount of the depreciation. They all must be aware of the alteration in the value of money, in consequence of' the discovery of the American mines, and the effect which it necessarily had on the value of the circulating medium' in Europe, during the last two or three centuries. The discovery of those mines had caused a diminution in the value of money; and that diminution was ultimately rendered still greater by the formation of our Bank. This latter circumstance had not, however, any very extended operation until the close of the American war. It was afterwards greatly increased by the establishment of country banks—a system which was not adopted on a very extensive scale, until the end of the late war. But, in addition to the diminution which had been effected by a sound paper currency, came a much greater one, occasioned by an issue of paper which was not redeemable at all; because, by adopting that paper system, they turned all the gold out of the country, and added it to the mass of precious metals on the continent. By this means they increased the original diminution in the value of money, in the same manner as if the whole of that gold so sent away had come from South America, and had never been in circulation in this country. Those who were acquainted with the subject, and who attended the Bank committee, must know, that this depreciation of the value of money was not only induced by the issue of paper, but was greatly increased by the facilities afforded to credit; for it was clear that when they could make one million do the service of two it operated, in the depreciation of the currency, to the extent of one. Not only was this 1321 effect produced by that economizing of paper to which he had just adverted, but it also arose from the ease by which paper tinder certain circumstance, could be obtained; because those who were acquinted with the proceedings of the country banks must know this that the farmer, on his making application to the bank in his neighbourhood, might have at his command 1,000l. or 10,000l. This sort of facility to obtain credit which the country banks gave, had tended very considerably to diminish the value of money. As there was no farmer that might not, if he pleased, mortgage his crops to those banks, that power, when exercised, operated on money itself, and the value of money was diminished in proportion as that system was resorted to. What he wished clearly to explain was, that the depreciation of money (arising, as it had done, from all these circumstances) was not to be measured by the mere difference between paper and gold; because, in fact, it went to a much greater extent. If they confined themselves to the difference between paper and gold, they would find that at different times it was extremely variable. He felt confident that he was correct when he said that the depreciation between paper and gold operated very variously at different times. Before the Bank committee, his hon. friend, the member for Ipswich had stated, that there was a depreciation of 36 per cent, in 1815. However, in following up this subject. The first operation of the restriction act produced very little effect on the price of gold, from 1797, until 1800: then it began to affect the price moderately, until 1805–6, when some considerable effect was produced. It was, however, affected less than it would otherwise have been; because gold itself being abundant, and not going quickly out of the country at the time, relieved a great deal of the effect which otherwise must have been produced. But the moment the gold was gone, then appeared the sensible effect of the depreciation between paper and gold. And, from 1806 till 1810 or 1811, the question was, which was the period of the greatest depreciation? But he contended that they were not to take the mischief done by this bill—if mischief had resulted from it—on returning to a regular standard with reference to the price of gold, at the time the bill passed; but they should take into consideration what was the 1322 extent of depreciation occasioned by; their living for a great number of years under a restricted paper system. And to whatever conclusion an individual, or a body of individuals, came on this point, they were bound to look at the difference between the depreciation which they conceived to have been occasioned by the continuance of that system, and the standard of currency which they were about to restore. If they looked to the depreciation of money and of commodities, they would find that commodities, had been infinitely more affected than the precious metals. If two or three different articles appeared only to be: so affected, then it would be fair to argue; that the general conclusion was not correct; but, if the operation could be seen on every commodity without exception, then it became evident that it arose from the depreciation of the currency; and if they took the average price of commodities at different times, they would arrive at the average effect of the paper system. He had undoubtedly found a singular coincidence in the general alteration of the price of commodities between a former period of peace and the present. Beginning with the price of wheat, which was, as near as possible, the price of the present day. This ran up, in