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• Prefatory Note to Volumes Iii and Iv
• Pamphlets and Papers Written For Publication 1809–1811
• Note On the Bullion Essays
• The Price of Gold Three Contributions to the Morning Chronicle1809
• The Price of Gold 1
• [first Reply to ‘a Friend to Bank-notes’] to the Editor of the Morning Chronicle.1
• [second Reply to ‘a Friend to Bank-notes’] to the Editor of the Morning Chronicle.1
• [appendix to ‘the Price of Gold’
• [a Reply By Trower]
• [a Further Reply By Ricardo]1
• The High Price of Bullion 1810– 11
• Three Letters to the Morning Chronicle On the Bullion Report 1810
• [three Letters On the Bullion Report] Report of the Bullion Committee1to Theeditor of the Morning Chronicle.
• [on Sir John Sinclair’s ‘observations’] Bullion Report1to Theeditor of the Morning Chronicle.
• [on Mr Randle Jackson’s Speech] Bullion Report1to Theeditor of the Morning Chronicle.
• Reply to Mr. Bosanquet’s ‘practical Observations On the Report of the Bullion Committee’, 1811
• Chapter I: Preliminary Observations.—mr. Bosanquet’s Objections to the Conclusions of the Bullion Committee Briefly Stated.
• Chapter II: Mr. Bosanquet’s Alleged Facts, Drawn From the History of the State of Exchange, Considered.
• Chapter III: Mr. Bosanquet’s Alleged Facts, In Supposed Refutation of the Conclusion That a Rise In the Market Price of Bullion Above the Mint Price Proves a Depreciation of the Currency, Considered.
• Chapter IV: Mr. Bosanquet’s Objections to the Statement, That the Balance of Payments Has Been In Favour of Great Britain, Examined.
• Chapter V: Mr. Bosanquet’s Argument to Prove That the Bank of England Hasnotthe Power of Forcing the Circulation of Bank Notes—considered.
• Chapter VI: Observations On the Principles of Seignorage.
• Chapter VII: Mr. Bosanquet’s Objections to the Proposition, That the Circulation of the Bank of England Regulates That of the Country Banks, Considered.
• Chapter VIII: Mr. Bosanquet’s Opinion—that Years of Scarcity and Taxes Have Been the Sole Cause of the Rise of Prices, Excessive Circulation No Cause—considered.
• Chapter IX: Mr. Bosanquet’s Opinion, That Evil Would Result From the Resumption of Cash Payments—considered.
• Appendix
• Notes On Bentham’s ‘sur Les Prix’ 1810– 1811
• Notes On the Bullion Report and Evidence 1810
• (a): [notes On the Report of the Bullion Committee]
• (b): [rough Notes On the First Part of the Minutes of Evidence]
• (c): [notes On the Minutes of Evidence] Minutes of Evidence
• Notes On Trotter’s ‘principles of Currency and Exchanges’ 1810
• Observations On Trower’s Notes On Trotter 1811
• Observations On Vansittart’s Propositions Respecting Money, Bullion and Exchanges 1811
• Appendix

Ricardo’s first appearance in print marked the beginning of what came to be known as the Bullion Controversy. It took the shape of an anonymous article on The Price of Gold published in the Morning Chronicle of 29 August 1809. His brother and biographer, Moses Ricardo, records how this contribution came to be published. ‘The immense transactions’, he says, ‘which he had with the Bank of England, in the course of business, tallying with the train of studies on which he was then engaged, led Mr. Ricardo to reflect upon the subject of the currency, to endeavour to account for the difference which existed between the value of the coin and the Bank notes, and to ascertain from what cause the depreciation of the latter arose. This occupied much of his attention at the time, and formed a frequent theme of conversation with those among his acquaintances who were inclined to enter upon it. He was induced to put his thoughts upon paper, without the remotest view at the time to publication. The late Mr. Perry, proprietor of the Morning Chronicle, was one of the few friends to whom Mr. Ricardo showed his manuscript. Mr. Perry urged him to allow it to be published in the Morning Chronicle; to which, not without some reluctance, Mr. Ricardo consented’.1

The publication of Ricardo’s article started an extensive correspondence in the Morning Chronicle. His own further contributions were provoked by a letter defending the Bank of England against his criticisms, which appeared on 14 September 1809 and was signed ‘A Friend to Bank Notes, but no Bank Director’, whom Ricardo ‘soon after found to be an intelligent friend of his own’,1 Hutches Trower. Ricardo’s reply to this letter appeared on 20 September over the signature ‘R.’ A second letter from ‘A Friend to Bank Notes’, although dated 23 September, was not published till 30 October; and Ricardo’s rejoinder, dated 4 November, and signed ‘R.’, did not appear until 23 November.2 This concluded their controversy in public. But once they had established each other’s identity, it seems that the two correspondents communicated their views to one another without waiting for the long delayed publication in the Morning Chronicle. Thus a private controversy arose between them concurrently with the last stage of their published letters and was carried on after their controversy in public had come to an end.

Ricardo’s answer to both of these replies of Trower was found among Trower’s papers and is printed below, pp. 36–46; the first part (pp. 36–43) deals with Trower’s reply to (a) and the second (pp. 43–6) with Trower’s reply to (b).1

Meanwhile Ricardo had decided to give further publicity to his views in the form of a pamphlet, The High Price of Bullion, a Proof of the Depreciation of Bank Notes, which was published by John Murray about a month after his last letter had appeared in the Morning Chronicle.2

The relation of the pamphlet to the Chronicle contributions has been the subject of some confusion. Ricardo himself, in his Introduction to the first three editions of the pamphlet, says that ‘he has thought proper to republish his sentiments on this question in a form more calculated to bring it to fair discussion’. M^cCulloch, however, who had not read any of the contributions to the Chronicle,1 is certainly misleading in his statement that ‘having subsequently collected the letters, and given them a more systematic form, Mr. Ricardo published them in a pamphlet’, as it suggests that the pamphlet was little more than a reprint of the letters.2 As Professor Hollander says,3 ‘An important consequence of McCulloch’s editorial neglect has been a general acquiescence in the view that the Chronicle letters were planned and published in serial form,4 and that the pamphlet on the “High Price of Bullion” was not merely a free version but an essential reproduction of the statements therein contained.’ A comparison of the pamphlet with the contributions to the Morning Chronicle shows that, although the main points discussed in the pamphlet had been outlined in the letters, the former is by no means a mere reprint, but was almost entirely written afresh.

Nor is there any foundation for Professor Silberling’s supposition that the High Price of Bullion was written before the contributions to the Morning Chronicle, indeed several years before.1 He rests his case mainly on the assertion that the pamphlet ‘refers to no political or economic events later than 1805’; but Ricardo’s treatment being essentially abstract, no events apart from the Bank Restriction are referred to, either before or after 1805, other than movements of prices; most of these, notably the rise in the price of gold, the fall of silver compared with gold and the depression of the exchange, refer to the year 1809. It is true that Ricardo refers only to works written before 1804, but it by no means follows that his comments on them were written at the time of their publication. It appears that in the autumn of 1809, after the publication of his original article, Ricardo read or re-read a number of writers on the subject of currency, including Locke, Sir James Steuart, Adam Smith, Lord Liverpool and Thornton, making notes which have been found among Ricardo’s papers.2 None of these writers is mentioned in Ricardo’s original article on The Price of Gold, but they are referred to both in the subsequent letters to the Chronicle (September and November 1809) and in the pamphlet. Indeed, certain controversial passages from these letters, directly replying to Trower’s arguments, are repeated verbatim in the pamphlet,3 which suggests that the latter was written some time between September and November 1809 (the Introduction is dated 1 December), during the final stage of, or immediately after, the controversy in the Chronicle.

On 1 February 1810, a month after the publication of the pamphlet, a speech by Francis Horner in the House of Commons, which led up to the appointment of the Bullion Committee, brought the Controversy to a further stage. Ricardo replied to this speech in a private letter, on 5 February,1 in which he disputed Horner’s statement that other factors besides the superabundance of the paper circulation had contributed to the high price of gold. A number of passages from this letter were embodied in the third edition, ‘With Additions’, of The High Price of Bullion, which was published early in March 1810,2 and, apart from some alterations in arrangement (see below, pp. 67,n. 1 and 74, n. 1), they constituted almost the entire changes in this edition. Further additions were made in the fourth edition, which was published a year later (see below, p. 11).

The Bullion Committee was actually appointed by the House of Commons on 19 February 1810 ‘to enquire into the Cause of the High Price of Gold Bullion’. Their report was formally laid before the House on 8 June, but it was not printed till August, and extracts appeared in all the newspapers of Monday, 13 August 1810.3

The appearance of the Bullion Report gave rise to a great output of controversial pamphlets.4 Ricardo’s contribution at this stage consisted of three letters to the Morning Chronicle in September 1810.5 The first, a review of the Report itself, appeared on 6 September.1 The second, on Sinclair’s pamphlet against the Report, on 18 September. The third, on Randle Jackson’s speech at the Bank Court of 20 September attacking the Report on behalf of the Bank, appeared on 24 September.2

Since the early summer of 1810, the question of who should review the Report in the Edinburgh Review had been under consideration. On 16 July Horner had written to Jeffrey, the editor: ‘I am just returned to town, after an absence of about ten days. The Bullion report, I am rather surprised to find, is not yet delivered from the printers; I revised the proof-sheets before I left town. I would rather do something for you myself, if you will let me know the utmost time you can allow me; rather, I mean, than trust that subject in the hands of any of your mercenary troops, one of whom was guilty of deplorable heresies in the account of a book by one Smith.3 I will do a short article for you this time, to do justice to Mr Ricardo and Mr Mushet, who called the public attention to this very important subject at the end of last year.’1

From a later letter it appears that the plan that Horner himself should write the Bullion article had been abandoned, that Ricardo had been approached and had refused2 and that Malthus had finally undertaken to do it: ‘Ricardo has taken such fright at the notion of writing in the Review, that I have not succeeded in that point; he prefers publishing in a separate pamphlet. Malthus has given me hopes that he will be able to scramble up an article this week; and I am very anxious to have the subject in his hands, and to engage him in the discussion, both because he agrees with me upon the fundamental principles of the doctrine, and because we have some differences, or rather difficulties which we try to solve differently, in some parts of the Theory. All I beg of you, though I have no right to ask any thing, is not to let Milne3 lay his hands upon us.’4

The paper which Ricardo had in preparation, and which he was unwilling to publish as a review, was no doubt his Reply to Mr. Bosanquet’s Practical Observations on the Bullion Report, which appeared as a separate pamphlet a month before the number of the Edinburgh Review containing Malthus’s Bullion article. Bosanquet’s ‘dexterous but somewhat unfair pamphlet’, as Horner described it,5 was regarded at the time as the most effective of the criticisms published on the Bullion Report. He directed his criticisms particularly against ‘Mr. Ricardo’s work, not only as having been the immediate cause of the inquiry which has since taken place, under the authority of the house of commons, but as a syllabus of the Report which has been presented by the Committee’. The Practical Observations on the Report of the Bullion Committee, by Charles Bosanquet, was published byJ. M. Richardson in the latter half of November 1810.1 A ‘Second Edition, Corrected, with a Supplement’ appeared in December of the same year,2 the Supplement being published also as a separate pamphlet. The body of Ricardo’s Reply is based on the first edition, and was sent to the press before he had seen Bosanquet’s second edition;3 his Appendix being added later to deal with Bosanquet’s Supplement.4 The Reply was being printed at the end of December 1810, as it appears from a letter of Mill,5 and it was published early in January 1811.6

Early in April7 the fourth edition of Ricardo’s High Price of Bullion was published.8 The main body of the pamphlet contained few changes, but the Introduction was omitted, and an Appendix was added containing his observations on the Edinburgh Review article, and outlining his plan for bullion payments, which he later developed in Economical and Secure Currency.9

On 8 April Horner replied: ‘Ricardo’s reply to your objections is not so well written, in point of clearness, as his usual style. I suspect that upon that dispute the truth lies between you, and that a mode of expressing and stating what takes place might be hit upon, to which you would both assent.’1

So far Ricardo and Malthus had never met, and the controversy between them had been carried on only in print. In June 1811, Malthus introduced himself to Ricardo. Malthus’s second article on Bullion, in the Edinburgh Review for August 1811, contained no criticism of Ricardo,2 and the further controversy between them was restricted to private discussions and correspondence.3

The Report of the Bullion Committee had been issued on 12 August 18101 in the official folio edition. Ricardo’s page- references, however, are to the octavo edition, which was published by Johnson and Ridgeway in September.2 The MS is among Ricardo’s Papers and has been published in Minor Papers on the Currency Question, 1809–1823, ed. by J. H. Hollander, Baltimore, The Johns Hopkins Press, 1932, pp. 45–59.

The reference numbers in the MS of the Notes on the Minutes of Evidence (described as (C) above) correspond to numbers written in pencil in Ricardo’s hand on his working copy of the octavo edition of the Bullion Report which is in the Library at Gatcombe.3

Although the Notes (C) begin with a comment referring top. 102 of the Minutes of Evidence, it is unlikely that any sheets containing comments on the earlier pages have been lost, since there are no numbers written on those pages in Ricardo’s working copy of the Bullion Report.1

65. If the Bank had been more liberal in their discounts at that period, they would have produced the same effect on general credit as was afterwards done by the issues of Exch^r. bills. It would appear that the bank would buy the exch^r. bills but would not discount the merchants bills,—or rather they would not advance money to the merchants without the guarantee of Parliament. If the bank bought the bills it was then by an increase of circulating medium that public credit was ultimately relieved.1 If the public and not the bank purchased the bills then was a portion of the circulating medium of the country which had been withdrawn from circulation again brought forth by the credit of government being pledged for the parties requiring relief.2

Aaron Asher Goldsmid.1 This gentleman’s evidence is very clear and explicit, both with regard to the price of gold, and the manner in which the bargains are executed. He stated, that, for these last 15 months, he had bought and sold more gold than on an average of years.

Does not this admission prove that it is not in consequence of our importations of corn from France that gold is greatly in demand, as if that were the case French gold coin would be particularly sought: of all gold that would be the best remittance. Yet Mr. G. believes that it is return for corn from France and Flanders that gold is2 exported:—The largest quantity sent to Holland. Does not think that the quantity of gold exported considerably exceeded, in the last twelve months, the quantity imported. Has not any idea that the increase or decrease of Bank notes has any connection with the rise or fall of the price of gold,—but acknowledges that he has paid no attention to it. If a person were at liberty to export English Gold, he certainly would get 16 pc^t. more than if he exported foreign gold.

Mr. Binns— 3 has frequently bought light guineas for which he has given not quite so much as 23 shillings

Mr. Merle— 1 has declined buying light guineas, as he thinks it contrary to law to give more than the coinage price for them; he has no doubt that the cause of the disappearance of guineas from circulation, [is]2 the high price of Gold Bullion and the temptation to export it on acc^t. of the high price. He does not think that the increase of Bank notes has had any effect on the price of gold,—but confesses that he has never made any observation on it, nor considered the subject generally. He never thought of considering what effect a large issue of Bank notes might have on the price of gold. He allowed that if there were no legal restrictions against melting guineas, he should consider paper as of less value than specie,—it would make a difference of 10/- an ounce

(C)

[NOTES ON THE MINUTES OF EVIDENCE] MINUTES OF EVIDENCE

Taken before the Select Committee appointed to enquire into the Cause of the High Price of Gold Bullion, and to take into consideration the State of the Circulating Medium, and of the Exchanges between Great Britain and Foreign Parts.

Jovis, 8° die Martii, 1810.

Mr.—, a Continental Merchant, again called in, and Examined.

[pp. 102–103.] In what way do you think the present issue of bank notes and country bankers paper would operate to reduce the rate of exchange, supposing the balance of trade to be in favour of this Country?—The greater the issue, the more the exchange would be lowered; and supposing that a scarcity of the circulating medium of this Country existed, the higher the exchange would be. Independent of this direct effect, a reduction of the circulating medium would also have that of lowering the1 prices of every article, and thus increase the facility and extent of their export.

That in consequence of an increase of bank notes in circulation, and articles of merchandize being raised in price, that the2 exports are less than they otherwise would be, and in that way the operation on the exchanges is to our disadvantage?—Yes, in as far as there is any competition in trade between this and other countries.

