EQUITABLE ADJUSTMENT OF CONTRACTS—PETITION OF MR. THOMSON. (Hansard, 1 May 1823)

§ Earl Stanhope

rose and addressed their lordships nearly as follows:—My lords, the petition which has just been read brings under your consideration a subject of very general interest and extreme importance—it is that subject of equitable adjustment, which has been so much misunderstood by some, and has been by others so much misapplied. An equitable adjustment is a phrase which of itself implies an adjustment upon principles of right, a true, clear, and undeniable consequence of that natural and immutable state of affairs, without which, although obedience to human laws may be enforced, those laws cannot command respect. It is evident, that if the government of a country alter the value of its currency, it ought in the same proportion, to alter the value of contracts made antecedent to such a regulation. By the introduction of the Bank Restriction bill in 1797, the value of the currency was rendered what it was not before; and such has proved to be the case not only with respect to gold, but by that which affords a much more accurate criterion, namely, by the value of manufactures and commerce. With 2 respect to gold, it must be recollected, that it cannot be understood as a standard value, except when it is used for purposes of government. For a few years, gold became itself depreciated to a great extent, in the same manner as paper when compared with gold. It has been stated, that nothing can be more futile or more fallacious than an attempt to measure the market price of gold by the depreciation of currency at different periods. That argument may suit those whose endeavour is, to prevent the matter from being viewed in its true light. As the value of the currency, however, has been very different at various periods, it is requisite, for the sake of justice, to pursue the principles of equitable adjustment, so that each contract should be rectified or adjusted, according to the real original value the commodity bore at the period when it was contracted for. This is another principle of equitable adjustment, which is essentially different from all those proposals which we have heard of, for the purpose of altering the standard, inasmuch as it would affect all contracts in the same proportion; for, by such an equitable adjustment as I allude to, each contract would be restored to its value at the time the parties contracted. Such are the principles that I conceive ought to regulate an equitable adjustment; than which none can be more just—none can be more necessary—I will not merely say, for the safety and well-being, but even for the existence of the country.—The object of my proposition, as to an equitable adjustment, is to rectify and to regulate, to their original value, all contracts made since the restriction of cash 3 payments in the year 1797, and previous to the restoration of cash payments in 1819. The effect of that would be to do justice to ail parties contracting; to correct all the grievances that now exist; and to place all the parties interested, in the same situation as they were in at the time when those contracts were entered into. Such being the means of remedying the evil, and such the nature and object of an equitable adjustment, I should be surprised at the calumnies that have been heaped upon it from various quarters, were I not convinced that wilful and base representations have been made upon the subject; by those who are perhaps interested in the continuance of that iniquity which it is the object of the proposers of an equitable adjustment to prevent. It was, however, with great astonishment that I heard, the other night, this measure stigmatized as being revolutionary, on a petition presented by a noble lord not now present, which petition proceeded from the county of Hereford, and also prayed for an equitable adjustment; When we talk of propositions being revolutionary, I should like to know, what can be more revolutionary, or more destructive to regular government and good order, than that which has the effect of revolutionizing the value of property? What can be more terrific than that, when done under the sanction of law? I would beg to quote the words of that admirable petition, which the noble lord presented from the county of Hereford, in which this country is said to be governed by a violent aristocracy, and proceeding gradually towards revolution. Can your lordships suppose that such a revolution can be consummated without experiencing the effects of, I will not merely say a change, but a total destruction of the constitution, and without producing evils which no man has anticipated? I retort the charge of revolutionary intentions upon those who have so used it, and who attempt to calumniate the measure with such epithets, but with which they in vain attempt to stigmatize it. I would wish them to use arguments instead of abuse. We have heard it lately Asserted that a system of equitable adjustment would produce dreadful confusion. It is the first time that I ever heard such an argument used against obtaining justice, to prevent the continuance of spoliation, and to avert the most destructive state of circumstances to individuals as 4 well as to society in general. It never was proposed by any man, that in following up the principles