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• An Essay On the Influence of a Low Price of Corn On the Profits of Stock 1815
• Proposals For an Economical and Secure Currency 1816
• Section I: In the Medium of Circulation—cause of Uniformity Is Cause of Goodness
• Section II: Use of a Standard Commodity—objections to It Considered
• Section III: The Standard, Its Imperfections—variations Below Without Allowance of the Countervailing Variations Above the Standard, Their Effects— Correspondence With the Standard the Rule For Paper Money
• Section IV: An Expedient to Bring the English Currency As Near As Possible to Perfection
• Section V: A Practice Which Creates a Great Mass of Mercantile Inconvenience— Remedy Proposed
• Section VI: The Public Services of the Bank Excessively Overpaid—remedy Proposed
• Section VII: Bank Profits and Savings—misapplication—proposed Remedy
• Appendix
• Funding System an Article In the Supplement to the Fourth, Fifth and Sixth Editions of the Encyclopaedia Britannica 1820
• On Protection to Agriculture 1822
• Introduction
• Section I: On Remunerating Price
• Section II: On the Influence of a Rise of Wages On the Price of Corn
• Section III: On the Effects of Taxes Imposed On a Particular Commodity
• Section IV: On the Effect of Abundant Crops On the Price of Corn
• Section V: On the Effect Produced On the Price of Corn By Mr. Peel’s Bill For Restoring the Ancient Standard
• Section VI: On the Effects of a Low Value of Corn On the Rate of Profits
• Section VII: Under a System of Protecting Duties Established With a View to Give the Monopoly of the Home Market to the Home Grower of Corn, Prices Cannot Be Otherwise Than Fluctuating
• Section VIII: On the Project of Advancing Money On Loan, to Speculators In Corn, At a Low Interest
• Section IX: Can the Present State of Agricultural Distress Be Attributed to Taxation?
• Conclusion
• Appendix (a.): At a Court of Directors At the Bank. On Thursday 20th May 1819.
• Plan For the Establishment of a National Bank
• Notes From Ricardo’s Manuscripts 1818–1823
• Fragments On Torrens Concerning Value 1818
• Note On Fragments On Torrens
• (a 1): [ricardo On Torrens]
• (a 2): [torrens On Ricardo]
• (b): [an Entry In Ricardo’s Commonplace Book]
• A Note On Prices and Taxation 1821
• On Blake’s ‘observations On the Effects Produced By the Expenditure of Government’ 1823
• Note On the Papers On Blake
• [notes On Blake’s ‘observations On the Effects Produced By the Expenditure of Government’ 1823 With Blake’s Replies]
• [an Unfinished Review of Blake’s ‘observations On … the Expenditure of Government’ 1823]
• Absolute Value and Exchangeable Value 1823
• Appendix
• The ‘ingenious Calculator’
• Bullion Report.

section vi

The public services of the Bank excessively overpaid—Remedy proposed

Mr.Grenfell has lately called the attention of parliament to a subject of importance to the financial interests of the community.1 At a time when taxes bear so heavy on the people, brought upon them by the unexampled difficulties and expenses of the war, a resource so obvious as that which he has pointed out will surely not be neglected.

It appears by the documents which Mr. Grenfell’s motions have produced,1 that the Bank have, for many years, on an average, had no less a sum of the public money in their hands, on which they have obtained an interest of five per cent., than eleven millions; and the only compensation which the public have derived for the advantage which the Bank have so long enjoyed is a loan of three millions from 1806 to 1814, a period of eight years, at an interest of three per cent.—and a further loan of three millions, without interest, which the Bank, in 1808, agreed to afford the public till six months after the definitive treaty of peace, and which by an act of last session2 was continued without interest till April 1816. From 1806 to 1816, a period of ten years, the Bank have gained five per cent. per annum on 11,000,000l., which will amount to £5,500,000

3,820,000l. will have been gained by the Bank in ten years, or 382,000l. per ann. for acting as bankers to the public, when, perhaps, the whole expense attending this department of their business does not exceed 10,000l. per ann.

