The new Parliament assembled on 21 April 1820; the King’s speech was delivered on 27 April.
COMMERCIAL RESTRICTIONS—PETITION OF THE MERCHANTS OF LONDON
8 May 1820
Mr. Baring presented a petition from the merchants of London, the object of which, he said, ‘was a renewal, under certain limitations, of the freedom of trade by the abolition of all injurious restrictions.’ It was not his intention to recommend any immediate disturbance of the corn laws. But some alterations were possible at once, including the removal of the duty on the importation of wool, of the restrictions on the importation of timber, and of all prohibitions; the throwing open of the trade in the Indian seas and the repeal of the Navigation laws. Mr. Robinson (President of the Board of Trade) said, ‘that the restrictive system of commerce in this country was founded in error, and calculated to defeat the object for which it was adopted’; yet it was ‘impossible all at once to alter our commercial system’. Lord Milton concurred in all the principles of the petition. The restrictive system was one of the causes of the distress; another cause was the change lately effected in the currency. This change was necessary, but hon. members had not fully anticipated the embarrassments it would occasion. ‘He believed even his hon. friend near him (Mr. Ricardo) had formed too low an estimate of the pressure which a change in our currency would create.’
Mr. Ricardo begged the noble lord to recollect, that at the time when he spoke on the bullion question last session the price of gold was at 4l. 3s. per oz. and that now it was at 3l. 17s. 10½d.; there could not, therefore, be such a pressure arising from this measure as the noble lord had described. At the time when that discussion took place, he certainly would rather have been inclined to have altered the standard than to have recurred to the old standard. But while the committee was sitting, a reduction took place in the price of gold, which fell to 4l. 2s. and it then became a question whether we should sacrifice a great principle in establishing a new standard, or incur a small degree of embarrassment and difficulty in recurring to the old. With regard to the petition before the House, he had heard it with great pleasure; and he was particularly pleased with the liberal sentiments delivered by the right hon. gentleman opposite. It was to him a great source of satisfaction that sound as well as liberal principles were put forward by so important a body as the merchants of London; the only thing that astonished him was, that it was only now that these principles were put forward—that they should have taken so much time in their progress, since they were first promulgated by Adam Smith. However desirable the system now suggested, it could not be denied but that some difficulties lay in the way of its completion. The difficulties were of two kinds; the first difficulty resolved itself into a question of revenue. To increase the sources of revenue was doubtless the object of every wise government; and where taxes of a particular kind pressed heavily upon the people, it did not appear to him a very difficult thing to substitute other taxes. Another difficulty, and a greater, was, respecting the vested interests. Many persons vested their capital on the faith of the continuation of the restrictive system, and therefore, however injurious that system might be, nothing could be more unjust than, by the immediate abolition of that system, to occasion the absolute ruin of those who vested large capital on the faith of laws so long established as the restrictive laws. But from this no argument could be surely drawn to continue the system in future times. No argument appeared to him more mischievous— more calculated to promote commotion and rebellion, than this—that if they once did wrong they should never do right, but that they should go on in error and make every mischievous system perpetual. He thought the House ought now to do what was suggested by the bullion committee. There were difficulties of a very formidable kind connected with the system embraced by the committee, at least with its immediate execution. And what was done on that occasion? Why, that which ought to be done on the present—to spread the return to cash payments over a great space of time. So now might they return, gradually return, to a better system of commercial regulation, allowing full time to those who had their property invested, to turn it into other channels. After they had done so, they might say to the capitalists, “The present system will continue only so long as you can accommodate yourselves without any sacrifice of your interests, to the new one which we propose.” Some restrictions might thus be removed immediately, without any inconvenience; others might be gradually relaxed, and others might be left till our situation had so greatly improved as to render their removal no inconvenience. He was surprised that the right hon. gentleman who had expressed such liberal principles of political economy, and had so freely declared himself against the policy of our commercial restrictions, had yet made a reservation in favour of the corn laws. They were necessary, he said, to protect the agricultural interests; and he (Mr Ricardo) would admit the validity of the argument, provided it could be made to appear that the agriculturists suffered more burthens than other classes of the community. But what were their peculiar burthens? They did not suffer more from the malt-tax, or from the leather tax, or from any other tax with which he was acquainted, than any other class of men. These taxes were common to all, and all felt their pressure alike. But the poor-rates, it was said, operated on them as a peculiar burthen. Well; if the poor-rates were really more oppressive to them than to other classes, and tended to raise the price of grain, he would recommend a countervailing duty on the importation of foreign corn, to the amount of the operation of that cause. He allowed that the poor-rates actually raised the price of corn, because they fell upon the land, and operated as a burthen solely upon agriculturists. But if, while this burthen was felt by them, other classes of the community felt equal burthens, they were put to no disadvantage, and ought to receive no protection. He was fully prepared to admit, that the necessity for supporting the poor constituted the only or the best apology for the corn-laws. Tithes likewise were another burthen to the landed interest, and tended, he would allow, to a certain extent, to raise the price of grain, and for these he would have no objection to allow a countervailing duty. There was this difference between poor-rates and tithes—that while we must support the poor, whatever was the produce, the church could only claim a tenth of what was raised; for, whatever was the deficiency of produce, the clergy must conform to their proportion, and find it sufficient for their support.