of equitable adjustment, we were to strike at the foundation of property, to discover who were the original holders. It is clear that every holder of a contract, whether by purchase or otherwise, is the same as the original holder: he not only possesses the same rights, but must submit also to the same obligations. That this is the principle of equitable adjustment is not a discovery that is new; but I should consider that as being no valid objection to it: if it were, I should refer your lordships to an act of parliament, passed in Scotland in the 3rd parliament of James 3rd, for the purpose of settling equitably all debts and contracts then subsisting. That act differs from the acts of our days, as it is very short: it states, in the preamble, that whatever contract may have been made for money, it is for the good of the realm, that the same should be settled equitably, according to the value of the currency; it then enacts that all debtors who owe any debts upon contracts, may be allowed to pay the same, according to the sum and substance of what was intended between the parties at the time of making their contract. Now, my lords, you here see the principle of an equitable adjustment measured out in Scotland in former times, by the authority of an act of parliament; and, if I be correctly informed, the same principle has been established in this country by the decision of a court of law. I don't know the names of the parties in that case; but I have no doubt they are familiar to my noble and learned friend upon the Woolsack. It was, I believe, a case which occurred towards the end of good queen Elizabeth's reign, with respect to a person who, having made his will at the close of that reign, and (as a great alteration had taken place in the value of the currency at that period), his executors entertained a doubt as to how to settle the testator's affairs, on account of the ruinous obligations they found imposed upon them by that will. A question was therefore agitated as to whether that testator understood that the payments were to, be made at the valuation of the currency at the commencement of the reign, or according to that value which existed at the time the will was executed? The court decided, inasmuch as the words of the will were, "I give and bequeath such and 5 such sums, to be paid to certain persons named, according to the valuation of the currency," that those words were to be understood as being applicable to the general value of the currency at the time the payments were to be made. Here again your lordships see the effect of an equitable adjustment acted upon in courts of law. Besides that, if we look to the example of other countries, I need only refer your lordships to the conduct of the emperor of Austria, and for which conduct, I dare say, the government of that country cannot be called in any respect revolutionary; in that country the present emperor having made considerable alterations in his currency, issued an edict to all the magistrates within his dominions, forbidding them, under the severest penalties, to open it before a certain day; and desiring them, at the same time, when that day came, to give it all possible publicity. When that edict was opened, it was found to contain a scale for the payment of debts, and directing all debts constituted by contracts previously obtained, to be paid according to that scale. It is also singular that the same country, Austria, should exhibit an example, not only of the sort of equitable adjustment here proposed, but also a measure similar in its nature to that bill, which has lately passed in this country, commonly called Mr. Peel's bill. Be that as it may, however, it is certain, that the paper currency of Austria has from time to time fluctuated from 440 to 250 in paper, as compared with 100 in silver. The emperor determined to ascertain the proportion between paper and silver which was settled at that time, and it was ascertained, that it afforded no more a just criterion of the value of silver in that country, than what are called the market-price of gold in this country. The emperor directed, as in this country, that the debts should be paid in silver, according to that ratio which he then established, and that system was begun in that country, having been occasioned by similar causes as have existed in this. At that time, the most grievous and intolerable inequality of payments prevailed in that country; and, as in this, the disproportionate value of payments was monstrous. Such a system as formerly prevailed in Austria, as to the payment of debts, was in the result, a source of extreme dissatisfaction and discontent 6 throughout the whole of the emperor's dominions.