HC Deb 26 February 1823 vol 8 cc254-64
Mr. Denison

, in presenting the petition of the freeholders of Surrey, in county meeting assembled, commented upon the great respectability of the meeting, and the degree of unanimity which had marked its proceedings. The petition complained of the weight of taxes and of it tithes; of the expensiveness of government in all its departments—its diplomacies, its armies, its colonies, and in the collection of its revenue. It recommended reform in parliament, general retrenchment, repeal of the malt-tax, and of the house and window-tax—a measure which he was glad to see already partly carried into execution. There was one point, however, which the petition did not touch, but upon which it might with great propriety have dwelt, and that was upon the tampering with the currency of the country, first in 1797, and again in 1819. He was of opinion, that those changes of currency had produced more mischief to the nation than any other cause whatever. It would have been incalculably better to have at once reduced the standard, than to have adopted the course which was now working so much mischief. He thought that some amicable adjustment was necessary throughout the country. He would not agree, however, to the defrauding of any class. He was of opinion, that church and funded property ought to be respected. He thought that the clergyman had as good a right to his tithe, and the fund holder to his dividend, as the first nobleman had to his estate. It was his opinion, that, before they touched either the one or the other, every sinecure ought to be abolished, and every place reduced as low as possible.

Captain Maberly

, as one of the small minority who had held up their hands against the petition, wished to say a few words. He was very far from thinking any general adjustment of contracts necessary. The instances of real suffering from the change of the currency were comparatively few; while the mischief of any interference with contracts would be incalculable.

Mr. Ricardo

would not have risen upon this occasion, if the hon. gentleman had not declared, that he wished some amicable arrangement could be made by which that part of the country which was now profiting on account of the loss of the others, might be made to bear its share in the burdens. He complained that the words which had been used at that and at other public meetings, had been vague as to the advantage of the public creditor. For his, part, he was at a loss to see what advantage the fundholder had gained. The argument appeared to him to be made use of rather upon the principle, that by giving your adversary's argument a bad name, you give your own a good one. Upon such grounds it was contended that the stockholder had met with nothing but gain; but those who had attended to the question, were of a different opinion. If only that which the fundholder was gaining now upon the sums which he had lent after the depreciation, was to be taken into the account, then there would no doubt be a balance in his favour; but, this view of the question would be most unfair. It would be stating the profit on the one side, without the corresponding loss on the other. If both of these were to be taken into the account, it would be found that the stockholder had had no thing more than was just; and that if the interest which he had been paid in depreciated currency, upon capital which when lent had not been depreciated, were to be set against the interest which he was receiving in undepreciated currency now, upon capital which when lent had been depreciated, then, not only would the loss in the one case compensate all that had been hitherto paid in the other, but would actually be equal to a perpetual annuity to that annual amount, which he was at present receiving. Mr. Mushett, of his majesty's mint, than whom nobody was better able to understand the subject himself, or to afford clear views of it to others, had, in a very luminous publication, demonstrated that this was the fact. A parade was made in the speeches at public meetings, of the 800,000,000l. of debt which had been lent in depreciated currency, and the vast amount of the difference of interest upon it; but it was well known, that about 400,000,000l. of this debt was borrowed before the Bank Restriction bill had operated any depreciation whatever; and another hundred millions had been lent to the government, before any considerable depreciation had taken place. Hence there had been 500,000,000l. lent to the public in capital which was not depreciated. Interest in the depreciated currency had been paid upon this for twenty years; and the loss arising therefrom, according to the calculation of Mr. Mushett, was allowing simple interest, about 27,000,000l.; or, allowing compound interest, and that was the fair allowance, about 12 or 13 millions more. It would appear, that the whole loss which the stockholder had sustained, in consequence of having been paid in a depreciated currency the interest on the sums borrowed, previous to and immediately following 1797, was about forty millions.—Having thus stated the disadvantages to the old public creditor, he should next state what was the calculation of the same authority, as to the advantages since the depreciation had ceased, by the alteration of the currency. That he calculated at two millions per annum. Compare that with the previous loss of forty millions, and by converting that amount into perpetual annuity, we should have the sum of two millions a year. So that the profit and loss would be found to balance each other. Taking, therefore, the respective interests of the stockholder and the payer of taxes, it would be seen, that no in- jury had occurred to either. Whether his opinion was right or wrong, as to the depreciation that existed at the period of the alteration of the currency, still, on the calculations of Mr. Mushett, it was evident, that to the public creditor, the profits at the one time, though greater, would be balanced by the corresponding losses at, the other. He stood not there to defend the alterations that had taken place in the currency. No man had taken greater pains than himself, either within or without that House, to show the absolute necessity of a fixed standard. His hon. friend expressed his regret, that what was called an amicable adjustment had not taken place in 1819, at the restoration of the standard. Why, then, had he not proposed it? It was suggested at that period by a noble lord (Folkestone), in place of reverting, to the old standard, to alter it to 4l. 1s. being the amount of the variation between the paper and the price of gold at that time. But, supposing that suggestion to have been adopted, was it to be argued, that a loss of 3 or 4 per cent could have produced all those distresses to agriculture, which the most extravagant opposers of the alteration of the currency attributed to that measure? Their opinions, even as to the amount of the depreciation, were Their irreconcileable: some stated it at 20 per cent, others contended it was 100; while the most extravagant went the length of asserting, that it amounted to 300 per cent. Suppose, however, that in place of reverting to the ancient standard, it had been increased 100 per cent, did they think no evils would have followed? Would the result, after doubling the amount of all the taxes, have left what now existed—an increasing revenue and a thriving trade? It was not his intention to renew the discussion on that hackneyed topic, Mr. Peel's bill; but, as such a variety of contradictory opinions had been given on its effects, he would state what was the opinion of a bank director on its efficacy, as it operated on the proceedings of the Bank. Mr. Turner, who had been in the direction for two years, decidedly said, that as to the operations of the Bank, Mr. Peel's bill remained a dead letter. It had neither accelerated nor retarded payments in specie; except by the payment of tea millions of exchequer bills to the Bank, which enabled it to expend that amount in the purchase of bullion. Taking into consideration the rule by which the bank directors generally admitted they regulated their issues, namely, the application for discounts, and coupling with that the low rate of the interest of money, the circulation would have been the same, and consequently the distress of agriculture as great, even if that bill had never passed.