Mr. Baring said, ‘that there was one point of importance on which he had the misfortune totally to differ with his hon. friend (Mr. Ricardo); on that point, as on every other, he would differ with him with reluctance and with diffidence.’ Mr. Baring conceived that on an average during the war as compared with the present time the difference in the currency was at least 25 per cent. ‘All the difficulty of the country was in its having a large debt;’ creditors had to be paid a higher value than had been received from them. ‘To add facilities to the circulation he should probably propose, if events did not alter his opinion, in the first place to make perpetual the plan of his hon. friend for payment in metallic bars instead of coin, for which the country was infinitely indebted to his hon. friend, and in the next place to give the Bank the option of paying, either in gold or in silver, not in depreciated or debased coin, but in weight.’
Mr. Ricardo, in explanation, stated that he had never imagined that the currency had never been depreciated more than 4 per cent. He had merely contended, that at the time when the subject was taken up by parliament in the last year, there was only that depreciation; which was too small to warrant an alteration of the ancient standard. He was well aware that during some of the latter years of the war, the depreciation had been as great as 25 per cent.
The petition was ordered to lie on the table. A similar petition being presented from the chamber of commerce of Edinburgh,
Mr. Ricardo said, he would take that opportunity of making an observation as to the two standards of gold and silver. He fully agreed with his hon. friend, that a payment in both would facilitate the payment of the public creditor; but then there was a question whether two standards would not be more liable to fluctuation than one invariable standard. If payment were made in one metal, it would be liable to less fluctuation than if made in two, and in two it would be less than if made in three; therefore he considered the payment in one metal as preferable, being liable to less fluctuation.
Mr. Baring replied, that he ‘considered the difference in this respect as more theoretical than it would be found in practice.’
12 May 1820
Earl Temple presented six petitions from Buckinghamshire for an inquiry into the depression of agriculture.
Mr. Ricardo was not disposed to refuse inquiry to the petitioners, though he thought, under the present state of the country, such a question ought not to be moved but under the soundest discretion. The labouring classes throughout the kingdom were reduced to the greatest distress. That was not the period, therefore, when measures should be taken to increase the price of corn. The agricultural interest had its depression, but still it was to be considered as one class, whose prosperity ought not to be forced at the sacrifice of the general good. There was not a more important question than that of the corn laws. Nothing, in his mind, was better calculated to afford general relief than the lowering of the price of corn. It was the first step to that great remedy, the making labour productive.
25 May 1820
Lord Milton presented a petition from the agriculturists of Yorkshire praying for protection against foreign competition.
Mr. Ricardo said, that the object of the petitioners seemed to him to be nothing else than to get a monopoly of the English market. The consequence would be, that the price of corn would be raised, and laid generally on all the other classes. The idea which the petitioners had of protecting duties was a most erroneous one, and would, if acted upon, be destructive of all commerce. If they meant that the countervailing duties should be equal in amount to the difference between the price at which corn could be sold here and that at which it was sold in a foreign market, they went upon a most erroneous principle, and one which, he hoped, would never be introduced. Suppose corn sold here at 80s., and that in Poland it could be procured for 40s. or 50s.; if, under such circumstances, it were intended to put on a countervailing duty of 30s., there would be an end of all importation, and of every principle of commerce. In that case, the importer would be at a certain loss by the amount of freight, and of course no one would import; the consequence would be, that the price of corn at home would be raised to an exorbitant height. Viewing the question in this light, he hoped that the motion for a committee, whenever it came before the House, would be negatived.