subsequent years, to an average of 86 or 87l. to the year 1820. They altered the currency, and the average went back to the price from which they had originally started. It was the misfortune of the present system, that 56s., which was considered a good remunerating price at the former period, was now utterly inadequate to support the farmer. What was the reason of this? It was occasioned by the altered currency, and by the produce of this country coming into contact with the commodities from all other parts of the world. Besides, the charges which the farmer had to maintain had not moved progressively with the altered value of the currency. His products did not bring their former price, while the private debts on his estate remained at their nominal value as originally contracted. Besides, the great mortgage which swept over the whole—he meant the national debt—was of such an oppressive nature, that the charges and burthens which grew out of it rendered it impossible for the farmer to live on the prices which at a former period were considered a fair remuneration. The difficulty, then, of the country was this— 1323 they could bring back their currency for certain purposes, they could bring it back as far as respected their income, but still they remained in the situation of having a depreciated currency, with reference to their expenditure. The effects of the rise of the value of the currency had been most ably and prophetically described by Dr. Coplestone, who thought, however, that all these inconveniences should be endured for the sake of the object. His words were remarkable—staling what would follow the return to cash payments, he said—"The prices of all commodities will in that case fall, and bargains will, with respect to one of the parties, be depreciated, but not with respect to the other. All contracts will be detrimental to the person who has to pay, but beneficial to him who has to receive. Goods will be sold for less than they cost, and will become more valuable. Trade will be cramped; the revenue abridged; more than all, agriculture will be checked, and the demand for country labour will in consequence be greatly contracted." In such a state of things, how could it be recommended that a greater alteration should be made in the currency than good faith required? What faith required should be done; but nothing should be yielded to the mere coxcombry of desiring a purer standard. If the country had had no debt, and the committee had merely sat as umpires to say what should have been done between debtors and creditors, lie should have not hesitated to have sanctioned a departure from the old standard. He should have taken the pound sterling at 15 or 16 shillings. But now the question of public faith intervened. It could not be doubted that the public creditor, and all to whom money was due, had been benefited to the extent of the change in the value of money. It might be said, that during the depreciation they had been injured to the same extent. He did not say that an argument might not be raised on the subject; but the creditor received more than the debtor could afford. The effect was, that the industrious were obliged to labour under difficulties, that the drones might we in the greater affluence. He used the term, drone merely to describe the operation of the system, not to convey the idea that justice should not be done. Of the two operations of raising and lowering the value of the currency, the latter was certainly better than the opposite; be 1324 cause the lowering of the value of the currency was cheating the drones. The person who had any thing to sell, found the value of his goods increasing; the man who had to buy, found the value of his money diminishing. The operation (he was speaking of interest, not of honesty) was advantageous to the country.—The hon. member for Portarlington told them, that the change of the value of the currency immediately had its effect on all commodities. But the effect could not penetrate into all parts of the country, or change habitual expenses. If he were going to York, and gave a post-boy 2s. 6d. who was accustomed to get 3s., the man would think him a shabby fellow, in spite of his political economy. But there was one very formidable way in which this operated on the farmer as to the tithes. From the great liberality of the clergy of the church of England, probably not two thirds of the value of the tithes were collected; but, having found that money was much less valuable during the late depreciation, they naturally raised their money payments; but having once set up these payments, it became a much more unpleasant and difficult thing to lower them; because the clergy received not more than was due to them, but much more, nearly the whole of the real value of the tithes than formerly.