« ZurückWeiter »
THE EFFECTS OF VARIATIONS IN THE CURRENCY.
The various changes which have short period after the suspension of taken place within the last five-and- cash payments, it became apparent, thirty years in our monetary system, both from the price of gold in the will undoubtedly form one of the bullion market, and from the rate of darkest pages in the annals of this foreign exchanges, that the pound country, and furnish to all coming note had sustained a considerable generations an imperishable monu- depreciation, and that although noment of the ignorance of British states- minally representing about the fourth men, in an age which vaunts itself on of an ounce of gold, it was only the progress which it has made in worth, in exchange, about the fifth every species of knowledge, and more of an ounce of that metal ; or, in especially in what is called the science more familiar language, although of Political Economy. The changes nominally purporting to represent in question have spread more ruth- twenty shillings, it had depreciated less and wider ruin, and created more so far as to be worth no more than public inconvenience, as well as pri- fourteen, at the most fifteen shilvate misery, than any public calamity lings, in exchange for other commowhich has ever occurred in the his- dities, tory of any known nation. Had the We must request our readers to task of effecting these changes fallen pause at this point, and contemplate into the hands of intelligent men-of for a moment the change which then men possessing but even a tyro's took place in our currency, together knowledge of the general principles with the effects which it produced on which they ought to have pro- upon the pecuniary relations of soceeded, means would have been de- ciety. The old standard of value vised to obviate the monstrous and was in effect destroyed, and another incalculable wrongs, both public and standard, considerably depreciated, private, which have resulted from the was adopted in its stead. All pubalterations which have been made in lic, as well as private creditors, were the standard of value.
compelled to receive payment in paAta moment of great public embar- per money, and consequently plunrassment and distrust, Mr Pitt was in- dered to an amount equalling the duced to have recourse to the fatal difference between the real value of step of restraining the Bank of Eng- the paper money in which their land from paying cash for its notes. claims were liquidated, and that of For several years after this event, mat the metallic currency in which their ters went on smoothly enough, and no capital had been lent. Supposing, harm, on the contrary, much good, therefore, the real value of the pound seemed to have resulted from the note to have at that period fallen to measure. The Governors of the Bank, fifteen shillings, it is manifest that a kept within bounds by old habits, loss of twenty-five per cent was inand accustomed to the restraint of flicted by this change upon the whole cash payments, did not at once per body of creditors throughout the ceive that their fetters had been with realm, while every debtor profited drawn; hence they acted with their to this amount, at the expense of his wonted reserve and discretion for
creditor. Nothing could have been some time after the necessity for that more unfair or iniquitous, but such circumspection had ceased. By de was the fact. Every person who had grees, however, they began to feel lent twenty shillings, was forced to their liberty. Their responsibility
put up with a repayment not exbeing lessened, if not altogether re ceeding fifteen shillings. This altermoved, they became freer in the is ation in the currency has been callsue of bank-notes, and in the end sa ed, and very properly called, an act turated the kingdom with paper mo of bankruptcy; for it was, to all inney. This paper money gradually tents and purposes, an act of nationdisplaced our metallic currency, and al, as well as individual bankruptcy. became the sole circulating medium The creditors, both of the state and of the country. In the course of a of private individuals, were compel
“ Since pa
led to forego at least twenty-five per ments were suspended in 1797, and cent upon their honest and just which, therefore, for all practical purclaims.
poses, had ceased to exist for upAn inconvertible paper currency
wards of twenty years. having been thus established as the per,” argued the Bullionists, “ as a actual, as well as legal, measure of standard of value, must, from its very value, all bargains were hencefor- nature, be fluctuating and uncertain, ward made—all debts, and other lia- it is expedient that a metallic standbilities, contracted in this new and ard should be substituted for it; and depreciated standard of fifteen shil- gold is, in many respects, the most lings to the pound sterling.