30 May 1820
Mr. Holme Sumner moved that the petitions upon the subject of agricultural distresses be referred to a select committee. He contended that the corn law of 1815 was inadequate and that new measures were required. Mr. Robinson (President of the Board of Trade) declared that he would oppose the motion unless the enquiries of the committee were confined to abuses which might exist in the execution of the law. Mr. Baring also opposed the motion.
Mr. Ricardo said, that there was one sentiment delivered by an hon. gentleman in the early part of the debate, in which he cordially concurred, namely, that in legislative enactments, the interest of one body of men ought not to be consulted at the expense of others, but that each should receive corresponding consideration in proportion to its importance. He (Mr. Ricardo) would wish to act up to this maxim, and, because he consulted the interests of the whole community, he would oppose the corn-laws. In many of the observations which he intended to make he had been anticipated by his hon. friend the member for Taunton. The agriculturists had contended that they had a right to be protected in a remunerating price for their produce, but they forget that no remunerating price could be fixed. It was in vain to talk of fixing a remunerating price, which must necessarily change with circumstances. If by preventing importation the farmer was compelled, for the national supply, to expend his capital on poor or unprofitable soils, the remunerating price at which he could keep this land in cultivation must be very high, as compared with the price of grain in other countries, where the soil was better, and less labour was required. Open the ports, admit foreign grain, and you drive this land out of cultivation; a less remunerating price would then do for the more productive lands. You might thus have fifty remunerating prices according as your capital was employed on productive or unproductive lands. It became the legislature, however, not to look at the partial losses which would be endured by a few, who could not cultivate their land profitably, at a diminished remunerative price, but to the general interests of the nation; and, connected with this, he would look to the profits of capital. In his opinion a remunerating price might have been so fixed, that 50s. per quarter would have answered the purpose, but at all events he conceived that if the farmers in the country could raise a sufficient supply for the demand, 70s. might be considered as a protecting price. —He would rather have a great quantity of produce at a low rate than a small quantity at a high. By making food cheap, the people would be enabled to purchase a greater quantity of it, and apply a part of their earnings to the purchase of luxuries. The high price of subsistence diminished the profits of capital in the following manner:— the price of manufactured articles—of a piece of cloth for instance—was made up of the wages of the manufacturer, the charges of management, and the interest of capital. The wages of the labourer were principally made up of what was necessary for subsistence; if grain was high, therefore, the price of labour, which might be before at 50 per cent on the manufactured article, might rise to 60, and being sold to the consumer at the same rate, the 10 per cent (difference) would necessarily be a deduction from the profits of stock. If food was high here, and cheap abroad, stock would thus have a tendency to leave the country, and to settle where higher profits could be realized. The right hon. president of the board of trade appeared inconsistent when he denied a committee to inquire into the more important question, and yet agreed to one for discussing such trifling matters as striking the average. This was not what the petitioners wanted; they declared that they could grow as much as the home market required, and they demanded a monopoly of it. He would admit their statement to its full extent. He would even admit that our land was susceptible of a great increase of population, and that we could grow what would be sufficient to support that increase. But then, see what the inference of the petitioners was—they required that importation, therefore, should not be allowed. The answer to the whole of their system was plain. “You can grow those articles, it is true, but then we can get them cheaper from other countries.” They could grow them, but was it expedient that they should under those circumstances? All general principles were against it. They might as well urge that as in France, they could grow beet-root for the purpose of producing sugar, as grow grain sufficient for home consumption merely because it could be done. The right hon. gentleman opposite had ridiculed that absurd scheme of Buonaparte in the most pointed language, but all his ridicule applied equally to the growing of corn in this country when we could get it cheaper elsewhere. Another of their arguments was, that as ship-owners and merchants were protected by the navigation laws, and other enactments, so they ought to be protected by prohibitions in return. But he denied that these protections were of any use to the country. The navigation laws were of no use. Nay, he would allow them to take any trade they pleased, and surround it with protections; the measure might be beneficial to the particular trade, but it must be injurious to the rest of the country. There was no principle more clear than this. The argument of the agriculturist was, that the legislature having enabled the ship-owner and cotton manufacturer to injure the community, they should give him a privilege to do the same. Again they talked of the tax on malt, as if the tax on malt was not a general burthen, which fell upon every class of the community. Another of their statements was, that they paid 30 per cent on the whole produce of the country. He contended that the land-owner did not pay 30 per cent on the whole produce of the country. The produce of the country was calculated at the value of two hundred millions a year; 30 per cent would be 60,000,000l., and besides that there were the assessed taxes, the customs, and various other sources of revenue, which showed that the calculation of 30 per cent was wrong. They spoke also of the encouragement given to foreign labour, but, he would ask, what article could they import which was not the produce of foreign labour? for which, it was to be observed, that English labour was given in exchange. The error committed in 1816 was that of making