—If they found that the standard had been screwed up too high, it was advisable to re-consider the subject. The manner in which the value of the pound sterling could be settled with justice to debtor and creditor was, by considering its average value for a certain length of time,—say ten years; because the great bulk of contracts would be found to have been made within that time. He was not himself bold enough to recommend a departure from the standard; but he wished to impress upon the House his view of the state of the country, and to induce them to enter into such an inquiry, that whatever they did, they might do it with their eyes open. He meant to propose the appointment of a committee above stairs, to consider this subject; and he should, before he sat down, state the objects which urged him to make that proposition. It was desirable, in his judgment, either to leave matters as they were, or to fix upon some permanent system. For the evils belonging to the resent system, or which were apprehended from the enforcement of the act of the 59th of the late king, he had two 1325 remedies to propose. The first was to render permanent the plan of paying Bank-notes in bullion, or to continue what lie hoped he might, without disrespect, call the Ricardo system; for, in his opinion, the permanent establishment of that plan was peculiarly calculated to relieve the tension which was at present felt in the currency of the country. He was glad, indeed, to hear from the chancellor of the exchequer, that his main objection to the permanency of this system, arose from an apprehension of the continuance and multiplication of forgeries. But he could not concur with those who thought that it was matter of so much difficulty to guard against those forgeries, the existence of which formed no argument against the adoption of a measure of which he never heard any practical man disapprove. The permanent establishment of this system would, indeeed, serve for the perfect presevation of the standard of value; for, estimating the currency of the country at about twenty-five millions of notes, if bullion were only to be paid to those who held 100l. or 200l. in notes, it would, it was generally admitted, be sufficient for the Bank to be provided with three millions of bullion to supply any probable balance between Bank paper and that article. But at the utmost, he conceived that from four to five millions of bullion would be amply sufficient for that purpose. The advantage of this system would be, to give facilities to the Bank; and it was to be recollected, that any facilities given to the Bank were facilities given to the country, whose wants it was the duty of the Bank to consult, and whose accommodation it was the duty of the Bank to promote; for through the establishment of this system the Bank would never be exposed to those sudden demands, or to have what was termed a "ran upon it," to which it must be liable, if called upon, to pay in coin. This was a very material consideration, he begged gentlemen to think, in the present state of! the public mind, especially from the recollection of what had happened within some years back. From the increased suspicion, indeed, which the occurrences of those years were calculated to excite, as well as from the increased mass of circulating medium occasioned by above 800 millions of debt, it was obviously necessary to guard the Bank against the inconvenience that must result from enabling the holders of one and five pound notes or other 1326 small sums, many of whom were most likely to be susceptible of panic, to apply for payment in coin. For persons holding such notes would, in the event of any new war, or sudden panic, be but too likely to press upon the Bank for cash, either for the purpose of immediately taking it to the market or for the purpose of hoarding. But if the Ricardo system were rendered permanent, one of these motives for a run upon the Bank would be taken away, as bullion could only be resorted to for the purpose of hoarding. With this system, then" he repeated, that at the utmost four or five millions in bullion would be sufficient to meet any probable demand upon the Bank, and to guard against any public inconvenience. The establishment of this system would, indeed, obviate the necessity of any coinage, and consequently prevent the expense which such coinage created, while would also save the country from the loss occasioned by the wear and tear of coin, which loss was notoriously material, after coin had circulated for 20 or 30 years. But, to encourage the adoption of this system, the House had the example of Hamburgh, where it had long prevailed, and where, through its existence, the genuine standard of value had been preserved in its utmost purity. In Hamburgh, too, that system was found perfectly applicable to every purpose of commercial convenience. But, as yet, he had heard no objection in that House to the permanent establishment of this plan, save that urged by the chancellor of the exchequer upon the subject of forgery. The commissioners appointed to devise some means of preventing the commission of that crime, appeared to have felt an overweening solicitude to discover something absolutely perfect—to have sought rather for the invention of an inimitable note, than for that of one which it would be most difficult to imitate. Hence, in his opinion, the failure of those commissioners. Hence, too, the question as to the prevention of forgery had not yet been fairly tried. It was impossible, indeed, to fabricate any thing more clumsy than the present Bank-note; and therefore it could not require much ingenuity to invent one more difficult of imitation. It was found that in other countries where a paper currency prevailed, no such forgeries