BANK CASH PAYMENTS BILL 9 April 1821 - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 5 Speeches and Evidence [1819]
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The Works and Correspondence of David Ricardo, ed. Piero Sraffa with the Collaboration of M.H. Dobb (Indianapolis: Liberty Fund, 2005). Vol. 5 Speeches and Evidence 1815-1823.
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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.]
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