the corn law a permanent law. It ought to have been a temporary measure, and to have ceased its operation as soon as the existing leases had expired, and the farmer was enabled to make new terms with his landlord. There were many measures that might be adopted with propriety, even in opposition to general principles, for a time, and under the exigencies of the moment, but parliament should always provide for a return to the good system. They should go back to that system as soon and as well as they could, but at all events they should go back. Nothing was more likely to occasion a convulsion than to persevere in a wrong measure merely because it had once for a temporary purpose been adopted. Adverting to the subject of countervailing duties, of which he had formerly spoken, he contended that it was not necessary to constitute a countervailing duty, that it should make up the difference between the price at which a foreigner could sell grain and that at which we could raise it. A countervailing duty, in his opinion, was one which balanced the particular tax laid upon any particular class of the community. Countervailing duties of a different description would entirely destroy all commercial intercourse. He agreed that the interests of the agriculturists, and of the other classes of the community, might be identified, provided we were restrained from intercourse with other nations; but this might not be the case in reference to foreign commerce. It might be the interest of the farmer to confine the manufacturer to the supply which he could afford him at a high price, while the manufacturer might procure the article cheaper from abroad. The price of grain might be raised by two causes—either by a change in the currency, which would affect grain like other articles; or by legislative restrictions, which might alter its relation to other articles. A rise in the price of corn from the latter cause tended to injure all who were not interested in the cultivation of the land, by lowering the profits of stock. It had been said, that the national debt, and the pressure of taxation, were the sources out of which the difficulty had arisen. It was no such thing. If all the taxes and the debt had been got rid of together, the same question would still arise —for while the population of foreign countries was not able to consume the produce of the land, and the population of this country was more than sufficient, there would be a disposition to import.—Some gentlemen seemed to think that taxation made a difference in the state of the question, as to our intercourse with foreign nations. It would no doubt be the case, if we taxed one article more than another, that we should cease to supply foreign countries with that commodity; but, if all articles were taxed alike, commerce in general would not be affected. If, for instance, this country produced corn and cloth, and that the production of each commodity was equally taxed, the amount of taxation would not make any difference in the relative advantage which one species of production had over the other, nor consequently in the choice of the commodity which we might supply to other nations, or be supplied with by them. It would be said, however, that taxation would make all things dearer; he admitted that—but though we might thus for a time cease to sell to other countries, we should not cease to buy of them, till the reduction of the quantity of money we possessed reduced prices also, and brought us to a level with them. It was one of the evils of the national debt, that it stood in the way of a reduction of the taxes in the same ratio as the currency was reduced. If, for instance, a tax was imposed of two shillings per yard on cloth worth twenty-two shillings, the country calculated on paying one-eleventh of the value; but when, in the progress of the alteration of the distribution of money, the cloth was reduced to 20s. a yard, the tax continuing the same, the country paid 1-10th of the value. There was another argument, which was the most important, because the most plausible argument in favour of the Corn law, viz. the plea that by importing corn, we became dependent on foreign countries. On the ground of economy not a word was to be said by any one who had paid attention to the subject, but in the argument that it was desirable that in war this country should not be dependent on another for subsistence, there was a certain degree of plausibility. In answer to this, it was to be said that if we imported corn in time of peace from any one country to a considerable extent, that country must be in the habit of growing corn specially for our consumption. In the event of a war with us, such a country would suffer extreme distress. We knew the effect of an excess, however small, of the supply of corn over the demand in the reduction of the price of this commodity, the consumption of which could not rapidly be increased, and the overplus of which consequently possessed no exchangeable value. All the agricultural distress we complained of would be not one-tenth of what such a country would suffer. But this went on the supposition that all our supply was to be derived from one country, whereas the fact was, that the supply would be derived from a great variety of countries; and was it probable that we should at once be at war with all of them? He therefore thought that this argument was hardly better founded than the other. This would be the happiest country in the world, and its progress in prosperity would be beyond the power of imagination to conceive, if we got rid of two great evils—the national debt and the corn laws. When he spoke of getting rid of the national debt, he did not mean by wiping it away with a sponge, but by honestly discharging it. His ideas on the subject were known and he had heard no argument to show that the measure he would recommend was not the best policy. If this evil were removed, the course of trade and the prices of articles would become natural and right; and if corn were exported or imported, as in other countries, without restraint, this country, possessing the greatest skill, the greatest industry, the best machinery, and every other advantage in the highest degree, its prosperity and happiness would be incomparably, and almost inconceivably, great. Other topics he would allude to but for the lateness of the hour. Gentlemen had favoured him more than he had expected. He should oppose the motion because he was persuaded that a committee would be productive of mischief, and not good.
