ADDRESS ON THE KING’S SPEECH AT THE OPENING OF THE SESSION
5 February 1822
The King’s speech was delivered this day. On the motion for the address, Mr. Hume moved an amendment recommending a reduction of expenditure, on the grounds that the excessive taxation was ‘a principal cause’ of the agricultural distress.
Mr. Ricardo, though he agreed with everything that had fallen from his hon. friend, the member for Aberdeen, in favour of economy and retrenchment, could not vote in favour of his amendment, as he differed widely from his hon. friend as to the causes of the existing agricultural distress. His hon. friend stated, that the cause of that distress was excessive taxation; but the real cause, it could not be denied, was the low price of agricultural produce. That taxation should be the cause of low prices was so absurd and so inconsistent with every principle of political economy, that he could not assent for a moment to the doctrine. Agreeing, however, as he did, with his hon. friend, as to the necessity of economy and retrenchment, and as to the impropriety of making loans to the occupiers of lands, he was sure they would be frequently found, in the course of the session, pursuing together that necessary object, a reduction of expenditure and taxation.
The amendment was negatived.
MR. BROUGHAM’S MOTION ON THE DISTRESSED STATE OF THE COUNTRY
11 February 1822
Mr. Brougham moved ‘That it is the bounden duty of this House, well-considering the pressure of the public burthens upon all, but especially the agricultural classes, to obtain for the suffering people of these realms such a reduction of the taxes as may be suited to the change in the value of money, and may afford an immediate relief to the distresses of the country.’ The Marquis of Londonderry opposed the motion.
Mr. Ricardo denied that taxation was the cause of the present agricultural distress. A country might, he said, be totally without taxes, and yet in the exact situation that England was at present. It was consistent enough in those who thought that the restoration of the currency had made a change of 50 or 56 per cent. in the value of money, and had consequently increased the actual value of the taxes in that proportion, though their nominal amount still remained the same, to say that taxation was the chief cause of the distressed state of agriculture; but it was impossible for those who held that the restoration in the currency had not created any thing like so great a change, to accede to such a statement. From the line of argument which his hon. and learned friend had pursued in one part of his speech, he was afraid that his hon. and learned friend was going to prove, that the very taxation which he wished to reduce was a source of benefit to the nation. His hon. and learned friend had stated, that the manufacturers of leather, on account of the tax on it, largely increased its price to the consumer, and derived so much benefit thereby as to be ready to represent it to parliament as a very useful and beneficial tax. Surely, by a parity of analogy, the agricultural interest, burdened as it was by taxation, might petition parliament against a reduction of it, since it was as much in their power as in that of the leather-manufacturer, to make it useful in enhancing the price of their commodity to the consumer. His hon. and learned friend had, however, drawn a very nice distinction—so nice indeed, that, for his own part, he was not gifted with ability to discern it—between the circumstances in which the leather-manufacturer and those in which the agriculturist was placed. He had said, that, in the case of the manufacturer, the taxation was paid by the consumer; but that in the case of the agriculturist, it was paid by the seller, and could not be charged to the consumer. He could wish his hon. and learned friend had stated to the House his reasons for such an assertion. If he were to be called upon to declare what he conceived the cause of the present depressed state of agriculture, he should say, that the cause of it was the abundance of produce now in hand, arising from the late abundant harvest, the quantity of land recently brought into cultivation, the importation of corn from Ireland, and various other causes, which it was not material for him at that time to mention. Indeed, the House would deceive both itself and the country, if it should come to a resolution that taxation was the cause of the distresses of the agricultural interest. He perfectly concurred in the opinion of his hon. and learned friend, that the present state of things could not last long: that was an unnatural state of things, in which the farmer could not obtain a remunerative price for his produce, and the landlord could not obtain an adequate rent from his tenant. His hon. and learned friend had stated, that unless something were done to relieve the farmer, much of the land would be thrown out of tillage. He said so too; and it was to that very circumstance that he looked forward as a remedy. His hon. and learned friend, among the other observations which he had made, had made some upon a set of individuals whom he stated to be anxious to transfer the whole landed property of the country into the hands of the public creditor. For his own part, he could not help observing, that he knew of no persons who entertained such wishes; neither could he imagine any cause which could, under such a measure, be necessary. He himself thought that the landholder might be enabled to receive an adequate rent, without any breach of faith being committed towards the stock-holders. With regard to the stock-holders, it might be supposed, from the language which had been used that evening, that it had been proposed to transfer to them the property of the land-holders, and to leave the land-holders entirely without resources. Now, such a proposition never had been, and never could be, seriously propounded. But though he said that, he was prepared to assert, that it would be most advisable, both for the land-holder and stock-holder, that the former should surrender to the latter a part of his property, in liquidation of the debt that had been contracted. Indeed, as the stockholder received, in the shape of interest, taxes from the landholder, it might be said that a part of the land did at this moment absolutely belong to him. [Cries of “Hear” from both sides of the House.] He would suppose, that during the war the ministers had come into the House, and, after stating the necessity of the case, had called upon the country gentlemen to give up a certain portion of their property in a direct manner to the exigencies of the state. Must they not, in that case, have absolutely parted with a portion of it? And if at that time others advanced for them that capital which they had not in an immediately tangible shape, was it not right that the capital so advanced should now be repaid to them? He was not demanding for the stock-holder more than he was entitled to receive; he was merely demanding that, in a compact such as he had described, the terms should be fairly and honourably fulfilled towards him. If the alteration in the value of the currency had given to the stock-holder more than he was entitled to, which he (Mr. R.) did not believe, let it be shown and let the deduction be made openly and without disguise. These were all the observations which he should obtrude at present upon the House. On a future occasion, he should explain the reasons why he thought that the alteration produced in the value of money by the restoration of the currency, had been greatly over-stated; and then he should endeavour to show, that if proper measures had been taken at the time of passing Mr. Peel’s bill, the resumption of cash payments would have produced no greater effect on the price of corn and other agricultural produce, than a fall of five per cent; whatever greater fall might have taken place, would have been attributable to other causes.
Mr. Brougham replied that he had been misrepresented. What he had said was, that the large capitalists interested in the leather trade derived a benefit from the tax on leather because it prevented men with small capitals from competing with them.
The previous question being put the House divided: for Mr. Brougham’s motion, 108; against it, 212. Ricardo voted with the minority for the motion.
18 February 1822
Mr. Ricardo presented a petition from Mr. John Woodrow who, he observed, had taken a great deal of pains in examining into the best mode of relieving the poor, and who was of opinion that the principle on which the Saving banks were at present conducted was not the most beneficial that could be devised. He conceived it would be much better, if those who vested their money in these banks were paid by way of annuity, but at a less rate of interest than was now given. Their money might be allowed to accumulate, and thus a comfortable provision would be insured to them, when they arrived at an advanced age. He (Mr. R.) thought the plan deserved the attention of the legislature.