convenient metal to constitute this About 1810, the political econo
standard.” To all this there seems no mists took the field on the subject of reasonable objection. “Therefore,”. the currency; they delivered them say they, “ the pound sterling now selves of long and vehement ha- about to be established, ought to rangues against an inconvertible pa- weigh 120 grains of gold of the standper circulation, denounced our whole ard fineness.” The inference here monetary system as vicious and frau- drawn is unquestionably a very exdulent, and loudly demanded its re traordinary instance of jumping at a establishment upon a metallic basis. conclusion. It is difficult to believe, In 1811, the Bullion Committee made without positive proof, that such reathe report which has been since so soning could for a moment have immuch vaunted. With infinite pains posed upon any man; and still more and labour this committee proved, difficult to conceive that it should what no man of common sense and have been acted upon by practical ordinary experience doubted for a statesmen. The premises above single moment, that for many years stated will not support the concluthe paper pound note had depreci- sion which was then drawn from ated from its nominal value. Lord them. It appears absurd to say, that Bexley and his party, however, stea- because it is expedient that the standdily combated this proposition: with ard of value should be metallic, it is equal intelligence and pertinacity, a necessary consequence that the they maintained that the currency pound sterling should contain the had not depreciated, and that a pound same quantity of gold as it contained note and a shilling were, in public previously to the suspension of cash estimation, equal in value to a golden payments. Reasons unquestionably guinea.
may exist, why the pound sterling By degrees, the arguments and facts should contain this identical weight of the Bullion Committee began to of gold; but the expediency of repenetrate the brains even of these storing a metallic standard of value official persons, who seemed at length is certainly not one of them. This to perceive that the paper pound was, in fact, the fallacy which so fanote had depreciated from its nominal tally misled the Legislature in 1819. value. The Bullion party having, All the absurdity in argument which after about eight years of hard labour, has been advanced on this subject, hammered into their antagonists the and, what is much more to be laconviction, that the paper currency mented, all the mistakes which have had sustained a depreciation, eagerly been committed in practice, with reproceeded to make the most of the gard to the currency, have arisen vantage ground which they had gain- from confounding two questions, ed; they saw that the battle was half which are in their nature perfectly won, and that the object, for which distinct. For it requires but little they had so long and so arduously sagacity to perceive that a resolustruggled, was now within their reach. tion, grounded on expediency, to reHaving prevailed upon anti-bullion- turn to a metallic standard, is one ists to consent to the establishment thing, and that fixing the weight of of the currency upon a metallic basis, this metal which is to constitute the they went one step farther, and per standard of the pound sterling, is ansuaded them to render the new stand- other question, totally unconnected ard of the same weight and fineness with the former. as the old standard, which had, in ef It was not the object of a return to fect, been abolished when cash pay- a metallic currency to increase the
real value of the pound sterling, in ance of the Bank Restriction Act. which all contracts for the twenty Having ascertained the weight of gold preceding years had been made; the which the paper pound note repreobject of this measure was merely to sented, or would have exchanged for, prevent the uncertainty and Auctua- they should have recommended it as tion in the standard of value from the standard of the new currency. If, the continuance of an inconvertible for instance, it had, on proper enpaper currency. To avoid the fluc- quiry, been discovered that the
paper tuating uncertainty to which the pound note, though nominally reprepound sterling, regulated in a paper senting 120 grains of gold, really restandard, could not fail to be liable, presented no more than 96 grains, or it was, no doubt, highly expedient three-fourths of the nominal weight, that the currency should have been the new standard should have been placed upon a metallic basis. But made to contain 96 grains, and not, because it was judged expedient, as it now does, 120 of that metal. that, on account of its greater cer Instead, however, of pursuing this tainty, our currency should be placed enquiry, and making the result of it upon a metallic, instead of a paper the means of determining the weight basis, it surely did not follow that of the metallic standard about to be the new standard of the pound ster- re-established, the committee, most ling should have been made to con unaccountably, turned aside to hunt tain a greater weight of the metal, after a guinea—a coin which, since selected for that purpose, than was the suspension of cash payments in actually represented by the paper 1797, had ceased to be the standard pound note, for which it was adopted of our currency: and having, after a as a substitute. Because gold was laborious and painful research, for fixed upon as the metal by which the which they consider themselves, no pound sterling should for the future doubt, entitled to the thanks of the be measured, it was a monstrous ab- country, made the amazing discovery, surdity to infer, therefore, that this that the guinea contained 126 grains pound sterling should contain 120 of gold, they decided that the new grains of this metal; or, in other standard should therefore contain 120 words, be of the same weight with a grains, or 2 i of a guinea. standard which, to all practical pur For more than twenty years preposes, had been abolished twenty viously to the restoration of a metallic years before.