Lord Folkestone

, referring to the question of his hon. friend, whether, if the standard had been increased even to the proportion of being doubled, the country would, under such circumstances, witness the phenomena of an increasing revenue and a thriving trade—contended, that there existed no similarity in the two cases. He should first beg leave to doubt one of the data of his hon. friend; namely, the existence of a thriving trade. When, a few nights past, one of the representatives for London, presented the petition of the city, he had laid considerable stress on the stagnation in trade that existed. Another hon. member, connected with commerce, the very night of the financial discussion, adverted particularly to the distresses of a very important branch of our commercial relations—the shipping interest. These facts were not easily reconcileable with a thriving trade. With respect to the suggestion he had made, in 1819, of increasing the standard to 4l. 1s., he confessed that now, after mature consideration, he was convinced that that amount of increase would be wholly inadequate to the state of things. That principle was limited to the variation which existed between paper and gold at the particular period. His hon. friend himself then argued on the assumption, that the amount of that variance did not exceed 5 per cent. And here he must be allowed to say, that his hon. friend had not been perfectly consistent with himself; for he had since admitted, that the variance was as great as 10 per cent. He (lord F.) maintained, however, that the depreciation was infinitely greater. The fallacy that ran through his hon. friend's argument was this, that he took into his calculation only the comparative depreciation that at the time existed between paper and gold. But there were many causes which operated to produce the depreciation of gold long before gold and paper separated. It was the effect of a depreciated paper currency to take gold down with it; until at length it refused to bear company with paper. That effect would take place under any circumstances where a depreciated paper existed; but there were circumstances of a municipal tendency in this country, that additionally operated to lower the value of gold. The penalties heretofore inflicted on the melting or the exportation of the coin, must have tended to lower the value of the gold currency, long before its separation from the paper, and before the gold was enabled to find its own level. The calculation of Mr. Mushett, which overlooked altogether that great depreciation, and which restricted itself to the variance between the paper and the price of gold, was not founded on correct views. Even before 1797, the value of the gold had suffered a depreciation; as must ever be the case whenever there existed a mixed currency of paper and specie. He was wrong also in the epochs, as well as in his data. His hon. friend, in assuming these data, confined the depreciation within improper bounds, as the gold itself was much more depreciated at the time of the alteration of the currency than he had stated. Though he (lord F.) considered it expedient to raise the standard at least four per cent in 1819, be felt now that he had suggested a very inadequate remedy.