Admitting that by an increase or decrease of the quantity of paper in circulation the prices of merchandize are increased and decreased, and the exportation greater or less, and that the exchange is of consequence indirectly affected; will you explain more particularly the direct operation of an excess of paper currency on the exchange?—An increase of the circulating medium enables persons to make greater advances to foreigners, and more3 bills are thus brought into the foreign market; this must have the effect of lowering the exchange. Should, on the contrary, a scarcity of money exist here, it would become desirable to realize and accelerate the payment of debts due to this Country; advances now readily made to them would from necessity be curtailed, and the foreigner, who required a bill on this country, would be obliged to pay a higher price for that which was scarce than if it were abundant. The importations, from the same causes, would be curtailed; and the desire to raise money by sending a greater quantity of goods abroad, would be increased. However great the inconvenience to individuals, I conceive that a very material reduction of the circulating medium in this Country (by which I do not mean to make any distinction between coin and paper) would have the immediate effect of raising the exchange so far above par as to enable foreigners to send Bullion to this Country for the liquidation of their debt, provided this principle were carried to such an extremity.

[p. 103.] Supposing a diminution of the paper of Great Britain to take place, or an expectation of such diminution generally to prevail, would not the following effect follow; would not those English merchants who now trade on borrowed capital, and order goods from abroad on their own account, with a view to importation hither, or invite consignments from abroad by4 offering to make large advances on the credit of them, curtail their orders and limit the extent of their advances, in consequence of their anticipating increasing difficulty in providing the means of payment; would not this conduct on their part lessen the quantity of drafts drawn upon them, and thus affect the balance of payments, and would not this alteration in the balance of payments tend to improve the British exchange?—I perfectly agree in the effect of the positions placed in the foregoing question, as I tried to explain in my preceding answer.

[p. 104.] In the case supposed [the circulating medium consisting almost exclusively of paper], will not the same general advance of prices in England, which you state an augmentation of5 paper to produce, operate as a discouragement to the exportation of English articles so long as the exchange shall remain the same, which shall be assumed to be at par?—Yes, certainly; but it is an assumption which, in my opinion, could never take place in fact.

[p. 105.] Then if the exchange was affected solely by the balance, the payments of exchanges with the North of Europe at this moment ought, according to the information on which you6 have formed your judgment, to have been in favour of England? —If that were the only cause that influenced the exchange, it is my opinion, that the exchange would have been in favour of England for some time past.

[p. 106.] Do you not conceive that without a free importation1 of the coin of the country, a diminution in the amount of its currency would produce a fall in the price of all commodities, and a consequent rise of the exchange, in the same proportion as if that diminution of currency had been effected by the export of a part of our coin?—I should suppose it could only have one-half7 the effect.

[p. 107.] You have stated, that the exchange has been greatly in our favour since the restriction on the Bank, and that the balance of payments then due to England was in consequence liquidated by great importations of Bullion into this Country; you have also stated, that in your opinion, the balance of payments is now in our favour; explain to the Committee to what cause you ascribe the difference in the exchange between those two periods, in each of which you conceive the balance of payments to be in our favour?—At the period of the suspension, the situation of the trade of this Country was very favourable to it: the stock of goods on hand, and which were required by the Continent, was very great; public opinion here in favour of the measure empowering the Bank to withhold cash payments was such, that for some time no traffic at home was carried on between this paper and coin: while the balance of trade therefore continued in favour of this country, the foreigner could only liquidate his debt by sending Bullion. Had the re-exportation8 been allowed, a very small proportion of such exportation would have been sufficient to keep the exchange at near par; or even the public opinion would have fixed it at that rate, if it were ascertained that such operations could take place when required. This not being the case, and some extraordinary causes (as explained) having taken place, that depressed the exchange, and coin being withheld both from internal circulation and from its operation with foreign countries, I conceive this to be the cause of an unfavourable rate of exchange during a period of a favourable balance of trade. In fact, the foundation by which what is called a par of exchange is fixed, no longer exists as matter of fact.

Page 102

Veneris, 9° die Martii, 1810.

John Whitmore, Esq. the Governor of the Bank of England, John Pearse, Esq. Deputy Governor of the Bank of England, called in together; and Examined.

[p. 112.] Let me suppose a case in which no demands were made upon the Bank by Government for unusual accommodations, but an unusual demand was made by merchants for increased facilities of discount; would the Bank in such a case consider itself as bound, in order to support public credit, to grant that increase of discounts, although there was a run upon it for Gold, occasioned by the high price of Bullion and the unfavourable state of the exchange?—I desire time to consider that question.

Supposing the Bank to be now paying in cash, and to experience a drain of Gold, as just mentioned; and supposing them also to afford precisely the same sum in the way of loan as before; would not a diminution of their paper take place, which would be proportionate to that diminution of their stock of guineas which the drain would occasion, inasmuch as every person coming to demand guineas would give in exchange for them an equal quantity of bank notes, which would be cancelled?—I would wish for time to consider that question.

Is there not reason to suspect that the present unfavourable state of the exchange may be in part owing to the want of that limitation of paper which used to take place before the suspension of the cash payments of the Bank, on the occasion of the exchanges becoming unfavourable?—My opinion is, I do not know whether it is that of the Bank, that the amount of our paper circulation has no reference at all to the state of the exchange.

Has that question ever been brought to a regular discussion and decision in the Court of Directors?—In the opinion of the Bank Directors, it had not sufficient bearing upon our concerns to make it more than a matter of conversation; it never was singly and separately a subject of discussion, though constantly in view with other circumstances.

Mr. Pearse.—The varying prices of the Hamburgh exchange compared with the varying amount of Bank notes at different periods, seem to prove that the amount of Bank notes in circulation has not1 had an influence on the exchange.

[p. 114.] Whether, since the suspension of the payments in cash down to the present time, there has been any material extension2 of commercial discounts?—I wish to have time to consider that question.

Page 112.2

Page 114

Lunae, 12° die Martii, 1810. Abraham Goldsmid, Esq. called in, and Examined.

[p. 120.] Does not the present low rate of exchange create1 the demand and the high price of Bullion?—The present high price of Bullion is on account of the low rate of exchange.

[p. 121.] Is it your opinion that the circulating medium, as entirely confined to paper in this country, produces any effect upon foreign exchanges?—I do not profess myself competent to2 give my opinion upon that.

Page 120

Martis, 13° die Martii, 1810.

John Whitmore, Esq. the Governor, and John Pearse, Esq. the Deputy Governor of the Bank of England, called in together; and Examined.

[p. 124.] Supposing the currency of any country to consist altogether of specie, would that specie be affected in its value by its abundance or by its diminution, the same as copper, brass, cloth, or any other article of merchandize?—I have already said1 that I decline answering questions as to opinion; I am very ready to answer any questions as to matters of fact; I have not opinions formed upon the points stated in this and the preceding question sufficiently matured to offer them to the Committee.

[p. 125.] You stated in a former examination, “Supposing the excess of the market price of Gold in Bank notes above the mint price to be 5 per cent. and that in consequence a drain of guineas takes place from the Bank, and the Bank, by diminishing the amount of its outstanding demands, raises the value of its paper 5 per cent.,” in the manner described in a former answer of yours, would not the result be to bring the market and the mint price of Gold to a par, and consequently to put a stop to the demand for guineas?

Mr. Whitmore.—I believe my former answer did not go to the Bank raising the price of their notes, for in fact, if the Bank was to2 raise the value of them, and give them for discounts, estimating them at such increased value, it would incur the penalty of usury. I therefore conceive this statement to suppose a case that cannot occur.

In taking into consideration the amount of your notes out in circulation, and in limiting the extent of your discounts to merchants, do you advert to the difference, when such exists, between the market and the mint price of Gold?—We do advert to that, inasmuch as we do not discount, at any time, for those persons who we know or have good reason to suppose export the Gold.

Page 124

Mercurii, 14° die Martii, 1810. John Louis Greffulhe, Esq. was Examined.

[p. 130.] Is it not your opinion that, if no forced paper circulation existed in the Country, it would not be possible for the exchanges to fall materially below their par, or for the price of Bullion to rise materially above its standard price?—I conceive1 that that would not prevent the exchange from falling very considerably under par, if the amount of Bullion in the Country were not sufficient to pay the balances.

1301

William Cecil Chambers, Esq. called in, and Examined.

1 [pp. 136–137.] What do you say as to an excessive currency, though not forced?—I do not conceive the thing possible.

What do you mean by a forced paper currency?—A paper which I am obliged to take against my will for more than its value; it is not forced so long as people take it willingly, which they will naturally do whilst undepreciated.

136

Page 1351

Mr. Chambers like those who have given their evidence before him ascribes the unfavorable exchange to the balance of payments being against us,—allows that a forced paper circulation would depress the exchange, but contends that the Bank of England cannot force a circulation; he does not conceive Gold to be a fairer standard for Bank of England notes than Indigo or broad cloth!!!

Page 152

It has been contended, by some intelligent men,2 that in the year 1797 when there was a run upon the Bank for specie, —that the Directors would have upheld public credit and have put a stop to the demand for guineas by increasing their discounts, rather than by diminishing them. I am of opinion that the run upon the Bank in 1797 proceeded from political alarm, and a desire on the part of the people to hoard guineas. I was myself witness of many persons actually exchanging bank notes for guineas for such purpose,—therefore it is probable that the Bank could not have prevented the stoppage of payments to which they were obliged to have re- course. But a demand upon the bank for specie3 from fears of the solidity of its resources, or from political alarm, are very different from a demand arising from a high price of bullion and a low rate of exchange and must be differently treated. In the latter case it can proceed only from an excessive issue of paper, if the gold coin is not debased and can only be checked by calling in the excess.4 In 1797 the exchange was at 38 with Hamburgh and gold bullion at £3. 17. 6.—In 1810 the exchange is at 29 and gold bullion at £4. 13—

Page 176

If the notes of the Bank of England in circulation are employed in making payments of above 1500 millions, and only a part of the Bank of England paper is available for that purpose as a great proportion is wanted for deposits by the county bankers,—does it not follow that the proportion of Bank notes to actual payments is exceedingly1 small?2 If the daily and bona fide payments exceed 5 millions,—and if we suppose what is barely possible3 such payments were made by bills of exchange payable at 60 days might not the bank contending as they do that by discounting bills given for real transactions they can never produce an4 issue of notes be called upon to discount bills in 60 days to the enormous amount of 300 millions?5

Veneris, 16° die Martii, 1810.

John Whitmore, Esq. the Governor, and John Pearse, Esq. the Deputy Governor of the Bank of England, called in together; and Examined.

[pp. 152–153.] Suppose a case in which no demands were made upon the Bank by Government for unusual accommodations, but an unusual demand was made by merchants for increased facilities of discount, would the Bank in such a case consider itself as bound, in order to support public credit, to grant that increase of discounts, although there was a run upon it for Gold occasioned by the high price of Bullion and the unfavourable state of the exchange?—I now consider my answer as my own opinion, not having the opportunity of consulting the Bank upon the question; in my opinion the Bank would not increase1 their discounts, nor on the other hand would it, I think, after the experience of the years 1796 and 1797, do well materially to diminish them.

Veneris, 23° die Martii, 1810.

John Whitmore, Esq. the Governor, and John Pearse, Esq. the Deputy Governor of the Bank of England, called in together; and Examined.

[p. 176.] Taking the daily average amount [of payments made by all the London bankers put together] so low as five millions, does it not follow that in the course of the year the notes of the Bank of England in circulation are employed in making payments of above 1,500,000,000 sterling, on the counters of the London bankers alone?—According to the opinion that I entertain, it will amount to that.

Taking into consideration the quantity of Bank of England paper necessary for country bankers, and the various other uses and applications for which it is demanded, does it not follow that there is only a certain limited proportion of the total amount of Bank of England paper in circulation, available for effecting the payment of this 1,500 million?—It is only part of the circulation that is available for such purpose.

Veneris, 30° die Martii, 1810.

John Whitmore, Esq. the Governor, and John Pearse, Esq. the Deputy Governor of the Bank of England, called in together; and Examined.

[pp. 184–185.] Does not the unfavourable course of exchange with foreign countries tend, even under the present restriction, in some degree to render its continuance and prolongation necessary, in so far as that necessity may depend on the proportion of specie in the coffers of the Bank to the amount of its notes in circulation?

Mr. Whitmore.—In my opinion the high price of Gold bullion abroad, does make it necessary to continue the restriction; but I have already observed, that the low state of exchange has not operated before the restriction to drain us of our guineas to any1 material extent.

Mr. Pearse.—Undoubtedly it does, as far as regards the supply of the public wants with a circulating medium, as it would not be possible for the Bank to continue that supply if the Restriction Bill were removed, whilst the foreign exchanges remain so unfavourable as at present; a profit of from ten to fifteen, to twenty per-cent. upon converting Guineas into bullion, would be too great a temptation to allow any to remain in the Bank, as long as a bank note remained in circulation. The Bank would therefore inevitably be driven to the necessity of calling in its notes, or in2 other words of reducing its advances on bills, &c. which would produce that distress which the Restriction Bill was passed to prevent.

[p. 186.] Suppose the measure to be determined upon by Parliament, of the opening of the Bank at a distant period, should you think that in the event of the exchanges continuing the same or nearly the same, some restriction of the Bank issues ought to take place with a view to prepare for the opening?...

Mr. Pearse.—In the contemplation of the removal of the Restriction Bill at any definite period, it would become necessary for the Bank to regulate the amount of its issues, with a reference to the course of exchange with foreign countries; but while that 3 exchange continues unfavourable (an event as arising out of the balance of payments not within the control or influence of the Bank) I cannot see that any regulation within the means of the Bank, would in the event of an opening, effectually preclude the risk of a demand for specie being then made for the purpose of profit in exporting it to the Continent.

[pp. 187–188.] Do you conceive that a very considerable reduction of the amount of the circulating medium, would not tend in any degree to increase its relative value compared with commodities, and that a considerable increase of it would have no tendency whatever to augment the price of commodities in exchange4 for such circulating medium?—It is a subject on which such a variety of opinions are entertained, I do not feel myself competent to give a decided answer.

In your examination of the 21st inst. you state, that an excess of country bank paper can only obtain when issued otherwise than as representing securities arising out of real transactions, and payable at fixed and not distant periods; and yet, in your examination of the 23d, you state, that this paper must always circulate at par, or it would return upon the parties that issue it; can there then be any permanent excess of country bank paper while it is so exchangeable?—In my answer of the 21st of March, I adverted to the causes which might be productive of an excess in the issues of country bank paper: in my answer of the 23d, I meant to allude to the consequences which must inevitably, in my opinion, result from the existence of such an excess. It is certainly possible, were it important in amount, that the country banks, by not regulating their issues on the principle of the Bank of England, might send forth a superabundance of their notes; but this excess, in my opinion, would no sooner exist in any material degree, than it would be corrected by its own operation, for the holders of such paper would immediately return it to the issuers, when they found that in consequence of the over issue its value was reduced or likely to be reduced below par: thus,5 though the balance might be slightly and transiently disturbed, no considerable or permanent over issue could possibly take place, as from the nature of things the amount of Bank notes in circulation must always find its level in the public wants.

[pp. 188–189.] If, however, he [the foreigner] receives £.100 in Bank notes, and is under the necessity of going to market for Bullion, will he the foreigner not rate his goods twenty per cent. higher, the difference in the price between them; and will he not invoice his goods twenty per cent. higher to his correspondent6 accordingly? [Mr. Whitmore]—I cannot contemplate a trade where the invoices are made out with reference to the price of Bullion.

If this were the case, what prospect should we have of a rise in the price of the exchange?—Never having weighed the subject7 with any reference to the price of Bullion, I am not prepared with an opinion how a merchant would act in such a case.

[184]6

188

189

Lunae, 2° die Aprilis, 1810. William Coningham, Esq. called in and Examined.

[p. 190.] It appears from your evidence before the Irish Exchange Committee in the year 1804, that you were of opinion that the paper currency of Ireland was then depreciated, and that this depreciation was the cause of the unfavourable state of the exchange between England and Ireland; are you of opinion that that paper is still depreciated, and if so, to what circumstance do you8 ascribe the improvement in the exchange between the two Countries?—I think it is still depreciated, but in a very inconsiderable degree compared with what it was in the year 1804: and I am inclined to think, that the cause of the depreciation being so much less now than it was at the period alluded to is, that there is greater confidence in the paper than there was at that time; and therefore the people take it with more freedom, and of course consider it of more value.

Mercurii, 4° die Aprilis, 1810. Sir Francis Baring, Bart. called in, and Examined.

[p. 195.] Would not the removal of the restrictions upon1 trade diminish the price of bullion?—The removal of the restrictions upon trade would produce an exportation of merchandize, and facilitate the means of importing bullion.