were heard of as unhappily occurred in this Country. He might be answered by a statement, 1327 that the same degree of ingenuity was not applied to the same purpose in those countries. But it so happened, that in America, for instance, the forgery of bank-notes was very rarely heard of, and in that country there were notes in circulation of very various descriptions. In France, too, there never was a forgery of the notes of the national bank, until the allies entered Paris. In consequence, however, of the panic created by their entrance into Paris, the plate of the Bank for fabricating notes was destroyed. But almost immediately afterwards an artist was employed to make another plate, for which he was to receive 1,000 guineas, and it was only within the interval from the destruction of one plate to the fabrication of another, that any forgery of the notes of the bank of France was ever known to have taken place.—Reverting to the observation of the chancellor of the exchequer as to the forgery of small Bank-notes, which was urged in objection to the permanency of the system which he (Mr. B.) recommended, he would ask, why some token, or any thing in the shape of metal, could not be substituted for our small notes if forgery were deemed so irremediable? For any substitute would be preferable to a promise to pay, when there was really no intention to perform that promise. Instead of such small notes then, he would propose some gold token for purposes of public convenience, as well as to guard against crimes. But he would be an advocate for any contrivance that might be devised to remove every obstacle to the establishment of a system materially calculated to answer the purposes of the country, whatever might be the contraction or the expansion of its currency. The second remedy which he had to propose was, the establishment of a double standard, namely, of gold and silver. This could be done, he would first say, without any violation whatever of good faith, that is, assuming the silver to be at the rate of 5s. 2d. per ounce; for then it was equivalent to gold at the Mint price. He, in this instance, made no novel proposition; for by the act of 1774, silver was made a legal tender to the amount of 25l. and for any sum above that it was made a legal tender by weight, according to an act of 1790. Up, then, to the year 1790, there could be no doubt of the existence of a double standard of value in the country. This, indeed, was the case 1328 until 1797, when, by an order in council, an alteration was made in the whole system of our currency. If it were argued that silver was likely to be cheaper than gold, he would maintain, that as the object was, to reduce the value of the pound sterling, or to establish the cheapest standard of value, the argument could not avail. But the fact was, that there was no likelihood of any material variation between the price of gold and and silver if both were established as standards of value. In France indeed, where the double standard had long existed, one per mill was the utmost variation that had, he understood, ever appeared between the price of gold and silver. But the ordinary operation of the money market would be a sufficient guarantee against any material variation between those two articles in this country, where it should be recollected, that the establishment of a perfect standard of value was not so much the desideratum as the creation of the means to regulate the price of the currency.—The hon. member, after recapitulating the objects which he had in view, in recommending a committee above stairs upon this subject, in which committee, if appointed, it would be competent to others to suggest any objections or measures which they might think proper, concluded with proposing that the chairman should be instructed to move the House, "That it is expedient to appoint a Select Committee, to consider the act of the 59th of the late king, chap. 49, with a view to alleviate the pressure which the due execution of that act is likely to produce upon the several branches of public industry."
§ Mr. Ricardo
began by observing, that his hon. friend had set out with contending for the propriety of establishing two standards: whereas a great part of his argument had gone to put the gold standard out of the question altogether. He had truly said, that in 1797, permission was given to the Bank of England, by act of parliament, to increase or diminish the amount of its circulation as it might think proper. Now, though he agreed that such a power could not have been lodged in hands less inclined to abuse that permission, he did consider it a power most dangerous to have been entrusted to any men, under any circumstances. It was undoubtedly true that the Bank had had it in its power to have kept the currency at a standard as if it had been composed 1329 entirely of gold and silver. He maintained that it had then the full power of doing so. The Bank of England, however, neglected that duty; and, in 1819, when the war had terminated, it became absolutely necessary that the House should adopt the steps it had adopted towards payment in bullion. The question with the House, then, was—"Shall we take the standard of our currency at its present depreciation? or shall we take it as it existed