MOTION FOR A COMMITTEE ON THE AGRICULTURAL DISTRESS
18 February 1822
On 15 February the Marquis of Londonderry announced the policy of the Government on the ‘Agricultural distress and the financial measures for its relief;’ he then gave notice that he would move for the revival of the agricultural committee and that the Chancellor of the Exchequer would bring forward a measure for enabling the Bank to issue 4,000,000l. on 3 per cent. Exchequer Bills in loans to different parishes on the security of the poor rates, to be used for the relief of the agriculturists. Accordingly, on 18 February, the Marquis of Londonderry moved that the report of the committee on the agricultural distress, presented in 1821, be referred to a select committee. Mr. J. Benett, Mr. Stuart Wortley and several other members having spoken on the motion,
Mr. Ricardo began by observing, that the hon. member had stated, that the operation of the sinking fund in the purchase of stock, would have the effect of reducing the interest of money, thus benefiting mortgagers and other borrowers, and in that way relieving the landed interest. But he begged to say, that the interest of money depended upon other causes. The rate of interest depended upon the profit that could be made upon the employment of capital; and that again depended upon the wages of labour, which were regulated, in a great measure, by the price of food. While a sinking fund was fairly applied, it might and would raise the price of stock; but it by no means followed, because the price of stock rose, that, therefore, the rate of interest would generally fall. He would not be understood to be adverse to the principle of the sinking fund, if he could be assured that it would be really applied to the liquidation of the public debt: but he found from experience, that, while the people were called upon to pay a large proportion of taxes for the maintenance of this fund, in the hope that it would be applied to the discharge of their debt, they experienced nothing but disappointment, through the manner in which that fund had been appropriated by the ministers. The existence of this fund would serve only to encourage ministers to engage in new wars, by facilitating the contraction of new loans. Such, indeed, had been the destination of every sinking fund which the country had known, from the plan of Walpole to those of the ministers who followed him. Mr. Pitt, notwithstanding the experience he had derived of the fate of all sinking funds, established by his predecessors in office, had been unable to secure his own. What a variety of expedients had been resorted to in order to keep up that system, and to secure the application of it to the purpose for which it was professedly designed at the outset. But they had all been ineffectual against the attacks of the present chancellor of the exchequer; a sinking fund which ought to be now above 20,000,000l. was so reduced that with the addition of 3,000,000l. of new taxes it only amounted to 5,000,000l.; and he had no doubt, whatever, that within a few years this grant would be found quite as inefficient as any that had preceded it. The hon. member for Wiltshire, had pronounced great praise upon the speech of his hon. and learned friend (Mr. Brougham); which was the more extraordinary, as the hon. member differed from all the main positions laid down by his hon. and learned friend; for, in opposition to the views of the hon. member, his hon. and learned friend had maintained, that it was impossible to raise the price of agricultural produce: that the producer could not transfer the taxes imposed upon him to the consumer, in the same manner as manufacturers could; while the hon. member for Wiltshire had maintained, that taxation did tend to increase the price of raw produce, his doubt only being as to the time that would be requisite for such purpose. His hon. and learned friend had observed, that if a man embarked any large proportion of capital in manufactures, he might, by the use of improved machinery, and other means, contrive, not only to overcome any discouraging prospect which might appear at the outset to damp his speculations, but even to advance his profits beyond any thing upon which he could originally calculate. But the agriculturist, upon investing his capital, had no other remedy for any discouraging prospect, excepting time alone, while he was oppressed with certain taxes; for he would never make the consumer pay them. The hon. member for Wiltshire’s observation, as to the time required to transfer taxes on raw produce to the consumer, was not applicable to the matter under discussion, because no new taxes had been laid on agricultural produce. If his observation had been applied to any taxes now for the first time proposed to be adopted, it would no doubt be entitled to attention. But it was to be recollected, that the taxes to which the hon. member had alluded, were, it might almost be said, interwoven with our general system of taxation, having existed for several years; yet that which had so long existed, was now by many persons set down as the cause of the low price of agricultural produce; and hence it was argued, that taxation was the cause of the public distress. But to the agriculturists he would say, that the only effectual remedy for their case was, to regulate their supply by the public demand: and, if they did not take special care of that, all other efforts must be unavailing. He had been represented by the hon. member for Wiltshire as to having said, that the land was mortgaged for the whole of the public debt. But he declared that he should have been quite ashamed to have made any such observation, as he only meant to say that which was his opinion, namely, that the land-owners were, as well as the other classes of the people, responsible to the fund-holders for the payment of their share of the debt [hear, hear!.] From the responsibility the fund-holder himself was not wholly exempted: towards the payment of his own debt he must himself be a large contributor. He did say, that it was for those who contended that the fund-holder received more than his fair share, to show the House how this had happened; and that if such were really the case, a proportionate abatement ought to be conceded. His hon. and learned friend (Mr. Brougham) in his last speech had remarked, that to raise the price of corn was impossible; and that, therefore, the remedy for the present depression must be by reducing taxes: but that, if this reduced taxation should not have the effect of placing the gentlemen of landed property in affluence—[cries of “No.”]
Mr. Brougham observed, that the case he put on a former evening was that of the distress of the landed interest becoming intolerable.
Mr. Ricardo said, he might in some degree have misunderstood his hon. and learned friend, but he would offer a word or two on the subject of this distress. It was not very long ago since they were all in a state of the greatest alarm, on account of the distressed manufacturers. It was conceived that our manufacturers were declining and the most gloomy apprehensions were indulged on their behalf. But he then took the liberty of intimating his opinion, that those distresses were not permanent; and, happily, his predictions had been fulfilled. He was disposed to hope equally well of the agricultural interests; but not while such a system of corn laws as the present existed. He thought it was most desirable to fix some system by which the prices of corn might be rendered less variable, and by which a proper and adequate compensation might be secured to the grower. One of the measures of relief proposed was, an advance of four millions by the Bank at three per cent interest. This was an hazardous experiment, unless the Bank had issued four millions more than was necessary for the circulation of the country. The House would do him the favour to recollect, that, in the session of 1819, he expressed an opinion on the Bank question, for which he received a reproof at the time from an hon. director, that the Bank should not then buy gold, but rather sell it. His fears, he would confess, were now the other way. Vast quantities of gold had been obtained by them to supply the circulation of this country; and he now begged the directors to consider whether they had more than was sufficient for that purpose; for if they had not, he was quite sure that the measure which they were about to adopt could not be expedient, for four millions could not be absorbed in our circulation. It was quite impossible that four millions could be added to the circulation, without affording a great inducement to export the gold. If the Bank had no greater quantity of gold than sufficed to carry on the circulation of the country, no measure could be more injudicious than this, as it respected them. If, on the other hand, having large quantities of gold in their possession, they issued four millions of additional currency, the effect would be, to promote the exportation of gold, to lower its value all over the world, and to turn the foreign exchanges against us. He gave the directors of the Bank full credit for their good intentions; he believed that men of higher honour or integrity could not exist; but he thought they had not a sufficient degree of talent for the management of so vast a machine as that with which they were intrusted. Once more he would intreat them to consider the matter well, in all its probable consequences, before they increased the present currency, by so large a sum as four millions. And here he would beg the House also to reflect what might have been the effect of the bill brought in by the right hon. gentleman (Mr. Peel), had it been fully acted on. He (Mr. Ricardo) had ventured to say, that its effect upon prices would be about five per cent. To that opinion he still adhered; and he thought he could demonstrate the fact. The state of our