[p. 196.] Are you not aware that the issuing of notes under five pounds has increased materially the whole amount of notes issued; and do you not believe that the amount of small notes should be left out of the account in comparing the present amount of notes in circulation with that existing at the period you have alluded to [previous to 1797]?—The small notes are equally paper, and they add to the mass of Bank notes before in circulation; they issue in the same manner in exchange for public or2 private securities: Instead of being left out in a comparative view, I fear they rather tend to increase the difficulty more than their due proportion, because they cannot be withdrawn without an issue of specie to an equal amount, and therefore stand in the front of the battle.

[pp. 198–199.] Do you conceive that the Bank of England will effectually guard against the possibility of any excess in the circulation of the country (as well their own as the paper of country banks) if they regulate their issues by the demand for discounts of good bills founded on real mercantile transactions, as the occasions of the Public may appear to require?—It has been ascertained by long experience, that wherever paper has circulated under the power and influence of Government on the Continent, it has failed. The paper of the Bank of England has stood firm for above a century, and flourishes at this moment with unabated confidence. The power reposed in the Bank is great; their paper is the basis on which the best interests of the Country rest; it is the seed which serves to produce the whole of its commerce, finance, agricultural improvements, &c. &c. Such a power may remain with safety, so long as the Bank is liable to discharge their notes in specie, because that circumstance constitutes a complete counteraction to any disposition (if it should be entertained) to increase the circulation beyond a reasonable and safe limit, and, under that circumstance, things (foreign exchanges,3 &c.) will find their proper level.... I consider the opinionentertained by some persons, that the Bank ought to regulate their issues by the public demand, as dangerous in the extreme, because I know by experience, that the demand for speculation can only be limited by a want of means; and I think the Bank would not be disposed to extend their issues beyond three-fourth parts of its present amount, if the restriction was removed....

195

217.

Mr. Tritton’s evidence generally is very cautious,—he appears not to have paid much attention to the subject of currency, and the effects produced on it by London and country Banks.

Page 218, 219

Mr. Harman1 thinks that the diminution of the paper of the Bank, would, neither immediately or remotely, tend to an improvement of the exchange.

In his answer to a subsequent question he allows that an augmentation of the quantity of Bank of England notes tends to raise the prices of commodities.

It therefore follows that a diminution of the quantity of Bank notes would lower the prices of commodities;—but if prices were considerably lowered and the exchange were not affected, this real fall in their price would not fail to en- courage foreign purchasers. But such purchases2 according to the principles of those who are for ascribing every effect on the exchange to the balance of trade, would speedily turn the balance in our favor or at least render the present balance less unfavorable and would therefore indirectly raise the exchange. It is to be regretted that the Committee did not press Mr. Harman for some explanation of these opinions which might have been proved so inconsistent.3

Lunae, 9° die Aprilis, 1810.

[pp. 213–18.] John Henton Tritton, Esq. a Partner in the Banking-House of Barclay & Co., called in, and Examined.

[p. 218.] Jeremiah Harman, Esq. Director of the Bank of England and General Merchant, called in, and Examined.

[p. 219.] Do you conceive that the diminution of the paper of the Bank would, either immediately or remotely, tend to an2 improvement of the exchange?—None whatever.

Was it not the practice of the Bank, antecedently to the restriction of the cash payments, to lessen in some degree the amount of its issues, when a material demand for guineas was made upon3 it?—It has been occasionally, and at one period in particular, according to my view of the subject, it accelerated very much the mischief which ensued.

[pp. 219–220.] Supposing the Parliament to enact that the Bank of England should again pay in Gold at a distant period, say one, two or three years, would it be your opinion that the Bank ought to resort to the measure of restraining its issues, as a means of preparing itself to meet that event, supposing the exchanges and the price of Bullion to continue as they now are?—I conceive4 that they must necessarily, if the exchanges were to continue as they now are, which, however, I deem barely within possibility.

[p. 220.] Do you not apprehend that there is a disposition in persons keeping accounts at the Bank, to apply for a larger extent of discount than it is on the whole expedient for the Bank to grant?—Very many do, and we treat them accordingly.

Do you not think that the sum total applied for, even though the accommodation afforded should be on the security of good bills to safe persons, might be such as to produce some excess in the quantity of the Bank issues if fully complied with?—I think if we discount only for solid persons, and such paper as is for real bonâ fide transactions, we cannot materially err.

Supposing you were to afford your accommodation at four per cent. instead of five per cent. interest, the current interest being five per cent., would there not be danger of excess?— Perhaps so.5

Does it not then follow, that, provided money is now worth something more than five per cent., and being in general difficult to be procured at that rate, you may fall into some excess by granting it at five per cent. on the principle which you have stated?—I think not, because we should discover the superabundance6 very soon.

What should you consider the test of that superabundance?— Money being more plentiful in the market.7

[p. 221.] Supposing the exchange to continue long and greatly unfavourable, should you not be disposed to refer this circumstance in some measure to an excess of paper currency, or should you assume that the balance of trade had continued during8 that long period unfavourable?—I must very materially alter my opinions, before I can suppose that the exchanges will be influenced by any modifications of our paper currency.

Have you ever known the exchange to fall to twelve or fifteen per cent. in any part of Europe, in which it was computed in coin9 containing a fixed quantity of gold or silver, or in paper or bank money exchanged at a fixed agio, either for such gold or silver coin, or for gold or silver bullion of a definite amount?—I really cannot from recollection answer that question.

229

Mr. Richardson’s evidence is full of information with respect to the details of money transactions in London as well as in the country. He proves most satisfactorily that there have been of late years great improvements in the way of economising the use of Bank notes which renders the same amount of notes effective for an enlarged commerce: He was asked whether he thought that ten millions of Bank notes would keep afloat the same quantity of business as fifteen millions would have done ten years ago. His answer was, “Not quite so much perhaps ten years ago”. It must however be admitted that a considerable saving in the use of notes has been effected.1

Martis, 22° die Maji, 1810.

[pp. 228–31.]Thomas Richardson, Esq. again called in, and Examined.

NOTES ON TROTTER’S ‘PRINCIPLES OF CURRENCY AND EXCHANGES’
1810

NOTE ON ‘NOTES ON TROTTER’

Trotter’s pamphlet attacking the Bullion Report appeared anonymously under the title The Principles of Currency and Exchanges applied to the Report from the Select Committee of the House of Commons Appointed to Inquire into the High Price of Gold Bullion, &c. &c., London, ‘Printed and sold by W. Winchester and Son’, 79 pp., dated on the title-page ‘Dec. 1, 1810’.1 Coutts Trotter, the author, was a partner in the banking house of Thomas Coutts & Co.

Ricardo’s comments were probably written in December 1810 or soon after.

The MS of Ricardo’s Notes, which is among Ricardo’s Papers, covers seventeen octavo pages.2 Each comment begins with a page-reference to Trotter’s pamphlet; when there are two or more comments referring to the same page, they are given progressive numbers. This suggests that (as in the case of his Notes on the Bullion Report and also of his Notes on Bentham) Ricardo wrote corresponding numbers on his working copy of the pamphlet; but no such copy has been found.3

In the text printed below quotations from, or summaries of, the relevant passages of Trotter’s pamphlet have been prefixed to Ricardo’s Notes.

[NOTES ON TROTTER’S ‘PRINCIPLES OF CURRENCY AND EXCHANGES’]

[p. 7.] In the course of a brief sketch of the origins of money Trotter says that in England the goldsmiths’ notes were of the same value as the precious metals, so long as those who issued them were ‘capable of fulfilling’ their contracts.

Page 7. And obliged

[p. 12.] In the preceding pages Trotter has considered the functions of money.

12 Up to this page there is not a word with which I do not agree.

[p. 13.] There ‘is a limitation and an insuperable one, to the quantity of money in any given state of society’: ‘the aggregate of the sum, in gold, in silver, and in paper engagements, in each person’s pocket or house, will, in every state of such society, form the total of, and be the limit to, the currency of the country.’

13 Whilst money is not depreciated, and the nominal prices of commodities not raised. If with payments to the amount of 100 millions 10 millions be sufficient for circulation, no more than that sum will be used, unless the money be depreciated in value. The payments may by depreciation of money be increased to 200 millions nominally; in such case 20 millions of the depreciated money will be required for circulation.

[p. 14.] There is, therefore, an absolute security against redundancy of currency, since in every case ‘the check of a saturated circulation interposes; and the least excess beyond the wants of the public, estimated by each individual for himself, flows back upon the Bank of England or the country banker who occasions it.’

14 A circulation can never be so saturated as to [be]1

incapable of admitting more. Before the discovery of America the same portion of commerce which now requires three millions of money was carried on (confidence[,] credit, and the economy introduced by banking being supposed the same) by one million. The currency is no more saturated with 3 millions now than it was with one then. It might as reasonably be contended that the two millions would flow back to the mine which produced it, as that the notes of the Bank of England, under the present system should flow back to the issuers.

[p. 15.] When a country banker increases his issues of notes ‘the range of this bank...which is confined to the circle in which the partners are known, are observed, and are trusted, becomes filled with their notes to the extent of the former circulation of metals...; and gold, no longer wanted here, but still possessing qualities of universal attraction, finds its way to other districts, and finally to other countries. This done, the measure is full; the banker can, by no assiduity or skill, force upon his neighbourhood more of his notes than there was before of specie...; should he attempt to do so, they will return incessantly upon him, and he will be called upon for their value in what is of universal, not of local, request; that is, will be called upon for gold, or for Bank of England notes’.1

[p. 17.] There is consequently no need to feel anxious about the restriction of cash payments by the Bank of England, for ‘the circulation even of this apparently unfettered establishment is limited: its managers cannot induce the population within their sphere to carry in their pockets, or hoard in their bureaus, more of bank-notes than each man anticipates the want of for his own purposes.’

17 This would be true if the notes retained their value, but when abundant their value sinks, and a greater amount becomes necessary for the same amount of trade and commerce.

[p. 19.] In particular, the discount of bills, as one of the modes which the Bank employs for diffusing its notes, can never lead to an excessive issue, for ‘it is evident that the whole of the bills so discounted and transferred into the hands of the Bank will become due in two months, that they will then be sent out for payment, and that as many notes will be received by the Bank in their discharge, and be thus withdrawn from circulation, as were issued by that body at the time of their discount.’

19 The correctness of these arguments depend entirely on the fact of the paper retaining its value,—they take for granted the subject in dispute. There is no question that the effects would be as here stated, if the paper did not whilst it was abundant cause depreciation. (See page 15)

[p. 21.] A paper currency is infinitely preferable to gold, ‘which, depending on foreign influences, is liable to be often inconveniently reduced, and sometimes to be almost annihilated (as we now see it is) by our foreign exchanges turning against us.’

21 1. Impossible if not forced out by paper.

[pp. 20–21.] Whenever an unusual number of notes has been thrown into circulation, as it happens for instance at the quarterly payments of the public dividends, the immediate effect is to reduce the demand made to the Bank of England for issues upon discounting bills: ‘At such times the depositories of mercantile men being overcharged with banknotes, the owners seek for productive employment of the excess in discounting bills;... Exactly, therefore, by so much as the excess of its notes in the hands of the public at any moment amounts to, the Bank will immediately be abridged of its usual power of diffusion.’

[21] 2. This is true if applied to a short period. Between the moment of the overissues of notes and their depreciation, there will necessarily be something like a glut of money in the market, but as soon as depreciation takes place, there is no longer a redundancy of money.

[pp. 23–24.] Trotter quotes the admission of the Bullion Report ‘that a part [of the small notes issued since the restriction of cash payments] must be considered as being introduced to supply the place of the specie which was deficient at the period of suspending cash-payments’; to this he objects that ‘this admission is evidently insufficient. In considering what void is filled up by small notes, our concern is not with the degree of deficiency of gold at the time of suspension, but with the actual amount of the void at this moment, after thirteen years of great waste by melting and exportation.’

24 1 This is perfectly a correct way of stating it, and should have been adhered to in Page 50.

[p. 24.] ‘Now, so far from a part of this new description of notes being sufficient, the whole of it is unequal to supply the decrease of specie in the last thirteen years’.

[24] 2 May not small notes to any requisite amount be obtained at the Bank in exchange for large notes?

[p. 25.] Trotter’s conclusion on this point is ‘that the whole of the excess (if there be any) of Bank of England paper is to be found in the class of notes which are above the value of five pounds’.

25. 1. Perfectly correct

[p. 25.] Trotter then estimates that ‘the mixed circulation of London before 1797, in gold and Bank of England notes, could not be less than sixteen millions and a half.’

[25] 2 Certainly not so much, or the present circulation could not be depreciated.

[pp. 25–26.] ‘It is now twenty millions, exclusive of the small portion of gold which yet remains, being an increase of about one- fourth.

‘But in the same period has there been no change whatever in the condition of society? has there been no addition to the population within the sphere of the Bank’s circulation? has there been no greater number of commercial transactions to adjust, or larger public revenue to remit into the Exchequer? In each of these, singly, I think I see almost a sufficient demand to draw forth the additional sum in dispute’.

26 1. Has the trade increased a fourth as well as the money, if not the increase of money is excessive.

2 Taxation does not require any addition of money, or if any so little as not to be worth computing

[p. 26.] Another circumstance involves an increased use for notes: ‘Above seven hundred country banks, which formerly held in gold the sum which they deemed it prudent to keep as a deposit in their command, now retain that portion in Bank of England paper, thus attracting a great permanent issue of bank-notes to districts to which they never reached before.’

[26] 3 No; they have deposits of Exchequer bills in London, and have very few Bank of England notes. There is no temptation to exchange country bank notes for any thing but bills on London. See Mr. Stuckey’s evidence Bullion Rep^t. 1

[pp. 27–28.] Trotter reverts to the increase of wealth during the period after the restriction of cash payments: ‘Not only there are more considerable merchants, more bankers, more agents, more dealers in every species of property, in the period under consideration; but each man’s transactions are numerically and actually increased.’

‘He has, in most instances, more rent to pay, more taxes, and more for the purchase of most articles of consumption; while, on the other hand, there is an equal increase in his receipts. In the upper ranks of society, except to those who unfortunately have only fixed incomes, there are every where increased rents of land, increased profits of trade; while, in the lower ranks, there are increased wages in every employment.’

27 1 Much is owing to depreciation

2D^o.

28 1 Caused by the depreciation of the currency. If money were depreciated 50 pc^t., the wages of labour would rise, and the same argument might be used. The point in dispute is constantly taken for granted.

[p. 28.] ‘I think I have shown the existence of a restricting principle in our nature and habits, which, by limiting the quantity of money in every man’s pocket or possession to the amount he finds necessary for his daily exchanges, limits, by consequence, the whole circulation of the realm.’

[28] 2 This principle limits the proportion of the value of money to the value of goods, but does not limit its absolute quantity.

[p. 29.] Trotter objects to the assertion of Bullion Committee that the only adequate provision against an excess of paper- currency is the convertibility of all paper into specie, which he shows to be a practical impossibility: ‘If, in times of the greatest abundance of specie, the public, from any cause, had called upon the Bank, and upon every country banker, for the sum declared in their notes to be held on the usual condition of repayment on demand, the Bank of England and the country banker must have been alike incapable of fulfilling the letter of their engagements.’

29 1 Of this the Committee were aware. The check against excess is convertibility of paper into gold whenever its value became less than gold coin. There never could be any temptation to demand gold coin for all the notes in circulation, unless the bank should lose all credit with the public.

This is not the case at present, and is a danger against which no human prudence can wholly guard us.

[pp. 29–30.] ‘The actual degree of convertibility of paper before the Restriction Act’ was excessive in ordinary times and insufficient in periods of popular alarm. ‘The truth is, as the times become more secure, and more confidence prevails, there will always be a greater proportion of paper’.

30 1 This is no argument against the fact of an over- issue of paper.

[p. 30.] If paper ‘is not convertible into gold, is it therefore of no value? is there nothing of intrinsic worth into which those who are fearful of its security may convert it in the temporary absence of this one article? Yes, into every thing that men desire, or that gold can purchase’.

[30] 2 All this is allowed but it is contended that it cannot be exchanged for so much of those things which man desires, or as gold can purchase, as it would do under a better system. We do not say that paper currency is good for nothing but that it is not so good as it would and ought to be.

[pp. 31–32.] ‘Why should we be thus tenacious of payment in gold, which the next moment it would be our business not to hoard or to enjoy, but again to send forth in purchase of some one or other of these very objects we now so much set at nought?... Although, in theoretical discussions, we are pleased with a supposed power of calling for our debts in the precious metals, it is obviously impossible to exercise that power to any extent.’