In 1807, when these advantages were first noticed by a committee of the house of commons, it was contended, by many persons, in favour of the Bank, and by Mr. Thornton, one of the directors who had been governor, that the gains of the Bank were in proportion to the amount of their notes in circulation, and that no advantage was derived from the public deposits, further than as they enabled the Bank to maintain a larger amount of notes in circulation. This fallacy was completely exposed by the committee.1

If Mr. Thornton’s argument were correct, no advantage whatever would have resulted to the Bank from the deposits of the public money—for those deposits do not enable them to maintain a larger amount of notes in circulation.

Suppose that before the Bank had any of the public deposits, the amount of their notes in circulation were twenty-five millions, and that they derived a profit by such circulation. Suppose now that government received ten millions for taxes in bank notes, and deposited them permanently with the Bank. The circulation would be immediately reduced to fifteen millions, but the profits of the Bank would be precisely the same as before; though fifteen millions only were then in circulation, the Bank would obtain a profit on twenty-five millions. If now they again raise the circulation to twenty-five millions, by employing the ten millions in discounting bills, purchasing exchequer bills, or advancing the payments on the loan for the year, for the holders of scrip receipts, will they not have added the interest of ten millions to their usual profits, although they should at no time have raised their circulation above the original sum of twenty-five millions?

That the increase in the amount of public deposits should enable the Bank to add to the amount of their notes in circulation is neither supported by theory nor experience. If we attend to the progress of these deposits, we shall observe that at no time did they increase so much as from 1800 to 1806, during which time there was no increase in the circulation of notes of five pounds and upwards; but from 1807 to 1815, when there was no increase whatever in the amount of public deposits, the amount of notes of five pounds and upwards had increased five millions.

Nothing can be more satisfactory on the subject of the profits of the Bank, from the public deposits, than the report of the committee on public expenditure, in 1807. It is as follows:

“In the evidence upon this part of the subject, it is admitted that the notes of the Bank are productive of profit, but it appears to be assumed that the government balances are only so in proportion as they tend to augment the amount of notes; whereas your committee are fully persuaded that both balances and notes are and must necessarily be productive.

“The funds of the Bank, which are the sources of profit, and which constitute the measure of the sum which they have to lend (subject only to a deduction on account of cash and bullion), may be classed under three heads.

“First. The sum received from their proprietors as capital, together with the savings which have been added to it.

“Secondly. The sum received from persons keeping cash at the Bank. This sum consists of the balances of the deposit accounts, both of government and of individuals. In 1797, this fund, including all the balances of individuals, was only 5,130,140l. The present government balances alone have been stated already at between eleven and twelve millions, including bank notes deposited in the Exchequer* .

“Thirdly. The sum received in return for notes put into circulation. A correspondent value for every note must originally have been given, and the value thus given for notes constitutes one part of the general fund to be lent at interest. A note-holder, indeed, does not differ essentially from a person to whom a balance is due. Both are creditors of the Bank; the one holding a note, which is the evidence of the debt due to him, the other having the evidence of an entry in the ledger of the Bank. The sum at all times running at interest will be in exact proportion to the amount of these three funds combined, deduction being made for the value of cash and bullion.”1

Every word of this statement appears to me unanswerable, and the principle laid down by the committee would afford us an infallible clue to ascertain the net profits of the Bank, if we knew the amount of their savings,—their cash and bullion, and their annual expenses, as well as the other particulars, are known to us.

It will be seen by the above extract, that in 1807 the amount of the public deposits was between eleven and twelve millions, whereas in 1797 the amount of public and private deposits were together only equal to 5,130,140l. In consequence of this report, Mr. Perceval applied to the Bank, on the part of the public, for a participation in their additional profits from this source, either in the way of an annual payment or as a loan of money without interest; and, after some negociation, a loan of three millions was obtained without interest, payable six months after a definitive treaty of peace.1

The same report also notices the exorbitant allowance which was made to the Bank for the management of the national debt. The public paid the Bank at that time at the rate of 450l. per million, for management, and it was stated by the committee that the additional allowance for management in the ten years, ending in 1807, in consequence of the increase of the debt, was more than 155,000l. whilst the “whole increase of the officers who actually transact the business, in the last eleven years, is only one hundred and thirty-seven, whose annual expence may be from 18,449l. to 23,290l.; the addition to the other permanent charges being probably about one half or two thirds of that sum.”2

After this report a new agreement was made with the Bank for the management of the public debt.

