The King’s speech on the opening of the session was delivered on 23 Jan. 1821.
SUPPLY—BANK OF IRELAND
2 February 1821
Mr. Grenfell asked the Chancellor of the Exchequer whether he was prepared to give any information as to the refusal of the Bank of Ireland to receive the coin of the realm as deposits. The Chancellor of the Exchequer was unable to give any information.
Mr. Ricardo observed, that paper in Ireland having become at a premium above the price of gold coin, persons had been under the necessity of incurring the expense of conveying gold coin to Ireland, to remedy an evil arising out of the deficiency of circulation from the failures in the south. If the Bank of Ireland had filled the void so occasioned, as it was their duty to have done, the evil would have been avoided. He was still of opinion, that the system established with regard to the Bank of England, two or three years ago, ought to be perpetuated. If the Bank contemplated paying in gold coin in 1823, as they were now by law required, they must purchase a quantity of gold for that purpose; and to this cause was to be attributed the present disproportion between the price of gold and silver. He hoped, that his right hon. friend would be of opinion, that the system now existing ought to be permanent, and that he would take an early opportunity of bringing forward a measure for that purpose.
[See further p. 98 below.]
TRADE OF BIRMINGHAM— PETITION OF THE MERCHANTS
8 February 1821
Mr. Dugdale presented a petition from the merchants and manufacturers of Birmingham for an inquiry into the causes of the national distress. Mr. Baring said that ‘a very considerable part of the distress ... arose from the nature of the currency’; and he suggested ‘the expediency of giving to the Bank the option of paying either in gold or silver, that the value of the two precious metals might be rendered more equal, and the present pound sterling, which was somewhat too high, relaxed. He wished to relax a cord which was at present stretched somewhat too tightly.’ He did not mean however to ‘trench upon the system of the member for Portarlington’.
Mr. Ricardo said, that if the House would indulge him for a few minutes, he should be desirous to make one or two allusions to what had fallen from his hon. friend below. The great point to which his hon. friend had addressed himself was the origin of the prevailing distress. By some persons this was ascribed to taxation, by others to restrictions on trade, and by his hon. friend to an alteration in the currency, which he seemed indeed to consider as almost the exclusive cause. With this view his hon. friend had entered into a comparison of the prices of corn at various periods, and he stated the fall to be from about 80 to 60s., inferring that other articles had undergone an equal depression. He seemed to think that with a quarter of corn he could now purchase the same quantity of other commodities which he could have obtained with it when corn was at 80s. and that the reduction of prices was therefore general and equal. Now, this representation he apprehended was erroneous. He could not agree that prices had fallen generally in the same proportion. He believed that the fall in corn had been severe beyond measure, whilst there had been no fall with regard to many other articles, or at any rate no fall in the least degree similar. If the prices of bullion were referred to at former periods, it would be seen that the price of corn had altered to the amount of 25 per cent. He was surprised to find his hon. friend making a statement from which, if correct, it must be inferred, that the distresses began at the moment when the last change in the currency took place. Now, if he looked back to the price of bullion in the flourishing year 1818, and compared it with the present price, it would be seen that the difference did not exceed 6 or 7 per cent. To this extent other prices might have since been affected, and he had no doubt that there had been a considerable reduction of prices in other countries. Wine had fallen here, and so had cotton goods; but he believed that fall was not more than equal to that which had occurred in most parts of Europe. In 1816 the price of gold was at 4l. an ounce. In the following year it was 4l. and 6d. In 1818 bullion still did not rise above 4l. 2s. and 4l. 3s., and in 1819, when the plan which he had the honour to recommend was adopted by the House, it was at 4l. 1s. The question, then, before the House was, whether it was advisable to return to the old standard, or to take the existing market rate, which was then about 4 per cent above that standard as the measure of value in future. But his hon. friend had argued on this subject as if bullion had been at that time, as it formerly was, at 5l. or 5l. 10s., an ounce. If, instead of being at 4l. 1s. bullion had been much higher, he should not have proposed a recurrence to the mint standard. What he was anxious about, was not to restore the old, but to establish a fixed standard; for, however desirable it might be to a body of merchants or bankers to possess the power of raising or lowering a fourth or fifth the value of the currency, and to make 3l. 17s. 10½d. at one time, equivalent to 5l. at another, it was a power destructive of every engagement, and finally ruinous to every interest. He was not anxious to restore the old standard; but the market price of bullion being then only 4l. 1s., he did not think it necessary to deviate from the ancient standard. What increased his surprise at the view which his hon. friend had taken in tracing all our distress to a variation in the currency was, that when a few years back we had so much greater variations, we had no such distress. With regard to the depression of agriculture, he believed it was a good deal owing to the laws which were enacted for the purpose of protecting it. It was certainly desirable that those engaged in the production of corn should have a vent when an excess of supply existed. When two or three good harvests followed in succession, we might, if prices were at all on a level with those on the continent, export it after a fall of three or four shillings a quarter; but at present there must be a destructive fall before it could be sent abroad. The hon. member for Cumberland, as well as the hon. member for Staffordshire, had talked of the extreme pressure of taxes on agriculture; as if they were found, in that respect, to be peculiarly burdensome. The stockholder was described as being comparatively free from these effects; but it would not be difficult to show, that all taxes fell upon the consumers of those commodities to which they were annexed; and if this were not the case, he did not see what right the landowner had to ask for protection. He could demonstrate, if it were necessary, that taxes always raised the price of that commodity on which they were laid, and therefore fell on the consumer. Was it not impossible that farmers could continue to grow corn for a series of years unless they obtained remunerating prices?— He would now offer a very few remarks on what had been thrown out as to the restoration of two metals as a standard. It gave him pain, however, to hear any allusions made to the subject of not paying the public creditor, and to find that they met with the reception which they did in some quarters. If, indeed, the dividend was to be reduced, he trusted that it would be done openly, and that no stratagem or delusion would be practised. With regard to the plan of his hon. friend, he was sorry that he could not approve of it, recommending, as it did, a different standard from that fixed in 1819; at least, he could not help thinking that the plan amounted to this when he heard his hon. friend say, that the string was too tight, and that it was desirable to empower the Bank to pay either in gold or silver. This appeared to him to be a complete departure from the true and sound principles of currency. No currency could be of the same value perpetually, any more than other articles could always retain the same price. Gold bullion, however, was the commodity which varied the least; and if a contract was made to pay 100l. at a future period, the contract would be most faithfully performed by the payment of that sum in gold. But it might suit the purpose of the debtor to pay it in silver, whilst, by so doing, the creditor would sustain a loss. The two metals seldom maintained the same proportion to each other long. The price of the one might rise, while that of the other fell. So the Bank being now under an obligation to pay 60 ounces of gold, would enable a person who received it, to propose more, or a greater nominal amount of commodities than he would if he paid in silver. The relative value of the two metals had varied since the act of parliament; but what was the cause of that variation? It was this: the Bank being a timid body, seldom clinging to the true principles of circulation, had taken alarm, and had made great and unnecessary purchases of gold, although they found, by experience, that no person applied to them for any. He almost doubted whether a single bar had been demanded from them since the commencement of the new plan. If the Bank were enabled, according to his hon. friend’s proposition, to pay in silver instead of gold, they would now realize a profit equal to the difference between 4s. 11½d. and 5s. 2d. As soon as this profit should cease, the two metals would have recovered their relative value, and then it would be difficult to discover the value of his hon. friend’s proposition. He had proved last session that the two metals might vary to the extent of three per cent; but his hon. friend then remarked, that this might be true in theory, but in France, where the experiment had been tried, the difference did not exceed one per mill. Still it was something to find that the possibility of the variation was admitted. He entirely agreed in all that had been said with regard to the retrenchment in our expenditure being the principal, if not the only source of relief. The committee would, he doubted not, without preconceived or particular views, inquire whether the present system of restrictions on trade was advantageous to the country. He should only add, with respect to the rents of land, that no interests could be more distinct than those of the owners and occupiers; yet it did happen that the latter were persuaded to petition that House for regulations which might be beneficial to one class, but most injurious to themselves.
Mr. Baring expressed once more his conviction that ‘from the operation of the plan lately adopted by the legislature with regard to the resumption of cash-payments,... the value of the pound sterling, with reference to the price of commodities, had advanced one-third, or at least one-fourth, above that which it bore during the latter years of the war.’ He again urged the policy of allowing a double tender, of silver as well as of gold. As a practical man he could see no purpose in having a single standard: ‘although the establishment of such a standard might be more agreeable to the views of the Royal Society, or other abstract philosophers, who would regulate weights and measures by the vibrations of the pendulum.’