standard in 1819, all bargains and conThe committee appointed to con tracts of a pecuniary nature had been sider the state of the currency pre- entered into,-farms had been rented, viously to the introduction of what is taxes had been assessed, lands had called “ Peel's Bill,” in 1819, seem been mortgaged, money had been to have had no conception of the lent both to the state and private inquestion which really required inves- dividuals,—in a depreciated currentigation. For reasons which we can cy. For more than twenty yearsnot pretend even to conjecture, the a period during which a new generamembers of this sage committee tion of men must have sprung up, made it their principal object to as and at the end of which very few
pecertain how much gold the pound cuniary arrangements were subsiststerling contained before the suspen- ing which had been entered into besion of cash payments. But this was fore its commencement—the whole undoubtedly a gross misapprehen- mass of the money transactions of sion of the object to which their atten- this country had been regulated and tion ought to have been directed. It settled on a paper pound sterling, was unnecessary to appoint a com which did not, in fact, represent more mittee of the House of Commons to than 96 grains of gold. When the ascertain the metallic value of the Legislature, therefore, determined to pound sterling before 1797 ; that fact substitute a metallic for a paper standwas already well known to every ard, policy, as well as justice, requicity 'prentice : on the contrary, its red that the new standard should researches should have been directed have been fixed at this weight. In towards ascertaining the average settling the weight of the new standweight of gold which the paper pound ard, the Legislature should have connote represented during the continu- sidered itself as a jury sitting in judg
ment between a debtor and his cre- fidelity with which the state should ditor, for the purpose of deciding fulfil its pecuniary engagements; what quantity of gold the former had with vapid dissertations on the faith really contracted to pay the latter which should be observed towards when he had borrowed from him a creditors, both public and private; pound note; and, having ascertained but these declaimers carefully keep what weight of this metal the paper out of sight the injustice done to the pound note lent by the creditor ac debtor, by obliging him to pay onetually represented at the date of the fourth more than he borrowed. The transaction, this should, upon every most scrupulous and honourable obprinciple of equity and fairness, have servance of the faith pledged by the been fixed upon as the weight of the debtor, does not surely require that new standard. As to any practical the creditor should receive
in repaymeasure to be suggested by the en ment more than he lent? When the quiry, the Legislature had no more to latter was, therefore, repaid in a medo with the weight of gold which con tallic currency, money which he had stituted the standard of the pound lent in paper pound-notes, he could sterling before the suspension of cash in fairness expect in repayment only payments had taken place, than with that weight of gold, which these pathe quantity of that metal which the per pound-notes would, at the period Spanish doubloon, or any other fo- of the loan, have exchanged for in reign coin, contains at present. The the bullion market. The same evenold standard of our pound sterling handed justice, which gave him an inwas, to all practical purposes, abo defeasible right to exact this amount, lished in 1797; a depreciated stand required that his demand should not ard then came into use, and consti- exceed this limit; for, as to the natuted the measure of value.
ture and extent of the wrong comHad these principles been acted mitted, it requires a very nice casuist on in settling the currency in 1819, indeed, to discriminate between the the country would have escaped the injustice done a creditor, by obliging general confusion which that mea him to receive, in liquidation of his sure has since produced; and we debt, 25 per cent less than he lent, should have experienced few, if any, and the injury inflicted upon the of the frightful difficulties, in which debtor, by forcing him to pay his the alteration which has been made creditor 25 per cent more than he in the value of the standard has in borrowed. volved the community. The change It is now, on all hands, admitted, then made in the standard of value that the currency bill of 1819 inwas as palpably unjust in principle, flicted upon the whole body of debtas it has proved irretrievably ruinous ors an unjust wrong, proportioned to in its result
. Had any man proposed, the excess of the new standard over in direct and unveiled terms, to add the value of the depreciated paper twenty-five
cent to the amount currency, in which, with exceptions of all pecuniary contracts at that pe too trifling to be taken into the acriod subsisting between debtor and count, the whole bulk of the creditor, the suggestion would have niary engagements then subsisting appeared too monstrous to be enter had been contracted. It was a wantained for an instant. But the mea ton and cruel injury, palliated by no sure which the legislature was then considerations of justice, necessity, so unwarily led to sanction, has in or policy, that those who had pecudirectly produced this ruinous in- niary claims to satisfy should have justice : for the injury inflicted upon been obliged to liquidate them in a the debtor is exactly the same, whe standard different from that in which ther he be called upon to pay L.125 they had been incurred; that every for each L.100 which he has borrow- debtor throughout the community ed, or be compelled to pay L.100 in should have been compelled to rea standard increased one-fourth in pay 120 grains of gold for 96 grains its weight.