450l. per million was to be paid if the unredeemed capital exceeded three hundred millions, but fell below four hundred millions.

340l. per million, if the capital exceeded four hundred millions, but fell below six hundred millions.3

300l. per million on such part of the public debt as exceeded six hundred millions.

Besides these allowances the Bank are paid 800l. per million for receiving contributions on loans; 1000l. on each contract for lotteries, and 1250l. per million, or one eighth per cent. for receiving contributions on the profits arising from property, professions, and trades. This agreement has been in force ever since.

As the period is now approaching when the affairs of the Bank will undergo the consideration of parliament, and when the agreement which regards the public deposits will expire, by the payment of the three millions borrowed of the Bank without interest, in 1808; no time can be more proper than the present to point out the undue advantages which were given to the Bank in the terms settled between them and Mr. Perceval in 1808. This I apprehend was the chief object of Mr. Grenfell; for it is not alone to the additional advantages which the Bank have obtained since the agreement in 1808 that he wishes to call the attention of parliament; but also to that agreement itself, under which the public are now paying, and have long paid, in one shape or another, enormous sums for very inadequate services.

Mr. Grenfell probably thinks, and, if he does, I most heartily concur with him, that a profit of 382,000l. per annum, which is the sum at which the advantages of the public deposits to the Bank, for a period of ten years, may be calculated, as will be seen page [77], very far exceeds the just compensation which the public ought to pay to the Bank, for doing the mere business of bankers; particularly when, in addition to this sum, 300,000l. per annum is now also paid for the management of the national debt, loans, &c.; when moreover the Bank have been enjoying, ever since the renewal of their charter, immense additional profits, from the substitution of paper money in lieu of a currency consisting partly of metallic and partly of paper money, which additional profits were not in contemplation, either of parliament which granted, or of the Bank which obtained that charter, when the bargain was made in 1800; and of which they might be in a great measure deprived by the repeal of the bill which restricts them from paying their notes in specie. Under these circumstances it must, I think, be allowed that in 1808 Mr. Perceval by no means obtained for the public what they had a right to expect; and it is to be hoped that, with the known sentiments of the Chancellor of the Exchequer,1 as to the right of the public to participate in the additional advantages of the Bank, arising from public deposits, terms more consonant with the public interest will now be insisted on.

It is true that the above sums, though paid by the public, are not the net profits of the Bank; from them a deduction must be made for the expences of that part of the Bank establishment which is exclusively appropriated to the public business; but those expences do not probably exceed 150,000l. per annum.

The committee on public expenditure stated in their report to the House of Commons,2 in 1807, “that the number of clerks employed by the Bank exclusively or principally in the public business was,

whose salaries, it is presumed, may be calculated at an average of between 120l. and 170l. for each clerk: taking them at 135l. which exceeds the average of those employed in the South Sea

either of which two last sums would be sufficient to provide a superannuation fund.

“The very moderate salaries, the report continues, received by the governor, deputy governor, and directors, amount to

Allowing, then, the very highest computation of the committee, the expence of managing the public business in 1807, including the whole of the salaries of the directors, incidental expences, additional buildings and repairs, together with law expences and loss by frauds and forgeries, amounted to 119,500l.

The committee also stated that the increased expences of the Bank for managing the public business, after a period of eleven years, from 1796 to 1807, were about 35,000l. per annum, on an increased debt of two hundred and seventy eight millions, being at the rate of 126l. per million. From 1807 to the present time the unredeemed debt managed by the Bank has increased from about five hundred and fifty millions to about eight hundred and thirty millions, or about two hundred and eighty millions—little more than from 1796 to 1807, and therefore at the same rate of 126l. per million, would be attended with a similar expence of 35,000l.; but, “as the rate of expence diminishes as the scale of business enlarges,”1 I shall estimate it at 30,500l. which added to 119,500l., the expences of 1807, will make the whole expence of managing the public business amount to 150,000l. The auditors of public accounts in 1786 estimated that 187l. 10s. per million was sufficient to pay the expences of managing a debt of two hundred and twenty-four millions.1 The estimate which I have just made is about 180l. per million, on a debt of eight hundred and thirty millions, which will appear an ample allowance when it is considered in what different proportions the debt itself increases, compared with the work which it occasions.