Mr. Ricardo remarked, that the difference between his hon. friend’s opinion and his own was this, that he maintained the advance of the pound sterling with reference to the price of commodities to be only about 4 or 5 per cent, which was equal to the difference between the price of gold at 4l. 1s. and 3l. 17s. 10½d. an ounce, while his hon. friend maintained that advance to be equal to 25 per cent. But how came it, he would ask, that although Russia, Austria, and France had adopted the same system as this country in the issue of paper, there should be such a difference in this country alone as his hon. friend had stated? He, however, differed from the views of his hon. friend, the principle of whose animadversions would in a great measure operate against any metallic currency whatever. With respect to his hon. friend’s recommendation of a double tender, it was obvious, that if that recommendation were adopted, the Bank, although it seldom saw its own interest, would be likely to realise a considerable sum by the purchase of silver at its present reduced price of 4s. 11d. an ounce. But as this purchase would serve to raise silver to the Mint price of 5s. 2d. and comparatively to advance the price of gold, the consequence of which would be to drive gold out of the country, this was, among other reasons, an argument with him for resisting his hon. friend’s doctrine.
The petition was ordered to be printed.
26 February 1821
Mr. Robinson (President of the Board of Trade) introduced a resolution for simplifying the methods by which the average prices of corn were ascertained for the purposes of the corn law; he also proposed to include the Isle of Man in the returns in order to prevent frauds. Mr. Curwen said, ‘he was sure that, within a very limited period, the country had lost at least a million by the frauds which had been committed. Large quantities of corn were imported from Denmark into the Isle of Man, and from thence shipped off to England. The greatest injury resulted to the English farmer from the introduction of foreign grain.’
Mr. Ricardo conceived that the effect of the measure would be to raise the importation price. An hon. member had spoken of the injury which an accumulation of foreign corn occasioned in the English market. That might be so; but the only remedy for this evil was, for this country to lower the prices of corn nearly to the standard of the prices of the continent. The only way to keep out foreign corn, was by putting high duties upon the importation of it. Now, suppose a year of scarcity had arrived, and that a high duty had been placed on the importation of foreign corn, would any minister at such a time of distress, attempt to enforce that duty—and shut out relief from a starving people? Impossible; and, therefore, the ports would be left open and free, and the immense importation which the hon. gentleman looked upon as so great a misfortune, would take place. Much had been said as to a remedy for the distress of the agriculturist: he was of opinion, that the only remedy for that distress was the total repeal of the corn laws and, sooner or later, a measure of that sort would be adopted.
The resolution was agreed to.
STATE OF THE REVENUE—REPEAL OF THE HOUSE AND WINDOW DUTIES
6 March 1821
Mr. Maberly proposed a series of resolutions for the retrenchment of public expenditure and for a reduction of 50 per cent upon all duties on inhabited houses and windows. The motion was opposed by the Chancellor of the Exchequer and by Mr. Huskisson, who contended ‘that we were not at liberty to take off taxes, unless we preserved the Sinking Fund.’
Mr. Ricardo reminded the right hon. gentleman, that the proposal of this night was not to reduce the Sinking Fund two millions, but to reduce the taxes to that amount; not by taking from the Sinking Fund, but by increased economy. The object was, to relieve the country from a part of the burdens under which it at present laboured. If, however, the motion had been to reduce the Sinking Fund, it should have met with no opposition from him. He considered it a delusion which was encouraged and made to amount to a certain sum, that ministers might be enabled finally to lay their hands upon it and devote it to purposes of unnecessary expenditure. Though the loan of last year amounted to 24,000,000l. there were 9,000,000l. of exchequer bills and 17,000,000l. of Sinking Fund, so that there was in fact a surplus of 2,000,000l. On the other side, it was asked whether it was intended to diminish the Consolidated Fund, which was the security to the public creditor? Yet ministers had been doing so year after year, until the deficiency amounted to 8,000,000l. Now, however, they were greatly alarmed at such a proposal, when in truth the object of the hon. mover was merely to reduce the expenditure. For the year ending the 5th of January, 1821, the Sinking Fund was estimated at 2,500,000l. He hoped it would turn out so; but his opinion undoubtedly was, that it would be considerably below that amount. It appeared to him that the diminution of the unfunded debt, between 5th January 1820, and 5th January 1821, amounted to very nearly 8,000,000l. while the Sinking Fund for the present year was 17,000,000l. making together 25,000,000l. This was in diminution of the debt; but, on the other hand, what had been added to it? The chancellor of the exchequer took a loan of 17,000,000l. and funded exchequer bills to the amount of 7,000,000l. so that an amount of stock equal to 24,000,000l. was added to the debt. Besides this there was a deficiency of the Consolidated Fund to the amount of 400,000l. Deducting therefore 24,400,000l. debt, incurred from the 25,000,000l. debt reduced, 600,000l. was the only real decrease; and he could call nothing a Sinking Fund, but what operated a reduction of the national debt.
The House divided: For the motion, 83; Against it, 109. Ricardo voted for the motion.
MR. GOOCH’S MOTION FOR A COMMITTEE ON AGRICULTURAL DISTRESS
7 March 1821
Mr. Gooch moved for the appointment of a committee to inquire into the distress of the agricultural interest. He trusted ‘that the gentlemen who usually opposed the agricultural interest—and especially that individual amongst them who was so highly distinguished for his knowledge of political economy (Mr. Ricardo), would permit the committee to see what good they could effect by their deliberations. Trade and agriculture were so interwoven with each other, that they appeared to him as but one interest; and he had always deemed it wicked to consider them as jarring with each other.’ He considered the agricultural interest as the basis of all the others, and therefore he asked the House to give to it ‘that protection which its value to the state demanded.’ Sir E. Knatchbull seconded the motion. Mr. Robinson (President of the Board of Trade) said that although the grounds on which he had objected to a similar motion the year before were applicable to all times, yet as a matter of feeling rather than one of expediency he would now consent to the inquiry. After some further debate,
Mr. Ricardo rose to defend his conduct and opinions, which had been repeatedly attacked in the course of the discussion. When he heard that all the interests of the country were equally consulted, he could not help saying, because he felt it, that the interests of landlords were chiefly considered. He had been represented as a mercantile man, having a particular interest which he consulted. He denied that he was interested either as a mercantile man or as a fundholder. He was a landed proprietor, and his interests were bound up with that of the House. He agreed with the Member for Essex, that high or low price in corn was nothing in itself. But he maintained the principle of a free trade in corn; not altogether a free trade in practice, but the general right should be allowed to every man, and every class of men, to apply their labour and resources in the most profitable way for themselves, which would be also the most profitable for the country. The effects of a free trade would be to get corn at the most advantageous rate. He wanted a countervailing duty to the home grower, to recompence all the additional charges which he had to pay in taxes above the charges borne by the foreign grower; but the protecting duty should not exceed the difference of those charges. The attention of the House had been called to the terrible effects which would be produced upon native agriculture, by allowing a free importation of cheap corn from the Continent. He would endeavour to shew what would be the real effect. The prices of corn would be reduced immediately, and agriculture might be distressed more than at present. But the labour of this country would be immediately applied to the production of other and more profitable commodities, which might be exchanged for cheap foreign corn if the lands were thrown out of cultivation, through too great a reduction of prices to compensate the production of grain at home. He had a great objection to a permanent duty on importations of corn; he still more strongly objected to a graduated duty, to rise in proportion as corn fell, and to fall as corn rose. Suppose the case of a bad crop; the grower would naturally look for the remedy for the loss of quantity in the superior price, from which he would be cut off by the adoption of a graduated protecting price. The Honourable Member for Oxford had asked for the solution of what might be called a riddle, uttered by him (Mr. Ricardo), that the immediate opening of the ports to importations of foreign corn, would be so far from disabling the country to pay the present nominal amount of taxes, that the country would be enabled from that very circumstance to pay a larger nominal amount of taxes. The Hon. Member should immediately have a solution. Suppose the country, instead of the present system of agriculture, could find out one which with far more ease of execution and with much less expense, would produce the same or a greater quantity of corn than was at present grown by the existing system, a great deal of labour would be thrown out of employment in agriculture; but let the House keep their eyes on the effects of the capital which would be liberated. Would not this capital be employed in the production of other commodities? and would all the commodities so produced be an addition of capital and gain to the whole country? Hon. Gentlemen asked how there could be any gain to the country when the price of corn would fall to one-half? His answer was, that the new commodities produced would contain a positive value, besides the value which would exist on the corn. In like manner would free importation of corn lead to a release of capital, which would be employed in producing commodities, bringing so much additional gain; for though the commodities as well as the grain would be at a lower rate of prices, they would contain a value sufficient, from their quantity, not only to remunerate their production, but to pay all the charges required by Government. He agreed with an observation of a Noble Person in another place, that part of the distress was owing to too much corn being produced, and