31 It is not fair to charge us with wanting gold; we contend that we should not want it nor take it, if we could get it. We wish only to have the right to obtain it as an effectual security against the depreciation of our property.

32 1 We have no childish affection for gold more than for paper. Not a complaint would be heard if the paper was not depreciated.

[p. 32.] ‘Had the paper part of our currency retained its value only by its convertibility into gold, it must have fallen gradually for the last twenty years; during which time the proportion it contains of the precious metals has been declining. In the last ten years, it ought, by this rule, to have fallen above a half; and, judging by the power of conversion it now possesses, a bank-note of one pound ought not to be worth five shillings; yet we see our notes retaining their original credit, commanding every article at their original value, and exchanging for our coin itself in every transaction in which they meet.’

[32] 2 We do not complain of any fall in the value of paper which it suffers in common with gold, but of that fall over and above that which gold sustains.1

3 It is not correct to say that they command every article at their original value. Our complaint is that they do not.

[pp. 32–33.] ‘The truth appears to be, that all excess of paper-currency is restrained by the causes we have stated; and its convertibility into gold, in a very small degree, is sufficient for convenience, as well as for preserving it from depreciation.’

33. 1 This is our argument.

[p. 33.] Trotter sums up the conclusions so far attained:

‘That there is no excess in the paper circulation of the country;

‘That there is a sufficient check and control over the issues of paper from the Bank of England and from country banks; and

‘That the currency of the country is in no degree depreciated by the use of paper.’

[33] 2 All these conclusions are without proof.

[p. 34.] It is true that the currency in England has lost some part of its value. This is due, first to gold itself having lost a part of its value, compared with commodities, throughout Europe: ‘Let us put the saddle on the right horse, and not blame paper for a fault which is, in part, ascribable to gold itself.’

34 But let us fairly state how much is owing to one cause, how much to the other.

[p. 35.] Secondly, to the increase of population: ‘In a country insulated as ours now is, by political as well as natural circumstances, every increase of population must make an increase in the demand for all the articles which land and industry produce. To raise the former, worse soils and more unfavourable situations must be taken into cultivation; and the produce therefore will be obtained, and must be sold, at an increased expense. To create the latter, men must be paid at a higher rate of wages, because in every state of society, and especially in one progressive, as that of England is, men must receive somewhat above what is necessary for their support; and the expense of that support will be regulated principally by the cheapness or dearness of food.’

35 Every increase of population must arise from an increase of capital, and has a tendency to lower the prices of commodities and therefore the wages of labour, not to raise them.

[p. 36.] Thirdly, to the burden of taxation.

36 Taxation has some effect no doubt, but will not account for the rise in the price of gold.

[p. 37.] Trotter denies that the rise in prices is due to the facility with which commercial men can procure notes from the Bank of England, and thus heighten the price of every article: ‘An increase of capital (which this is to the small degree in which it exists) never raises the price of commodities, but has exactly the opposite effect’.

37 An increase of Capital never raises the prices of commodities, but an increase of money unaccompanied by an increase of Capital invariably does. Can there be an increase of population without an increase of Capital having preceded it?, yet in Page 35 we are told that an increase of population will occasion a rise in the prices of commodities, and in the wages of labour.

[p. 38] The competition of merchants, who buy to sell again, cannot heighten prices, since every merchant, in the offer he can afford to make, is limited ‘by the price which he expects to obtain in selling again. So far, indeed, from this increased capital being the occasion of high prices, it is one of the principal means of keeping them down;—a competition of capitalists, like a competition of manufacturers, restricts their respective profits.... Agreat capital is the principal advantage which any country has in entering into a competition of sales with other nations; it makes roads, it erects machinery, it promotes canals....’

38. The same cause, namely, an increase of money which will induce him to give a higher price for goods, will secure him one proportionally higher when he sells again. A competition of Capitalists keeps down prices, but money is not Capital. An increase of Capital is attended with all the benefits enumerated; an increase of money to be retained in circulation is unattended with any benefit whatever.

[p. 39.] Part II opens with a summary of the results reached so far:

‘Having shewn that the amount of our currency is fixed by an impassable boundary, which precludes the possibility of excess; having shewn that the convertibility of the portion which is paper, into that which is of the precious metals, was always limited; having shewn that (except in times of alarm, when it might be better if there were none) a very moderate degree of convertibility is necessary for the common purposes of life; and appealing to every man’s experience, that, in the small, indeed, but frequent exchanges in which gold and silver now mix, paper and these precious metals pass at a like value, thus establishing a standard for the former; it follows, that our currency is not now depressed by the use of paper.’

39. 1. This has not been shewn

2. Not frequent exchanges.

[pp. 39–40.] ‘But I am desired to take a guinea, and to melt it down; and I am shewn that the moment it is freed from the stamp of law,—as soon, in short, as it becomes bullion,—it rises in value; and that that portion of gold, which yesterday exchanged only for a one-pound note and one shilling, now exchanges for the same note, and four shillings and sixpence.

‘This evidently must proceed from one of two causes; it must proceed from the currency of which it late made a part having fallen below its usual value, or from gold in the shape of bullion, which it has now become, having risen above it.’

It has been shown that it is not the former of these causes; and therefore there can be no doubt that ‘bullion has risen above its ordinary price to the whole extent of the disparity’.

40. 1 In either case the holder of bank notes has equal cause for complaint. Why should he not rise from the value1 of bullion as well as lose from the fall. If bullion falls in value, the value of money, whilst the mint is open to every one falls in the same proportion. Why should not the owner of money be benefited by the rise of bullion? Did not the author say Page 35 that the cause of the rise of the prices of commodities was the decreasing value of gold generally, yet we are now told that bullion has risen. These opinions are directly at variance

[p. 40.] It is an ‘exploded belief, that gold is an unvarying standard.’

[40] 2. Who has asserted that gold is an unvarying standard of value? There is no unvarying standard in existence. Gold is however unvarying with regard to that money which is made of gold, and this proceeds from its being at all times convertible without expence into such money, and also from money being again convertible into gold bullion. If an ounce of gold bullion from being worth 15 ounces of silver rises to the value of 30 ounces of silver, an ounce of gold coin will do the same.

[p. 41.] Gold is in fact subject to variations: ‘Since the discovery of America, and the influx which the mines of that part of the world have poured upon Europe, its value has fallen in this country to one-third’.

41. 1. The discovery of the American mines though they had quadrupled the amount of gold would not have sunk its price, whilst the mint price has not altered, and whilst it was measured by gold coin.

[p. 41.] Gold ‘is also subject to some variation from locality: in America, where it is recently dug from the mine, it must necessarily be cheaper than in Europe, which it reaches with all the expenses of freight and hazard attending upon so long a conveyance.’

[41] 2 In America it is cheaper than in Europe but not cheaper measured in gold money. It is cheaper in labour,— cheaper in most goods or it would not be exported from thence.

[p. 42.] But on the whole, gold is the ‘best approximation to a perfect standard.... We have hitherto experienced very littleinconvenience from such local and temporary alterations; nor shall we now from that we witness, if we do not create inconveniences by improper interference.’

42. 1. We have unfortunately created inconveniences by improper interference already. A second interference is necessary in consequence of the first.

[p. 42.] Without entering into the intricacies of foreign exchanges, it must be evident to every man, who will consider the subject, that when a country, like an individual, makes purchases more in value than it sells in return, that country must, for the moment, remain in debt to the extent of the difference.’

[42] 2. A country generally speaking never does this,— and if it did so the exchange would not be affected till the debtor country was preparing to make the payment, and then it would not vary beyond the limits stated by the bullion Committee.

[p. 44.] But there is a limit to the extent of the advances which England can obtain: something must therefore be remitted, and since the exportation of commodities from England is made impossible by political barriers, and gold is easily transported and concealed, ‘the first thing that feels the impulse of an unfavourable exchange is this very gold, which the Committee would seem to think unsusceptible of influence.

‘What then follows this demand for gold? All the train of appearances which result from a demand for other articles: it becomes more and more scarce—it gets higher and higher in price.’

44 This is the fallacy. If the preceding position could be admitted gold might rise in value, but not in price whilst measured in gold coin or in bank notes accurately representing such coin,—particularly if one class of the community had no scruple to evade the law, and exported or melted the coin as best suited their convenience.

[p. 45.] The ‘scanty fund’ of gold deposited in the Bank of England is ineffectual ‘to settle the heavy balance of payments we are every day incurring’.

45. This paragraph is indisputable.

[p. 46.] Referring to the licences granted for the import of specie, Trotter asks: ‘Could Government have found the precious metals as it could have done shoes, or clothing, or provisions, in England, would it have had recourse to such modes?’

46. 1. Yes if the trade were advantageous.

[p. 46.] ‘Whenever the imports and the foreign expenses of this or any other country exceed its exports, its exchanges will be unfavourable, and gold dear; whenever the reverse is the case, when our exports exceed our imports and foreign charges, our exchanges must be favourable, and gold cheap. How then can that be considered as an undeviating measure, which is thus ever affected by circumstances so uncontrollable?’

[46] 2. True but within the limits specified by the committee.

3. Was it not allowed, Page 15, that the issues of paper forced the exportation of gold. Would not the reduction of their amount check exportation, and if carried sufficiently far produce importation

[p. 47.] To the question, why during the long series of years when the balance of trade was favourable to England, the price of gold had not fallen, Trotter answers: ‘When the balance of trade was against the Continent, it had always the option to pay its debts in whatever best suited our market, and, consequently, there never could be any redundancy of this, more than of any other article of commerce; as soon as the measure of our wants became full, the surplus would flow back to where it was more desired, and other articles would be selected, more suited to our market.’

47. 1. This is a just principle, but why does it not make gold revert back to us from the continent? The abundance of paper. For the same reasons that there could be no redundancy here, there could, under a sound system, be no deficiency.

[p. 47.] ‘But it will be said this theory does not hold good at the present moment. The measure of the Continental market is admitted to be full: gold, therefore, not being dear there, there cannot be the usual attraction of a high price to excite exportation from England; yet the tendency of the current is strongly that way.’

[47] 2. This would be difficult to admit under any circumstances, but is wholly impossible whilst any commodities are imported. If commodities are imported for gold, the conclusion that gold is dearer abroad is inevitable.

[p. 48.] ‘At this time, and in this country, gold is dear’.

48. It is dearer compared with the depreciated currency, but cheaper compared with all other things.

[p. 49.] During those periods between 1797 and 1810 in which the foreign exchanges were unfavourable, gold rose in price.

49. It is not denied any where, that with a low exchange gold has a tendency, with the present legal restraint, to become more valuable than an equal weight of coin, and an opposite tendency with a high exchange; but the effects are very limited.

[p. 50.] By comparing the circulation of bank-paper with the price of gold, Trotter finds decisive proof that there is no correspondence between them. In the years 1797, 1798 and 1799, when there was an addition of 5½ millions to the circulation, ‘gold never altered its price’. Further, in the years 1800–1802, the circulation increased 23 per cent., and gold rose in value only 4, 5 and 6 per cent. In the years 1803–1807, when ‘a further increase of issues took place to the extent of a million and a half, gold bullion became cheaper’.

50. 1. How much of this was in small notes? It has been acknowledged, Page 24, that they should be left out of the account. Besides in the year 1797 the currency was much below its natural level as the exchange and the coinage will indicate.

2. The effects of the increased issues of the years 1800, 1, 2, 3, 4, 5, 6 and 7 were at length but not immediately counteracted by the exportation of bullion.

[p. 51.] Therefore the opinion held by some persons, that the ‘currency is depreciated to the whole extent of the rise which bullion has experienced’ leads to ‘the most obvious absurdities.’

51. 1. I see no absurdity in such view.

[pp. 51–52.] From such an opinion, it would follow that in 1800 the currency of Great Britain became depreciated to the extent of 6 per cent., ‘and that, in 1805, with a greater proportion of paper, with a larger public debt, and with an extended war, the same currency, in all these respects less secure, recovered all the value it had lost.’

52. 1 Not the same currency but one reduced by the exportation of the coin.

[p. 52.] ‘Were such opinions just, it would follow also, that if Mr. Goldsmid, in executing any very urgent commission, should raise bullion two or three per cent. above the usual price, he would by such rash act strike off a million from the value of our currency: but the truth is, in all these instances it is only a few ounces of bullion that have got dearer or cheaper; our currency remains just the same.’

[52] 2. It is not the price given by Mr. Goldsmid “which will strike off a million from the value of our currency”, any more than an extravagant price for coffee will add to the value of that commodity, unless in both instances the prices given is the fair, steady market price of the commodity. If so it is of little consequence whether one ounce or a thousand ounces be actually purchased. It is not the purchase but the price which proves depreciation.

[p. 53.] Trotter then replies to those who urge that the holder of a bank-note, by the letter of his contract, is entitled at all times to the same weight of gold: ‘Independent of the injustice of placing the parties to any contract in a situation not in contemplation at the time of making such contract,...the very terms of the contract are against this reasoning. There is not in existence any note of the Bank of England, or of a country bank, engaging to pay a pound of bullion: the engagement such notes contain is to pay a certain portion of the coin of the realm; which coin, bereft as it is, and always has been, of exportability, is of the same value now that it was when it issued from the Mint; and never was intended to give to the possessor the fluctuating and now very unusual advantages of bullion, from which it is so distinctly separated by the law.’

53. 1. The Bank one of the parties have placed themselves there, and may extricate themselves from the consequences by diminishing the amount of their notes.

2. Whether intended or not the effect was such till the present period.

[p. 54.] A guinea, when melted into a small ingot, could be sold at £1. 4s. 6d.: ‘Let this ingot again receive the unvarying character of coin which the law gave it, and meant it should always retain; let it once more be secured by the Tower stamp from those influences which its exportability subjects it to, and which now affect it so much...—then that ingot, that guinea, will be of the value of this note and this shilling’.

54 This is assuming the point in dispute. Coin is degraded in this case by the tower stamp, and no efforts of Government can or ought to keep it in that state. It is bad policy and at the same time contrary to every principle of equity. Bank notes can be kept in their degraded state and are therefore subject to a depreciation from which coin is exempted.

[p. 55.] The Bullion Committee had shown that there was an exact correspondence between the price of bullion and the foreign exchanges. ‘The natural inference’ was ‘that they were cause and effect’; but the Committee had formed a different conclusion and pointed to ‘something in our domestic currency as the cause of both appearances.’

55. Where do the Committee say that they are not cause and effect. The exchange is affected by the Bank issues, and becomes in its turn the cause of the high price of bullion.

[p. 56.] ‘A high market-price of gold must continue just as long as the exchange is unfavourable, however long that may be: while we have an unfavourable balance to pay, we shall ever wish to pay it, amongst other things, in that article which is of cheapest conveyance; and that article will in consequence be dear’.

56. A high price in paper does not enable us to obtain that article; it is only a nominally not a really high price.

[p. 57.] ‘The exportable gold...has acquired a new power— that of paying at the cheapest rate a foreign debt—and consequently a new value;... That portion of our gold which is in coin, which we have barred from exportation, and, of course, from this accidental quality, remains as it was, at the Mint price’.

57. The current gold coin possesses the same power, and is used for such purposes by many without scruple. The author Page 15 has himself told us so. Gold coin cannot therefore sink much beneath the value of gold bullion.

[pp. 57–58.] The Bullion Committee have stated that the ‘general rise of all prices, and in the market-price of gold, with a fall of foreign exchanges, will be the effect of an excessive quantity of circulating medium, not exportable to other countries, or convertible into a coin which is so.’ To this Trotter replies: ‘But, so long as the limitations I have explained exist, there can be no excess. Our circulating medium, when it was all of the precious metals, was never exportable,—consequently no change has taken place in this respect; and, in its present state, it is just as convertible into other coin, and into every thing that is valuable, as it ever was. One description of commodities alone have changed their relative price—those particularly fitted by their qualities for facility of transit; and surely it is not by comparing our currency with these only, that a fair test is offered of its deterioration.’

58. This is the point in dispute. I deny it.

[p. 59.] ‘Of what avail is it to us to know that gold would pay our Continental debt, at a loss of only 8 per cent. if we have not gold to the extent of that debt which we can export?’

59. But why have we not gold? The author has himself, Page 15, answered. The issues of banks have forced it out of the country.

[pp. 60–61.] The Bullion Committee, although they admit that there was an unfavourable balance of trade, state ‘—surely without cause—“that they find it difficult to resist an inference, that a portion, at least, of the late great fall in our exchanges, must have resulted, not from the state of trade, but from a change in the relative value of our domestic currency.”’