Supposing, then, the expences to be about 150,000l. the net profits obtained by the Bank by all its transactions with the public this year will be as follows:

Of this vast sum, 372,000l. probably arises from the deposits alone, an expence which might almost wholly be saved to the nation, if government were to take the management of that concern into their own hands, by having a common treasury, on which each department should draw in the same manner as they now do on the Bank of England, investing the eleven millions, which appears to be the average deposits, in Exchequer bills, a part of which might be sold in the market, if any unforeseen circumstances should reduce the deposits below that sum.

The resolutions* proposed by Mr. Grenfell, and on which parliament will decide the next session, after briefly recapitulating the facts contained in the documents which his motions have produced, conclude thus: “That this House will take into early consideration the advantages derived by the Bank, as well from the management of the national debt, as from the amount of balances of public money remaining in their hands, with the view to the adoption of such an arrangement, when the engagements now subsisting shall have expired, as may be consistent with what is due to the interest of the public, and the rights, credit, and stability of the Bank of England.”

Mr. Mellish, the governor of the Bank, has also proposed resolutions to be submitted to parliament next session. These resolutions* admit all the facts stated by Mr. Grenfell’s; they mention also one or two trifling services which the Bank perform for the public, one without charge,† and another at a less charge than is incurred by employing the ordinary collector of taxes. But the 8th and 9th resolutions advance an extraordinary pretension,—they appear to question whether on the expiration of the loan of 3,000,000l. in 1816, government will be at liberty before 1833, the time when the charter will expire, to demand any compensation whatever from the Bank for the advantages they derive from the public deposits, or to make any new arrangement respecting the charge for management of the national debt. These resolutions are as follows:

8th. “That by the 39 and 40 Geo. 3. c. 28. s. 13, it is enacted, “That during the continuance of the charter, the Bank shall enjoy all privileges, profits, emoluments, benefits, and advantages whatsoever, which they now possess and enjoy by virtue of any employment by or on behalf of the public.

“That previously to such renewal of their charter, the Bank was employed as the public banker, in keeping the cash of all the principal departments in the receipt of the public revenue, and in issuing and conducting the public expenditure, &c.”

9th. “That whenever the engagements now subsisting between the public and the Bank shall expire, it may be proper to consider the advantages derived by the Bank from its transactions with the public, with a view to the adoption of such arrangements as may be consistent with those principles of equity and good faith, which ought to prevail in all transactions between the public and the Bank of England.”*

That the Bank should now for the first time intimate that their charter precludes the public from making any demand on the Bank for a participation in the advantages arising from the public deposits, after all that has passed since 1800 on that subject, does indeed appear surprising.

The charter of the Bank was renewed in 1800 for twenty-one years, from its expiration in 1812; consequently it will not now terminate till 1833. But since 1800, so far from the Bank asserting any such claim of right to the whole advantages of the public deposits, they in 1806 lent government 3,000,000l. till 1814, at 3 per cent. interest, and in 1808 they lent 3,000,000l. more till the termination of the war, without interest, and in the last session of parliament the loan of 3,000,000l. was continued without interest till April 1816. These loans were expressly granted, in consideration of the increase in the amount of the public deposits.