agriculture must lessen its produce so as to suit the demand. He knew that taxation was an evil; but it could not be truly said that the taxation on agriculture prevented corn from remunerating the expense of its production. If the charges for growing or producing any thing were great, the price demanded for the article would correspond. If his hat or any thing else were taxed, he had, as the consumer, to pay an additional price for it; and where taxation went too far, it would diminish the consumption of the commodity so taxed. In other words, taxation tended to reduce the demand for the taxed commodity, but it did not prevent the remuneration of all the expenses of production for so much of the commodity as was in demand. It was wrong to say that corn could not be produced on account of the taxes on agriculture. The Member for Wareham had given a most convincing instance of the truth of this position, by explaining the duty on salt, which he stated to amount to 3,000l. upon the value of every 190l. Three thousand pounds duty were paid on salt, and yet salt yielded a sufficient profit to the producer. He did not mean to say that there was no hardship suffered by the consumer; but this proved that taxation alone did not prevent an adequate remuneration to the corn-grower. It had been said that importation would throw the whole of the lands out of cultivation. But this was assuming that the remunerating price was for every grower the same; whereas, corn was raised in some lands at 40s. and in others at not less than 70s. He had been asked how the cheap corn, when imported, could be paid for? By selling commodities? If that were not practicable, it must be because it would be more advantageous to grow corn than to part with commodities for it. A great deal had been said about the ware-housing system. He had been asked, who would speculate in corn with the prospect of large quantities being let out upon the market at a very diminished price? He would, if he were inclined to speculate, do it in corn. Having the market to himself while corn was under 80s. he would deal, and when it was 79s. without any dread or jealousy of a commodity which was not allowed to enter the market. The Member for Cumberland had put a question to him categorically. Could we grow corn at the same rate as on the Continent?—No; and for that reason he would have it imported: that was precisely the argument he went upon. The Member for Winchelsea, not then in his place, had asked, “Where has the Honourable Member (Mr. Ricardo) been? Has he just descended from some other planet? Does he know that a great deal of capital is engaged in agriculture, which would be then (in case of a free trade) thrown out of that employment?” This was considering the means without reference to the end sought. The end proposed in the employment of all capital was to obtain abundant production. He would say that if he could get corn so much cheaper than it could be grown, he deemed the capital employed in growing corn, to the exclusion of corn more cheaply to be acquired, a nuisance. Better such capital were altogether annihilated. But it would not be annihilated. The greater part of it would be turned into profitable channels. Something had been said about the national debt, and he had been represented as holding the landed property pledged to the payment of the debt. In his opinion not only landed, but funded, and every other kind of property, was pledged to the payment. It was unfair to leave the whole expense of the war on the shoulders of some of their fellow-citizens. After some further arguments to shew the advantages of a free trade, and after expressing his hopes that the country would recover from the unnatural depression under which it laboured, he stated that he had some fears lest the Committee, when appointed, should attempt to raise the protecting prices, from a vague hope of deriving relief there from for the present difficulties of agriculture. He concluded by saying, that he had a great objection to a permanent duty, but he had still greater to a graduated one. He hoped that if any were adopted, it would be the lowest countervailing duty which could be calculated to repay the additional charges of taxation suffered by the home-grower.
The motion was agreed to, and the committee was appointed. Among the members were: Mr. Gooch (Chairman), Lord Castle-reagh, Mr. F. Robinson, Mr. Huskisson, Mr. Brougham, Mr. Wodehouse, Mr. Baring, Sir E. Knatchbull, Mr. H. Sumner, Mr. Western, Mr. S. Wortley, Lord Althorp, Sir H. Parnell, Mr. Sturges Bourne.
Mr. Dickinson moved, that Mr. Ricardo should be added to the committee.
Mr. Gooch had no objection.
Mr. Ricardo, Mr. Curwen, and Mr. Denis Browne, were added to the committee.
[The following is Hansard’s report. Cp. above, p. 81, footnote.]
Mr. Ricardo disclaimed any intention of imputing unworthy motives to any of the various parties whose interests were concerned in the question; but he would say, as he had said before, that the interest of the landholders must necessarily be opposed to that of the consumers in the present case. Some hon. gentlemen had been pleased to address him as a mercantile man, as if he had a particular interest to serve. He would answer, that he was not a mercantile man—that he was not a man of funded property, but that he was a landed proprietor, and, as such, had the same interest in the question with many of those who had opposed him. He did not look to the interest of any one party in the state, but to that of the whole country. He agreed in one opinion which had fallen from the hon. member for Essex, that it was not the money price of corn they were discussing, but the labour price; and it was on that very ground that he contended for the policy of a free trade. And what did a free trade mean?—that they should devote the capital which they possessed to the more extensive production of any commodity; corn, for instance. It would result, that the greater the capital which they could so devote, the more of the article would they be able to procure. While he said this, he begged that he might not be understood as advocating an unlimited free trade in corn; for there were circumstances attending that question which rendered it imperative upon the legislature to impose some shackles upon a trade, which, more than any other, being once without restraint, speedily required them. And this led him to consider what had been urged by many gentlemen upon the subject of countervailing duties. If the agriculturists would show that they had any particular taxes to cope with, which other producers had not, then, undoubtedly, they ought to have a countervailing duty to that amount: and not only so, but there ought to be a drawback allowed upon exportation to that amount. The great principle upon which they should go was this—to make the price of their corn approximate, as nearly as possible, to the price it bore in other countries. He was more sanguine, undoubtedly, than many; but he was not such an enthusiast as to suppose that, under present circumstances, they could reach at one step this great and true principle of all corn trade. Much had been said, affirming and denying the direct interest of landholders in monopolizing the market. He would say, without hesitation, that gentlemen of landed property had an interest in getting the monopoly of the market for their own corn. In the mode in which they had gone about it, however, they had not been very dexterous or successful. The hon. member for Cumberland [Mr. Curwen] had said, with great propriety and truth, that for many years past a glut of corn had always come into the country whenever the price had risen above 80s. This fact confirmed the objections which had been raised to protecting duties upon that commodity. Although a duty on the importation of corn would not be so wise a measure as the approach to that system which he had suggested as constituting the true principle of a corn trade; yet he did think that a permanent duty upon importation would be a much wiser measure than that which had been proposed and advocated. Let them rather have a certain moderate duty which should have a tendency to produce a price of corn that should not be very variable. The last desideratum was of the very highest importance, as much of the evil arose from the fluctuation of prices. The system which had been proposed by the hon. member for Bridgenorth [Mr. Whitmore], of duties that should rise as the price of corn fell, and fall as the price of corn rose, he could not consider a very wise one. What would be the situation of the grower, if such a system were put in practice? Supposing he had to contend with the deficiencies of a short crop in one season, he naturally expected to make up for them in the next season. But the adoption of these duties would leave him no such remedy for his misfortunes. The hon. member for Oxford had the other evening appeared surprised at one or two positions which he had ventured to advance. The hon. gentleman had called upon him to solve this riddle, as he called it, namely, “if you open your ports, and import the immense quantities of corn which then will inundate the country, how can it be said the country will be better able to sustain a money taxation? —so far from it, the means she now possesses, now applicable to that purpose, will be withdrawn from her.” But it was not difficult to give the required solution. Suppose the case of a country which was cultivating its own lands, and received no supply from abroad;—a country that had a much better mode and practice of agriculture than others; and which, in consequence of that circumstance, could, with less trouble and expense than they could do, grow all that was necessary for her purpose. It was clear that, under such circumstances, the price of corn would be much lowered there. But, let gentlemen keep their eyes upon the capital that would be thus liberated from the land. Would that be idle? Would that be employed in no way? Would it not be employed for the purchase and obtaining of other commodities? Would not those commodities be of value in the country, and by their value afford to pay that additional taxation which he had alluded to, in the position that had so much startled the hon. member for Oxford? “But,” said that hon. gentleman again, “do you mean to say, that if the price of corn be lessened one half, the country can afford to pay the same money taxation?” He answered confidently, “Yes,” these commodities of which he had spoken would enable her to pay it. An opinion had been given in another place, which he thought had been treated with too much levity. It did appear to him, that that opinion was well founded; for he also was one who thought that the low price of corn, under which we were at present labouring, was occasioned by too great a supply. He did not think it to be the consequence of taxation. Whether that abundance was the effect of too great an importation, or arose from a diminution of the demand, still the depression was in every case, if the price did not repay the producer, to be attributed to no other cause but the too great supply. Taxation, undoubtedly, was