Mr. Brougham, in the course of a speech in support of the motion, said: ‘His hon. friend, the member for Portarlington, had argued as if he had dropped from another planet; as if this were a land of the most perfect liberty of trade—as if there were no taxes—no drawback—no bounties—no searchers—on any other branch of trade but agriculture; as if, in this Utopian world, of his hon. friend’s creation the first measure of restriction ever thought on was that on the importation of corn; as if all classes of the community were alike—as if all trades were on an equal footing; and that, in this new state, we were called upon to decide the abstract question, whether or not there should be a protecting price for corn? But we were not in this condition—we were in a state of society in which we had manufactures of almost every description, protected in every way, even to criminal enactments, to prevent the raw material from going out of the country, in order thereby to assist the native manufacturer.’
The motion was carried by 150 votes to 101, the Government being left in a minority, and the House adjourned. The following day however a motion of the President of the Board of Trade restricting the terms of reference of the committee was carried by 251 votes to 108.
IRISH PROTECTING DUTIES
2 June 1820
Mr. Curwen presented a petition from the woollen cloth manufacturers of Keswick against continuing the protecting duties upon Irish linen.
Mr. Ricardo observed, that it seemed to be admitted on all sides, that these protecting duties ought to be repealed. They had existed for 20 years, which surely was a period quite long enough to give the Irish manufacturers an opportunity of preparing for their repeal, if any such opportunity were necessary; and he really could see no reason for their further continuance.
8 June 1820
The Chancellor of the Exchequer moved that the duties on several articles produced in Great Britain and Ireland, imported from one country into the other, should be continued till 1825, and thereafter at reduced rates till 1840, when they would finally cease.
Mr. Ricardo said, he was glad to see even that the time was to come when the country would rouse to those right principles, from which there never should have been any deviation; and hoped, that when the question of bounties with respect to linen, was brought forward, a proposition would be adopted to limit the existence of those bounties also to a certain period, as they were quite as objectionable, upon principle, as the duties referred to in the resolutions before the committee.
Mr. J. Foster observed, that the duties alluded to were protecting duties for England as well as for Ireland.
Mr. Ricardo considered those duties injurious to Ireland as well as to England, especially in the intercourse between the two countries.
The resolutions were agreed to.
LOAN—WAYS AND MEANS
9 June 1820
The Chancellor of the Exchequer stated the terms of the loan of five millions which had been contracted for on this day: ‘the contractors had taken the loan at nearly 2 per cent above the current price of stock.’