The committee on public expenditure, in their report (1807), to which I have already referred, speaking of the loan of 3,000,000l. to the public in 1806, at three per cent. interest, observe, “But the transaction is most material in another view, as it evinces that the agreement made in 1800 was not considered either by those who acted on the part of the public, or by the Bank directors themselves, as a bar against further participation, whenever the increase of their profits derived from the public, and the circumstances of public affairs, might, upon similar principles, make such a claim reasonable and expedient.”1 And what is Mr. Perceval’s language at the same period, when in consequence of this report he applied for and obtained a loan of 3,000,000l. till the end of the war? In his letter to the governor and deputy governor of the Bank, dated the 11th of January 1808, he says, “I think it necessary to observe, that the proposal to confine the duration of the advance, by way of loan, or of the annual payment into the Exchequer, to the period of the present war, and twelve months after the termination of it, is by no means to be understood as an admission on my part, that at the expiration of such period, the public will no longer be entitled to look to any advantage from the continuance of such deposits; but simply as a provision, by which the government and the Bank may be respectively enabled, under the change in the state of affairs which will then have taken place, probably affecting the amount of public balances in the hands of the latter, to consider of a new arrangement.”2 On the 19th of January, Mr. Perceval’s proposals were submitted to the Court of Directors in a more official form,—they conclude thus: “And it is understood that during the continuance of this advance by the Bank, no alteration is to be proposed in the general course of business, between the Bank and the Exchequer, nor any regulation introduced by which the accounts now by law directed to be kept at the Bank shall be withdrawn from thence.”1 These proposals were recommended for acceptance by the Court of Directors to the Court of Proprietors, and were, without comment, agreed to on the 21st of January.

Mr. Vansittart, in his application to the Bank in November 1814, relative to continuing the loan of 3,000,000l., which would have become due on the 17th of December following, till April 1816, uses these words: “But I beg to be distinctly understood as not departing from the reservation made by the late Mr. Perceval, in his letter to the governor and deputy governor of the Bank, of the 11th January, 1808, by which he guarded against the possibility of any misconstruction which could preclude the public, after the expiration of the period of the loan then agreed upon, from asserting its title to future advantage from the continuance or increase of such deposits; and as adhering generally to the principles maintained by Mr. Perceval, in the discussion which then took place.”2

No comment whatever appears to have been made by the Bank on these observations: a general Court of Proprietors was called, and the loan of three millions was continued till April, 1816.

It surely will not come with a very good grace now from the Bank, to insist that the agreement of 1800 precludes the public from demanding any compensation for the advantages which the Bank have derived from the increase of the public deposits since that period, when, on so many occasions, the right of participation has been so expressly claimed on the part of government, and acceded to by the Court of Directors.

In addition to these strong facts, by a reference to the basis on which the agreement for the renewal of the charter was founded, as detailed by Mr. Thornton in his evidence before the committee of public expenditure in 1807* , it will still further appear, that the Bank have no claim whatever to shelter themselves under their charter, in refusing to let the public participate in the profits which have accrued from the augmentation of the public deposits.

It must be recollected that Mr. Thornton was, in 1800, the governor of the Bank; that he was the negociator, on the part of the Bank, with Mr. Pitt, for the renewal of the charter; and that, in fact, the idea of renewing the charter, so long before its expiration, originated with him. Mr. Thornton told the committee, that the only sums of public money, on which the Bank derived profit, and which were referred to by him and Mr. Pitt, with a view to settle the compensation which the public should receive for prolonging the exclusive privileges of the Bank, were those lodged at the Bank for the payment of the growing dividends, and for the quarterly issues to the commissioners for the redemption of the national debt.

Mr. Thornton expressly states, that all other public accounts were of trifling amount, and “the probable augmentation of the balances of public money from the various departments of government was not taken into the account;” “that such augmentation was neither adverted to, nor provided for.”

If, then, it is acknowledged by the very negociator on the part of the Bank that the probable augmentation of the public balances formed no part of the consideration in settling the pecuniary remuneration which was given to the public for continuing to the Bank their exclusive privileges, how can it now, with any justice, be contended by the Bank, that the profits derived from those augmented balances, which were “neither adverted to, nor provided for,” belong of right exclusively to the Bank, and that the public have no claim either to participate in them, or to withdraw the balances to any use to which they may think proper to apply them.

It is to be observed, that Mr. Thornton, in his evidence before alluded to, represented all the other public accounts, excepting the two before mentioned, as of trifling amount; but, by accounts which were last session presented to parliament, it appears that in 1800, the year to which Mr. Thornton’s evidence refers, when the charter was renewed, the public balances of all descriptions deposited with the Bank amounted to 6,200,000l.,1 exceeding the aggregate amount stated by Mr. Thornton, by three millions, which he would, if he had been aware of this fact, hardly have called “a trifling amount.”