—Having troubled your lordships, at this length, upon the general principles of this measure—principles which have been so unjustly calumniated—allow me to apply those principles to the case of this petitioner. His case is this—that he is in danger of losing two estates which were bought by him in the year 1811 for 132,000l.; he is in danger of being dispossessed and deprived of those estates by the foreclosure of a deed of mortgage for 60,000l., being less than one-half of the value of the estates upon which that mortgage was granted.":—His lordship then entered into an elucidation of the losses sustained by the petitioner, founded upon the statement in the petition, and also stated various other similar cases of hardship, which had come within his knowledge, as arising from the depreciation of landed property. He mentioned one instance, in Herefordshire, where an estate was sold for 25,000l. some years ago, and which hid been repurchased by the original proprietor for 6,000l. He would ask their lordships, whether it was possible to state any thing, more strong and energetic, to shew the cruelty and hardship which this petitioner and others in a similar situation were under the necessity of enduring, on account of the injustice arising from the inconceivably great reduction in the value of property, without any alteration being made in the value of the currency. Those evils could only be remedied by an equitable adjustment; and until that system which he now proposed, was adopted, the evils complained of could not be remedied. In duty to their country, their lordships were bound to prevent the mortgagee under such circumstances executing a foreclosure.—His lordship also mentioned the case of a person whose income had been reduced from 60,000l. a-year, to 30,000l. a year; with the same annuities of 21,000l. a-year to pay out of 30,000l. a year, which he had to pay out of 60,000l. a-year. He was well aware, that 9,000l. a-year was quite enough for any man; but he only mentioned it to shew the proportionate hardship which was inflicted by the state of the currency upon landed proprietors. No man could willingly submit to be thus dispossessed of his property nor have swallowed up or transferred into other hands. In order to pay claims established upon former contracts, many were 7 under the necessity of disposing of twice the quantity of produce compared with the value of the property, when those contracts were entered into. He asked for justice being done to the public debtors—he asked for justice being done to the suffering people of this country—he asked for justice in redress of grievances, such as those which even Buonaparte, in the plenitude of his power, would not have allowed to exist. Unless those grievances were speedily redressed, we might expect that the country would be overwhelmed in ruin, or, at least, involved in convulsions which no man would desire to see, and which, perhaps, none have apprehended as likely to arise from such a cause. He called upon their lordships to arrest the progress of such consequences. But such was the state of affairs, that those grievances met them in every step. Should we ever again have occasion to revert to the question of peace or war, he should ask their lord-ships, how they could be prepared to go to war, even if menaced by some danger or distress, under such a state of circumstances? The sinews of war were money; and he would ask, whether they could expect to raise sufficient funds, if the landed proprietors of the country were so impoverished? He trusted, however, that the sinews of war did not merely consist in money, but in that unconquerable will and courage, which would never submit nor yield. Even in that case, he would ask, how they could expect that unconquerable will and courage to be evinced by a population oppressed as it was by the measures of government? No wonder that the people were distressed, discontented, and disaffected, by the continuance of evils in a system of government which tended to render them desperate. Unless the government were disposed to sink the country into a state far more base and abject than it had ever before exhibited at any time of its history, he had no doubt their lordships would find it necessary soon to redress those grievances, in order to restore the ancient energy of its population. He should think it his duty to bring forward some motion upon this subject of equitable adjustment; and he took that opportunity of thus stating his sentiments, however ineffectual his exertions might be, or whatever little success might attend them. The attention of parliament had been unfortunately occupied with a review of 8 transactions in which they had no direct concern; namely, that of considering the conduct of foreign sovereigns, in which they had, comparatively speaking, no right to judge, and whose conduct they had no power to control; while the government neglected redressing those grievances which existed in our own country, and which it was in their power to remedy. It was still his intention to submit various motions upon the subject of those grievances, whenever the time arrived when the result was likely to be more advantageous and beneficial than at the present moment. He could not, however, lose that opportunity of protesting against leaving unredressed and unconsidered by parliament, the state of the currency which imposed such tremendous grievances upon the country. The petition which had given rise to these observations, he viewed as the petition, not of one individual, but of every individual in the realm, from the highest to the lowest; because every one was concerned in the benefits to be derived from the just principle of an equitable adjustment. It was therefore his intention, upon those general principles, to move, upon some future day, that this petition be taken into consideration; but, at present, he should content himself with moving that it be laid upon the table.