a very great evil; no man was more ready to deprecate the present system and extent of the taxation than he was; but how did it operate? Take the commonest article of trade; a hat, for instance. If the hat were taxed, the price of the hat rose of course. Enemy as he was to all taxation, he must say that it was not to taxation only that he attributed the distresses of the farmer; and they who did so, attributed the evil, he thought, to a wrong cause. The hon. member for Ware-ham had said a great deal, to show that those distresses were principally to be imputed to the heavy duties upon salt. Every person who used salt was injured to a certain degree by that tax: no doubt it was a very grievous burthen, but it was certainly not an adequate reason to be assigned for the present distressed state of agriculture. It had been said that such large quantities of corn had been imported, and at so low a rate, that all the poor lands would go out of cultivation. This he took to be a fallacy: and to proceed from hon. members erroneously supposing that all corn was grown at the same remunerating price. But nothing was more clear than that price was as 30s. in some instances, and 40s., 50s., 60s., and 70s. in others. The hon. member for Essex had told the House what small quantities of corn, after all, had been imported within the last ten or twelve years, from foreign countries. Another hon. gentleman, however, was for prohibiting the importation of foreign corn altogether, and asked them how they were to pay for it? Why, as for that matter, they ought not to contract the debt, if they could not pay for it; and if the fact was that they could not pay for foreign corn, that was pretty good security, he should conceive, that they would grow it themselves. Then there was the warehousing system. It had been said, “who will speculate in corn, when he knows what a tremendous quantity of it is hanging over him?” He would for one; for, if he had bought his corn at 79s., and it was now selling for 70s. he would keep it on hand; and take care not to sell it till it had got above 79s. Then if it rose only to 80s., he evidently had the market in his own hands. The hon. member for Cumberland had asked, “Can we grow corn in England on the same terms as the foreign grower.” To this he would answer “No:” and for that very reason he would import it. But, what was the proposed end of all capital, if it was not this—that the possessor should procure a great abundance of produce with it? Now if he could prove that by getting rid of all that capital which is employed in land, he could make more profitable use of it, then he contended, that that was in effect so much capital gained by him. But here again an erroneous idea prevailed. The House was told of the capital which was employed in land, and told in a manner as if it was absolutely and entirely vested in it. Let them just consider, however, the wages of labour, the price of improvements, the charges of manure, and they would find that the total cost of all these items would be a capital saved. The hon. member for Kent [Sir E. Knatchbull] had spoken in a very disparaging manner of thrashing machines. Now, in his opinion, every thing which tended to lessen human labour was an advantage to mankind. Something also had been said on the subject of the national debt. He had no particular individual interest in it, because he derived no revenue from it; but he would say, that the landed interest, the agricultural interest, the trading and every other public interest, were pledged to the public debt. What could be more dishonourable than for a state to carry on the expenses of war by the money advanced upon her good credit by her own subjects, and then to turn round upon those from whom she had borrowed it, and say—“We are insolvent, and we will not pay you.” It was totally unworthy of an enlightened and honourable assembly to entertain a proposition so monstrous. The hon. member for Cumberland appeared to entertain a very strange idea of the nature of countervailing duties. He had said, that the countervailing duties should amount to all the difference between the price for which the foreigner could grow corn, and that for which we could afford to grow it. But the fact was by no means so. The House might remember the large capital employed in France during the continental system of exclusion, in obtaining a species of sugar from beet. Now, the question was, when that exclusion was abolished, and sugars could be imported, what were they to do with the capital employed in the beet process? The hon. member, on his proposition, would have required a countervailing duty to the amount of the difference between the price at which sugar could be so imported, and that at which it could be extracted from beet. Another argument was, that rent and capital would be annihilated if the land was thrown out of cultivation. He did not mean to deny that the House ought to deal tenderly with all the interests concerned; but though opening the ports would throw a good many labourers out of employment in land, it would open other sources of labour. The hon. member for Bridgenorth [Mr. Whitmore] had taken an unfavourable view of the state of the country. For his own part, he had better hopes. He could not help feeling that the difficulties of the country were nearly at an end, and that the present unnatural state of depression must soon cease to be felt. He thought we were now reviving; and nothing could so much contribute to that revival as the relief of the people from taxation by every possible means. He had great apprehension from the appointment of this committee, because he feared that it would look for relief to restrictions upon importation. If restrictions were to be imposed, he would rather have a fixed duty than a graduated one, as being most likely to produce permanent benefit to the country.
BANK CASH PAYMENTS BILL
19 March 1821
The Chancellor of the Exchequer reminded the House that by the Act of 1819, the Bank of England were entitled, at their option, to issue gold coin on the 1st of May 1822, and were bound to resume cash payments on the 1st of May 1823. He would now propose that this optional power should be brought into practical operation on the 1st of May 1821. Two circumstances justified the anticipation: first, the rapid accumulation of treasure in the Bank, which by restricting the circulation of other countries produced an unfavourable effect on commerce; secondly, the widespread forgery of Bank-notes, which could only be diminished by the progressive substitution of coin for Bank-notes. Mr. Baring moved that the principle of the Act of 1819 be reconsidered. He thought the distress of the country was due to the rise in the value of the currency and the increased burden of debt, which had followed the return to cash payments. ‘He was not himself bold enough to recommend a departure from the standard,’ but he would propose two remedies for the evils of the present system. ‘The first was to render permanent the plan of paying Bank-notes in bullion, or to continue what he hoped he might, without disrespect, call the Ricardo system; for, in his opinion, the permanent establishment of that plan was peculiarly calculated to relieve the tension which was at present felt in the currency of the country.’ As to the danger of forgery, it could not require much ingenuity to invent a Bank-note more difficult to imitate than the present clumsy one; or, instead of the small notes, he would propose a gold token. ‘The second remedy which he had to propose was, the establishment of a double standard, namely, gold and silver.’
Mr. Ricardo began by observing, that his hon. friend had set out with contending for the propriety of establishing two standards: whereas a great part of his argument had gone to put the gold standard out of the question altogether. He had truly said, that in 1797, permission was given to the Bank of England, by act of parliament, to increase or diminish the amount of its circulation as it might think proper. Now, though he agreed that such a power could not have been lodged in hands less inclined to abuse that permission, he did consider it a power most dangerous to have been entrusted to any men, under any circumstances. It was undoubtedly true that the Bank had had it in its power to have kept the currency at a standard as if it had been composed entirely of gold and silver. He maintained that it had then the full power of doing so. The Bank of England, however, neglected that duty; and, in 1819, when the war had terminated, it became absolutely necessary that the House should adopt the steps it had adopted towards payment in bullion. The question with the House, then, was—“Shall we take the standard of our currency at its present depreciation? or shall we take it as it existed previously to the year 1797?” His noble friend, the member for Salisbury (lord Folkestone), had, with a great deal of good sense and judgment, proposed to fix the standard at the price at which gold then was. On that point he had differed from his noble friend, thinking that gold was not then sufficiently depreciated, had it been more depreciated, he should have preferred that plan to the adoption of a more variable standard. His hon. friend who had called him a theorist , seemed himself to have undergone a great change of sentiment. His own opinion always was, that there should be but one standard, and that that standard should be gold; because silver was liable to undergo such changes, that it might sink in value below gold, and thus occasion the greatest confusion; but his hon. friend had formerly contended, that the adoption of two standards would be attended with advantage. Now, however, his hon. friend advanced another idea, which, he confessed, did strike him with astonishment. His hon. friend seemed disposed to admit all the advantages of a fixed currency, and that gold should be adopted as the standard, but also thought, that the Bank should be allowed, at their option, to pay in silver, at 5s. 2d. per oz. for ten years to come, still retaining gold as the sole standard, and then adjust the price of silver to the standard of gold. Now, suppose the silver to sink to 4s. or to 3s. 6d., before the ten years had expired, at the end of that term it would be necessary, on the principle of his hon. friend, to raise it to 5s. 2d. thus adjusting it every ten years. This would unquestionably be one of the most variable standards that could possibly be devised. His hon. friend had stated, that representations were sent from all parts of the country complaining of the prevalence of distress. This was unfortunately too true; but it was worthy of remark, that his hon. friend, who was no theorist, had nevertheless a theory respecting the cause of these distresses, by which he imputed them all to the state of the currency. Now, it appeared to him that they might with more truth be referred to a great many other causes. They might arise from an abundant harvest, from the vast importations from Ireland, which had not taken place formerly, and from the late improvements in agriculture, which, he apprehended, would be