If, then, the fact of this large additional deposit did not come under the consideration of Mr. Thornton and Mr. Pitt, at the time of renewing the charter; if no part of the remuneration which the public then received was founded on this fact; the large amount of public deposits in 1800, so far from entitling the Bank to retain the whole profits arising from the still larger deposits at the present period, binds them in justice to be particularly liberal in any new engagement they may now make with the public, as affording a remuneration for a profit so long enjoyed, which, it is to be presumed, they would not have been allowed to enjoy, if the facts had been clearly known and considered, at the time of settling the terms on which the charter was renewed.

But whether known or not known, must have been of little consequence in Mr. Thornton’s estimation; whose opinion, that the profits of the Bank were not increased by the augmentation of the public balances, otherwise than as they contributed to increase the amount of bank notes in circulation, is so emphatically given.

Is it not lamentable to view a great and opulent body like the Bank of England, exhibiting a wish to augment their hoards by undue gains wrested from the hands of an overburthened people?1 Ought it not rather to have been expected that gratitude for their charter, and the unlooked for advantages with which it has been attended; for the bonuses and increased dividends which they have already shared, and for the great undivided treasure which it has further enabled them to accumulate, would have induced the Bank voluntarily to relinquish to the state, the whole benefit which is derived from the employment of eleven millions of the public money, instead of manifesting a wish to deprive them of the small portion of it which they have for a few years enjoyed?

When the rate of charge for the management of the national debt was under discussion, in 1807, Mr. Thornton said, “that in a matter between the public and the Bank, he was sure nothing but a fair compensation for trouble, risk, and actual losses, and the great responsibility that attaches to the office, would be required.”1

How comes it that the language of the directors of the present day is so much changed? Instead of expecting only a fair compensation for trouble, risk, and actual losses, they endeavour to deprive the public even of the inadequate compensation which they have hitherto received; and appeal, now for the first time, to their charter, for their right to hold the public money, and to enjoy all the profit which can be derived from its use, without allowing the least remuneration to the public.

If the charter were as binding as the Bank contend for, a great public company, possessing so advantageous a monopoly, and so intimately connected with the state, might be expected to act on a more liberal policy towards its generous benefactors.

Till the last session of parliament, the Bank were also particularly favoured in the composition which they paid for stamp duties. In 1791, they paid a composition of 12,000l. per annum, in lieu of all stamps either on bills or notes. In 1799, on an increase of the stamp duty, this composition was advanced to 20,000l.; and an addition of 4,000l., raising the whole to 24,000l., was made for the duty on notes under 5l., which the Bank had then begun to circulate. In 1804, an addition of not less than 50 per cent. was made to the stamp duty imposed by the act of 1799, on notes under 5l., and a considerable increase on the notes of a higher value; and although the Bank circulation of notes under 5l. had increased from one and a half to four and a half millions, and the amount of notes of a higher description had also increased, yet the whole composition of the Bank was only raised from 24,000l. to 32,000l. In 1808, there was a further increase of 33 per cent. to the stamp duty, at which time the composition was raised from 32,000l. to 42,000l. In both these instances the increase was not in proportion even to the increase of duty; and no allowance whatever was made for the increase in the amount of the Bank circulation.

In the last session of parliament, on a further increase of the stamp duty, the principle was for the first time established, that the Bank should pay a composition, in some proportion to the amount of their circulation. It is now fixed as follows. Upon the average circulation of the three preceding years, the Bank is to pay at the rate of 3500l. per million, without reference to the classes or value of the notes of which the aggregate circulation may consist.

The average of the Bank circulation for three years, ending 5th April, 1815, was 25,102,600l.; and upon this average they will pay this year about 87,500l.

Next year the average will be taken upon the three years, ending in April 1816; and if it differs from the last, the duty will vary accordingly.1

If the same course had been followed now, as in 1804 and 1808, the Bank would have had to pay, even with the additional duty, only 52,500l., so that 35,000l. per annum has been saved to the public, by parliament having at last recognized the principle which should have been adopted in 1799; and by the neglect of which, the public have probably been losers and the Bank consequently gainers, of a sum little less than 500,000l.