money system at that time was this:—gold was five per cent higher in value than paper; that was, a man having an ounce of bullion could per chase the same quantity of any commodity as another man could do with 4l. 2s. in Bank notes. The question was, how to make these two denominations of money coincide in value? It was quite clear, that if nothing was done to alter the value of gold, it was only necessary to raise the value of paper to the same level, and that then the sum of 3l. 17s. 10½d. in paper would purchase as much as the ounce of gold. After the right hon. gentleman’s bill was brought in and had passed, he (Mr. Ricardo) regretted that it was not carried into effect in the method at first proposed; he referred to the intended payments in bars of gold bullion. If that plan had been acted upon, the Bank would have been competent to have answered all demands upon it with the gold then in their possession, how small soever that sum might have been. As they therefore, in that case, would not have affected the general value of gold in Europe, by making large purchases in other countries, the change could not possibly be greater than the difference between gold and paper, at the time of the passing of the bill. The bill of the right hon. member (Mr. Peel), he did not conceive to be materially different from the plan proposed by himself, for it established an intermediate system of payments in bullion, and did not make the payments in cash imperative till the 1st May, 1823. He could not imagine the reasons which had induced the Bank to commence cash payments at so early a period. He had always blamed them for being too hasty in their preparations; for if they had contented themselves with bullion payments, and the country had seen the advantage of that system, it might have been continued—as undoubtedly it would have been wise to continue it—and payments in cash might have been deferred some years longer. If the affairs of the Bank had been conducted with skill, the directors, instead of forcing so great an importation of gold, should have kept the exchange as nearly as possible at par. He repeated then, that the consequence of the law, if skilfully acted upon, was only to cause a rise of 5 per cent. But the Bank had acted very differently, and had imported a great quantity of gold; as much perhaps as twenty millions. This, of course, had created a change in the price of commodities, in addition to the apparent difference between paper and gold. The buying up of this quantity of gold must have affected a change in the value of it (as compared with other commodities) throughout Europe. What the amount of this change was, it was impossible to say—it was mere matter of conjecture. But when they took the quantity of gold in circulation in Europe into the calculation, and all the paper also, for that too must be reckoned, he did not conceive that it could be great, and he should imagine that 5 per cent would be an ample allowance for the effect. [Hear, hear!].—With respect to the 4 millions of Exchequer bills, and the mode of their application which the noble lord had made a part of his plan, he was really astonished to find the right hon. member for Chichester (Mr. Huskisson), in a speech which contained many sound observations, supporting a system for lending the public money on the security of corn and poor-rates. Such a system was decidedly contrary to every established principle of political economy and common sense.—As to the effect and operation of taxes, he wished to make one or two observations. There were two descriptions of persons, producers and consumers, likely to complain to that House of the pressure of taxation. Against the producers he was prepared to say, he would shut the doors of that House. He would tell them they had the remedy in their own hands; that they must regulate their own price, by making the supply square with the demand. But to the consumers on whom the taxes really pressed, he would say, the doors of the House should be always thrown open. When they said that their income was unequal to their expenditure, and that taxes prevented them from procuring the comforts and enjoyments to which they were accustomed, he would say, that their prayers were entitled to the utmost attention, and that the taxes should as far as possible, be removed. Now, he would ask gentlemen, to whom they supposed the repeal of the malt tax would be a benefit—to the farmer who produced it, or to the general consumer? He should say to the consumer. And so on of the salt, the soap, and other taxes, which affected articles of general consumption. That would be his reason for calling for the repeal of these taxes; but not at all from the impression that those taxes were duplicated or triplicated by dealers or sellers. His hon. and learned friend seemed to think, that if a commodity changed hands two or three times, each dealer would charge 10 per cent on the amount of the tax; so that, after various changes, it might be increased to an almost indefinite amount to the consumer; but, if these two or three changes took place in the course of one year, 10 per cent, supposing that was the ordinary rate of profit per annum, would satisfy all the persons through whose hands it passed. He had been represented, very erroneously, to have stated that reduction of taxes was not a benefit. But the contrary was the fact. He always thought that taxes were injurious, but they affected all classes of consumers, and the repeal of any one of them would not be particularly serviceable to the agricultural class. His hon. and learned friend observed, that if the quantity of capital were increased, it was an axiom in political economy, that profits would be diminished. Far from that being the fact, he denied the position altogether. If the capital of the country were doubled and the price of provisions lowered, he would have no doubt that the rate of profits would not be reduced. But with the continually increasing population of England, they could not have low prices of corn, if they did not import foreign corn. He would not at this moment propose an importation free of all restraints, but he would agree to a protecting duty (the amount he was hardly capable of fixing), gradually declining till the duty was equal to the peculiar burthens to which the farmer was liable. The hon. member after a recapitulation of his remarks, and characterising in strong terms of reprobation the impolicy of the system of lending the public money upon the security of corn or poor’s-rate, concluded with observing, in reference to what had fallen from the hon. member for Wiltshire as to the increased amount of taxation which the landowners and farmers had now to pay in consequence of the depreciation of the currency, that the fundholders were subjected to the same advance upon the taxes, although that class of proprietors had not derived any additional advantage from the war or its consequences, as Mr. Mushett had most satisfactorily demonstrated. —[The hon. member sat down amidst loud and general cheering.]
A committee was appointed, consisting mostly of the same members as the committee of 1821 [see above, p. 86–7] including Ricardo: among the new members were W. W. Whitmore and Sir J. Newport.
WAYS AND MEANS
22 February 1822
Col. Davies called the attention of the House to certain discrepancies between the finance accounts for the year and the statement of income and expenditure of the country up to 5 Jan.1821. Mr. Hume moved that ‘the Chancellor of the Exchequer should be requested to reconcile the two accounts’.
Mr. Ricardo thought it necessary that some explanation should be given; and he begged leave to call the attention of the Chancellor of the Exchequer to a question which he (Mr. Ricardo) had put to him last year, when he had brought forward his Budget. The sum which had actually been devoted to the repayment of Exchequer Bills up to January 15, 1821, had been only 950,000l., while the Chancellor of the Exchequer had said it would be 1,700,000l., it appearing that 700,000l. had been expended in the payment of interest on Exchequer Bills. Next year the Chancellor of the Exchequer had promised that the surplus would be 4,000,000l. But when it came to be ascertained, it had turned out to be only 2,600,000l. How was the Right Honourable Gentleman to reconcile these differences. The interest on Exchequer Bills had amounted to 1,380,000l. and this, with some other matters not well explained, made a total of 1,700,000l. If the accounts were to be kept in this way, it was impossible that the Members of that House could come to any knowledge of the real state of the country. They had been told of large surpluses, which, from year to year, were to be available to purposes of economy, but when they came to count those sums, they found that the greater part had vanished. If they were told that 1,700,000l. would be available in one year, and instead of that had only 950,000l.; if they were told that in the subsequent year there would be four millions, and it had turned out that there were only two millions, what security was there that next year they might not have only two millions instead of the five millions, of which the Right Honourable Gentleman had boasted? The whole of the boasted surplus might thus, it was evident, be absorbed in a quarter of which the House had no knowledge. It had been said that the expences were to be but 18,210,000l. but upon casting up the four items of which they were composed, the amount proved to be eighteen millions five hundred and fifty thousand pounds. If the expenditure of the year was to exceed the estimate by half a million; if they were to be told of a surplus of four millions, and then in place of that to have a surplus only of 2,600,000l. Then what security had they that there would be a surplus of five millions next year? He thought that the matter stood in much need of explanation.