felt hereafter more severely. These causes his hon. friend entirely over-looked, and laid the whole blame on the alteration which had been made in the currency; while he (Mr. Ricardo) contended that this alteration could not be said to amount to more than 5 per cent. He admitted, that gold might have altered in value; that was an accident against which it was impossible to provide; but, supposing that silver had been adopted as a standard, would it not also have varied? His hon. friend contended, that if silver had been made the standard, it could never have fallen so much in value; but his hon. friend argued all along on the assumption that the whole difference between gold and silver was owing to the rise of gold. This, however, was not fair; for when a difference arose in the relative value of the two metals, he had just as good a right to say that silver had fallen, as his hon. friend had to say that gold had risen. The surest test was the rate of the foreign exchanges; and if his hon. friend looked at what a pound sterling was worth in 1816 in the silver coin of France, and what it was now worth, he would find it difficult to make out a variation of more than 10 per cent. He begged the House to recollect, that in 1817 wheat sold at 109s. and bullion was then at 3l. 18s. 6d. Would his hon. friend say, that that price was owing to the depreciation of the currency? and if not, was he calling on his hon. friend to concede too much, by admitting that the present price of grain might be owing to many other causes? His hon. friend had said, that a great deal of capital had been expended during the war. Now, he doubted whether this was a sound proposition: for, he believed that the savings of individuals during the war, would be found to have more than counteracted the profuse expenditure of the government, and that the capital of the country at the end of the war was greater than it was at the commencement of it. His hon. friend had asked, why we should have a purer standard than the rest of the world?—a question which might be very properly answered by asking, why we should not? If other countries chose to adopt an error, was that any reason why we should follow their example? The attempt to procure the best possible standard had been characterised by his hon. friend as a piece of coxcombry to which he attached no value; but, in a question of finance, if we could get a better system than our neighbours, we were surely justified in adopting it. He undoubtedly did wish for a better system, and it was for that reason that he wished to see one metal adopted as a standard of currency, and the system of two metals rejected. With respect to the adoption of a gold token, he thought it would be attended with great danger; if by a gold token was meant a token materially less in value than the gold coin which it represented. The necessary consequence of such a system would be, that the tokens would be imitated in foreign countries, and poured into this country in such quantities as would very speedily produce a depreciation of our currency, equivalent to the difference between the value of the sovereign and that of the token which represented the sovereign. If he could be induced to give his consent to the introduction of a gold token, it must be of such a value as nearly to equal the value of the sovereign. He would permit no more alloy in the token than what would be sufficient to cover the actual expense of coining the bullion into money. Such a plan would afford a sufficient security against the inroads of forgers , and might be advantageously adopted.—It had been said, that if one metal were adopted for a standard of currency, it would be in the power of speculators to raise or lower the standard, and consequently place the Bank in an awkward predicament; but the power which the Bank had of regulating its issues, would always be sufficient to prevent any inconvenience of that kind. With respect to the suggestion of the right hon. gentleman opposite for diminishing the issues of Bank-notes as a security against forgery, he entirely concurred with his hon. friend that such a plan would be wholly ineffectual as a remedy against forgery. It was perfectly clear, that whether the issues consisted altogether of Bank-notes, or half in Bank-notes and half in sovereigns, the danger of forgery would be the same. The only effectual remedy against forgery would be, to hasten the period at which the Bank might commence payment in specie. He should be perfectly ready to abandon his own plan, if by so doing that most desirable object could be effected; and he was quite satisfied that the Bank was at this time in such a state of preparation, that in a very few months they might provide the best and only effectual security against the imitation of their notes, by returning to the system of currency which existed in this country previous to 1797. The right hon. gentleman had dwelt upon the tendency of his measure to prevent the accumulation of coin in the Bank; as if the coffers of the Bank were overflowing with coin. Now, the fact was, that the Bank had a great deal of bullion and very little coin. To propose a measure, therefore, for preventing the accumulation of coin in the hands of the Bank, was to provide against a danger, which was not at all likely to occur. With respect to the laws relating to usury, he should be extremely glad to see them repealed; and he thought no time more proper for the repeal of those laws than the present, when the rate of interest had actually sunk below 5 per cent. The rate of interest in the market had been invariably under 5 per cent since 1819. It would be a great advantage to the mercantile interests, that the Bank of England should discount the notes presented to them, not at one invariable rate of interest, but varying according to the alteration of the rate of interest in the market.
[See further p. 105.]
BANK CASH PAYMENTS
28 March 1821
Mr. Grenfell, referring to the alleged refusal of the Bank of Ireland to receive coin of the realm as deposits [see above, p. 70], said that he had now been assured by the principal director of the Bank of Ireland that there was not the slightest foundation for the statement. Mr. Irving thought ‘that, situated as the Bank of Ireland was, they might have regulated the exchanges better by the distribution of their issues in a more suitable manner than they had done’. Mr. Ellis stated ‘that 500,000l. was voted for the service of those who, having property, could not immediately turn it into specie; but so increased was the liberality of the Bank of Ireland on that occasion, that it actually rendered necessary the application of only 100,000l. of that sum.... With respect to the statement that the low rate of exchange arose from the small quantity of circulating medium in Ireland it appeared to him that that could not justly be cited as the true cause, when it was on record that the exports of corn from Ireland were three times greater in the last than in the former year. That was the circumstance to which the low rate of exchange was attributable, and not to any deficiency in the Bank of Ireland issues.’
Mr. Ricardo was very much gratified at what he had heard from the hon. gent. (Mr. Irving) this night. The hon. gent. was now of opinion that the circulation of the Bank regulated the state of the exchange, and he (Mr. Ricardo) was very happy that the hon. gent. was at last a convert to that doctrine. Those gentlemen who imagined that a lucrative trade could be carried on by exchanging coin for Bank-notes, were, as it appeared to him, very much mistaken, because it was impossible for Bank notes to be more valuable than the coin of the country. It was impossible for a man, who was called on in the course of trade, to purchase any commodity to carry on his trade more profitably with Bank notes than with the coin of the realm. Therefore there was no sort of inducement, as it appeared to him, for any person to exchange his bullion at the Bank for their notes. The Bank of Ireland was, however, placed under very different circumstances from the Bank of England; and they did seem to him to have acted with a degree of energy, which, if it had been the case of this country, they would have found the Bank of England not ready to have adopted. What was the case of the Bank of Ireland? The stoppage of a number of private banks in the country rendered it absolutely necessary that a very great increase in the circulation, of some sort or another, should be provided. Either the diminution of the circulating medium must be supplied by coin, or a powerful effort must be made by the Bank of Ireland to make up the deficiency by an issue of notes. The Bank of Ireland did make that great effort to the amount, he believed, of 50 per cent; and, from what he had himself heard from the Governor of the Bank of Ireland, that issue would have been increased still farther if those securities had been offered on which the Bank of Ireland usually made their advances; but, from the state of Ireland, those securities could not at the moment be found; and the Bank, however willing to increase their issues, had not the power so to do. It was very evident that the Bank of Ireland would not have increased the circulation if they had taken in sovereigns and issued paper. That would have been merely to decrease one circulation, and to increase another. With respect to the management of the debt of Ireland, an hon. gent. had observed that there was a compensation given to the Bank for the care of that debt. Undoubtedly there was a species of remuneration; but when he contrasted that remuneration with what the Bank of England received for the management of our debt, the latter appeared to him to be enormous. At the same time he was one of those who did not think that banks should be called on to serve the public gratis. The word ‘liberality’ had been used, with respect to the conduct of the Bank of Ireland, and, in his opinion, such a phrase was not properly applied, merely because they had issued their Bank notes; because a bank never increased its paper issue without receiving some advantage from it. He fully concurred in the opinion of those who held that the circulation of the Bank of Ireland was, at the time the distress occurred, very deficient; and he looked upon the exchange to have been affected, not by the great increase of the exportation of corn, but as arising from the issue of the Bank of Ireland not being so high, in notes or money, as it ought to have been.
29 March 1821
Mr. Ricardo begged to know from the Secretary of the Treasury whether the annual accounts which were produced respecting the public expenditure, by order of the house, might not be printed in a more perspicuous and simple form. The hon. gent. particularly referred to one branch of the accounts; but he spoke so low, that we could not hear to which he referred.
Mr. Lushington expressed his readiness to adopt any suggestion for the purpose of having the accounts more clearly understood.
AGRICULTURAL HORSES TAX
5 April 1821
Mr. Curwen moved for leave to bring in a bill for the repeal of the tax upon horses employed in agriculture.