Mr. Wodehouse

expressed his disinclination to prolong the discussion, but he could not allow the opportunity to pass, without submitting to the consideration of the House, and particularly to the hon. gentleman who disputed the effects of the alteration of the currency, the high and acknowledged authority of the late Mr. Henry Thornton, on that memorable discussion upon the report of the bullion committee, on the 6th of May, 1811:—To change the standard when the paper has been long depreciated, is only to establish and perpetuate a currency of that value to which we already are accustomed, and may also be made the means of precluding further depression. The very argument of justice, after a certain time, passes over to the side of deterioration. If we have been used to a depreciated paper for only two or three years, justice is on the side of returning to the antecedent standard; but if eight, ten, or even fifteen or twenty years, have passed since the paper fell, then it may be deemed unfair to restore the ancient value of the circulating medium; for bargains will have been made, and loans supplied, under an expectation of the continuance of the existing depreciation."

Mr. Sumner

observed, that the meeting at which the present petition was agreed to, was numerous, and that it had been convened by the high sheriff; but he disclaimed all the imputations which it cast upon that House, in keeping up an exorbitant expenditure, and an extravagant military establishment. He was certain that the petition did not speak the sentiments of nineteen-twentieths of the freeholders of Surrey. He believed that such a reform as was contemplated in the petition would be any thing but a remedy for the distresses under which the country laboured; for, if corruption were really the evil which existed, that evil would become a thousand times more formidable, if the representation should fall into the hands of those persons who were most desirous of the change.

Mr. Grey Bennet

agreed, that the question of the currency, with reference to the existing agricultural distress, ought to be brought forward specifically in that House. His hon. friend, the member for Essex, would, before this, have submitted his motion on that important subject, if the delicate state of his health had not prevented him. He would not now go into that question; but he could not avoid expressing his astonishment, when he heard his hon. friend asserting, that he did not consider the distress which weighed heavily on the agriculturists, to have been, in any great degree, produced by the change in the currency. Was it possible, when the currency was raised from a depreciation of 40 or 50 per cent, and placed at par, that such a change could take place, without having a considerable effect on the property of the country? Transactions which had been carried on in one currency, were now to be paid in another—debts which had been contracted under a depreciated currency, were now to be paid in gold; and yet, to his utter astonishment, his hon. friend argued, that such a transition had produced no ill effect. He, however, was prepared to show, that it had operated a. depreciation of not less than 40 per cent. But, supposing it to be only 10 per cent, how could his hon. friend give his assent to a measure which imposed a tax of 10-per cent on every debtor; which added 10 per cent to the property of every creditor; which raised the value of every placeman's salary 10 per cent; which gave an addition of 10 per cent to that large class of persons who were creditors of the state, from the king on the throne to the lowest constable in the country? The House had proceeded, ignorantly and confidingly, in legislating on this subject. They began by supporting the measure proposed by Mr. Pitt in 1797; they had agreed to every measure which his successors had brought forward with respect to the currency; until, in 1812, they came to that memorable vote, by which they declared (O! wonderful wisdom of parliament!) that things which in the market were of different value, were equal in public estimation. They had stripped lord King of his property: and he doubted not, that the hon. member for Surrey, who now talked so feelingly about public spoliation, gave his assent to the measure under which that confiscation was effected, when parliament declared, that debts which were contracted to be paid at the rate of 1l. 1s. should be discharged at the rate of 14s. Parliament had been led to do this ignorantly and confidingly, but not dishonestly; but, having done it, they ought to look back to the want of knowledge and information which prevailed when they legislated on this subject; and, when they saw the overwhelming distress which that want of knowledge had caused, they ought to take into their serious consideration the means best calculated to remove or alleviate the existing evil. Parliament had been asked repeatedly to take this subject into its consideration. Committee after committee had sat, to inquire into the cause of agricultural distress, and one would suppose it to be almost impossible, that a question of such vital importance as the effect produced by the changes which had taken place in the currency, should not have been made the subject of investigation by some one of those committees. This had not been done; and certainly it was not wonderful, when they considered the rapid growth of intelligence throughout the country, arising from the dissemination of the debates of that House, and the publication of books out of it, if the people felt it necessary to discuss this question at public meetings, since parliament refused to entertain it. He, however, did not know a worse place for the discussion of such a question than a public meeting. It ought to be debated in parliament. But, if parliament would not do its duty, the people would do theirs. Certain he was, that not a public meeting would in future be held, at which this subject would not be taken into con- sideration. Though gentlemen might scout these opinions, and load those who held them with all the hard names they could think of; still he would prove, even against the authority of Mr. Mushett, that the substantial justice of the case rested with the petitioners.