NAVY FIVE PER CENTS
25 February 1822
The Chancellor of the Exchequer introduced a measure for the commutation of every 100l. of Navy five per cents into 105l. of a new four per cent stock. The time allowed for holders resident in Great Britain to signify their dissent was limited to the 16th of March; for those who lived out of Great Britain and in Europe, the 1st of June; and for those who lived out of Europe, twelve months from the present time.
Mr. Ricardo thought the plan very desirable, and the terms proposed by ministers extremely fair. With regard to the time allowed for option, he thought it amply sufficient. But, suppose persons were to purchase stock in the name of others residing abroad, with a fraudulent intention, would they be entitled to the extended term, or would they be obliged to give their answer by the 16th of March?
The Chancellor of the Exchequer said, the case supposed by the hon. member would be precluded by some resolutions which would be subsequently read at the table.
Mr. Ricardo said, it would very much facilitate the plan, if such holders of five per cents as assented, could know at what time the transfer to the four per cents was to take place. The question of the dividends might at first sight offer some difficulty, but this difficulty was more apparent than real, because the very same dividend which was given to a person holding 100l. in the five per cents might be given to a person holding 105l. in the four per cents. If this stock were quickly transferred, the natural consequence would be, to raise the price of it in the market; and as persons would be induced to speculate in it from the advantage of a small but quick profit, the operation from this circumstance would be much facilitated. The right hon. gentleman would do well if he explained the mode in which the money was to be paid off to persons who dissented. It was evident that persons having an option, and who were in doubt whether they might or might not have made a bad bargain, would not decide till the latest moment. He should like to know then, if many thousand letters came in on the 16th of March, how these applications were to be disposed of.
The resolutions were agreed to.
5 March 1822
Mr. Scarlett, in presenting a petition from Peterborough, said that a superabundance of produce could not of itself have caused the agricultural distress. ‘Supposing the farmer were to pay all the demands made upon him—for instance, his rent, tithes, and taxes—not in money, but in kind—would it not be clear that, in such a case, an abundance of produce would be of considerable advantage to him? How, then, could it be maintained, that abundance of produce, under the existing state of things, was the chief cause of the evils by which the agriculturist was now oppressed?’
Mr. Ricardo said, it was true, that, if the produce of the land was divided into certain proportions, every party would be benefitted by an abundant crop; but his learned friend having come to that conclusion, left his argument there, instead of extending it a little farther. Now, he would ask his learned friend whether, if the quantity of commodity were excessively abundant, that was to say, the double, treble, or quadruple of an ordinary crop, it would not be a cause of poverty to the agriculturist? He maintained that it would be so; for the farmer, after having satisfied the consumption of himself and family, would find, upon going to exchange the surplus of his commodity for other commodities , such a competition in the market as would compel him to dispose of it upon very low terms; and thus abundance of produce would be to him a cause of distress. It was true that, from the alteration of the currency, the evil had been aggravated; for it was clear that it rendered it necessary to sell a greater quantity of corn to answer the demands of the government and the landlord. But he now contended, as he had at all former times contended, that, up to a certain point, for instance, 10 per cent, great loss had been derived from the change in our currency; but that the rest of the distress was to be attributed to the increased quantity of produce.
BANKS OF ENGLAND, AND OF IRELAND
8 March 1822
Mr. Maberley’s motion for an account of the interest paid to the Bank of Ireland having given rise to some discussion on the comparative charges made by the Banks of Ireland, and of England, Mr. Pearse (a Bank director) rebutted ‘the insinuations thrown out against the Bank of England’ and said: ‘The hon. member for Portarlington had, upon a former occasion, asserted, that the directors had scarcely ability enough to perform the duties with which they were intrusted: but he (Mr. P.) preferred the opinions of the proprietors of Bank-stock, who elected them annually, to all the theories of modern philosophers on the subject.’
Mr. Ricardo said, that whenever the conduct of the Bank was brought before the notice of the House, he should think it his duty to speak of it as he thought and felt. With regard to the directors, he was willing, at all times, to give them full credit for honesty of intention; but he could not help thinking, that they had at different times involved the country in considerable difficulties. He persisted in saying, that the Bank restriction act which was passed in 1797, might have been unattended with detriment to the country, had the directors known how to manage their own concerns. But, not knowing how to manage them upon true principles, they had issued a quantity of paper so large as to depreciate its own value; and to recover from that depreciation, the country had found it necessary to undergo a painful process, which had been the cause of a great part of the present distress. Ever since the year 1819, the Bank had committed a great error in its eagerness to provide gold. That error they confessed themselves, when they offered to lend government 4,000,000l. Such an offer he took to be a specific confession of error, inasmuch as it was a declaration that they had amassed more gold than was necessary, and by so doing had aggravated the evils under which the country suffered. As to the plan of the Bank lending 4,000,000l. to the government, he viewed it with some degree of fear, because the directors had convinced him by their conduct that they did not know what they were about. If they thought they could issue either 4,000,000l. of gold coin, or even of paper, without withdrawing the gold coin from circulation, they were mightily mistaken. He was quite sure that the currency could not absorb it, and therefore it must go abroad.
DISTRESS IN CANADA
13 March 1822
Mr. Marryat presented a petition from the House of Assembly of Lower Canada complaining of the distress caused by the restrictions imposed on their trade by the British legislature.
Mr. Ricardo thought the House bound to attend to the complaints of the petitioners. The Canadians suffered serious hardships which ought to be removed; they complained, 1st. That we did not take timber from them on the same terms as we did before. 2nd, that we refused to admit their corn. And 3dly, that they were subjected to the inconvenience of purchasing all articles in our markets. As to the first, we had a right to go to any market we pleased for our timber; but, on that very principle, the second cause of grievance ought to be done away, and their corn ought to have access to our markets. With respect to the forcing the colonies to purchase in our markets, when they might be more conveniently supplied elsewhere, it was an inconvenience to which they ought not to be exposed. He would always oppose that principle, not only as applied to Canada, but to every other colony.
MOTION RESPECTING THE SIMPLIFYING AND BETTER ARRANGEMENT OF THE PUBLIC ACCOUNTS
14 March 1822
Mr. Maberly, in moving for a select committee on the public accounts, observed that the various public accounts, when compared with one another, were full of errors; for instance, the balance-sheet account presented by the Marquis of Londonderry on 15 February last, differed from the finance accounts of 1821, and the Chancellor of the Exchequer’s account differed from both. Mr. Lushington, in the course of his reply, said that ‘the balance-sheet form was adopted at the suggestion of an hon. member (Mr. Ricardo), and was deemed to be the most compendious way of stating the accounts.’
Mr. Ricardo said, that the public accounts ought to be so stated, that every member, upon referring to them, might be able to make a balance-sheet from them, and see at once what was the actual revenue, and what the expenditure of the country.
The motion was withdrawn. On 18 April on the motion of the Chancellor of the Exchequer a select committee was appointed ‘to investigate the manner in which the public accounts are at present kept, and to suggest such improvements in the system as might appear necessary.’ Ricardo was appointed a member of the committee.