previously to the year 1797?" His noble friend, the member for Salisbury (lord Folkestone), had, with a great deal of good sense and judgment, proposed to fix the standard at the price at which gold then was. On that point he had differed from his noble friend, thinking that gold was not then sufficiently depreciated, had it been more depreciated, he should have preferred that plan to the adoption of a more variable standard. His hon. friend who had called him a theorist, seemed himself to have undergone a great change of sentiment. His own opinion always was, that there should be but one standard, and that that standard should be gold; because silver was liable to undergo such changes, that it might sink in value below gold, and thus occasion the greatest confusion; but his hon. friend had formerly contended, that the adoption of two standards would be attended with advantage. Now, however, his hon. friend advanced another idea, which, he confessed, did strike him with astonishment. His hon. friend seemed disposed to admit all the advantages of a fixed currency, and that gold should be adopted as the standard, but also thought, that the Bank should be allowed, at their option, to pay in silver, at 5s. 2d. per oz. for ten years to come, still retaining gold as the' sole standard, and then adjust the price of silver to the standard of gold. Now, suppose the silver to sink to 4s. or to 3s. 6d., before the ten years had expired, at the end of that term it would be necessary, on the principle of his hon. friend, to raise it to 5s. 2d. thus adjusting it every ten years. This would unquestionably be one of the most variable standards that could possibly be devised. His hon. friend had stated, that representations were sent from all parts of the country complaining of the prevalence of distress. This was unfortunately too true; but it was worthy of remark, that his hon. friend, who was no theorist had nevertheless a theory respecting the cause of these distresses, by 1330 which he imputed them all to the state of the currency. Now, it appeared to him that they might with more truth be referred to a great many other causes. They might arise from an abundant harvest, from the vast importations from Ireland, which had not taken place formerly, and from the late improvements in agriculture, which, he apprehended, would be felt hereafter more severely. These causes his hon. friend entirely overlooked, and laid the whole blame on the alteration which had been made in the currency; while he (Mr. Ricardo) contended that this alteration could not be said to amount to more than 5 per cent. He admitted, that gold might have altered in value; that was an accident against which it was impossible to provide; but, supposing that silver bad been adopted as a standard, would it not also have varied? His hon. friend contended, that if silver had been made the standard, it could never have fallen so much in value; but his hon. friend argued all along on the assumption that the whole difference between gold and silver was owing to the rise of gold; This, however, was not fair; for when a difference arose in the relative value of the two metals, he had just as good a right to say that silver had fallen, as his hon. friend had to say that gold had risen. The surest test was the rate of the foreign exchanges; and if his hon. friend looked at what a pound sterling was worth in 1816 in the silver coin of France, and what it was now worth, he would find difficult to make out a variation of more than 10 per cent. He begged the House to recollect, that in 1817 wheat sold at 109s. and bullion was then at 3l.18l. Would his hon. friend say, that that price was owing to the depreciation of the currency? and if not, was he calling on his hon. friend to concede too much, by admitting that the present price, of grain might be owing to many other causes?: His hon. friend had said, that a great deal of capital had been expended during the war. Now, he doubted whether this was a sound proposition: for, he believed that the savings of individuals during the war, would be found to have more than courteracted the profuse expenditure of the, government, and that the capital of the, country at the end of the war was greater than it was at the commencement, of it His hon. friend had asked, why we should; have a purer standard than the rest of the world?—a question which might he very 1331 properly answered by asking, why we should not? If other countries chose to adopt an error, was that any reason why we should follow their example? The attempt to procure the best possible standard had been characterised by his hon. friend as a1 piece of coxcombry to which he attached no value but, in a question of finance, if we could get a better system than our neighbours, we were surely justified in adopting it. He undoubtedly did wish for a better system, and it was for that reason that he wished to see one metal adopted as a standard of currency, and the system of two metals rejected. With respect to the adoption of a gold token, he thought it would be attended with great danger; if by a gold token was meant a token materially less in value than the gold coin which it represented. The necessary consequence of such a system would be, that the tokens would be imitated in foreign countries, and poured into this country in such quantities as would very speedily produce a depreciation of our currency, equivalent to the difference between the value of the sovereign and that of the token which represented the sovereign; If he could be induced to give his consent to the introduction of a gold token, it must be of such a value as nearly to equal the value of the sovereign. He would permit no more alloy in the token than what would be sufficient to cover the actual expense of coining the bullion into money. Such a plan would afford a sufficient security against the inroads of foreigners, and might be advantageously adopted.