Mr. Ricardo said, he should certainly give his support to the motion. He should do so on the same principle on which he had voted for repealing the last duty on malt , not because it was in itself a bad tax, or pressed with peculiar hardship on the landed interest, but with a view of compelling the observance of strict economy in the administration of government. It was his belief that the whole amount of the malt tax might be saved by measures of economy; and as he looked upon the sinking fund to be utterly useless—to be at this moment unproductive of one single good effect—he was quite disposed to abrogate every tax so long as any portion of that fund remained in existence. The hon. mover had stated, that foreign monarchs were embarking in the corn trade, that they were becoming merchants, and that the king of Sweden was importing oats into this country. Now if this were the fact, he for one should rather rejoice at it, because he should expect to make much better bargains with kings and princes than with their subjects. The hon. gentleman, however, need not be under any alarm; for if, as he represented, these trading potentates would not take back our hardware and pottery in exchange, and would receive nothing but bullion, there was a sufficient security for our continuing to grow our own corn.
Mr. Baring ‘expressed his regret at hearing this question argued with reference to the conflicting interests of different classes of the community. It gave him some surprise to find his hon. friend treating a great national subject [the sinking fund] in a way which, practically considered, he must pronounce extraordinary and almost absurd.’
The motion was withdrawn.
5 April 1821
Mr. Wallace, the Vice-President of the Board of Trade, moved a resolution for reducing the duty on timber from the Baltic and increasing that on timber from the British colonies of North America, thus diminishing the protection of the latter. Sir H. Parnell moved an amendment to equalize all duties at the end of five years. Mr. Sykes, opposing the amendment, pointed out that ‘the American timber trade was carried on by British shipping, but three-fourths of the Norway timber trade was carried on by foreign ships’. Mr. Baring remarked that ‘the general principle of political economy which ought to regulate the conduct of a great country ... would lead us to purchase an article wherever it could be had of the best quality and at the cheapest price’. But in this particular case ‘some sacrifice of the several interests of the public to those of the ship-owners was necessary’.
Mr. Ricardo said, he was anxious to deliver his opinion on the present proposition, as it involved a principle of infinitely greater importance than the question immediately under consideration. They had been told that they ought to go to the best, and cheapest market, and also that the timber of Norway and Russia was better and cheaper than that of America; and yet they were recommended as a practical measure, to take the worst timber at the dearest rate! His hon. friend (Mr. Bennet), in a speech full of the soundest argument, and as yet totally unanswered by the gentlemen opposite, had shown, in the most convincing manner, that by buying our timber from the northern powers of Europe, we should save 400,000l. annually on the purchase of that article, and consequently that we were yearly incurring a debt to that amount, in order to put this money into the pockets of the ship-owners. If a bill were introduced for the specific and avowed purpose of granting a sum to that amount to the ship-owners, he would much rather agree to it than to the resolutions now before the committee, for in that case the capital thus given to them might be more usefully employed. At present it was a total sacrifice of 400,000l. a year, as much so as if the ships engaged in the coasting trade should be obliged to sail round the island in order to give employment to a greater number. He was of opinion that, according to the true principles of commerce, it ought to form no part of the consumer’s consideration to enter into the distribution by the seller, of the money or labour which he (the consumer) exchanged for any commodity which he wanted. All the consumer had to consider was, where he could get the article he wanted cheapest; whether the payments were to be made in money or in manufactures was matter quite of minor importance. In this, as in all other branches of commercial policy, it was useless to urge partial views in behalf of one set of men or another. That House ought not to look to the right or the left, but consider merely how the people of England, as a body, could best employ their capital and labour. Wrong notions of commercial policy had too long prevailed; and now that the country had begun to recognize sounder principles, the sooner they acted upon them the better. There were exceptions to be made in cases of very old established arrangements; but this American trade was not one of them; was of new date, and mainly sprung out of a quarrel between England and the Baltic powers : it was then said that the latter would withhold their timber, and that the colonial trade must necessarily be encouraged in Canada. What once occurred, might again happen it was said. Well, then, his reply was—if ever it should happen, it would be time enough to pay the high price: at present let more economical arrangements be attempted. It was strange that inconsistency always marked the progress of monopolists. One set of men now called out for this colonial trade in behalf of the shipping interest, and the very same set of men, if they were spoken to about the West India Dock system, would call it partial and oppressive. So, respecting the Irish linen monopoly, it was said, why not be allowed to go to Germany, where the same manufacture might be had cheaper? He certainly concurred in the hon. baronet’s view of this question.
Sir Henry Parnell’s amendment was lost by 15 votes to 54. Ricardo voted for the amendment.
[See further p. 110 below.]
BANK CASH PAYMENTS BILL
9 April 1821
On this debate [cp. above, p. 91] being resumed Mr. Baring moved as an amendment that a select committee be appointed to reconsider the whole subject: ‘the more he considered this question, the more he felt it to be ... “the” one in which were involved all the distresses experienced by the country and their remedy.’ Mr. Attwood, seconding, said that the value of money since 1819 had risen 20 or 30 per cent., and not 3 per cent. as predicted by Mr. Ricardo. The Chancellor of the Exchequer opposed the amendment.
Mr. Ricardo said, he would not have troubled the House if he had not been so pointedly alluded to in the course of the debate. He was not answerable, he said, for the effect which the present measure might have upon particular classes; but he contended that if the advice which he had given long ago had been adopted—if the Bank, instead of buying, had sold gold, as he recommended —the effect would have been very different from what it was at present. It was impossible, on any system of metallic circulation, to guard against the alterations to which the metals themselves were liable; yet all the complaints they had heard that night referred to the changes in the value of the metals. When the measure of 1819 had been adopted, they had known that the alteration that it would make between gold and paper would be 4 per cent: yet with that knowledge, they had, in all the difficulties with which they were surrounded, recommended the measure. The hon. member for Taunton had entered into a speculation on the subject, as if a gold standard had been an innovation of 1819. But that standard had been adopted some time between 1796 and 1798. Up to that period, gold and silver had been the standard. The chancellor of the exchequer had laboured under a mistake when he had said that silver had been a legal tender only to the amount of 25l. It was true that that had been the utmost amount in the degraded currency of the country; but a man might have gone to the Mint with his silver, and 100,000l. might be paid in silver of standard value. This, however, had never been any man’s interest. But gold had been carried to the Mint, and gold had, in fact become the standard. The change in the relative value of the metals had taken place in the period he had mentioned between 1796 and 1798; and large quantities of silver had been carried to the Mint, in order to profit by the state of the law, and the relative value of silver and gold. If government had not interfered, a guinea would not have been found in the country, and silver would have been the standard. The government, aware that there would be one silver currency of degraded value, and another of standard value, had by an act of parliament, he believed, shut the Mint against silver; and he asked whether gold had not then become the standard? If the Bank had not bought gold, contrary to his opinion and recommendation, gold would not have risen. But it was only an assumption that gold had risen. When the relative value was changed, what criterion could they find, to show, whether the one rose, or the other fell? His hon. friend (Mr. Baring), who had been examined before the committee with the attention which his high authority demanded, had strenuously recommended a gold standard as less variable than a silver standard. Yet he now stated, from his experience in France, that silver varied very little. His hon. friend’s theories thus changed very often; his own were unchanged, though he had been represented as moving with the vibrations of a pendulum, and entertaining views of placing the currency in a degree of perfection not suited to our situation. His hon. friend had himself the same views of the perfection of the currency; and he regretted that his hon. friend had not continued to entertain those opinions. His hon. friend had spoken of the danger of keeping men’s minds in a state of uncertainty; yet he constantly came down to the House with new speculations. The evil of uncertainty and alarm could only be got rid of by parliament being determined to adhere to the measure they had adopted. Such speculations coming from so great an authority as his hon. friend, were calculated to do much mischief. It had been stated, that we could not get labourers to consent to a fall of wages, and that they ran away with the capital of their employers. By altering the value of money, it was very true that they altered the distribution of property. By increasing the value of the currency, the stockholder received greater value, and another paid more. With rents it was the same: the landlord received more value, and the farmer paid more. Thus the distribution of property was always altered by the alteration of the currency. It was quite possible that this alteration might occasion a glut of certain commodities in the market. For instance, a clothier might bring to market a certain quantity of superfine cloth when prices were at a certain rate; if the clothiers should come to receive more money than before, and their labourers to pay more, it was not likely that the labourers should require so much superfine cloth as those whose property was diminished by the change in the currency had required: the consequence would be a glut of cloth in the market. By altering the distribution of property thus, an alteration would be made in the demand for some commodities; there would be a deficiency of supply to the new taste which came to the market, with the increase of property: and there would be too much for the taste whose resources had fallen. The hon. member for Callington (Mr. Attwood) had ascribed the variations of prices in all commodities to the currency. He begged the hon. member to look at the variations in the prices of corn during the last century, and connect them if he could with the currency. Corn had risen or fallen forty or fifty per cent when no alteration had taken place in the currency. The low price of corn was to be ascribed to the very large importation from Ireland, to the productive harvest, to the very great abundance of corn that was in the country. The demand was limited, because no man could eat more than a certain quantity of bread. If there was more than the usual and ordinary quantity in the market, the price must of necessity fall. We had no outlet for corn, because our prices were higher than in any other country. If the variations in prices were owing to the money standard, which he denied, all countries must have been affected by similar variations, and he wondered that his hon. friend had not told them his experience in that respect in France, America, Russia, Spain, and other countries. But if the variations were owing to what he (Mr. Ricardo) had stated, it was not fair to impute them to the act of 1819. The chancellor of the exchequer had said gold had not risen before the peace of Amiens. This was not quite correct. It had begun to rise in 1799; in 1800 it had been 4l. 5s.