Mr. Ricardo observed, that the present loan was made on very satisfactory terms. It was impossible, he thought, that it could be obtained at a more favourable rate. He however traced those favourable terms to the recommendation of an hon. friend (Mr. Grenfell) who, some years ago, had advised that the commissioners of the national debt should be allowed to subscribe for the loan to the amount of the balances in their hands. This advice was followed on the present occasion; but if the old course had been adopted, and the loan had been for 17,000,000l., the result would have been very different. Another cause which tended to procure terms so favourable was the smallness of the loan. It was within the power of a great number of persons to bid for a loan of 5,000,000l. and therefore the competition for the present loan was much more extensive than usual, and far greater than if it had been for 17,000,000l. In consequence of these circumstances, the right hon. gentleman had certainly obtained such terms as must be highly satisfactory to the country. He conceived that no fairer mode could be devised in forming contracts for the public than by open competition. That system, he hoped, would be generally acted on. An hon. gentleman had, on a former night, asked some questions relative to a large amount of exchequer bills, which had been issued by government at par, when they were at a discount in the market. From the explanation of the right hon. gentleman it seemed that they were given in consequence of a contract for a quantity of silver. Now, it was quite evident that the 7s. or 8s. received by government from the persons with whom the contract was made would be reimbursed by a profit in the price of the silver; they would undoubtedly raise the price to the amount which they were likely to lose. He thought, in this instance too, that the system of competition should have been acted on, and that they should have been purchased in that way. He wished for some explanation with respect to the quantity of exchequer bills relative to which information had been demanded a few evenings ago. A statement had then been made, which his hon. friend, and other gentlemen, declared they did not understand. It appeared to him to be a very mysterious transaction, and he could not make it out. It seemed that a provision had been made for appropriating the growing amount of the consolidated fund. His hon. friend had noticed this, and had observed that the growing amount might be made productive and useful to the public. In consequence of his representation a bill had been brought in some time ago, to enable the public to make use of its growing amount, by which it was provided, however, that they should not borrow more than 6,000,000l. from it. But it so happened that this growing consolidated fund was not equal to the discharge of the advances that had been made on it in the preceding quarter. He would thus explain himself:—Supposing this was the beginning of the quarter, that the public accounts were made up, and that there was a deficiency of 3,000,000l.; the Bank, in the first instance, made this good; and out of the amount of the consolidated fund in the commencing quarter the Bank was repaid those 3,000,000l. Supposing, over and above this sum of 3,000,000l., an equal sum accrued, the public, under the act, would, he understood, have the advantage of those 3,000,000l., since, by its provisions, a sum of 6,000,000l. might be borrowed for the public service. This was the system; but how, he asked, was it possible that the public could have the advantage of any part of this growing fund, when in fact it was in debt? It was exceedingly difficult for him to comprehend this. In April, 1819, there was a sum of 2,027,000l. so issued for the use of the public; and it was stated that from that period to April 1820, the public had the benefit of that money. But how could they have the use or benefit of it out of a growing consolidated fund, on which there was no surplus whatever, but which, on the contrary, was in debt, and that debt amounting to more than the 6,000,000l. which they were by the act of parliament empowered to borrow? As he could not understand this, he would be obliged to the right hon. gentleman to inform the House whether the public had really derived advantage from this 2,027,000l. from April, 1819, to April, 1820.
The Chancellor of the Exchequer explained.
Mr. Ricardo observed, that on the 5th of July, 1819, there was a deficiency of 8,400,000l. “But,” said the right hon. gentleman, “you have, without interest, 2,600,000l., for which exchequer bills have been deposited.” This he denied; and he would contend that the public had not the advantage of that sum.
Later in the debate, Mr. Alderman Heygate opposed the present loan and the issuing of bills to repay the Bank, because those measures would produce a reduction in the circulating medium, which must be attended with increased distress in the country: ‘such a reduction was at present unnecessary, for the price of gold being the same as the mint price, the Bank note was at par.’
Mr. Ricardo thought it quite unnecessary for the Bank of England to reduce its circulating medium any further than it was at present reduced. The worthy alderman had said, that gold was now at the Mint-price; perhaps he might have said that it was a little under it; for he knew that many persons took gold to the Mint at the Mint-price, in order to have it coined; and this they could not do if gold was not, in fact, a little under that price, because some space of time must elapse before they could receive the benefit of the coinage. But the worthy alderman appeared to labour under a mistake in supposing that a reduction of the circulating medium would be a consequence of this loan, or repaying the Bank. The reduction of bank-notes within the last year did not exceed 2,000,000l.; that reduction of 2,000,000l. was all that was necessary to bring about that state of the currency which all had united with the finance committee in desiring to see obtained. Indeed, if the Bank was desirous to follow their own interest, it was a clear and obvious one: if they were to effect a very great reduction in their paper, which he should most sincerely lament, the consequence would be such a rise in paper, and such a fall in gold, that individuals would carry their gold to the Mint, and endeavour to fill up the circulation with it. As to the alarm felt by his hon. friend it was quite groundless, for there could be no fear but that the Bank would keep up a sufficient quantity of notes, as their own advantage depended upon the issue. As to the sinking fund, the argument of himself and his hon. friend had been, “Take away all which tends to delude the country—take away so much of that sinking fund as is not in reality an excess of income over expenditure.” Therefore he entirely concurred in the opinions of the worthy alderman, that they should immediately get rid of so much of the fund as, being nominal, was merely a delusion.