60 The author forgets that the Committee are of opinion that a favourable or an unfavourable balance of trade is controuled by the Bank issues.

[p. 63.] During the state of alarm in Ireland between 1799 and 1804, ‘Irish individuals and Irish families gave more and more for bills upon England; the exchange on this country got higher and higher, and gold rose in Dublin to a corresponding premium. It was not that an Irish gentleman, so alarmed, thought the Bank of Ireland had issued too many notes that he wished to exchange them for those of England; but because he wished the whole or some part of his property to be out of the reach of risks then peculiar to that part of the empire.’

63 Not because he thought so, but that alive to his interest he felt that in twenty guineas he possessed a value superior to £21. in notes.

[p. 64.] The alarm has been gradually subsiding, ‘till now we see in Ireland, what we ought to anticipate seeing in this country, relatively with the Continent, the exchange restored to par, and that, too, with a circulation of notes in Ireland as unlimited and as great as it was in the deprecated year of 1804.’

64. 1. The fact is, we have degraded our currency equally to that of Ireland, instead of raising that of Ireland up to ours. Two blacks will not make a white.

[p. 64.] ‘The case of the banking companies in Scotland seems at first view to be the most favourable to the arguments of the Committee; their fault was certainly in part that of over-issues’.

[64] 2. Over-issues are possible then! I wish the author had explained what in his opinion would be the effects of the over-issues of the Bank, if the case were possible. Would they be in any thing different from what we now see.

[p. 66.] The year 1793 was one of singular distress. ‘What was the real evil? It was not a want of the currency of the country then existing;...it was mutual confidence which was wanting, and the evil was cured by a restoration of that confidence.’

66 It was a want of currency which aggravated the evil arising from want of confidence. The issue of commercial Exchequer bills induced the Bank to advance money on them, which they would not have done on other securities.

[p. 70.] In his ‘Conclusion’ Trotter reverts to the Report of the Bullion Committee: ‘They recommend that, in two years, the Bank should resume its payments in gold, whether peace be restored or not. If peace shall then prevail, the order will have been superfluous, as the law unaltered already directs cash-payments in that event.’

70. 1. When peace comes we shall not want for advocates for a continuance of the restriction bill.

[p. 70.] ‘Should peace not be restored, the Bank...must add to our unfavourable balance by increasing our imports: they must raise the difficult supplies, which they will be obliged to provide for their cash-payments, by the most ruinous means to themselves; for they must purchase abroad, to bring it home, that very commodity which the whole trading world are seeking at home to send abroad.’

[70] 2. There would be no such necessity. A contraction of their notes would make others import gold.

[p. 70.] ‘Is it not apparent, that one supply, or one hundred supplies, will not suffice in the given state of exchanges?’

[70] 3. But the exchanges are controulable by the Bank issues

[pp. 70–71.] ‘Have we not seen at least eight or ten millions of our specie melted down and sent away in the last fifteen years’?

71. 1. Yes; but caused by over-issues. Let paper be contracted and the inducement will cease. (See page 15)

[p. 71.] The regulations proposed in the Bullion Report, if ‘carried to the extreme of possibility,...would produce the most inconvenient effects:—it is within possibility, that the Bank, constantly coining and constantly importing to supply a waste greater than it could replace, might be obliged to declare its inability to keep out its notes at this expense, and might find itself under the necessity (I put an extreme case) of withdrawing its paper from circulation altogether. What then would be the result?’

[71] 2 An unbounded importation of gold would be the result; a measure by no means desirable. Our adversaries charge us with being unfriendly to a paper circulation,—this is not just,—it is of its abuse that we complain

[pp. 71–72.] ‘Either the public must be satisfied with a worse currency, and accept for their convenience the notes of private bankers to the extent of the void; or they must import twenty millions of the precious metals to perform the offices which bank- notes now execute so well.’

72. 1. Is not the principle of the Committee which is so often denied in this work acknowledged here. Viz that a reduction of notes, or rather their annihilation would cause the import of the precious metals, and consequently of a favourable exchange.

[p. 72.] ‘In the former case our exchanges would remain exactly as they are now; in the latter almost inconceivable case... we should, at the expense of a million a year in interest for the use of this expensive instrument, and of two or three millions in unfavourable exchanges to acquire it, bring up our currency to the war-price of bullion, which price, obtained by such sacrifices, it would again lose the hour after peace and free intercourse were restored.’

[72] 2. What is meant by “bringing up our currency to the war price of bullion”? Would the price of gold under the circumstances supposed be above £3. 17. 10½ p^r. oz? If it were who would take any part of the 20 millions imported to the mint to be coined? The bank it must be remembered is supposed to have ceased to exist.

3. The measure would be improvident and ruinous, because the same good might be obtained with a very small sacrifice.

[p. 73.] The restriction of cash payments has indeed prevented the Bank of England from paying its notes in coin, but ‘it has left the law exactly as it stood before, with regard to the rest of the community: every individual stands precisely as he did before 1797, and is as liable to a settlement of his debt in the coin which the law alone acknowledges as he ever was.’

73 Can the consequences be contemplated, without the most fearful alarm, of every creditor insisting on payments being made to him in coin, to which by law he is entitled? Let them insist on this right and bank notes would be immediately at a great and acknowledged discount.

[p. 75.] The restriction has relieved the community ‘from the intolerable expense of purchasing gold only to coin, and of coining gold only to be melted down.’

75 We might have been secured from all such consequences by a reduction in the amount of paper, at any time since the alarm ceased in 1797.

[p. 76.] The restriction was ‘an act of the Legislature, adopted on public grounds, and in fulfilment of one of the duties of Government—to prevent or lessen a public evil in the exportation of our coin’.

76 But if those public grounds are proved to have ceased, should not the measure itself?

[pp. 76–77.] The efficient state of the currency ‘deserves our peculiar care; but we ought to watch it without any of those prejudices or alarms which we daily see in men otherwise intelligent, who impute our debts, our taxes, our commercial distresses, to some irregular action of this (to them) unintelligible machine.’

77 They justly distinguish what is imputable to this cause, and what to other causes. The machine is by no means unintelligible to those against whom it is charged,—I suspect the saddle is put on the wrong horse.

[p. 78.] The public ought to be unfettered in their choice between a gold and a paper currency. ‘That we have not now this choice is the result of political circumstances entirely out of our control.’

78. 1. Entirely within our control

[p. 78.] ‘It is not to be anticipated that the Power which now holds the Continent in bondage, and shuts its ports against our commerce, will always be able to exercise the same injurious sway. Whenever that ceases, and with it ceases the necessity of our late foreign expenditure, we shall again see the precious metals at their Mint price’.

[78] 2 I doubt much whether bullion can ever fall to its mint price, whilst the present amount of paper continues in circulation. I should say decidedly it could not (unless our commerce was greatly to increase) if the value of gold and silver did not fall in Europe equal to the depreciation of our paper. This would have the effect of increasing the currencies of other countries in the same proportion in which ours has been increased.

OBSERVATIONS ON TROWER’S NOTES ON TROTTER
1811

NOTE ON ‘OBSERVATIONS ON TROWER’S NOTES ON TROTTER’

Trower, like Ricardo, had written a commentary on Trotter’s pamphlet. This commentary, extending to forty pages of MS, is headed ‘Notes and Observations on a Pamphlet entitled The Principles of Currency and Exchanges...(Anonymous) by Coutts Trotter Esqr.’ and is dated ‘February 1811’. It is in reply to this paper that Ricardo wrote the Observations here printed.

Both MSS were found among Trower’s papers. Trower’s MS is unpublished and is in the possession of Dr Bonar. Ricardo’s MS has been published in Appendix A (2) to Letters of David Ricardo to Hutches Trower and Others 1811–1823, ed. by J. Bonar and J. H. Hollander, Oxford, 1899,1 from which it is here reprinted. The MS is in the possession of Professor Hollander.

[OBSERVATIONS ON TROWER’S NOTES ON TROTTER]

What does Mr. Trotter mean by saying that it may be more advantageous to discharge a foreign debt by the exportation of a dear than of a cheap article;—by the exportation of gold which is dearer than by commodities which are cheaper here than abroad?1 This is evidently impossible;— it implies a contradiction and needs no argument to prove its absurdity. If he means that the exportation of all other commodities will be attended with so much expense as to make it more advantageous to export gold,—then gold cannot be said to be dearer here than abroad because it is under all circumstances the cheapest exportable commodity. When we say that gold is dearer here than abroad and that commodities are not, we must include the expences attending their transportation to the foreign market, otherwise they are not fair subjects of comparison. If Mr. Trotter means that nothing but gold will be accepted in payment of our debt notwithstanding its relative price,—then there is an end of all comparison between gold and other things,—we have contracted to pay gold and nothing but gold will absolve us from our engagements. But it is not with Trotter’s; it is with Mr. Trower’s observations that I have now to deal.

He observes that if it could be admitted that a foreign merchant would import gold at a loss, it would follow [“]that merchants were bartering two commodities on one of which they both lose (this one I suppose is bullion) [;] their profits then, he says, must be taken out of the other article. The seller must add to the price of the article (of wheat for example) the loss sustained upon the bullion he receives in payment; the buyer must afterwards add to the price of the article (wheat) over and above his profit the loss he sustains upon the bullion in which he pays for it.[”]1 In the first place this is not a fair answer to Mr. Trotter,—he supposes a debt already contracted and which can only be discharged by money;—his argument has no reference to any new contract which may take place between the exporter of wheat from the continent and the exporter of bullion or of money from England, and in which contract the consideration of the value of these articles must necessarily enter. His case is this, an importer of wheat into England has engaged to pay a sum of money, a certain weight of bullion, and the time is arrived at which his creditor will accept of nothing else.

Secondly, if we admit that the argument is fairly applied, we are not told on whose account the transaction took place; was it on account of the foreign or of the English merchant? We are led to suppose indeed that it is on account of both, and that they have both an interest in the value of bullion because they are both to add to the price of the wheat to compensate them for the loss on the Bullion,—one of them is to do so because bullion is cheap and the other because bullion is dear. If it be said that the importation of the wheat into England is on account of the English merchant only, then the transaction was complete as far as regarded the foreign merchant at the moment he sold the wheat. He bought it in France for a sum of French currency and sold it for a sum of French currency which was to be paid him either by means of a bill of exchange or by the actual transit of bullion of an equal value,—he has therefore no other interest but to take care to receive his payment, and his profit if any should attach to it. It is probable that he might have only been an agent and have no other interest but his commission for his trouble. If then the transaction be on account of the English merchant what possible inducement will he have to import the wheat if the bullion which he has engaged to give in return for it, be dearer in England than in France, that is to say if he cannot sell it for more money than he has purchased it for.

If he can do so, does it not prove that bullion is cheaper in England than in France? that with the commodity wheat more bullion may be bought in England than in France? As far as those commodities are concerned, what greater evidence can we possess of bullion being dearer in France than in England? Is it a satisfactory answer to say, no; it is the wheat that is dearer in England;—dearer for what? why, for bullion. This I conceive is but another way of saying that bullion is cheaper in England and dearer in France. How are we to distinguish then whether the profit has been obtained by the sale of the money or by the purchase of the wheat, seeing that they precisely express the same thing?

In the supposed case then, of the exportation of bullion, notwithstanding its being dearer in the exporting country, in return for wheat, the fact that wheat is cheaper in the importing country is necessarily involved;—how then can there be any remedy against the disadvantage of exporting bullion by raising the price of the wheat? It is saying, because wheat is cheaper here than abroad,—I will add to the quantity by importing more and will at the same time increase its price. The same argument may be used if the whole transaction were on account of the foreign merchant.

OBSERVATIONS ON VANSITTART’S PROPOSITIONS RESPECTING MONEY, BULLION AND EXCHANGES
1811

NOTE TO ‘OBSERVATIONS ON VANSITTART’

Ricardo’s Observations on Vansittart’s Propositions on the Bullion Report appear to have been written between 26 April and 3 May 1811. The MS, which is among Ricardo’s Papers, covers seven quarto pages. It has been printed in Minor Papers on the Currency Question, ed. by J. H. Hollander, Baltimore, The Johns Hopkins Press, 1932, pp. 111–17.

The Bullion Report, though published in August 1810, was not discussed in the House of Commons until the following year. On 5 April 1811 it was agreed, on Horner’s proposal, that the debate on the Report should take place on 29 April; later, however, the debate was postponed to 6 May.

During the intervening weeks Resolutions were drawn up and circulated both by the supporters and by the opponents of the Report;1 on 22 April Horner’s sixteen Resolutions embodying the conclusions of the Report were printed,2 and on 26 April Vansittart’s seventeen Counter-Resolutions were printed under the title ‘Propositions respecting Money, Bullion and Exchanges’.3 On 3 May were printed Horner’s Amendments to Vansittart’s Propositions, and also a revised version of these Propositions.4

The debate on Horner’s Resolutions began on 6 May and ended with the defeat of all his Resolutions on 9 May. That on Vansittart’s Propositions began on 13 May and ended on 15 May with their adoption, after Horner’s amendments had been negatived.

Ricardo’s Observations refer to the first printed version of Vansittart’s Propositions, dated 26 April 1811.1 This establishes the earliest date for the writing of Ricardo’s Observations and suggests as the latest date 3 May, when the revised version of Vansittart’s Propositions was printed.2

The first ten of Vansittart’s Propositions (which is as far as Ricardo’s comments go), in their original version, are here printed in square brackets and in smaller type before the respective comments.

OBSERVATIONS ON THE PROPOSITIONS RESPECTING MONEY, BULLION AND EXCHANGES

[Vansittart’s Counter-Resolutions, dated 26 April 1811.]1

[I. That the right of establishing and regulating the legal Money of this Kingdom hath at all times been a Royal Prerogative, vested in the Sovereigns thereof, who have from time to time exercised the same as they have seen fit, in changing such legal Money, or altering and varying the value, and enforcing or restraining the circulation thereof, by Proclamation, or in concurrence with the Estates of the Realm by Act of Parliament: and that such legal Money cannot lawfully be defaced, melted down or exported.

II. —That the Promissory Notes of the Governor and Company of the Bank of England are engagements to pay certain sums of Money in the legal Coin of this Kingdom; and that for more than a century past, the said Governor and Company were at all times ready to discharge such Promissory Notes in legal Coin of the Realm, until restrained from so doing on the 25th of February 1797, by His Majesty’s Order in Council, confirmed by Act of Parliament.

III. —That the Promissory Notes of the said Company have hitherto been, and are at this time, held to be equivalent to the legal Coin of the Realm, in all pecuniary transactions to which such Coin is legally applicable.]

3^d. The Promissory Notes of the Bank of England cannot justly be said to be at “this time held to be equivalent to the legal coin of the Realm” when the coin is bought at a prem^m. of 6 and 7 pc^t.,—and when it is prevented from openly rising to 15 or 18 pc^t. (its real and intrinsic value above paper) by the terror of the law which deters all men of character from engaging in a traffic which is disreputable and illegal. Whilst the law can be enforced the currency may be depreciated 50 pc^t., and yet the coin and paper may preserve the same value as currency.

[IV.—That at various periods, as well before as since the said Restriction, the Exchanges between Great Britain and several other Countries have been unfavourable to Great Britain: and that during such periods, the prices of Gold and Silver Bullion, especially of such Gold Bullion as could be legally exported, have frequently risen above the Mint price; and the coinage of Money at the Mint has been either wholly suspended or greatly diminished in amount: and that such circumstances have usually occurred, when expensive Naval and Military operations have been carried on abroad, and in times of public danger or alarm, or when large importations of Grain from foreign parts have taken place.]

4^th. At no period have the exchanges before the restriction been more unfavourable to Great Britain than 5 or 7 pc^t. or the expences attending the transportation of bullion. Neither did the price of gold bullion in bars, whilst the coin was undebased rise above the mint price excepting in the years 1783 and 4 when it exceeded the mint price about one penny halfpenny.

[V.—That such unfavourable Exchanges, and rise in the price of Bullion, occurred to a greater or less degree during the wars carried on by King William the 3d. and Queen Ann; and also during part of the Seven years war, and of the American war; and during the War and Scarcity of grain in 1795 and 1796, when the difficulty increased to such a degree, that on the 25th of February 1797, the Bank of England was restrained from making payments in Cash by His Majesty’s Order in Council, confirmed and continued to the present time by divers Acts of Parliament; and the Exchanges became afterwards still more unfavourable, and the price of Bullion higher, during the scarcity which prevailed for two years previous to the Peace of Amiens.]