MR. CURWEN’S MOTION RESPECTING THE DUTIES ON TALLOW AND CANDLES
20 March 1822
Mr. Curwen moved for a committee to take into consideration the propriety of augmenting the duty on imported tallow and of repealing the duty on candles. Mr. Robinson (President of the Board of Trade) opposed the motion; ‘he could not agree to a proposal which could only benefit agriculture by throwing a burthen on the whole body of consumers, or by impeding the trade of the country.’ Besides, ‘the just complaint of foreigners, was, that the trade of this country was so restricted, that all their ingenuity was required to get an article into this country on profitable terms; and now that one article was found on which they could get a profit, the state was to step in and take it in the shape of a tax. If this was to be our rule of commercial policy, we might as well shut up shop at once.’
Mr. Ricardo said, he had heard with great pleasure the principles avowed by the president of the board of trade, and hoped the right hon. gentleman would hereafter act upon them; for if they had hitherto been followed up, the right hon. gentleman could never have proposed the duties upon cheese and butter [Hear!!.] The hon. mover was a great friend to agriculture, and was ready to go a great way in support of it. The length to which he had gone that night was really surprising, for he had told them exactly the quantity of tallow produced in this country, the quantity produced abroad, and the effect which the tax operating on this quantity would have upon the price, which he told them was precisely 5l. 10s., the rest of the proposed tax being to be paid by the foreign producer. How the hon. gentleman got at this result was surprising. He believed the fact would turn out to be very different; that the producers in all foreign countries furnished their articles on the average, at the price at which they could afford them; and that a tax now imposed, would on the average of future years, be added to the price. He could not consent to tax the whole community for the benefit of one class. As he anticipated that his hon. friend’s motion would meet with the fate it deserved, he should not detain the House longer, but to observe on a remark of the hon. member for Hull. The hon. member for Hull had said, that he was a friend to a surplus revenue beyond expenditure, but that he was an enemy to a sinking fund. Now to what purpose was a surplus revenue applicable but as a sinking fund? The hon. member had said, that he found from the experience of history, that a sinking fund was always seized by the ministers. He (Mr. R.) agreed with him, and it was on this account that he objected to the proposal to maintain a surplus revenue. In principle nothing could be better than a sinking fund. He was so great a friend to the principle, that he was ready to consent that the country should make a great effort to get out of debt; but then he would be sure that the means taken would effect the object. He would not trust any ministers, no matter who they were, with a surplus revenue, and he should therefore, join in any vote for a remission of taxes that might be proposed, so long as a surplus revenue remained. The taxes on candles and on salt had been proposed for reduction, but though that on salt was undoubtedly very burthensome, it did not appear to him to be that which most demanded reduction. The taxes on law proceedings seemed to him the most abominable that existed in the country, by subjecting the poor man, and the man of middling fortune, who applied for justice, to the most ruinous expence [hear!]. Every gentleman had his favourite plan for repealing a particular tax, and this tax upon justice, was that which he should most desire to see reduced.
The motion was negatived.
EXTRA POST—PETITION OF MR. BURGESS
2 April 1822
Mr. Stuart Wortley moved to refer to a select committee the petition of Mr. H. Burgess for remuneration for the expenses which he had incurred in the preparations for an extra post, which had been encouraged by government and eventually prevented by decisions of parliament. The Chancellor of the Exchequer supported the motion.
Mr. Ricardo said, the ground on which the chancellor of the exchequer had put the case would have induced him to vote against the motion if he had known nothing else of it. The right hon. gentleman had called on them to accede to the motion as a matter of compassion or indulgence. Now, they were not entitled to vote away the public money from their own sentiments of compassion. If the Treasury had given Mr. Burgess encouragement to incur expence, they should take on themselves the responsibility of remunerating him.
The motion was negatived.
3 April 1822
On 1 April Mr. Gooch brought up the report of the select committee on the distressed state of agriculture: it was then agreed that the report should be taken into consideration at the end of the month [see below, p. 155].
On 3 April, however, Mr. J. Benett presented a petition from the distressed agriculturists of Wiltshire, and this was made an occasion to anticipate the debate upon the report. Mr. Western expressed his dissent from the conclusions of the select committee and said that ‘an immense proportion of the present difficulties arose from the alteration in the currency’. ‘During the depreciation we had contracted an enormous debt, which was now to be paid by the industrious classes in a currency of increased value. This had made such a havoc in the property of the country, as was never made by revolution or civil war. It was true, during the depreciation of money, the rents of estates had been doubled, but incumbrances had doubled and taxes had quadrupled, so that the situation of landlord had not been a whit better. But what was the state of the landlord now? His income was again reduced to one half, and all their fixed payments remained.’
Mr. Ricardo said, that no one could be more aware of the great difficulties which had been occasioned by alterations in the currency than himself. He had given the subject the greatest attention in his power, and had laboured hard to show the necessity of a fixed and unvariable standard of value. At the same time, he could not agree with the hon. member for Essex, as to the operation of the changes in the currency upon agriculture. Let them suppose the utmost extent of the operation of the changes in currency on the pressure of taxes. They must deduct from the whole amount of taxation, the amount of those taxes which were employed in expenditure, as they had been diminished in proportion as the value of money had been augmented. Supposing, then, 40,000,000l. to remain, on which the operation of the currency on taxation was to be calculated. What proportion could possibly be paid by the tenantry of this amount? Suppose one fourth. He did not include the landlords in this calculation, but only the tenantry. Suppose one-fourth paid by the tenantry, their proportion would be 10,000,000l. Suppose, according to the extravagant calculation of the hon. gentleman, that 25 per cent was the real amount of the alteration operated by recurring to a metallic standard of value. Then 2,500,000l. was the whole extent of its operation on the tenantry. Was it possible that the distress which was now felt could be owing to 2,500,000l.? Such a sum was totally inadequate to such an effect. Let them look again at the landlords. The alteration could affect them only as it took more from them in the shape of taxation. No person was more ready than he was to admit, that it occasioned an increase of burthen in this shape as in every other; but he must be allowed to ask, whether, if the tenant paid the rent demanded, the landlord must not be benefited by receiving the same rent which he had exacted in the depreciated currency? He admitted that landlords did not receive the same rent, but had made an allowance equal to the depreciation. But, if he received the rest of the rent, whence arose the distress? He had given up 25 per cent, and received 75 per cent, equal to 100. How, then, was he injured? But the landlords did not receive 75 per cent. They told them that they could not receive any rent—that the distress was so great, that the surplus could not pay any thing but the taxes. He asked, then, whether the depreciation could possibly have occasioned this? He did not believe that the changes in the currency since 1819, had been more than 10 per cent. But did he say that the landed interest suffered only to the extent of 10 per cent? No such thing. The greatness of the distress he was most sensible of, and the causes which had been assigned he thought amply sufficient to account for it— namely, the abundance of several successive harvests, the importation of corn from Ireland, and other similar causes. It was utterly impossible that this country could be reduced to that situation that the surplus produce of agriculture should be only sufficient to pay the taxes, without affording any rent to the landlord, or any profit to the cultivator. This was a situation to which the country could not possibly come.