BANK OF ENGLAND ACCOUNTS
13 June 1820
Mr. Grenfell moved for a number of accounts relating to the Bank and said that, the principles which he had so strenuously contended for having been adopted, ‘he trusted the warfare between the Bank of England and himself was over.’ He referred again to the large profits which the Bank had made from the public balances in their hands; they had now been reduced, but a further saving of 100,000l. might be effected on the charge for the management of the public debt by the Bank. Mr. Pearse, a Bank director, defended the Bank.
Mr. Ricardo conceived, that if it were true, as had been stated, that the Bank had made no larger profits in consequence of its connexion with government, and its retaining these balances than any private concern which might have held them would have made, it must have managed its own affairs very badly. The hon. director had mentioned, as one of the great advantages which had accrued to the public from the acts of the Bank, the lending of a sum of money, without interest, to the government. But the thing was differently represented by the court of directors at the time. The Bank was then in this situation:—it had been allowed to increase the amount of its capital, instead of dividing a larger amount of profits among the proprietors—that is, instead of making a larger dividend it had been permitted to add to its capital: and the understanding was, that the loan of 3,000,000l., upon which no interest was to become due, was a boon to the public in return for that permission. At some former periods, the remuneration to the Bank must have been enormous, or it was now very considerably underpaid. But his own opinion upon the charge of management was, that the balances in question were now so small, that it was hardly necessary to have brought the subject before the House.
The papers were ordered to be printed.
19 June 1820
The Chancellor of the Exchequer introduced the budget. In the course of his speech he remarked that, as 12 millions were to be borrowed from the sinking fund, 5 millions would remain to be applied by the commissioners for the purchase of stock; these purchases had the effect of regulating the market during the whole year and of preventing sudden fluctuations from forced sales or from combinations of speculators.
Mr. Ricardo said, he could not clearly understand the alleged benefit which the money-market was to receive from the right hon. gentleman’s arrangement. It was certainly a subject of lamentation that, after five years of peace, we should still find our expenses increasing. According to the right hon. gentleman we had had effectually a sinking fund of but 1,000,000l. during the last year; but if this were correct, and the right hon. gentleman were to follow out the statements contained in the report of the finance committee, he would perceive from the expenditure that there had been an actual deficiency. He would here observe, that he found an item of 1,125,000l. perfectly unexplained. There was no account by which he could trace the manner in which it was proposed to provide for this item of 1,125,000l. The surplus of 1,000,000l., which had been mentioned by the right hon. gentleman, he had already taken into account; but he must contend that this sum of 1,125,000l. still appeared as against the accounts given in by the chancellor of the exchequer, whether he looked at this or at that paper . This sum of 1,125,000l. ought to appear, therefore, among other outstanding demands. He had a right to presume that the right hon. gentleman was bound to provide for this particular one, among the others. Next year it was anticipated by that right hon. gentleman that we were to have a sinking fund of between three and four millions. During the present year, he said, that he calculated, after deducting 9,000,000l. of unfunded debt to be paid off from 11,000,000l., that there would be a sinking fund of about 2,000,000l. But the right hon. gentleman seemed to forget, that this imaginary improvement of his was made to appear twice in the same statement. He first of all said, that we should have a sinking fund of such and such an amount; but, when he came to speak of the deficiencies upon the consolidated fund, and of the fund out of which they were to be supplied, he must have forgotten, when he was expatiating upon the sinking fund, that he was alluding to that out of which those very deficiencies were to be so supplied. And, throughout all these accounts, he had clearly forgotten that there was, in the quarter ending in January 1819, a deficiency of 8,000,000l. upon exchequer bills. He quite agreed in every word that had fallen from his hon. friend, the member for Penrhyn, respecting the alarming deficiency upon the consolidated fund. He quite concurred with him in saying, that that which was the growing produce of the consolidated fund used to be sufficient to pay all the demands upon it for the current quarter; whereas, instead of this, it was now found insufficient to pay even the arrears of the preceding quarter. During the last year, he considered the finance committee to have pursued a very good plan in letting them know what was the real state of the finances of the country. The committee had allowed them to see, in that, whether their amount was greater or less than it had been at that time twelve months. Now, he had endeavoured to apply the very same plan to the accounts of this year; and he found it to apply to them in a most remarkable manner. The committee last year estimated the unfunded debt at 53,133,000l. They took the amount of exchequer-bills in circulation, of Irish treasury