Mr. Baring’s amendment was negatived.
[See for the third reading below, p. 110.]
12 April 1821
Mr. Serjeant Onslow moved for leave to bring in a bill to repeal the Usury Laws. In the course of the discussion Mr. R. Gordon ‘deprecated the theory which this proposition had in view, cautioning the House to beware of theories from the sad experience of the measure for the resumption of cash payments. This, however, was the age of theories, and nothing was heard of but a recourse to first principles.’ Mr. Calcraft, opposing the motion, said that none of the advantages expected from the repeal of the assize of bread had been realised: the present measure would upset mortgages and persuade lenders that they ought to have obtained better terms.
Mr. Ricardo thought the House and the public were very much indebted to the learned gentleman, for the measure which he had proposed; and expressed his astonishment at the apprehensions of members, that its adoption would operate to the prejudice of the landed gentry, by raising the rate of interest; for the fact was, that the lenders of money would not have more power to raise the rate of interest than the borrowers would have to keep it down; and the competition between both would serve to bring it to a reasonable standard. As to the allusion of his hon. friend to the assize of bread, that case had no analogy to the present question, because the maximum upon bread was merely meant to keep the price of that article in due relation to the price of corn. An hon. friend had taken occasion, in referring to the resumption of cash payments, to reprobate what he called that theory. But his hon. friend should consider that the restriction upon cash payments was a departure from the old and established theory of the country, to the sound currency and wholesome practice of which it was now proposed to return. His hon. friend had deprecated change in such a strain, as would really form an argument against any improvement. He had had great experience in the money market, and could state the usury laws to have always been felt as a dead weight on those wishing to raise money. With respect to those concerned in the money market itself, the laws had always been inoperative; and during the war indirect means had been found of obtaining seven, eight, ten and fifteen per cent interest. The laws therefore occasioned inconvenience, but did no good.
Leave was given to bring in the bill. In the course of the session the bill was postponed several times and finally abandoned.
BANK CASH PAYMENTS BILL
13 April 1821
On this bill [cp. p. 105] being brought in for the third reading,
Mr. Ricardo said, he should not have blamed the Bank if they had only increased their issues to an amount sufficient to replace the gold coin that had been removed from the country; but they had extended their issues far beyond what was necessary for that purpose, and to this increase of circulation he ascribed all the depreciation which had followed.
The bill was read a third time and passed.
TIMBER DUTIES BILL
16 April 1821
[See above, p. 102.] Mr. J. P. Grant moved as an amendment that the drawback allowed on Russian timber be repealed. Mr. Wallace opposed the amendment because the effect of such a measure would be to give Norway the monopoly of the trade.
Mr. Ricardo was much surprised at the course of argument adopted upon this question. Norway was said to be benefitted by the new arrangement, merely because she had before suffered a still greater injustice than it was now proposed to inflict upon her. The proposition made by his learned friend went only to place Russia and Norway, as respected the importation of their timber and deals, on the same footing; yet this had been described by the right hon. gentleman, as giving a monopoly to Norway; and it had been contended that such a regulation would cause a proportionate rise in the price of Norwegian timber. Now, a slight degree of attention must convince every one, that the higher the price of Norwegian timber rose, the more able must Russia be to compete effectually with Norway. It was contended, that the interest of the producer ought to be looked to, as well as that of the consumer, in legislative principles. But the fact was, that in attending to the interest of the consumer, protection was at the same time extended to all other classes. The true way of encouraging production was to discover and open facilities to consumption. An hon. gentleman had observed, that timber of a superior quality might be had by those who chose to pay a higher price, and that there was therefore no compulsion on the purchaser. But it was a little too much to raise the price of the best article by means of import duties, and then tell the consumer that he was not obliged to buy the cheap and inferior one. The practical effect of these duties was to raise as much compulsion as could be introduced into commercial affairs.
The amendment was negatived.
REFORM OF PARLIAMENT
18 April 1821
On 17 April Mr. Lambton moved for a committee of the whole House, ‘to consider the state of the representation of the people in Parliament.’ He said that he had prepared a bill extending the franchise to all householders and certain classes of leaseholders, and limiting the duration of parliaments to three years. The debate was continued on the following day.
Mr. Ricardo observed, that the subject of reform was the most important question which could come before that House. He was anxious, therefore, to declare his opinion with reference to it. He agreed with the hon. member for Durham, that it was quite necessary the House of Commons should truly represent the people. It was not necessary for him to have the proof of the recent votes of the House to be convinced that the people at present were not represented. From the manner in which that House was constituted, he was quite certain before of that fact. He would, therefore, embrace any plan which was likely to give the country an efficient representation, and should consequently support the measure now proposed. There was only one thing respecting it which he regretted; and here he was sure that what he was about to declare would be very unpopular in the House: he regretted that his hon. friend did not propose the introduction of voting by ballot, which he thought would be a greater security for the full and fair representation of the people than any extension of the elective franchise. The people would then vote for the man whom they should consider as best calculated to support their interest, without any fear of the overwhelming influence of their superiors. It might be said, that if this were to take place, the effect would be, that in time the people would get rid of the Lords. He denied that this would be the effect. The people would never, when left to their own free and unbiassed choice, be anxious to get rid of that which they considered the instrument of their good government; and unless gentlemen were prepared to assert that the Lords were an instrument of bad government, which he believed nobody would assert, they could not entertain any rational fear that the people would be anxious to get rid of them.
The House divided on the motion: Ayes, 43; Noes, 55. Ricardo voted for the motion.
POOR RELIEF BILL
8 May 1821
Mr. Scarlett moved for leave to bring in three measures to amend the Poor Laws: ‘the first was, the establishing the [poor rates] assessments for the last year as a maximum; the second, the preventing parochial relief where the parties merely grounded their claim upon being unable to obtain work; and the third, the abandonment of the power enabling justices to order the removal of paupers.’
Mr. Ricardo expressed his surprise that any apprehension should be entertained of the tendency of his hon. and learned friend’s bill to create embarrassment in the law of settlement, as the great object of that bill was, to remove all difficulty and litigation with respect to that law. It had been observed that labour, instead of being paid in wages by employers, had been paid out of the Poor-rates. If so, why then should not the amount of such payment be deducted in fairness from those rates? This was one of the objects of his hon. and learned friend’s bill; because that bill proposed to have the labourer paid in just wages by his employer, instead of having him transferred to the Poor-rates. The effect, indeed, of his hon. and learned friend’s measure would be, to regulate the price of labour by the demand, and that was the end peculiarly desired. With respect to the pressure of the taxes and the national debt upon the poor, that pressure could not be disputed, especially as it took away from the rich the means of employing the poor: but he had no doubt, if the supply of labour were reduced below the demand, which was the purpose of his hon. and learned friend’s measure, that the public debt and taxes would bear exclusively upon the rich, and the poor would be most materially benefitted.
Leave was given. Later in the Session the bill was withdrawn.
31 May 1821
During the debate Mr. Lockhart complained that ministers, wishing to gloss over agricultural distress, had purposely delayed the report of the Agricultural Committee.
Mr. Ricardo thought it right to say, in justice to his Majesty’s ministers, and to the agricultural committee, that the charges made against them were not well-founded. (Hear, hear.) No unnecessary delay had taken place in the formation of the report of that committee. (Hear.) The delay had arisen entirely from the peculiar nature of the subject, and could not be attributed to any want of diligence on the part of the members of the committee. (Hear, hear.) He expected and believed that the report would be made before the prorogation of parliament. (Hear.)