5^th. Though the exchanges were unfavourable and gold bullion rose above the mint price during the Wars of King William and Queen Anne, this happened only1 occasionally and in a moderate degree, all which occurrences may be satisfactorily explained—from the acknowledged state of the debasement of the coin. That this was the principal cause is abundantly proved by the fact of the price of gold falling below the mint price and the exchanges rising above par immediately on the reformation of the coin. During the seven years war the gold coin then the principal measure of value had become debased which will account for the price of gold having occasionally been as high as £4. 1. 6. The exchange was, though as low as 31.10 in 1760, never below the real par. The relative value of gold and silver was in the market at this time as 14 to 1. Gold was a legal tender in England and a pound sterling in gold was probably of less value in the market than the silver in 31/10 of Hamburgh. The real par of exchange between England and Hamburgh when the relative market value of gold and silver, agrees with the relative mint value viz as 1 to 15.07, is 35/1,—con- sequently when the relative value is as 1 to 14 the real par is 32/7. Now if we take into our consideration the debased state of the English coin in the year 1760 it is probable that the exchange when at 31/10 was really favourable to England.

At no period in the American War did the price of bar gold exceed the mint price excepting in 1783 when it was as high as £3. 18. p^r. oz. 1½d. above the mint price. The exchanges were at this time never more than 3½ pc^t. below par, the lowest exchange with Hamburgh being 31/5, whilst the relative value of gold and silver was as 1 to 14 and consequently the real par 32/7. In 1795 and 6 neither the price of bar gold nor of foreign coin exceeded £3. 17. 6 nor were the exchanges at any period lower than 32/4, the relative value of gold and silver being as 1 to 14, and the real par 32/7. In 1797 when the Bank of England was restrained from making payments in Cash the exchanges were considerably in favour of England, and the price of gold 4½d. under the mint price.

In the beginning of 1799 the exchange was both nominally and really favourable to England, being at 37/7. In the latter end of that year the price of silver had risen 10 pc^t. and then the currency of Hamburgh had risen relatively to that of England in the same proportion so that the exchange tho’ nominally 10 pc^t. unfavourable to England was really at par.— From this Period the exchange and price of bullion were operated on by the excessive issues of the Bank, which were after sufficient intervals corrected from time to time by the exportation of the coin.

[VI.—That during the period of 75 years, ending with the 1st of January 1796 and previous to the aforesaid restriction whereof, with the exception of some small intervals, Accounts are before the House, the price of Standard Gold in bars has been at or under the Mint price 34 years and 5 months; and above the said Mint price 39 years and 7 months; and that the price of Foreign Gold Coin has been at or under £3. 18. per oz. 31 years and 2 months, and above the said price 42 years and 10 months. And that during the same period of 75 years, the price of standard Silver appears to have been at or under the Mint price, 3 years and 2 months only.]

6^th. For a period of 22 years previous to 1^st. Jan^y 1796 that is to say from the recoinage in 1774, the price of gold in bars never exceeded the mint price excepting in the latter end of 1783 and beginning of 1784 when it rose to £3. 18—p^r oz. From 1717 when gold was declared a legal tender to 1774 it has generally been about £3. 18—p^r oz but occasionally rose to £4 and even to £4. 1 p^r oz.—This price is justly attributable to the debased state of the coinage. It is remarkable that the price of gold in coin seldom at these periods exceeded the price of gold in bars which I think is a satisfactory proof that the price of gold was occasioned by the state of the currency and not in consequence of a really unfavourable exchange and therefore any demand for gold abroad. Since the recoinage the price of gold in coin has frequently exceeded the price of gold in bars by 2 or 3/-. It would be a remarkable circumstance if one of the precious metals were not always above the mint price. In this country silver has been generally so circumstanced.

[VII.—That the unfavourable state of the Exchanges, and the high price of Bullion, do not, in any of the instances above referred to, appear to have been produced by the restriction upon Cash payments at the Bank of England, or by any excess in the issue of Bank Notes; inasmuch as all the said instances, except the last, occurred previously to any restriction on such Cash payments; and because, so far as appears by such information as has been procured, the price of Bullion has frequently been highest, and the Exchanges most unfavourable, at periods, when the issues of Bank Notes have been considerably diminished, and to have been afterwards restored to their ordinary rates, although those issues have been increased.]

7^th. The assertion in this resolution is by no means proved. If it is founded on Mr. Pearse’s statement it must be given up as that gentleman’s facts as well as his reasoning are incorrect.1

[VIII.—That during the latter part and for sometime after the close of the American war, during the years 1781, 1782 and 1783, the exchange with Hamburgh fell from 34.1 to 31.5, being about 8 per cent.; and the price of foreign gold rose from £3. 17. 6. to £4. 2. 3. per oz. and the price of Dollars from 5s. 4½. per oz. to 5s. 11¼. and that the Bank Notes in circulation were reduced between March 1782 and December 1782, from £9,160,000 to £5,995,000, being a diminution of above one third, and continued (with occasional variations) at such reduced rate until December 1784: and that the exchange with Hamburgh rose to 34.6, and the price of Gold fell to £3. 17. 6. and Dollars to 5s. 1½. per oz. before the 25^th February 1787, the amount of Bank Notes being then increased to £8,688,000.]

8. The price of foreign gold coin is frequently 2 or 3/- p^r. oz higher than bar gold being often wanted for particular markets. It appears that in the year 1781 the price of bar gold did not exceed £3. 17. 6 and gold in coin is once quoted £4. 0. 6. In 1782 bar gold did not exceed £3. 17. 9 and gold in coin is once quoted £4. 2.—In 1783 bar gold £3. 18— and foreign gold is in one month quoted as high as £4. 2. 3 and as low as1 £3. 17. 9. The exchange in 1781—varied from 34/1 to 31/11 a fall of nearly 7 pc^t. but during the same period silver rose 7 pc^t. viz. from 5/5½ which was the price when the exchange was 34/1 to 5/10 its price when the exchange was 31/11. In 1782 the exchange fell to 31/8 and silver rose to 5/11½. In 1783 the exchange fell to 31/5 and 31/6 and silver to 5/8½. In neither of these years was the real exchange more unfavourable to England than 3½ pc^t. —It should be remarked that the price of dollars was not 5/11¼ at the same period that the price of gold was £4. 2. 3. According to the wording of this resolution we should be induced to suppose that the fall of 8 pc^t. in the exchange occasioned both the high price of gold and the high price of dollars. When dollars were at 5/11¼ gold in bars was at £3. 17. 9 and foreign gold in coin £4.—. 1 and the exchange 31/10—the relative value of gold and silver being as 1 to 13.1—so that the real par of exchange was 31/- and consequently the then exchange of 31/10 favourable to England.

I have no account of the Bank notes in circulation in the years 1781. 2. 3.2 —Was the circulation in March 1782 of 9,160,000 a temporary or had it been a permanent amount?— what was the state of it in Jan^y. 1782, in Jan^y. 1783.1 An increase of a month or two can produce no permanent nor even a temporary effect.—I should like to see the account of Bank notes in circulation up to 1790.2 —Mr. Vansittart wishes his readers to suppose that the price of gold did not fall to £3. 17. 6; dollars to 5/1½; and the exchange did not rise to 34/6 till the increase of Bank notes in 1787 to 8,688,000,— but it appears that in Jan^y. 1784, bar gold and foreign gold were no higher than £3. 18— p^r. oz., from May 1784 to August 1785 neither of them were above £3. 17. 10½ and from that period till 1792 they were never higher than £3. 17. 6. In 1784 Dollars were at 5/1 and in 1785 as low as 5/- and the exchange was at 34/10 in 1784 and at 35/6 in 1785.

[IX.—That the Amount of Bank Notes in February 1787 was £8,688,000, and in February 1791 £11,699,000; and that during the same period, the sum of £10,704,000 was coined in Gold; and that the Exchange with Hamburgh rose about 3 per cent.]

9. Did the exchange during the periods alluded to in these resolutions vary beyond the limits laid down as the true principle by the Report,—this is the test by which they ought fairly to be tried. Who has denied that the exchange may be 1 or 2 pc^t. or even more at one time in favour of Hamburgh, and at another 1 or 2 pc in favour of London. Who again has denied that during a period of successful commerce1 an increase of 3 or 4 millions of circulating medium may not be wanted? This might have been occasioned too by a diminution generally in the market of the world of the value of the precious metals. The coinage from 1787 to 1791 inclusive from foreign gold did not exceed £4,000,000 that from light guineas cannot be considered as an augmentation to the currency. Mr. Vansittart states the whole at 10,704 millions.2

[X.—That between the 25^th of February 1795, and the 25^th of February 1797, the amount of Bank Notes was reduced from £13,539,000 to £8,640,000, during which time the exchange with Hamburgh fell from 36 to 35, being about 3 per cent., and the said amount was increased to £11,855,000, exclusive of £1,542,000 in Notes of £1. and £2. each on the 1st of February 1798, during which time the Exchange rose to 38.2, being about 9 per cent.]

10. In January 1795 the circulation of Bank notes was from 10 to 12 millions[,] in March it was as high as 14 millions but was immediately reduced to about 10 millions, it continued during the whole year between 10 and 11 millions except for one fortnight when it exceeded it. It was not till after July 1796 that the amount of notes was lowered to below 9,500,000[,] for the rest of the year it varied from 9,500,000 to about 9,000,000. The exchange fell in 1795 from 36 at which it was in Feb^y. to 32/10 in July. In the end of 1796 the exchange rose again to 34/7, the price of silver being at 5/4 and 5/6 and gold £3. 17. 6 the exchange was uniformly above par.

The average amount of notes in Jan^y. 1795 was 11 millions[,] in Feb^y. about 10 millions, in March 11,700, in April 11,100, in May 10.200, June 9,800, July 10,250, Aug 10600, —Sep 10,500,—Oct^r 10400, Nov 10750, D^cr 11,900, Jan 96 10300, Feb 10,350, Mar 9,800, Ap 10500, May 10,100, June 9,400, July 9,400 and continued about 9 millions till Feb 1797,—in which year the exchange rose to 38/2. It must be observed that the price of standard silver fell this year to 5/0½ so that the real par was perhaps not less than 36 or 37.

It appears then that it was between Ap^l. 1796 and Feb^y. 1797 that the amount of notes was reduced from 10,500 to 8,640, and that the exchange rose from 32/7 the price in Jan 1796 to 36/8 in April and 38/- in Sep^r.,1 the earliest period perhaps at which the effects of the reduction of the amount of the circulation would be felt by the exchange.

APPENDIX

APPENDIX

‘Mr. ’ of the Bullion Report

In his Notes on the Bullion Report (above, p. 347 ff.) Ricardo comments extensively on the evidence of the anonymous Continental merchant who was a witness before the Bullion Committee, and refers to him several times in his Reply to Bosanquet (above, pp. 163, 168, 185) and once in his Notes on Bentham (above,p. 288).

This witness gave evidence on four days (2, 5, 7 and 8 March1810), being described in the Minutes as ‘Mr.—, a Continental Merchant’; he is referred to in the Report as ‘a very eminent Continental Merchant’1 and again as ‘the Merchant who has been already mentioned as being intimately acquainted with the trade between this Country and the Continent of Europe’.2

Professor Cannan, speaking of him in the Introduction to his reprint of the Bullion Report,3 says ‘An obvious conjecture is that this modest Mr. Blank was the great N. M. Rothschild.’ Later writers have required no further proof and have taken this identification with Rothschild for granted.4 This suggestion however can be dismissed, apart from the circumstances mentioned below, simply by comparing the evidence of Mr. with that given by Rothschild before the Secret Committees of 1819 (Resumption of Cash Payments) and 1832 (Renewal of the Bank Charter);5 the differences in style and the contradiction between the opinions of Mr. in 1810 and of Rothschild in 1819 and 1832 are such as to rule out the hypothesis of their being the same person.

Besides, there is nothing that could be even remotely compromising in Mr.—’s evidence and it is difficult to imagine that anyone should feel so endangered by the acknowledgement of its authorship as to adopt the extraordinary expedient of being reported anonymously. The only possible reason for anonymity must have been to conceal the presence of the witness in London at the time. But there was no secret about Rothschild’s residence in England, where he had been established for many years. Thus there could be no reason for his anonymity.1

As the anonymous merchant was the only witness, besides Sir Francis Baring, whose evidence on the whole supported the conclusions of the Committee, he was frequently referred to in the pamphlet literature and was singled out for attack by the Anti- bullionists; but none of these writers supplies any clue to his identity.2 What was said in the Bullion debate in the House of Commons by critics of the Report is a little more informative. George Rose, Vice-President of the Board of Trade, said of him that ‘though a most respectable man, [he] has more of Continental than of British interests’.1 And Nicholas Vansittart, the leading opponent of the Report, referred to him as ‘One gentle- man...of whom (as he is not named) we know nothing more, than that he resides abroad, therefore has not had the means of forming his judgement on the spot’.2

That he was a resident abroad, and that he had more of Continental than of British interests is thus all the information that was disclosed at the time. Retaining this, we turn for further clues to his own evidence before the Committee.

Other Continental merchants3 who were heard, under their names, by the Bullion Committee, were asked as one of the first questions: ‘Are you acquainted with the subject of the exchanges between this Country and the Continent?’4 Whilst merchants specialising in the trade with any one country were at once asked a question on the currency of that particular country.5

Now, the first question asked to the anonymous Continental merchant was the significant one: ‘Are you acquainted with the subject of the exchange between this country and Hamburgh?’6 And although he replied ‘I am, and with other foreign Countries’, his factual evidence on foreign countries refers largely to Hamburg or else to the other Northern countries. Indeed, when he is asked ‘Can you state how much per cent. may be the present expence and risk of transporting Gold from London to Amsterdam or Hamburgh, or any other principal places of trade on the Continent?’ he answers simply ‘Independent of the premium of insurance, it would be from 1½ to 2 per cent. from London to Hamburgh.’1

If therefore we assume that Mr.— was a resident of Hamburg, the reason for his wishing to remain anonymous and to conceal his presence in London becomes apparent. For Hamburg had been in French occupation since the end of 1806, and under the Berlin and Milan Decrees a visit to England constituted a serious offence.2

It is recorded that only seven British firms were able to continue their activity in Hamburg during the French occupation, as their partners had the Hamburg citizenship. The names of the firms in question are: Parish & Co.; Kirkpatrick & Co.; Humphrey Carvick & Co.; J. B. Smith, Barclay & Co.; Peacock & Co.; George Walker; Thomas Tattlock.3

Certain allusions in Mr.—’s evidence, taken in conjunction with an entry in one of the accounts in the Appendix to the Bullion Report, indicate the firm among those listed with which he was probably connected.

Mr.— in his evidence mentions repeatedly ‘foreign subsidies’4 and ‘the expenditures for the account of Government abroad’5 among the ‘extraordinary causes’ which he regards as having operated on the exchange so as to depress it below par at times when the balance of trade was in favour of England.

Appendix LXX to the Bullion Report contains an account of the Bills of Exchange drawn on the Treasury for expenses abroad, from 1804 to 1809. One of the largest single items in this account is a payment for over £700,000, in the year 1806, to Edward Thornton, Minister at Hamburg, for ‘Public services’; in connection with which, payments for over £5000 were made to each of two firms of Hamburg merchants, Thornton and Power, and Parish and Co., for ‘Interest and commission on the negociation of bills drawn by Mr. Thornton, &c.’1

It was the more likely that a Hamburg merchant would be acquainted with the British Government’s expenses abroad and their subsidies to the Allies if he had been himself connected with such transactions; now Thornton and Power had ceased activity in Hamburg after the French occupation, so we may concentrate our attention on Parish & Co.2

The firm, one of the largest merchant houses in Hamburg, had been founded by John Parish, who had gone there as a boy from Scotland in 1756. He retired from the business in 1796, entrusting it to his sons, and fled from Hamburg when the city was occupied by the French, settling at Bath in 1807, where he remained till his death in 1829. In 1809 three of his sons, John, Richard and Charles, were in charge of the firm. It appears that at this time Richard conducted the ordinary commercial activity of the firm, Charles was engaged in the dangerous business of breaking through the Continental blockade, with bases at Heligoland and the small ports of Holstein, and John, the eldest brother, had undertaken the even more dangerous task of transmitting the British subsidies to Austria, then at war with Napoleon.