bills, deficiency bills, &c.; and the result of their estimate was 53,133,000l. By the papers before the House, it appeared, that at the period to which they were made out, the unfunded debt was actually diminished in the sum of 2,000,000l. only, although the right hon. gentleman calculated that diminution at upwards of 10,000,000l. If, however, the papers before them were correct, he must contend, that the amount of actual diminution upon the unfunded debt, between the 5th of January 1819, and the 5th of January 1820, was only 2,000,000l. It was now necessary to see in what ratio the funded debt had increased; and by the returns that had been made to the House, they would find that the sum actually received by loan (which loans last year amounted to 24,000,000l.) was 18,736,000l. Deducting the sinking fund from this, the balance must necessarily be the actual amount to which the funded debt had been increased during the present year; and that increase was to the exact extent to which the unfunded debt had been this year paid off, namely, 2,000,000l.: so that, after all the complicated accounts that had been submitted to the House, the general result was this —that they had decreased the unfunded debt 2,000,000l. and had increased the funded debt 2,000,000l. It had been said that, in point of fact, there was no sinking fund whatever, for that the deficiencies upon the interest of exchequer-bills would amount to a sum about equal to that fund. And indeed it appeared to him, that these deficiencies had increased 1,370,000l. more than they amounted to last year. He had one observation more to make about the funding of 7,000,000l. of exchequer bills. The hon. member for Penryhn had paid some compliments to the chancellor of the exchequer, for having upon this occasion funded in the 5 per cents, rather than in any other stock. But, in order to contend that that was a judicious measure, he ought first to have shown that there was a sufficiency of capital to fund in the 5 per cents rather than in the three per cents. If they possessed a very large sinking fund and that sinking fund was likely to be operative, then undoubtedly it was proper to fund in a new stock and create one of 5 per cent in preference to funding in the 3 per cents; and, in that view of the question, he should have been disposed to have approved of the former of these measures. But, seeing that they possessed little or no sinking fund, he was very much disposed to doubt, whether the terms of such a loan would be of that advantageous character which his hon. friend seemed disposed to attribute to them.
COMMITTEE OF SUPPLY
21 June 1820
A debate arose on methods of keeping the public accounts.
Mr. Ricardo took the opportunity of objecting to the manner in which the Chancellor of the Exchequer stated the budget. He ought to insert, with reference to the former year, a column of expenditure as well as of receipt. He should say, “I have received so much from the ways and means— so much has been expended—and so much remains to be received on the last year’s budget.” He did not believe that the ways and means stated by the right hon. gent. the other evening would be equal to the payments that were chargeable on them. In his opinion, there would be a deficiency of 2,000,000l.
The Chancellor of the Exchequer observed that in future years more detailed accounts might be produced.
28 June 1820
Mr. Maxwell moved for a select committee to inquire into the means of relieving the distress of the cotton weavers. Amongst the plans to be considered he mentioned: the taxing of ‘a machine called “a power-loom”’ which competed with the simple loom of the individual weaver (‘the capital of the poor man, which consisted in the labour of his two hands, must bear the burden of taxation, since those articles, without which he could not exist, were taxed; while the large capital of the wealthy manufacturer, which he invested in a machine, was suffered to escape any contribution to the revenue’); and the application of public money to provide lands for those who could obtain no employment at their looms. Mr. Robinson opposed the motion.
Mr. Ricardo said, that he conceived the duty of government to be, to give the greatest possible development to industry. This they could do only by removing the obstacles which had been created. He complained therefore of government on very different grounds from the hon. mover, for his complaint was against the restrictions on trade, and other obstacles of that description, which opposed the development of industry. The recommendations of the hon. mover were inconsistent with the contrast between one class and another. If government interfered, they would do mischief and no good. They had already interfered, and done mischief by the poor laws. The principles of the hon. mover would likewise violate the sacredness of property, which constituted the great security of society.
The motion was withdrawn.
3 July 1820
On the order of the day for going into a committee of supply on the expenses of his majesty’s coronation,
Mr. Ricardo thought that if the various articles likely to be consumed at the coronation could be bought cheaper in the foreign than the home market, there could be no objection to their not being home manufacture, seeing that they must be purchased by the produce of our own industry.
[The remainder of the session was mainly taken up by the proceedings against the Queen, which were initiated in the House of Lords on 5 July by the introduction of a bill of pains and penalties and brought to a close on 10 November, when the bill was withdrawn. The session closed on 23 Nov. 1820.]