1 June 1821
The Chancellor of the Exchequer brought forward the Budget.
Mr. Ricardo said, that the chancellor of the exchequer always gave a most flattering account of the state of the country. Last session he had declared that the funds which would be applicable to the expenditure of the present year would be much greater than what he had now stated them to be. He had stated that the addition to the sinking fund would have been 1,700,000l. instead of 950,000l. had it not been for the additional interest on exchequer bills. Now, he wished to know whether the interest of those exchequer bills had not been provided for in the preceding session? He thought a sum was voted for that purpose, because he took occasion, on the last budget, to remind the right hon. gentleman that he had made no provision whatever for the interest on the exchequer debt; and he stated in answer, that provision had already been made out of former votes. If that were the case, he must place this payment against certain debts which should be liquidated in the present year, and not against that which fairly belonged to the budget of former years. From the papers which were in the hands of members, it appeared that the account might be correctly stated thus:— By the annual accounts, the amount of the unfunded debt appeared to be 17,292,544l. There were funded, during the last year, 7,000,000l. exchequer bills, which, added to the former amount gave a total of 24,292,544l. There was a deficiency arising on the consolidated fund, which the right hon. gentleman had entirely left out of view. That deficiency amounted to 517,232l. during the present year, and this being added to the enormous deficiency which existed before, might be stated, in fact, at 8,990,000l. And here he could not help remarking, that these accounts, from the way in which they were made up, did not give the committee that correct view of the state of the finances which it was desirable that it should be furnished with. If he wished to consult them for information, he could find no part from which he could clearly discover what the annual deficiency upon the consolidated fund really was. A paper having been moved for some time since, he was enabled to ascertain that on the year ending the 5th Jan. 1821, that deficiency was 8,850,327l. and in the year ending 5th Jan. 1820, 8,321,000l. The difference between the sums was 429,327l. Now, this being the case, what was the reason that in the annual printed accounts which were delivered to the House, the amount of the deficiency upon the consolidated fund for the very same period , was stated at 517,232l. instead of 429,327l.? making a difference between those accounts and the return which he spoke of, of 87,905l. He did not mention this difference upon account of the magnitude of the sum, but for the purpose of showing how little reliance could be placed on these public accounts, under their present shape. But, to return to the matter of those accounts. It seemed that, during the last year, we had contracted loans to the amount of 24,292,544l. to which must be added, for the deficiency upon the consolidated fund, 517,232l., making together 24,809,776l. Against this amount they must put that part of the debt which had been paid off. It must be shown how much money had been devoted to that purpose; and then, whatever balance appeared, by so much had our debt increased or decreased. We had a sinking fund last year of 17,510,000l. The amount of treasury bills paid off was 2,000,000l. The difference between the amount of exchequer bills upon the 5th January, 1820, and the 5th January, 1821, was 5,934,928l. So that we had devoted, in truth, to the payment of the national debt, whether funded or unfunded, during the current year, the sum of 25,444,928l., and reckoning, as he did, the amount of the debt contracted to be during the same period, 24,809,776l., the difference would be 635,152l. The actual amount, therefore, of difference, between the debt on the 5th Jan. 1820, and the debt on the 5th Jan. 1821, did appear to be no more than 635,152l., although the right hon. gentleman by some other species of calculation, made it amount to 950,000l. The House was told by the right hon. gentleman, that there would be a sinking fund next year, of 4,000,000l. Now, assuming the revenue for the current year to be as stated by the right hon. gentleman, and supposing that there should be such a sinking fund, it was to be remembered that the right hon. gentleman had included in his calculation a sum of 500,000l. which he said he was to receive from France, and which was applicable towards the payment of the national debt during the present year. But if this 500,000l. was so applicable during the present year, it would not be in the next, or any future year. He (Mr. Ricardo) wished to know what funds could be made of general and permanent application in this way; and therefore it was of little avail to bring forward such a sum as this in such a statement. He took it that the sinking fund would really amount to 2,809,000l.; and the sinking fund on exchequer bills, to 290,000l., making the sinking fund 3,099,000l. instead of 4,000,000l. He confessed he was one of those who thought a sinking fund very useless. He did not mean to say that he was not favourable to such a fund in the abstract. Upon the principle of the thing there could be hardly any doubt; but, after the experience which they had had, he did not expect to see that principle acted upon. He did not expect that it would ever be made applicable to the reduction of the national debt. The hon. gentleman then briefly recapitulated the history of this fund from the time of sir Robert Walpole. When Mr. Pitt came into power, he was desirous of establishing a sinking fund upon the safest and most permanent principles, so as to secure it from all inter-meddling of ministers. What had become of this sinking fund, and where were all these boasted securities? First of all, the present chancellor of the exchequer came down to the House boasting (as if he were going to confer a great obligation on the country and the fund-holder) of his intention to take about 7,000,000l. of the annual income of this sinking fund; and he then talked of the greatness of the treasure with which we should be incumbered. That right hon. gentleman’s alarms ever seemed to arise, not from any prospect of our poverty but from the great increase of our wealth; and accordingly he was always telling the House of the various mischiefs that resulted from excess of capital. Had that right hon. gentleman considered the true principles of capital, he would have seen that there never could be much danger of its excess. Upon the subject of this sinking fund, he would take the liberty of calling the attention of the House to a pamphlet which had been written under the auspices of a right hon. gentleman opposite he believed. [The hon. gentleman here read an extract from a pamphlet.] This was the system of which it had been gravely observed that no departure from the original measure, and no violation of the act of 1792, had taken place in the subsequent appropriation of the fund. Now, the principle of Mr. Pitt’s system was professedly this—that thereafter, every war should carry in itself the seeds of its own destruction. In every word of the reasoning of this pamphlet upon this question, he (Mr. R.) did most cordially agree; and hence he inferred, that such appropriation as had been made of the sinking fund, was a violation of the public faith. It was the violation of that fund which had entailed upon us a large increase of debt; and they who expected to see it preserved inviolate hereafter, did, in his opinion, deceive themselves. The right hon. gentleman had ventured to apply, in payment of the interest of a new debt, almost all the sinking fund that remained to us. Almost all, did he say! The right hon. gentleman had, in effect, applied the whole of it. He had lately increased the taxes by 3,000,000l., a sum which was more than the sinking fund actually amounted to. He (Mr. R.), therefore, was rather disposed now to say, “Let us have no sinking fund; let the money remain in the pockets of the people. When the ministers want supplies, whether for carrying on a war, or for any other purpose, let them come down to the House and ask for them, without having any such fund to resort to.” Ministers were accustomed to tell the House that they must have a sinking fund to meet exigencies, to second the efforts of our armies and generals, and to inspire the enemy with a salutary respect for us. But the legal and the original intention of the sinking fund was, to pay off the national debt; in proof of which he might refer the House to a well known speech of Mr. Pitt’s. [Here Mr. Ricardo read a passage from it.] After this declaration of Mr. Pitt, and after all which they had seen in late years, could they place any confidence in ministers as to their being likely to act upon such a principle? Under all circumstances, whenever a motion should be made for the repeal of any tax that was within the actual amount of the sinking fund, he, for one, would support such repeal. He knew it would be objected that the revenue would sometimes fall short in particular branches, which would make it difficult to supply the deficiency. If so, let government impose new taxes to raise the full sums necessary for the state; but he would never consent to this sort of misapplication of a fund created for the specific purpose of liquidating the debt of the country. But this sum had been appropriated and fresh taxes imposed likewise. The people consented to fresh taxes on that occasion, in the hope that they should the more speedily experience some relief; and but for this reasonable expectation, parliament too would never have been induced to impose them. Unfortunately, the people of England were at this moment much more in debt than they would have been if there had been no sinking fund in existence. He should offer but a word or two relative to saving banks. He highly approved of them; but a plan had been suggested by a gentleman in the country, to which he thought the House would do well to pay some attention. The name of this gentleman, he believed, was Woodrow, and his plan was one by which a life-annuity income might be obtained in these banks. The plan was, that persons at an early age might be willing to make a trifling sacrifice, which, by the operation of compound interest, would in the course, say of thirty or forty years, increase to a considerable sum. At the birth of a child, a father might be disposed to put by a small sum of money, for the purpose of procuring to the child an annuity hereafter: a plan of this kind would be productive of great benefits.
ILL-TREATMENT OF HORSES BILL
1 June 1821
On this bill, which was brought in by Mr. Richard Martin,
Mr. Ricardo said, that when so many barbarities prevailed in fishing and hunting, and other species of amusement, it was idle to legislate without including all possible cases.
[The session closed on 11 July 1821.]