which he had borrowed. To this Those who dwell upon the wrongs addition to the weight of gold really inflicted by the alteration of the represented by the paper money oristandard in 1819, are instantly assail- ginally lent, no creditor could, on ed with shallow declamations on the any principle of justice, establish
even the shadow of a claim : it was also to make the new standard of therefore, an act of barefaced rob- value of the same weight and finebery, as it enabled every creditor, ness as the old standard abolished in under the colour and sanction of law, 1797, they gave the Jews, stock-jobto exact a pound sterling, measured bers, and attorneys of the country, by the present standard, for every an enormous advantage, at the exdepreciated pound note which he pense of the classes connected with had lent.
land. In 1819, the simple-minded It may also be observed, that country gentlemen fell into the snare however important might have been which was artfully laid for them; they the interests involved in regulating were deluded by the Ricardos and the current value of the debt due Rothchilds of the day, and led, by from the state to individuals, they the confidence which they reposed in were inconsiderable indeed, when Mr Peel, whom the flatteries of the compared with the various and ex Economists had seduced into the betensive private interests affected by lief that he understood the subject, the alteration then made in the real into the gross folly of establishing a value of the pound sterling. If we news tandard of value, which, at one suppose, that the interest of the pub- stroke of the pen, added at least 25 lic debt amounted at that time to per cent to the weight of their inthirty millions of pounds sterling, cumbrances and debts. No sooner still the pecuniary engagements of a had this monstrous act of legislative private nature subsisting at the same iniquity been consummated, than the period, must have amounted to at real authors of it began to gather the least ten times that sum. So that, if fruit of their cunning management. justice and good faith required, what The stockjobbers sold out of the they certainly did not, that the pub- funds, and thus obtained a pound lic creditor should have had a right worth twenty for every pound worth to exact 120 grains of gold for the fifteen shillings, which they had inpaper pound-note, representing only vested in those securities: with the 96 grains, which he lent the state, it profits then realized, they were enwas, nevertheless, a monstrous ab- abled to possess themselves of princesurdity to infer, that every private ly estates belonging to ancient famicreditor was, therefore, entitled to a lies, whom this alteration of the standsimilar addition to the amount of his ard ruined and beggared. claims upon those who were indebt When we call to mind the vast ed to him. The addition of one number of estates which must have fourth made to the public debt by been mortgaged during the deprecithe alteration of the standard, has no ation of our currency, we shall the doubt been felt by the community better comprehend the frightful difas extremely unjust and onerous ; ficulties occasioned by the alteration but this inconvenience has proved a of the standard in 1819. Of the enormere feather in the scale, when ba- mous wrongs which that measure inlanced against the enormous and in- flicted upon individuals, we could, tolerable iniquity of adding twenty- from our own personal knowledge, five per cent to the real amount of adduce a long catalogue of affectall the pecuniary obligations then ing instances : but from want of subsisting between private indivi- space, as well as the fear of exhaustduals. The effect of increasing the ing the patience of our readers, we standard, in which the public credi- must content ourselves with one or tor was to be henceforward paid, two cases, which may serve to illuswas merely to add one-fourth to the trate the injuries inflicted upon a real amount of the taxes imposed numerous body of private individuupon the people; an evil and injus- als by the operation of “ Mr Peel's tice, no doubt, of infinite magnitude; bill.” but the influence of this measure A landed proprietor, with whom upon all private money engagements we had some acquaintance, died in has proved ten times more oppres. 1812. He had seven children, among sive and disastrous.
whom it was his intention that his When the bullion-party succeeded property should be divided in nearly in cajoling Parliament, not only to equal shares. For this purpose, his re-establish a metallic currency, but estate was valued a short time before