Mr. Peel

said, he did not rise to discuss the question of the currency, for he deprecated all incidental debate upon the subject, more especially as a notice of motion had been given, which would bring the whole question under the consideration of the House; but, if he remained altogether silent, he might be supposed to acquiesce in statements, the validity of which he could never admit. How was it possible to suppose that, after the long derangement which had taken place in the currency, its value could be restored by the bill of 1819, without partial pressure and inconvenience? It was no solid objection to this measure, that such pressure was proved to exist. It was a consequence that could not he avoided. Before 1819, as far as the fundholder was concerned, a great part of the debt was contracted in a depreciated currency; but it should not be forgotten, that there was a distinct enactment to the effect, that on the arrival of peace the currency should be restored. Different views of policy might be fairly entertained at different periods; but surely at all times, and at all periods, equity and justice were the same. What was just in 1811, was just in 1819, even though the pressure in the latter year were greater than in the former. What was the resolution proposed to the House in 1811, by Mr. Horner? why, that payment in cash should be renewed by the Bank, not within six months after the ratification of a definitive treaty of peace, but within two years from that present time. When it was found necessary to enact, that the payment of promissory notes in cash should be suspended, it was not in contemplation of those who passed the act, that any change should take place in the value of promissory notes; and that was what the House declared in its resolution of 1811. At the present period, then, would it be just, to make any deduction from what we were bound to pay the public creditor, on account of a change of value? Such was not the intention of parliament when it contemplated a return to cash payments on the event of peace. For himself, he maintained every opinion on the subject which he had advanced in 1819. He still deprecated a partial discussion, but he appealed to the internal state of the country now and in 1819, as an evidence in support of his opinions.

Mr. Monck

said, that if, as was asserted, the old restictrion act committed a great injustice on the public creditor, it was no less true, that a great injustice was now inflicted on the public debtor. Mr. Mushett's tables, it should be observed, only went down to near the present period; but, while the injustice to the creditor only operated at the utmost for about twenty years, that to the debtor would, if persisted in now, affect him in perpetuity. Those who were opposed to his opinion, considered the question as only between the creditor and debtor; but there was another class distinct from both, whose interests were most seriously affected. He meant heirs at law, mortgagers, and others who made contracts under very different circumstances; and who, if the House did not interfere, must be stripped of their property, and consigned to absolute ruin. A very serious fallacy existed relative to the currency up to 1819, namely, that there was no difference between the price and the value of gold; but the fact was, that when the price was depreciated not more than 4 per cent, the value of the gold itself was depreciated 40 per cent. When the bill passed, the price was fixed at 3l. 17s. 10½d., but the value of the metal had enhanced, and went on enhancing up to the present period. During the suspension of cash payments, the value of gold was so depreciated, that, for the first time in the annals of the world, an ounce of gold only represented the value of one quarter of wheat. He would ask, at what period of the world, in what chronicon pretiosum did it occur, that an ounce of gold only represented, and was exchangeable for, a quarter of wheat? In former times, as now, the ounce represented at least two quarters; but, whatever was the cause, there could be no doubt as to the effect. It was certain that the landed proprietors must reduce their rent at least two-thirds. Those proprietors now received but 6s. 8d. where they formerly received a pound; but, as debtors to the exchequer, they were still called on for the pound, while they received but the 6s. 8d. He threw out these observations, with a view of accounting for the cause of the unparalleled distress which overwhelmed the productive industry of the country; and he was convinced that, the more the House considered the subject, the more they would feel themselves bound to apply a just and equitable remedy.

Mr. Ricardo

admitted, that the noble lord was correct, in stating that he (Mr. R.) had on one occasion computed the depreciation at 5 per cent, and that he now found it to be 10 per cent; still, he was not in error. His first computation referred to a payment in bullion; and it would have been correct if the Bank had acted precisely in the spirit of that bill but, instead of doing so, they had got together a large quantity of gold, which they coined into sovereigns, and then they came down to the House to procure an act, enabling them to get rid of those sovereigns. If the measure of which he approved had been acted on, the depreciation would have been but 5 per cent; because it would have been measured by the price of gold.

Lord Folkestone

said, he had supposed the hon. member to have been arguing with reference to Mr. Peel's bill; but now he discovered, that his argument rested on a measure which existed only in his own imagination.

Ordered to lie on the table.

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