[1 ]See Appendix VI, below, pp. 136–7.

[1 ]These documents, printed by order of the House of Commons in May and June 1815, are in Parliamentary Papers, 1814–15, vol. x.

[2 ]55 Geo. 3. c. 16.

[1 ]See ‘Second Report from the Committee on the Public Expenditure...’, 1807, pp. 104–5 and 77–9.

[* ]By some of my readers the words “including bank notes deposited in the Exchequer” may not be understood. They are bank notes never put into circulation; neither are they included in any return made by the Bank. They are called at the Exchequer special notes, and1 are mere vouchers, (not having even the form of bank notes), of the payment to the Bank from the Exchequer of such monies as are daily received at the latter office. They are the record, therefore, of a part of the public deposits lodged with the Bank.

* In 1797 the Bank stated their finances to be as follows:2

On the other side of the account they shewed in what securities these funds were invested, and, with the exception of cash and bullion, and a small sum for stamps,3 they were all yielding interest and profit to the Bank.

[1 ]‘Second Report from the Committee on the Public Expenditure...’, 1807, p. 77. The italics are Ricardo’s.

[1 ]See ‘Papers presented to the House of Commons, relating to the Bank...’, 3 Feb. 1808, pp. 4–13; in Parliamentary Papers, 1808, vol. x.

[2 ]‘Second Report from the Committee on the Public Expenditure...’, 1807, p. 71.

[3 ]See ‘Papers presented to the House of Commons, relating to the Bank...’, 1808, p. 15.

[1 ]See below, p. 90.

[2 ]‘Second Report...’, p. 71.

[1 ]The Report actually says: ‘in proportion as the scale of business becomes enlarged, the rate of commission may be reduced’, p. 70.

[1 ]See above, p. 53.

[* ]See Appendix.

[* ]See Appendix.

[† ]The one without charge is the calculating the deduction from each dividend warrant for property tax.

The other is receiving contributions from those who pay their property tax into the Bank, for which the Bank receives 1250l. per million, or one-eighth per cent.

If the collector had gone from house to house to receive this money, he would have had an allowance of five pence per pound, which would have cost the public 58,007l. instead of 3480l. paid to the Bank.

Perhaps no part of the business of the Bank is more easily transacted than this which they have pointed out. Instead of being under-paid, it appears to me to be paid most liberally.

The saving to the public is really effected by the money being brought to one focus, instead of being collected from various quarters. The Bank appear to consider the rule, by which they are to measure the moderation of their charges, to be the saving which they effect to their employer, rather than the just compensation for their own trouble and expence. What would they think of an engineer, if in his charge for the construction of a steam engine he should be guided by the value of the labour which the engine was calculated to save, and not by the value of the labour and materials necessary to its construction?

[* ]Since the first edition of this work was published, the first Lord of the Treasury, and the Chancellor of the Exchequer, have proposed to the Bank that they shall continue the advance of three millions, which would have been due in April next, for two years without interest:—and further that the Bank shall advance the sum of six millions at four per cent. for two years certain, and shall continue the same for three years longer from such period, subject to repayment upon six months notice to be given, at any time between the 10th October in any year, and the 5th of April following, either by the Lords of the Treasury to the Bank, or by the Bank to their Lordships. This proposal was agreed to by a General Court of Proprietors of Bank Stock, held, on the 8th of February, for the purpose of considering the same.1

At this general court, on asking for some explanation respecting the deposit of the public money at the end of the two years, I noticed with approbation the departure of the Bank from the claim which they had set up in the above resolutions, in which they appeared to me to assert the right of the Bank to the custody of the public money without paying any remuneration whatever; to which the Governor of the Bank, Mr. Mellish, replied, that I had totally misconceived the meaning of those resolutions, and he was sure if I read them again with attention, I should be convinced that no such construction could be put on them. I am glad the Bank disclaim having had the intention of depriving the public of the advantage which they have enjoyed since the report of the Committee on Public Expenditure; though I regret, that they have expressed themselves so obscurely, as to have given me and many others a different impression. The resolutions still appear to me to assert that the privilege of being public banker was for a valuable consideration secured to the Bank during the continuance of their charter, and that at the expiration of that engagement, and not before, it might be proper to consider of a new arrangement.