John Parish, junior describes his enterprise in a report to the Emperor of Austria as follows. At the beginning of the year 1809, being in London, he was asked on behalf of the British Government if he could devise means for transmitting to the Austrian Government an instalment of the British subsidy. ‘At that moment this seemed almost impossible, as all communication with the Continent was so hindered by the French measures that there was danger of life even in receiving a simple letter.’ He decided to hazard for the purpose his fortune and his person ‘since no one else was then in a position to achieve the object desired.’ In May he went from London to Hamburg to make arrangements for advancing the money from his own resources, as it was not possible to transfer it from England; and in June he proceeded, by way of Berlin, to the Austrian headquarters where he made the payment.1

This was not an isolated transaction, for in the autumn of 1810, a confidential British agent on the Continent, J. M. Johnson, wrote to the Under-Secretary of State at the Foreign Office that John Parish, junior ‘has on various occasions rendered important services to the british government, and...it is thro’ his house that most government payments have of late years been made on the continent’, adding that Parish ‘was frequently consulted by Mr. Canning and Mr. Hammond’.2 Subsequently Parish went to London, with a letter of Johnson, dated 29 Nov. 1810, introducing him to the Under-Secretary as one ‘who has rendered essential services to our government on many important occasions.’3

We know, therefore, that Parish was on secret visits to London both in the spring of 1809 and in the autumn of 1810. There is no direct evidence of his being there in March 1810, when Mr.was being examined by the Bullion Committee. But there is a circumstance which may have provided the occasion for a visit at that time. When Austria concluded her armistice with Napoleon (in July 1809), the monthly subsidy from the British Government naturally came to an end. Metternich, however, requested J. M. Johnson, the British secret agent, to demand of the British Government that the subsidy be continued up to the ratification of the peace, on the ground that after the armistice ‘the threatening attitude of the Austrian armies’ continued to operate as a powerful diversion in favour of England. The message was to be delivered by the agent himself on his arrival in England; otherwise, as the agent reported, Metternich ‘particularly requested that in case any unforeseen event prevented my immediate return to England I should not make the foregoing communication in writing untill a perfectly safe mode of conveyance presented itself’. In fact Johnson went only as far as Hamburg, where he wrote his report to the Foreign Office on 7 January 1810, and sent it to London where it did not arrive until 16 February.1 It is probable that the transmission of the message would be entrusted to the house of Parish, which was the usual channel of communication;2 and in connection with this negotiation (which does not appear to have achieved Metternich’s object) John Parish, junior himself may have travelled to London just at the time when the Bullion Committee began its hearings.

Turning back to Mr.—’s evidence we find one or two details which tally with events in the life of John Parish, junior as given by Ehrenberg. Mr.— in his evidence describes, as from first- hand knowledge, the state of public opinion and the general commercial conditions in England, following the suspension of cash payments in 1797, and refers to the commercial distress which existed in the year 1799;3 now, in 1799 John Parish, junior made a prolonged visit to England.4 Also, Mr.— alludes to the currency events in Austria in the summer of 1809,5 when as we know Parish was on a mission to that country.

Apart from his evidence to the Bullion Committee (if it is admitted that he was the anonymous witness) John Parish, junior’s only contribution to the subject appears to have been a paper on the Austrian Banking and Currency system, which he sent to Friedrich von Gentz in August 1816.1 In that year, at the age of 42, he retired from business with a large fortune, bought the estate of Senftenberg in Bohemia and was made a baron by the Emperor of Austria in recognition of his services. He died in1858.

The hypothesis here advanced as to the identity of Mr. has since been confirmed as a result of a search in the Hamburg Archives kindly undertaken by Dr Eduard Rosenbaum at my request. There is in the Archives, among the papers of Karl Sieveking (a contemporary of Parish) an unpublished ‘History of the Pound Sterling from 25 February 1797 to the Second Peace of Paris’. Reviewing the evidence given before the Bullion Committee Sieveking writes: ‘Particularly remarkable is the evidence of a Continental merchant, who is said to be Mr John Parish of Hamburg, at present owner of the estate of Senftenberg in Bohemia’.2 Sieveking was in a position to know, for when writing his history in 1817 he was in touch with Parish who supplied him with a copy of the Bullion Report and a set of the Edinburgh Review.3

TABLES OF CORRESPONDING PAGES for Ricardo’s Pamphlets in the original editions, 1811, M^cCulloch’s edition (Works, 1846 etc.), Gonner’s edition (Economic Essays, 1923 etc.), and the present edition.

[1 ]Annual Biography and Obituary for the Year 1824, pp. 371–2. The passage continues: ‘and it was inserted in the shape of letters under the signature ofR., the first of which appeared on the 6th day of September, 1810.’ This is quite incorrect, for in fact it was inserted in the shape of an article, unsigned, which appeared on 29 August 1809: the two other contributions to the Chronicle of 1809 were evoked by criticisms of the article after publication and could not have formed part of the original MS shown to Perry. The biographer is confusing the three contributions of 1809 with the three letters to the Chronicle of 1810.

[1 ]Annual Biography and Obituary for 1824, p. 372.

[2 ]The authorship was acknowledged in a leading article of the Morning Chronicle of 27 August 1810, after the publication of the Bullion Report: ‘The letters of our invaluable correspondent Mr Ricardo, contributed most essentially to open the eyes of the public to the true cause of the depreciation of paper.’ Ricardo’s article and his two letters to the Morning Chronicle of 1809 were reprinted under the title Three Letters on the Price of Gold, by David Ricardo, ed. by J. H. Hollander, Baltimore, Johns Hopkins Press,1903.

[1 ]The first part of Ricardo’s answer was first published by Dr Bonar under the title ‘Ricardo on Currency’ in Economic Journal, March 1896, pp. 64–9. The two extant papers of this private controversy between Trower and Ricardo were published in their entirety as Appendix A (1) and (2) to Letters of David Ricardo to Hutches Trower and Others 1811–1823, ed. byJ. Bonar and J. H. Hollander, Oxford, 1899. Trower’s paper is here printed from the MS now in the possession of Dr Bonar. Ricardo’s paper is reprinted from Letters to Trower; the MS is now in the possession of Professor Hollander (see The Economic Library of J. H. Hollander, Ph.D., privately printed, Baltimore, 1937, p.314).

[2 ]There is some doubt as to the exact date of publication. Murray’s advertisement in the Morning Chronicle of Tuesday, 26 Dec. 1809, announced ‘On Thursday next will be published, The High Price of Bullion...’, and Bosanquet (Practical Observations, p. 2) refers to it as ‘published late in 1809’. However, the first advertisement under the usual heading ‘This day is published’ occurred in The Times of Saturday, 30 December; even this may have been premature, as it gave no price, whereas the practice was to do so on actual publication. The earliest advertisement stating the price (2s.) which has been found is that published in The Times of 3 Jan. 1810. Thus, publication may have been delayed a few days into the new year, which would agree with the date 1810 on the title-page of the pamphlet.

[1 ]As is shown by the fact that in his Life and Writings of Mr. Ricardo (1824 and later editions), he gives the date of the first contribution to the Chronicle as ‘6 September 1809’, which is an attempt to reconcile the date given in the Annual Obituary (see above, p. 3, n. 1) with the year given in Ricardo’s Introduction.

[c]Culloch in the successive editions of his Life and Writings of Mr. Ricardo.

[3 ]Introduction to Ricardo’s Three Letters on the Price of Gold, p. 4.

[c]Culloch was following the Annual Obituary; see above, p. 3, n. 1.

[1 ]‘The tract was probably first thrown together several years before as essentially a criticism (through the eyes of Horner and Lord King) of Thornton’s hesitant conclusions: it contains some evidence of Wheatley’s influence, and, like Wheatley’s Essay, refers to no political or economic events later than1805. The main body of the tract was, in all probability, prepared prior to the articles in the Chronicle newspaper.’ (‘Financial and Monetary Policy of Great Britain during the Napoleonic Wars, II, Ricardo and the Bullion Report’, in Quarterly Journal of Economics, May 1924, p. 423, n.) Professor Silberling’s strange theory that the publication of the Bullion pamphlet was part of a bear manoeuvre on the Stock Exchange will be discussed in connection with Ricardo’s business activities.

[2 ]These notes contain conclusive evidence (in the form of dated postmarks) of having been written in 1809, and some of them after the middle of October 1809.

[3 ]See below, pp. 24 and 82, and pp. 27 and 87–8.

[1 ]Below, VI, 1.

[2 ]Advertised in Monthly Literary Advertiser of 10 March 1810. The second edition, ‘Corrected’, which is a reprint of the first with merely verbal alterations, was first advertised in The Times of 28 February, but is likely to have been prepared for publication before Ricardo wrote his letter to Horner of 5 February.

[iv], p. 98), is also disproved by the letter of Horner quoted below, p. 9.

[4 ]Ricardo annotated, more or less extensively, several of these pamphlets. His Notes on Trotter’s Principles of Currency and Exchanges are printed below, p. 379 ff.; the remainder are merely marginal jottings, mostly illegible.

[5 ]Although the date of the first of these letters had been given in the Memoir of Ricardo in the Annual Biography and Obituary for 1824, (see above, p. 3, n. 1), that reference has been regarded as merely a misprint for the date of the original article of 1809, and consequently the existence of the 1810 group of letters was generally overlooked until the discovery of their cuttings among Ricardo’s Papers, when they were reprinted in Ricardo’s Minor Papers on the Currency Question, Baltimore, 1932.

[1 ]This letter was reprinted, without acknowledgement to the Morning Chronicle, in The Tradesman; or Commercial Magazine for 1 Oct. 1810, pp. 344–50, under the title ‘Observations on the Report of the Bullion Committee’ and over the signature ‘R.’ What purported to be a sequel to it was inserted, unsigned, under the same title in the number for 1 Nov. 1810 of The Tradesman; this, however, was not by Ricardo, and had appeared as an anonymous letter in the Morning Chronicle of 8 Sept.1810.

[2 ]A few days later, on 1 October, Whishaw wrote to Horner from London: ‘Your Bullion Report is, I think, very successful. It is much talked of and has made a greater impression than I expected; of which R. Jackson’s speech (for which he has received or is to receive an handsome present from the Bank) and the various publications which have appeared, are the most decisive proofs. The discussion has been tolerably well kept up in the Morning Chronicle, to which Ricardo has contributed many very good observations.’ (Unpublished MS in the possession of Lady Langman.)

[3 ]The author of the review of Thomas Smith’s Essay on the Theory of Money and the Exchange, in the Edinburgh Review for October 1808, was James Mill (see Bain, James Mill,p. 91).

[ii], p. 24.

[2 ]The Notes on the Bullion Report (below, p. 347 ff.) written by Ricardo about this time may have been in connection with this proposal.

[3 ]Mill, whose family name was sometimes spelt Milne (Bain, op. cit. p. 3); cp. above, p. 9, n. 3.

[4 ]Horner to Jeffrey, 3 Dec. 1810. Unpublished MS in the possession of Lady Langman.

[ii],p.41.

[1 ]The postscript to the 1st ed. is dated 14 Nov. 1810.

[2 ]The preface to the 2nd ed. is dated 3 Dec. 1810.

[3 ]See below, pp. 204 and 247.

[4 ]In the Library at Gatcombe there are Ricardo’s copies of the 1st ed. of Practical Observations and of the separate Supplement. The former contains many comments in Ricardo’s handwriting, but they are almost entirely illegible.

[5 ]25 Dec. 1810, below, VI, 14. This letter accompanied the first part of the MS of Dumont’s translation of Bentham’s work on prices which Ricardo proceeded to read and criticise; see below, p. 259 ff.

[6 ]Advertised in Monthly Literary Advertiser, 10 Jan. 1811. The Reply did not go to a second edition. A slip of errata containing five entries was printed and is found in some copies. The corrections are noticed in footnotes below.

[7 ]Shortly before, on 21 March 1811, Ricardo took part in a General Court of the Bank of England at which the subject of the Bullion Report was raised, and spoke briefly on the price of gold; see below, V, 461–2.

[8 ]Advertised in Monthly Literary Advertiser for 10 April; the earliest advertisement in the Morning Chronicle did not appear till 27 April.

[9 ]The Appendix was also published as a separate pamphlet, see below, p. 99,n. 1.

[1 ]Both MSS, unpublished, are in the possession of Lady Langman.

[2 ]Cp. below, VI, 47–8.

[3 ]The Bullion Controversy entered upon its final stage in April and May 1811, with the debates in the House of Commons on the Resolutions of Horner and the counter-Resolutions of Vansittart. Ricardo’s Notes on the latter (printed below, p. 411 ff.) are all that he seems to have written on the subject at this stage.

[1 ]See above, p. 8, n. 3.

[2 ]Advt. in The Times, 23 Sept. 1810; and a new ed., ib. 13 Dec. 1810 [nos. 2 and 4 in F.W. Fetter’s ‘Editions of the Bullion Report’, Economica, 1955,p. 153–4]. Ricardo’s two copies are of the former edition. For dating the Notes see also the reference to Randle Jackson’s speech of 20 Sept. 1810, below, p. 358, and the allusion to the table of discounts, which was first published in the Morning Chronicle of the 15 Oct., below, p. 358.

[3 ]There is another copy of the same edition of the Bullion Report that belonged to Ricardo in the Goldsmiths’ Library of the University of London, but it bears no reference numbers.

[1 ]On the other hand, some later sheets of the MS may have been lost, since there are a few numbers written on pages after p. 102 which have no corresponding comment; see below, p. 360, n. 1 and p. 372, n. 1.

[1 ]This sentence is ins.

[2 ]Replaces ‘for the suspected parties.’

[1 ]The passages referred to are in Bullion Report, ‘Minutes of Evidence’, 8vo ed., pp. 4–18.

[2 ]‘chiefly’ is del. here.

[3 ]Bullion Report, ‘Minutes of Evidence’, p. 23.

[1 ]ib. pp. 26 and 37–8.

[2 ]Omitted in MS.

[1 ]Corrected by Ricardo on his copy ‘[expo]rtation’.

[2 ]The exclamation marks on the margins of this page are Ricardo’s.

[1 ]In Ricardo’s copy of the Bullion Report, the figures 2, 3 and 4 are written against other questions to Greffulhe (the first, fourth and fifth following the one reprinted above), but there are no corresponding notes in the MS. They may have been written on a sheet now lost.

[1 ]This note, which is a general comment on Chambers’ evidence, pp. 135–7, follows in the MS the note to p. 136.

[iii]. Cp. Bullion Report, 8vo ed., p. 65.

[3 ]Replaces ‘But a run upon the bank’.

[4 ]Replaces ‘checked by a diminution [replacing ‘limitation’] of the amount of notes.’

[1 ]Written above ‘very’, which however is not del.

[t]. was made by a bill of exchange’ is del. here.

[3 ]Last six words are ins.

[4 ]‘excessive’ has probably been omitted here by an oversight.

[5 ]An earlier version does not contain the two lines, from ‘contending’ to ‘issue of notes’, but it has in addition at the end of the paragraph: ‘if they were to consider as they profess to do that they can never err in discounting bills for bona fide transactions’.

[6 ]MS, by a mistake, has ‘181’.

[1 ]This note refers to the answer marked ‘2’ in Ricardo’s copy of the Bullion Report. Although the figure ‘1’ is written against the first answer in Harman’s evidence (‘though the state of the exchanges is constantly watched, the amount of our discounts is not regulated with any reference to that circumstance’), there is no corresponding comment in Ricardo’s MS.

[2 ]The last two lines beginning ‘this real fall’ replace ‘foreigners would be induced to purchase more of our commodities,—this’ which however is not del.

[3 ]Replaces ‘of these discordant opinions’.

[1 ]On the last sheet of the MS (B) there is written by Ricardo the following paragraph which appears to refer to Account No. XIX of the Appendix to the Bullion Report: ‘What is the reason that gold monies in the years 1805, 6, 7, 8, 9 and 1810 should be coined at the mint from foreign gold, when by the evidence of the dealers in bullion English gold as it is called can be purchased cheaper?’

[1 ]A ‘Second Edition’ of 80 pp. was published under the author’s name and ‘sold by Cadell and Davies, andW. Winchester and Son’; it is odd that it bears the same date, ‘Dec. 1, 1810’. From the page references in Ricardo’s Notes it is clear that he was using the first edition.

[2 ]The Notes have been published in Minor Papers on the Currency Question, ed. by J. H. Hollander, Baltimore, The Johns Hopkins Press, 1932, pp. 91–99.

[3 ]There is a copy of the first edition of Trotter’s pamphlet which belonged to Ricardo in the Goldsmiths’ Library of the University of London, but it bears no such numbers; ‘by Coutts Trotter’ is inscribed in Ricardo’s hand on the title-page.