—It Had been- said, that if one metal were adopted for a standard of currency, it would be in the power of speculators to raise or lower the standard, and consequently place the Bank in an awkward predicament; but the power which the Bank had of regulating its issues, would always be sufficient to prevent any inconvenience of that kind. With respect to the suggestion of the right hon. gentleman opposite for diminishing the issues of Bank-notes as a security against forgery, he entirely concurred with his hon. friend that such a plan would be wholly ineffectual as a remedy against forgery. It was perfectly clear, that whether the issues consisted altogether of Bank-notes, or half of Bank-notes and half in sovereigns, the danger of forgery would be the same. The only effectual remedy against forgery would be to hasten period at which 1332 the Bank might commence payment in specie. He should be perfectly ready to abandon his own plan, if by so doing that most desirable object could be effected; and he was quite satisfied that the Bank was at this time in such a state of preparation, that in a very few months they might provide the best and only effectual security against the imitation of their notes, by returning to the system of currency which existed in this country previous to 1797. The right hon. gentleman had dwelt upon the tendency of his measure to prevent the accumulation of coin in the Bank; as if the coffers of the Bank were overflowing with coin. Now, the fact was, that the Bank had a great deal of bullion and very little coin. To propose a measure, therefore, for preventing the accumulation of coin in the hands of the Bank, was to provide against a danger, which was not at all likely to occur. With respect to the laws relating to usury, he should be extremely glad to see them repealed; and he thought no time more proper for the repeal of those laws than the present, when the rate of interest had actually sunk below 5 percent. The rate of interest in the market had been invariably under 5 per cent since 1819. It would be a great advantage to the mercantile interests, that the Bank of England should discount the notes presented to-them, not at one invariable rate of interest, but varying according to the alteration of the rate of interest in the market.
§ Mr. Pearse
could not but not express his surprise, that after the measure of 1819 had received the sanction of parliament and the Bank was ready to discharge its duty towards the public, the very persons who promoted that measure, should now be the first to object to its operation.
defended the principles on which the committee in 1819, which had advised the partial restoration of cash payments had acted. He contended that the plan of the hon. member could not be carried into prectice, and that even the mode proposed by the hon. member for Portarlington would be preferable. The doctrine of the former member would by no means remedy the distresses which were at present complained of. With respect to the committee which sat in 1819 he maintained that they could have come, under all the circumstances, to no other conclusion than that which they had recommended to the House. It should be 1333 recollected that at that time they had an alternative of evils. In 1814 it was expected that the Bank would resume the issue of metallic currency; in 1815 it was looked for as likely to take place in 1816; and in 1816 it was thought that the resumption of cash payments would certainly be made in 1818. Now, in 1819, the question which came under consideration was, whether there should be any resumption of payments at all; and at that time the committee had to consider the alternative of not paying, and the evils, after all the expectations which had been raised, of that alternative. They had then fixed the standard price of gold at 80s. 3d., as the average of the three preceding years; but they did not mean to deny the inconvenience which would result from that or any other standard. The only inconvenience, however, which could be considered as resulting from it, was the difference between 80s. 3d. and 3l. 17s. 10½. The delay of the committee in 1819 was complained of, and the same objection would apply still more forcibly against going into a committee at present.
denied that the probable resumption of cash payments had in any material degree induced the provincial bankers to lessen the extent of their discounts, or contributed to the distress under which the country was labouring. He contended, that the depression in the prices of commodities had produced the contraction which had naturally taken place in the circulation.