— He wished here to say a few words of the report which the agricultural committee had made. The former report contained some most admirable propositions. If he might divide it into two parts, he would say, the first half was as excellent a report as had ever emanated from any committee of that House, and was well worthy of being placed beside the bullion report and the report on the resumption of cash payments by the Bank. It contained most sound and excellent observations on the corn trade, and on the corn-laws. It most justly pointed out two great evils arising from the corn-laws, which affected the present distress. The first was, when there was a scarcity, and corn rose to 80s., then the ports were opened, and we were deluged with foreign corn, whatever might be the price in the countries from which it came. The ports were open for any quantity. This was a great evil, and operated at the very time when the short harvest ought to be compensated by high prices. The second evil was felt when in a season of plenty we habitually produced corn at an expense very considerably above other countries. If there were successively good harvests, the farmer could obtain no relief from exportation, and was thus ruined by the abundance of produce. What was the inference from this, but that they should take measures, to enable our farmers, in seasons of abundance, when they could not obtain prices to compensate the expense of culture, to get relief by exporting to other countries, and for this purpose a duty on importation of foreign grain should be imposed, equal to the peculiar taxes which fell on the farmer, such as tythes and a part of the poor-rate; and a drawback of the same amount should be allowed on exportation. If such a regulation were adopted, after a small fall of prices, the farmer would then export to other countries, and relieve the glut of the corn market at home. Another part of the report was totally incorrect. It spoke of countervailing duties, not, as all countervailing duties ought to be, as imposts upon the importer in order to subject him to all the burthens of the home-grower of corn, so that the taxes might fall equally on grower and importer, but as duties which should be equal to the additional expense of growing corn in this country over other countries. Countervailing duties on this principle, would thus be sometimes 20s., and sometimes 30s. There appeared to him to be no principle more clear, than that there could not be a fixed remunerating price in any country. Before there was a dense state of population in a country, they would cultivate the very best lands, and they could then compete with any country, and export their surplus produce. There would then be no occasion for countervailing duties. But when population became more dense, poorer lands would be cultivated, and an increase of charges would arise from the greater expenses of cultivation. As population went on, the cultivation would go on to still poorer lands, and the price would continue to rise. If, then, the rule should be, for a countervailing duty, the difference of charge in the growth, no limit could be affixed to the amount. He could not conceive any system of duties more destructive to the best interests of the country.—He would now advert to the present report. He had gone into the committee under a deep impression of the great distress which the agricultural interest suffered, with a most unfeigned desire to find some means of relief, not upon the general and absolutely true principles of legislation, but with every inclination to give every facility to measures of immediate effect in alleviating distress. All he required was, that there should be something in the report, pledging them, when the distress should have gone by, and the farmers should be rescued from their suffering—for he was the advocate of the farmer, and not those who pretended to be the exclusive friend of agriculture—all he had required was, that the report should promise a return to proper principles when the present dangers should have been removed. But, although the report recognized the evil which produced low prices, and the apprehension of still lower prices, it did not hold up the slightest purpose of ever returning to sound principles. It expressed hopes of better principles being adopted, and the House would be astonished to hear what those principles were. It was to have recourse to the countervailing duties which he had explained. If on this plan they attempted to give a monopoly to grapes reared in hot-houses, countervailing duties might be imposed on wine, to make it as dear as the produce of the hot-houses. In the same way with sugar. In this way all branches of foreign commerce would be lost to this nation, and to every nation which adopted countervailing duties. The only true policy was to allow us to go to the country where the article required was most easily and abundantly produced. He was ashamed to occupy the time of the House so long [Cheers]; he would not go into detail, but he felt called upon to throw out a few observations. The hon. member for Essex had alluded to the West Indian cultivators. If he wanted an argument, he would take that very case, and he asked how the currency could be supposed to have affected them? Was it not notorious that their distress was entirely caused by over production? Were not the measures adopted for their relief calculated to give them a market for their produce which they had not before? In the same manner, the agriculturist of this country must be relieved by increased demand, or diminished supply. He had not said that taxes contributed not to the distress. On that point he had been misunderstood. They who were exposed to exclusive taxes ought to receive protection from those taxes. But on this subject he would give his opinions in greater detail on a future occasion.
Mr. H.G. Bennet ‘rose to protest against the doctrine, that taxes had nothing to do with the distresses of the agricultural interest’. The Marquis of Londonderry in reply said, ‘that hon. gentleman might take a lesson from his friend near him, the member for Portarlington, who had shown how small a portion of that distress now complained of had been thrown on the suffering individuals by taxation.... The distress was caused by the operation of the seasons, and the state of the markets; and therefore could not be cured by the remission of taxation, even though that were pushed to the length of national bankruptcy.... Though abundance was desirable, yet carried beyond a certain point, it occasioned evils like those now felt. He was not prepared to go into this view of the question, and to show how they suffered by abundance: but if the hon. member for Portarlington turned his intelligent mind to it, he could make the House understand this part of the subject.’
Mr. Ricardo corrected the error which appeared to have prevailed in the mind of his hon. friend, the member for Salisbury, that he (Mr. R.) was an advocate for taxation. On the contrary, he had voted for every reduction of taxes that had been proposed in the course of the session, because he was anxious for the repeal of taxes, feeling that every tax must prove a burthen upon the public.
AGRICULTURAL DISTRESS AND THE FINANCIAL AND OTHER MEASURES FOR ITS RELIEF
29 April 1822
The Marquis of Londonderry in pursuance of the report from the committee on the agricultural distress (which had been presented on 1 April 1822) moved a series of resolutions on agriculture and at the same time announced various financial measures which the government would shortly bring forward. He repeated the opinion which he had formerly expressed that the remission of taxes could only be a palliative, but not an effectual remedy for the agricultural distress; an opinion which had received sanction and confirmation ‘in the able work which has recently been published by the hon. member for Portarlington (Mr. Ricardo), than whom it is impossible for the House on such questions to have higher authority’. Lord Londonderry’s resolutions provided that, once the ports had been opened to the importation of corn on the price reaching the limit fixed by the existing law (80s. per quarter for wheat ), that limit should thereafter be lowered to 70s.; the importation however instead of being free of duty as it was under the existing law would be subject to a duty of 12s. per quarter for wheat when the price was between 70s. and 80s., of 5s. when the price was between 80s. and 85s., and of 1s. when above 85s. An exception was made for foreign corn already in the warehouses. It was also proposed to advance up to 1,000,000l. on the security of British corn when the price of wheat was under 60s. Mr. Western spoke next.