[1 ]Omitted in MS.

[1 ]Ricardo refers to this passage in his comments on Trotter’s pp. 19, 57, 59 and 71.

[1 ]Bullion Report, ‘Minutes of Evidence’, 8vo ed., pp. 210–13.

[1 ]This comment must refer to the first part of the quotation, although Ricardo appears to have overlooked the peculiar sense which Trotter attaches to ‘convertibility’. Trotter says in effect: Had paper retained its value in terms of commodities in proportion to its gold cover only, it must have fallen in terms of commodities (as well as of gold). Ricardo’s interpretation seems to be: Had paper retained its value in terms of gold by retaining its convertibility, it must have fallen in terms of commodities.

[1 ]A slip, for ‘why should he not gain from a rise in the value’.

[1 ]It is there prefixed to another paper, written by Ricardo in 1809, which in the present edition is printed above,p. 36 ff.; cp. p. 5.

[1 ]See Principles of Currency and Exchanges, 1810, pp. 44–7.

[1 ]This passage is quoted from Trower’s Notes on Trotter. As a result of Ricardo’s criticism Trower crossed it out in his MS and replaced it with a new version.

[1 ]Both sets of Resolutions are in Parliamentary Papers, 1810–11, vol. x.

[2 ]The Resolutions, like the Report, were drawn up by Horner, Huskisson and Thornton: ‘I understand that the first ten or twelve were by Mr. Huskisson, and those which follow by Mr. Horner, except the resolution stating that “it is the duty of the Bank”, et cetera, which is by Mr. Thornton.’ (Letter of Lord Auckland to Lord Grenville, 25 April 1811, in Historical MSS Commission, Report on the MSS of J. B. Fortescue at Dropmore, 1927, vol. x, p. 131.)

[3 ]That Vansittart was ‘the godfather, but not the father’ of the famous third Resolution which equalizes Bank-notes with gold was disclosed by Canning in a speech in the debate on the Bank Charter, 13 Feb. 1826; but when challenged he declined to name the ‘father’ (Hansard, N.S., XIV, 331). According to the Dictionary of National Biography, article ‘Vansit- tart’, the Counter-Resolutions were ‘drawn up by the request of Perceval’.

[4 ]A third version, only slightly differing from the second, was printed under the date 14–15 May 1811.

[1 ]In the second version, besides some alterations in the statistics, Resolutions 6 and 7 are transposed; Ricardo’s comments follow the order of the first version.

[2 ]See also below, pp. 420, n. 2 and 421,n. 1.

[1 ]The first ten Propositions of Vansittart are here reproduced from the version of 26 April 1811, in Parliamentary Papers, 1810– 1811, vol. x.

[1 ]‘this happened only’ is written above ‘they were so’, which however is not del.

[1 ]See Pearse’s evidence, above, p. 357.

[1 ]‘and as low as’ is written above ‘and varied from,’ which however is not del.

[o]. 147).

[

These figures are from an Account ordered to be printed 22 Feb. 1811 (Parliamentary Papers, 1810–11, vol. x, N°. 22).

[2 ]Replaces ‘1787’.

[1 ]‘that’ is ins. here by mistake.

[2 ]Replaces ‘10 millions’; an imperfect correction.

[1 ]The last two rates refer to the year 1797.

[1 ]Report, 8vo ed., p. 19.

[2 ]ib. p. 26.

[3 ]The Paper Pound of 1797–1821, London, 1919, p. xlii.

[4 ]See A. Brady, William Huskisson and Liberal Reform, Oxford, 1928 (‘The evidence of a few merchants, including N. M. Rothschild’, p. 25) and L. Stuart Sutherland, in Economic History Review, April 1932 (‘Mr. ,to be identified in all probability, as has been suggested, with Nathan Rothschild’, p. 378).

[5 ]I owe this comparison to Professor Hayek. evidence either in broken English, or in the patois of his country, thought fit to guard their readers against the poison of his representations.’

[1 ]Another false identification is suggested by the title of an anonymous pamphlet published many years later, at the time of the Bank Charter inquiry of 1832: The Evidence that WOULD have been given by Mr.—, Late a Continental Merchant, before the Committee of Secrecy Appointed to Inquire into the Expediency of Renewing the Bank Charter, London, Pelham Richardson, 1832. A note on the author’s own copy which is in the British Museum (8229. aaaa. 21/4) identifies him as John Cazenove (ca. 1788–1879), a member of the Political Economy Club and writer of several pamphlets on economic subjects, who was the son of a Geneva merchant migrated to London. Although the author describes himself in the same terms as the anonymous witness of 1810, they cannot be the same person, as they hold altogether different views on the subject; in any case Cazenove would have had no reasons for concealing his presence in London, and he could hardly have been ‘a very eminent’ merchant at 22 years of age.

[2 ]Sir John Sinclair, in his Observations on the Report of the Bullion Committee, 1810, p. 6, wrote: ‘They have also reported the evidence of an anonymous witness, contrary to the usage of Parliament, unless special reasons can be, and actually are assigned, for the concealment; and they seem to have laid peculiar weight on the doctrines of this nameless individual. Yet this unknown individual may be a foreigner, or a person usually resident abroad, who may not be so anxious, as a British merchant would necessarily be, to deliver opinions favourable to the prosperity of this country.’ On which the Quarterly Review for November 1810 (p.524) observed: ‘Now, for anything that Sir John has learned to the contrary, “this unknown individual may be a foreigner”; and yet the Committee have not, by printing his

[1 ]6 May 1811, Hansard, XIX, 836.

[2 ]7 May 1811, Hansard, XIX, 931.

[3 ]These were, as the description usually implied, London merchants trading to the Continent.

[4 ]See the evidence of J. L. Greffulhe, ‘Minutes of Evidence’, p. 61 and ofW. C. Chalmers, p. 135.

[5 ]See the evidence of T. Hughan, ‘a merchant, trading to the West Indies’, p. 55, and of S. Williams, ‘a Merchant trading to the United States of America’, p. 140.

[6 ]p. 77.

[1 ]pp. 83–4. Many others of his answers are equally significant as to his origin, e.g. (p. 78): ‘Taking Gold...at Hamburgh at what we call its par, which is 96 stivers banco for a ducat....’

[2 ]As Mr.— told the Committee, ‘when the French got possession of the North of Germany [they] passed severe penal decrees against a communication with this Country’ (p. 88).

[3 ]This list, from a document of August 1807, is given in H. Hitzigrath, Die Kompagnie der Merchant Adventurers und die englische Kirchengemeinde in Hamburg 1611–1835, Hamburg, 1904, p. 62.

[4 ]‘Minutes of Evidence’, p. 97.

[5 ]ib. p. 105; see other allusions to these ‘extraordinary causes’, pp. 107 and 109.

[1 ]‘Appendix of Accounts’, p. 99; similar entries, for much smaller payments, in 1807, p. 101. In both cases the dates are no doubt those of the payment of the bills, which may have been (in the case of the 1807 bills, certainly had been) drawn during the previous year.

[ii] of the series Grosse Vermo¨gen).

[1 ]From an address (in German) of John Parish, jun. to the Emperor Francis, published by Ehrenberg, op. cit., pp. 117–18. No date is given, but it was apparently written several years after the events described, probably in1816.

[2 ]J. M. Johnson to C. C. Smith, from Gothenburg, 25 Nov. 1810. (Public Record Office, F.O. 7/92, quoted by C. S. B. Buckland, Metternich and the British Government from 1809 to 1813, London, 1932, pp. 131–2.) George Hammond was the permanent head of the Foreign Office under Canning till 1809.

[3 ]F.O. 7/93, unpublished.

[1 ]This account of Johnson’s mission is derived from Buckland, Metternich and the British Government, pp. 37–9.

[2 ]Buckland, op. cit., pp. 128 and 131.

[3 ]‘Minutes of Evidence’, pp. 101, 107 and 97.

[4 ]Ehrenberg, op. cit., p. 92.

[5 ]Referring to the influence of the quantity of paper on its price: ‘we have seen a strong instance of it last summer, when, from the extraordinary exertions of the Austrian Government....’ (‘Minutes of Evidence’, p. 86.)

[iii],p. 336. Gentz, in October 1816, described Parish as ‘unstreitig einer der ersten mercantilischen Ko¨pfe unserer Zeit’ (Gentz und Wessenberg, Briefe, ed. A. Fournier, 1907, quoted by Buckland, p. 132; see also Ehrenberg,p. 117, n.).

[r]. John Parish von Hamburg, jetzig. Besitzers der Herrschaft Senftenberg in Bo¨hmen’.

[iii],p. 395.

[1]‘permanently multiplied beyond the gold and silver which’ was first written here, and then replaced by ‘so multiplied as to be permanently’, which was also deleted.

[1]‘in your fav’ is del. here.

[1]This sentence is inserted.

[2]This sentence is ins.

[3]‘its real amount’ replaces ‘it’.

[1]‘even if’ replaces ‘unless’.

[2]‘sufficiently’ is del. here.

[3]The Note is del. and no number corresponds to it on Dumont’s MS.

[1]‘depend on the’ is del. here.

[2]Replaces ‘the £10,000 would not represent only the million of goods but 100 times’.

[1]‘No other security’ is del. here.

[2]Ricardo had first opened this Note with: ‘Does not all pecuniary revenue excepting’; then he deleted it and started again: ‘I feel some difficulty in distinguishing what the author means by “Capital Pecuniare”, and as the same sum of money forms successively the pecuniary revenue of many different people,—I cannot agree that it is the pecuniary revenue which constitutes the price of those articles of which the real revenue is composed. Suppose the real revenue of a society valued in money to be 100,000£, and 1000£ to be sufficient to circulate that revenue, it will then appear that the whole society will have the £1000 go thro’ their hands so often as to constitute a revenue of £100,000,—prices then’. This was also del.

[1]‘any’ is del. here.

[2]Ricardo had first written ‘parvienne’, but then altered it to ‘parviene’. In Dumont’s handwriting ‘parvient’ is hardly distinguishable from ‘parviene’.

[3]This paragraph is ins. between Note 20 and the first Note 21: it seems to belong to the latter.

[1]‘or any other’ is ins.

[2]The whole paragraph is del.

[3]The cross-reference is obscure, there being no Note 44 onLivre I, whilst Note 44 on Livre II deals with a different subject. Probably a mistake for ‘No 4’, meaning the second Note 21; see following footnote.

[4]This note, which is misnumbered 21, presumably refers to Bentham’s 4th form of relative revenue, that is to say, to what immediately precedes the passage marked 22. Bentham’s grounds for including the wages of labour, or a part of them, in relative revenue are not given in Dumont’s MS; Dumont in a subsequent passage here omitted says that the explanation is wanting in Bentham’s original MSS and offers as his own conjecture: ‘les gages du travail pourroient être ane´antis— est-ce le cas que l’auteur entend quand on reduit l’ouvrier à l’esclavage?’

[5]‘society’ is del. here.

[6]i.e., Dumont’s note.

[7]The whole Note is del. No number to correspond with it is written on Dumont’s MS.

[1]Wealth of Nations, Bk. i, ch. iv; Cannan’s ed., vol. i,p.30.

[2]Replaces ‘source’.

[3]‘But luxury if by that term we mean’ is del. here.

[1]‘equally good’ is ins.

[1]‘Minutes of Evidence’, 8vo ed., p. 81. On ‘Mr.—’ see below,p. 427 ff.

[1]‘Minutes of Evidence’, 8vo ed., pp. 162–3, 164, 212, etc.

[2]Last six words replace ‘which they can speedily turn into’.

[1]This sentence replaces ‘but as the augmentation of money adds nothing to the real riches of a country, the annuity cannot be subject to any further variation from this cause.’

[1]This sentence is ins.

[2]‘and nothing reproduced’ is ins.

[1]This sentence is ins.

[2]The last five words are ins.

[3]The remainder of the Note replaces ‘but I do not quite accord with the steps by which the author has arrived at it.’

[4]The number 9½ appears on Dumont’s MS, but not on Ricardo’s. What is here assumed to be Note 9½, is written in Ricardo’s MS, upside down and without reference number, at the back of the page containing Notes 23 to 30 below: the assumption seems to be justified by the relevance of the comment to the text, as well as by the sequence implied in the opening of Note 10, ‘Here again’ etc.

[1]‘The augmentation’ is del. in this place.

[2]Replaces ‘never’.

[3]‘that the augmentation of goods is the only legitimate cause for an increase of money’ is written above the latter part of this sentence in the MS, but it is not clear whether it was intended as a correction or as an addition.

[4]Replaces ‘Is not this saying what has been before explained that an increased commerce and capital’.

[5]‘its depreciation’ is del. here.

[1]The last six words are ins.

[2]The remainder of this sentence replaces ‘The calculation here requires 15 pct. on the new capital.’

[3]‘I cannot allow that money can be augmented’ is del. here.

[4]Four earlier attempts at opening this Note were del. in succession: 1, ‘It would be a tax of’; 2, ‘A tax of two’; 3, ‘This tax would be’; 4, ‘Can this be called a tax? It would be a tax to the former possessors of money only a great [‘a great’ replaces ‘but the exact’] amount of which would be gained by other members of the society.’

[5]Left unfinished in MS.

[1]‘the augmentation of’ is ins.

[2]‘The author supposes that we should retain the same’ is del. here.

[1]Although this paragraph appears in the MS as part of Note 21, it was probably intended as a separate Note, commenting on the opening of the next Chapter (‘Accroissement des prix par disette’).

[1]Above, p. 310.

[1]‘I think the answer can not be doubtful.’ is del. here.

[1]‘old’ is ins.

[2]‘of increase’ is ins.

[3]Replaces ‘That money has’. Ricardo obviously intended to delete ‘been’, two words below.

[4]‘necessary to’ is written above ‘the cause of’, which however is not del.

[1]‘it destroys all security’ is del. here.

[2]‘real’ is ins.

[2]‘quantity of the’ is del. here.

[3]‘diminished’ is ins.

[1]‘when’ is del. here.

[2]‘increased’ is ins.

[1]‘metallic’ is ins.

[2]‘an increase of’ is ins.

[3]‘land and’ is ins.

[4]‘The produce of’ is ins.

[5]Replaces ‘can make no difference.’

[6]‘nearly’ is ins.

[1]This sentence, first written as a literal translation of the French text, was subsequently altered as above.

[2]Replaces ‘That inasmuch as’.

[3]Replaces ‘it causes no’.

[4]‘foreign’ is del. here.

[5]Replaces ‘affected’.

[1]Replaces ‘produced any effect’.

[3]First written ‘An increased commerce and revenue requires an additional circulating medium, whilst it preserves the same value, it will therefore bear an increase of paper circulation’, then altered as above. Ricardo omitted however to strike out ‘requires an’ and ‘increase’.

[1]‘therefore’ was ins. and then del. here.

[2]Left blank in MS. The proportion was as 241 to 688, according to the ‘Scale of Discounts’ presented by the Bank to the Bullion Committee with the request that it should not be made public. It was however published in the Morning Chronicle of 15 Oct. 1810; see below, Appendix to Vol. IV.

[3]See The Speech of Randle Jackson, Esq. delivered at the General Court of the Bank of England, held on the 20th of September, 1810, respecting the Report of the Bullion Committee...London, Butterworth, pp. 23–4; cp. above, p. 152.

[4]Observations on the Report of the Bullion Committee. By the Right Honourable Sir John Sinclair, Bart., M.P., London, Cadell and Davies, 1810.

[5]‘opinions’ is written above ‘evidence’, which however is not del.

[6]Sinclair’s words are ‘Sanctioned by the authority of persons of practical detail’ (Observations,p. 28)

[2]‘it can be supposed’ is ins.

[3]‘could be’ is written above ‘were’, which, however, is not del.

[4]Replaces ‘is never’.

[1]‘excessive’ is del. here.

[2] See below, p. 375.

[3]‘because if all such bills were discounted we might have four times the amount of paper that is now actually in circulation’ is del. here.

[7]‘had permanently existed’ replaces ‘were possible’; and, in the next line, ‘might have been’ replaces ‘might be’.

[1]Replaces ‘lower’.

[1]‘As the guineas have been withdrawn and the small notes only substituted’ is del. here.

[1]‘As the guineas have been withdrawn and the small notes only substituted’ is del. here.

[1]‘probable’ is ins.

[2] ‘which circulates commodities’ is ins.

[3]Replaces ‘If the mines of America had never been discovered’.

[4]Replaces ‘she now possesses’.

[1]‘not envy’ is del. here.

[2]‘only’ is del. here.