[1 ]p. 83. The italics are Ricardo’s.

[2 ]‘Papers presented to the House of Commons, relating to the Bank...’, 3 Feb. 1808, p. 12.

[1 ]‘Papers presented to the House of Commons, relating to the Bank...’, 3 Feb. 1808, p. 15. The italics are Ricardo’s.

[2 ]‘Correspondence with the Bank’, ordered to be printed 10 Feb. 1815, p. i; in Parliamentary Papers, 1814–15, vol. x.

[* ]Report, page 104.

[1 ]The figure is calculated from the accounts referred to above, p. 91, notes 1 and 2 and from ‘An Account of the Total Amount of the Balances arising from Unclaimed Dividends...in the hands of the Bank from the 1st of February 1799 to the 1st of January 1800...’, 26 June 1815; in Parliamentary Papers, 1814–15, vol. x.

[1 ]The ‘moral’ argument against the Bank, and the actual wording of this sentence, were suggested by Mill; see below, VII, 5.

[1 ]‘Second Report from the Committee on the Public Expenditure...’, 1807, p. 106.

[1 ]The last three paragraphs are adapted by Ricardo from Grenfell’s letter of 8 Sept. 1815, below, VI, 266–7.

[* ]By some of my readers the words “including bank notes deposited in the Exchequer” may not be understood. They are bank notes never put into circulation; neither are they included in any return made by the Bank. They are called at the Exchequer special notes, and1 are mere vouchers, (not having even the form of bank notes), of the payment to the Bank from the Exchequer of such monies as are daily received at the latter office. They are the record, therefore, of a part of the public deposits lodged with the Bank.

* In 1797 the Bank stated their finances to be as follows:2

On the other side of the account they shewed in what securities these funds were invested, and, with the exception of cash and bullion, and a small sum for stamps,3 they were all yielding interest and profit to the Bank.

[* ]Since the first edition of this work was published, the first Lord of the Treasury, and the Chancellor of the Exchequer, have proposed to the Bank that they shall continue the advance of three millions, which would have been due in April next, for two years without interest:—and further that the Bank shall advance the sum of six millions at four per cent. for two years certain, and shall continue the same for three years longer from such period, subject to repayment upon six months notice to be given, at any time between the 10th October in any year, and the 5th of April following, either by the Lords of the Treasury to the Bank, or by the Bank to their Lordships. This proposal was agreed to by a General Court of Proprietors of Bank Stock, held, on the 8th of February, for the purpose of considering the same.1

At this general court, on asking for some explanation respecting the deposit of the public money at the end of the two years, I noticed with approbation the departure of the Bank from the claim which they had set up in the above resolutions, in which they appeared to me to assert the right of the Bank to the custody of the public money without paying any remuneration whatever; to which the Governor of the Bank, Mr. Mellish, replied, that I had totally misconceived the meaning of those resolutions, and he was sure if I read them again with attention, I should be convinced that no such construction could be put on them. I am glad the Bank disclaim having had the intention of depriving the public of the advantage which they have enjoyed since the report of the Committee on Public Expenditure; though I regret, that they have expressed themselves so obscurely, as to have given me and many others a different impression. The resolutions still appear to me to assert that the privilege of being public banker was for a valuable consideration secured to the Bank during the continuance of their charter, and that at the expiration of that engagement, and not before, it might be proper to consider of a new arrangement.

[1]Ed. 1 reads ‘, but’ in place of ‘. They are called at the Exchequer special notes, and’.

[2]See ‘Report of the Lords’ Committee of Secrecy. Order of Council 26th February 1797; Relating to the Bank’, Appendix ‘Papers and Accounts’, p. 75; reprinted in Parliamentary Papers, 1810, vol. iii.

[3]Ed. 1 does not contain ‘and a small sum for stamps,’.

[1]On the General Court held on 8 Feb. 1816, two days after publication of ed. 1, see below, V, 465.