§ Mr. Ellice
said, that nothing could be more correct than the whole statement made by his hon. friend (Mr. Baring) of the amount of our difficulties—and notwithstanding the arguments adduced by the right hon. gentleman (Mr. Peel) in favour of the expediency of the determination adopted by the committee in 1819, he still felt satisfied, that taking to the extent of debt contracted, the taxes imposed to pay the interest, and also all the enormous amount of private contracts and engagements, which had been affected by tlie restoration of the ancient standard, more injustice than justice had been done by that measure, and more burthen imposed on the means and productive industry of the country, than he yet saw the possibility of its being able to meet. The right hon. gentleman, and his hon. friend (Mr. Ricardo) had re-stated all their opinions of the exaggeration 1334 of these difficulties. They would admit that he (Mr. E.) had been also consistent from the first; and it was no trifling consolation to him, in his error, if he was guilty of error, that his hon. friend (My Baring), who had formerly differed with him, in extent, at least, now confirmed from experience, the statements he had formerly made. He was convinced, as he had stated before during this session, that the committee had been led into error, as to the extent of the depreciation, by the apparent price of gold in this country during the preceding year—occasioned by an immense issue, for the purpose of what was called regulating the market and exchanges by the Bank, and if lie could have brought his mind to the conclusion, that all the depreciation to be apprehended was between the then apparent price of 81s. per oz. and 77s. 10d. he would have concurred in opinion, that the difference was not sufficient to warrant, a departure from the principles on which our currency had been previously regulated. That was, however, far from his. conviction: on the contrary, and making; allowance to the effect produced by the operations of the Bank—and the exportation of about 7 or 8 millions of gold coin in 1818 and 1819, he did not think the whole depreciation—for it had been going on gradually in many branches of industry although it had not affected others till more recently, before the report of the committee—could not be calculated at less than 30 per cent; and to that extent he conscientiously believed that a deterioration had been effected in the means of every debtor, whether public or private, and an aggravation, and increase of their respective engagements and contracts—With respect to the measures now before the House, considering the die was cast by the bill of IS 19, he was more disposed now to support the proposal of the chancellor of the exchequer, than that of his hon. friend (Mr. Baring) for the appointment of a committee, limiting, as he was bound to do, the objects of their inquiry to the specifics which had been suggested to their consideration. He had never seen so clearly as others had anticipated, and as they had been represented by the committee, all the advantages of what had been called the Ricardo system—at least, to the exclusion of a coin circulation; although he admitted the convenience and facility it afforded as a concurrent medium of circulation with coin, 1335 to the issue of paper; and in large transactions of business, where bullion was in many instances a preferable payment to coin; but still he was not so much attached to it, as to wish to see it entirely supersede a metallic currency—nor was he disposed to give up this principle, or to sacrifice that of the ancient standard, for the consideration of 3 or 4 per cent, an alleviation which was all his hon. friend calculated his plan would produce. We had proceeded too far in those principles to deviate from them now, for so trifling an advantage, even if that advantage was to be purchased (which he was afraid it was not, looking to all the circumstances of our situation), at no greater cost than their sacrifice—and which, after all could only be submitted to, on the establishment of a greater and more overwhelming necessity than had existed in 1819. If his hon. friend had come forward with a direct proposition to reduce the standard of our gold coin to its relative value with our silver currency,—which would have been a relief to the public of 11 or 14 percent, and had defended his proposition on the ground of absolute necessity,—he might have been disposed to refer the case so fairly brought forward, to a committee; but then he doubted whether, if this tempting, but most serious consideration was ever gone into, even this depreciation would be sufficient to relieve all the distress and difficulty which had been brought upon the country, first and principally by the paper system, and then by their subsequent determination to restore the ancient standard, fie wished he could concur with his hon. friend (Mr. Ricardo) in his opinion, that we had experienced the worst effects of those measures; but it was now almost impossible to reconsider or retrace our steps; and, in the choice of evils which surrounded us, possibly the worst would be, any new alteration in our currency—although he hoped not, others of a disgraceful and distressing nature might yet be forced upon us, but we were bound, at least to the extent of our ability to proceed now, and it was from this opinion that he supported the proposition of the chancellor of the exchequer in preference to that of his hon. friend. At least, in so doing he should adhere to principle; and Some benefits of a most important description had already resulted from depression in prices, and would be essentially promoted by the circulation of money. The 1336 industrious classes in some branches, lie meant the manufacturing labourers were now in a greater state of comparative