Mr. Ricardo said, that, having a proposition which he wished to submit to the House, he offered himself thus early to the committee. He was desirous of laying his proposition before the House, as the noble lord had laid his, in order that the House might have an opportunity of judging of their several merits. The hon. member for Essex had said, that the noble lord’s plan would have the effect of extending the paper currency. He cared not whether it would or would not; for he knew full surely that they had at present as extended a currency as the state of the country required. The present plan—however it might be disguised—was an attack upon the sinking fund. The sinking fund was in principle relinquished. He cared not whether the ultimate accumulation was to be 7,000,000l. or 9,000,000l.; the present plan was a breach of public faith, so far as the application of the sinking fund could be a breach of faith. There was, in fact, no longer any sinking fund. He solemnly protested against prolonging the charter of the Bank. They had repeatedly called on the chancellor of the exchequer not to enter into any engagement with the Bank for a renewal of their charter. Yet it was now said, that there would be an extension for 10 years, for an object for which it was totally insufficient. It would be a great improvement that the public should be allowed to enter into partnery concerns for supplying their own money transactions, instead of having them intrusted for 10 years longer to the Bank. He had hoped never to have heard of their charter being renewed. The benefit of the paper currency ought to belong to the public. No advantage could ever be derived from the Bank lending money to the public.—With respect to what the noble lord had said of their plans differing very little, he thought there was the most essential difference between them. He (Mr. R.) proposed that a duty of 20s. per quarter should be imposed on the importation of wheat when the price rose to 70s. The noble lord supposed that he (Mr. R.) had adopted this of choice; but instead of that, he considered it as forced upon him, and he consented reluctantly to this duty, on account of the distress which now existed, and only on that account. There was another very important difference. He proposed that this duty should be imposed when wheat rose to 70s., because agriculture was at present so extremely depressed. But the noble lord proposed 80s., 85s., 70s., and brought nearer all of them to the importing price, while he (Mr. R.) differed upon that point, and by imposing a duty of 20s. when the price was lower at home, afforded a greater relief to the farmer. He thought the farmers the most distressed class in the country, and the most cruelly used. When the prices rose in consequence of a short harvest, and when the farmers ought to have compensation, they diminished their profits, and let corn in from all parts of the world. This great evil the noble lord did not propose to remedy. If the price rose to 85s., it was only required to pay a duty of 1s., and the poor farmer might be inundated with foreign corn. But another difference between him and the noble lord was this—he (Mr. R.) contended, that there could be no security to the farmer while the price of corn was kept higher in this country than in foreign countries. This had been ably shown in the last year’s agricultural report. Did the noble lord propose to relieve the agriculturists from this evil, or to afford any mitigation of it? No. Therefore they would be fully as ill off as now. According to his (Mr. R.’s) plan they would be sure that the prices here could not be much higher than they were abroad. He would read the propositions, which he hoped the noble lord would be prevailed on to admit with his own; if not, he hoped the House would decide respecting it. They were as follow:
1. “That it is expedient to provide that the foreign corn now under bond in the United Kingdom may be taken out for home consumption, whenever the average price of wheat, ascertained in the usual mode, shall exceed 65s. a quarter, upon the payment of the following duties:—Wheat 15s. a quarter; rye, peas, and beans, 9s. 6d. a quarter; barley, bear, or bigg, 7s. 6d. a quarter; oats, 5s. a quarter.
2. “That whenever the average price of wheat, ascertained in the usual mode, shall exceed 70s. a quarter, the trade in corn shall henceforth be permanently free, but subject to the following duties upon importation:—Of wheat, 20s. a quarter; rye, peas, and beans, 13s. 3d. a quarter; barley, bear, or bigg, 10s. a quarter; oats, 6s. 8d. a quarter.
3. “That at the expiration of one year from the time at which the above duties on corn imported shall be in operation, they be reduced as follows:—On wheat, 1s. a quarter; rye, peas, and beans, 8d. a quarter; barley, bear, or bigg, 6d. a quarter; oats 4d. a quarter.
4. “That a like reduction of duties be made in every subsequent year, until the duty on the importation of wheat be 10s. a quarter; rye, peas, and beans, 6s. 7d. a quarter; barley, bear, or bigg, 5s. a quarter; oats, 3s. 4d. a quarter, at which rates they shall henceforth be fixed.
5. “That a drawback or bounty be allowed on the exportation of corn to foreign countries, On wheat, 7s. a quarter; rye, peas, and beans, 4s. 6d. a quarter; barley, bear, and bigg, 3s. 6d. a quarter; oats 2s. 4d. a quarter; and that such drawback or bounty in like manner as the importation duty be fixed.”
Mr. Huskisson moved a series of resolutions to the effect that three months after the price of wheat exceeded 70s. per quarter, or so much sooner as it exceeded 80s., the ports should be permanently open to the importation of foreign corn, subject to the same duties as proposed by the Marquis of Londonderry.
[See further p. 162.]
NAVAL AND MILITARY PENSIONS
1 May 1822
The Chancellor of the Exchequer moved a series of resolutions recommending a plan for spreading the burden of pensions, which arose principally from the war, equally over a period of 45 years; it was proposed to offer a fixed annuity of 2,800,000l. for that period to contractors who would undertake to pay the pensions. The pensions amounted at present to 5,000,000l. annually and they would probably be reduced to 300,000l. after 45 years, by ‘the natural decrement of human life’. ‘The transaction’, he said, ‘would stand completely clear of the sinking fund.’
Mr. Ricardo was astonished how ministers could come down with grave faces, and propose such a measure, after all the anxiety they had expressed on the subject of the sinking fund. This plan was nothing more nor less than an invasion of that fund. The chancellor of the exchequer had said, that these annuities were a part of the debt of the country. This he (Mr. R.) admitted. But, supposing the object of ministers was, to relieve the country from taxation to the amount of 2,200,000l., and they took that sum from the sinking fund, he would ask them to compare the situation in which the country would be placed at the end of 45 years, with that in which it would stand at the expiration of the same period by adopting the plan now proposed. In both cases the object would be to raise 2,200,000l. per annum; but, at the end of 45 years, acting on the plan now introduced, would not the country be more in debt, than it would be if the sum were taken immediately out of the sinking fund? Now, if this proposition were true—and it could not be controverted— was it not, he demanded, an invasion of the sinking fund? He, however, had no objection to it on that account: but it was the greatest inconsistency in the right hon. gentleman to say that the sinking fund was to be held sacred, while he came to the House with a proposition that would leave the country more in debt 45 years hence than if 2,200,000l. were taken from it at once. He agreed with his hon. friend (Mr. Gurney), that the debt which was the object of this proposition carried a sinking fund along with it. Year by year, as lives dropped off, it was decreasing; and what was the object of the sinking fund but to place all public debt in the situation of this particular debt? Thus, if 30,000,000l. were owing in one year, to reduce it to 29,500,000l. in the next; then to 29,000,000l., then to 28,500,000l.; and so on progressively, until at last the whole was liquidated. A less beneficial effect would be produced by prolonging the debt beyond the term to which it would extend, but for this plan, which he could not help considering an entire fallacy.
The resolutions were agreed to.
3 May 1822
On the report stage, Mr. Hume moved as an amendment that the contract be made with the Commissioners for the Redemption of the National Debt.
Mr. Ricardo said, that the proposition of the hon. member for Montrose was the same as that of ministers, only he wished the contract to be made on the most advantageous terms. Whatever bonus the private contractor obtained, would be a clear loss to the country. There could be no doubt that, if the sum required were now taken from the sinking fund, at the end of 45 years the country would be in a better situation than if the money were borrowed of individuals. He was an enemy to all complicated schemes, and was for avoiding a crooked path when there was a straight one before him leading to the same end. The obvious course was to take the sum from the sinking fund.
The House divided: for the amendment, 56; against it, 135. Ricardo voted for the amendment.
[See further p. 191.]