comfort than they had been for the last three years, arising from the low price of provisions; and it was generally acknowledged that the prices of labour and food are very differently affected by alterations in our currency, a depreciation in the value of money having been invariably found to press with greater severity upon the labouring population, and an enhancement to produce a greater relative depression in the price of other commodities than in that of labour. He would not be tempted by what had passed in debate to extend these observations or to pursue the details of the proposed measure. The House would recollect he had before foretold its absolute necessity, in aid of the measures adopted in 1819, and that he had added a rider to the bill of the right hon. gentleman (Mr. Peel) on the same object, which the House then agreed to, but which was rejected by the superior wisdom and foresight of the Lords. It was quite clear at that time, under the apprehensions entertained and expressed by the Bank, and while they were not compelled to receive bullion at proportionate rates, to the gradual scale in the bill, that paper would soon become more valuable in the currency than gold, and this was proved by the price of gold having been raised to the mint price, almost before the bill had passed into a law, and certainly, he believed, before their lordships had rejected the clause he added to it. What, then, had been the absurd results of this restriction? In Ireland it clearly appeared, and not he was afraid from the best motives on the part of the Bank, the current coin of the realm had been at a depreciation of 3 or 4 per cent; and here individuals had actually taken their gold to the mint to be coined into sovereigns for payment to the Bank, who could not reissue the money, if it had been demanded, without its passing through the crucible, to be converted into Ricardos. Foreseeing these results, he had suggested the alteration in the former bill, and being convinced of the expediency of restoring to the country gradually, a metallic circulation, of which we had been so long deprived, and which the peace enabled us to supply, as it has been determined to face all the other difficulties of these measures; he gave his cordial support to the bill proposed by 1337 the chancellor of the exchequer. His hon. friend had calculated, that under present circumstances 25 millions of coin would fill all the channels of circulation, if there was no limitation to the issue. It was generally understood the Bank were now in possession of 15 millions uselessly deposited in their vaults; and surely with all the frauds with which this measure was surrounded, we were never before in so fit a condition to commence the undertaking of restoring our currency to its former state, and to place it on a footing of equal security with that of other countries. In saying all this, he must again guard himself from being understood to underrate any of the difficulties, and possibly inseparable ones in the end, which the report of the committee in 1819, and the subsequent proceedings had involved the country. He certainly had concurred in all the principles then established, dreading the result of their application, although they had been so long neglected and absolutely denied, and if the country could, in the end, meet the situation in which a deviation from them had left her, or if even we should be obliged to have recourse to the most ruinous expedients to extricate ourselves from it; still he hoped our example and our sufferings would be a caution in all future times to avoid the time serving and miserable policy to which we owe our present difficulties and dangers. He hoped his hon. friend would consent to withdraw his motion, as, although differing with him in opinion, he had such respect for his great and useful talents, and general knowledge, that he should regret being obliged to divide against him on this subject.
was of opinion, that it would be more advantageous to resort to the expedient proposed by the chancellor of the exchequer—or indeed almost any other, than return to all the hazard and insecurity of a paper currency.
thought that the danger did not consist in the mere existence of a paper currency, but in a paper currency not convertible into money. He had been of opinion formerly, and he saw no reason for changing that opinion, that it would have been wise in parliament to have altered the standard, before they determined on a return to cash payments. The misfortune was, that we were brought into such a situation by the system we had pursued, as to render it inevitable that great injustice must be done in either 1338 case; but the question was, in which case the greater injustice would be done? and he thought that a greater injustice would follow from a return to the established standard. If the standard was altered by a declared law, in an open, undisguised manner, it would not be an act of injustice as in the case where it was secretly done; but when they talked of breach of faith, he would ask, what greater breach of faith could there be, than the suspension of cash payments?
§ Mr. Huskisson
protested against the doctrine of the noble lord, that to change the standard by law would have been no fraud. The noble lord seemed to forget the condition under which the public debt was contracted, namely, a return to cash payments in six months after peace.
said, the introduction of a double standard could not be considered an innovation. It existed ever since the time of queen Elizabeth up to 1797. His great difference with his hon. friend was, as to the amount of depreciation. His hon. friend took it solely from the price of gold, without taking into consideration the state of the country.
§ The amendment was negatived, and the original resolution agreed to.