AGRICULTURAL DISTRESS REPORT
7 May 1822
The Report [see p. 155] was further considered. Mr. Attwood opposed all the resolutions that had been moved [see pp. 155 and 158–9 above] because, under the pretence of relieving agriculture, their real object was to pave the way for the introduction of foreign grain. The true causes of the agricultural distress were the alterations in the value of currency and the enormous burden of taxation. But it was surprising to find that ‘in the present day, when that new school, or new science as it was called, of political economy, was supposed so greatly to flourish, and was certainly so widely extended,’ doubts should exist as to what the effect of taxation was. ‘The hon. member for Portarlington—(and if he referred so repeatedly to the opinion of that hon. gentleman, it was because he was the only individual of equal authority, who had given any consistent exposition at all of the causes of agricultural distress, and he thought that the agricultural interest was on that account indebted to the hon. gentleman, at least, for his intentions, although he (Mr. Attwood) did not agree with him, in scarcely any one of the opinions he entertained; and was convinced that those opinions had produced extensive mischief and were calculated to occasion still more);— that hon. member had taken a survey of the condition of agriculture, and he found it suffering under great embarrassments; he had found that corn could not be produced in this country, at the present time, for the same monied cost at which it had been formerly produced here; and at which it could now be produced in the countries around them; and what was the explanation that he gave of the causes of this change? He told them that to feed an augmenting population, they had been driven to the cultivation of inferior soils; that those soils could be alone cultivated by the application of additional labour; that they yielded a smaller surplus produce; that none but a higher monied price could be a remunerative price for corn so grown; that this was the main source of the difficulties of agriculture, and that the relief from those difficulties was to be found in abandoning the cultivation of those poorer soils. But as this was the main ground on which the whole system of the hon. member rested, he would beg to state his opinions in his own words, as they were found in a pamphlet recently printed by him on that subject. [Mr. Attwood then read from a pamphlet of Mr. Ricardo]—“The words remunerative price, are meant to denote the price at which corn can be raised, paying all charges.—It follows, from this definition, that in proportion as a country is driven to the cultivation of poorer lands for the support of an increasing population, the price of corn to be remunerative must rise. It appears, then, that in the progress of society, when no importation takes place we are obliged constantly to have recourse to worse soils to feed an augmenting population, and with every step of our progress the price of corn must rise.” This was the hon. gentleman’s theory, by which, as applied to this country, he explained the cause of the rise of corn since 1793, and why it was, that corn could not now be grown in this country at a low price. Now he (Mr. Attwood) was convinced, that there was no foundation, in fact, for the assertions here maintained, and on which this system was founded. He believed, that the fact thus assumed was directly the reverse of that which did in reality exist; that, so far from the average quality of land becoming poorer as population and wealth advanced, it became richer; and he had no doubt, but the average quality of the land under cultivation in this country, at the period of its highest prices, and of the greatest prosperity of agriculture, at the period prior to the close of the late war—that the average quality of land was then more fertile; that it produced more corn on an average by the acre, and with less positive labour; that it yielded a greater surplus produce, than at any former period. It was not true, that the cultivation of any country, proceeded in the manner, and according to the calculation here assumed. It was not the best land, which was first cultivated; nor the worst land which was last cultivated. This was determined in a great measure by other circumstances; by the rights of proprietorship, by locality, by enterprize, by the peculiarities of feudal tenure, its remains still existing; by roads, canals, the erection of towns, of manufactories; all those and other obstacles of a similar nature interfered with the calculations of the hon. member; and bad land when it was once brought into cultivation, and subjected to the operations of agriculture; by draining, by watering, by the application of various substances, frequently became the best land, and was afterwards cultivated at the least expense.’ Mr. Attwood illustrated his contention by reference to various periods of history and continued: ‘Adam Smith, the greatest of authorities on the subject of political economy, would tell them, that the operation of excessive taxation on agriculture, was precisely similar to that which the member for Portarlington traced to an imaginary poverty of the land. The effect of taxation on agriculture, as explained by Dr. Smith, might be stated in these words; that it was an effect similar to that which would be produced,—by an increased barrenness of the soil; by an increased inclemency of the sky.’ Mr. Attwood then proceeded to show that the burden of taxation was increased to the same extent as the value of the currency had been raised. But this was not to be estimated from the price of gold. ‘The hon. member for Portarlington, who had chiefly insisted on that mode of calculation, had never hitherto been induced to explain, why gold, taken as a commodity, in the market, by the ounce, was to be considered as a better criterion than any other commodity.’ He (Mr. A.) contended that ‘it was undoubtedly a worse.... The most proper commodities to determine the extent of that change, were those in which agriculture was principally interested, corn and cattle.’ The prices of corn and cattle, as compared with the average of the last five years of the war, had fallen one half; ‘the pressure of taxation upon agriculture, therefore, had been doubled.’
Mr. Ricardo said, he rose, impressed with great admiration for the speech which the House had just heard. He thought the hon. gentleman had shown a very considerable degree of talent, much research, and great knowledge of the subject upon which he had spoken. [Hear.] Notwithstanding these circumstances, he could not help thinking, that the hon. gentleman had committed a great many errors. The hon. gentleman had spoken of him (Mr. Ricardo) as if he had always been a favourer of a paper circulation [cries of “No, no”]—as if, in fact, he had not been one of the first to point out the evils of a currency, in the estimation of which the House could have no guide, and which was at all times liable to be increased or diminished, as it might suit the convenience or the pleasure of the Bank. The hon. gentleman appeared to have founded the whole of his speech upon a passage in a pamphlet that he (Mr. Ricardo) had written, respecting what were called “remunerating prices.” To the test of the doctrine and reasoning of that pamphlet, he should be very willing to trust the whole of the argument in this case. It could make no difference to the farmer how he obtained those remunerating prices, provided he got them; although it was very true (as had been asserted by the hon. gentleman), that in order to obtain such prices, he must be content to be paid in money or value of very different descriptions. But the important fact was, that it was impossible a man could long go on, producing any one particular commodity, unless he could obtain for it a remunerating price.—The hon. gentleman had spoken as if he (Mr. Ricardo) were alone responsible for the alteration which had lately taken place in the value of money. He would, however, beg the House to recollect the state in which the currency stood in the year 1819. At the time of the passing of the bill of 1819, the difference between the paper currency and gold was only 5 per cent. What he had then suggested was, that measures should be taken which, while they restored the value of the paper currency to an equality with gold, and thus put an end to the depreciation, would make any purchases of gold unnecessary. Under those measures, as there would have been no additional demand for gold, there could have been no increase in the value of that metal. But as that suggestion was not followed, but another which rendered the purchase of gold necessary, and which (as it had been carried into effect by the Bank) had made a considerable change in the value of gold, how was he (Mr. R.) responsible for the effects of it? If the change in the value of money had been 20 or even 50 per cent he should not have been responsible for it. Undoubtedly, as the hon. member contended, the burthen of money taxation was increased, in proportion to the increase in the value of money: the only difference was as to the amount of that increase. He (Mr. Ricardo) contended, that it was at the utmost about 10 per cent, and nothing like what had been contended by the hon. gentleman. The hon. member had said that he (Mr. Ricardo) measured depreciation solely by the price of gold; and the same observation had been made in various parts of the House, and repeated elsewhere under an entire misconception of the meaning of the word depreciation. Depreciation meant a lowering of the value of the currency, as compared with the standard by which it was professedly regulated. When he used the word, he used it in this obvious and proper sense. The standard itself might be altered, as compared with other things; and it might so happen that a currency might be depreciated, when it had actually risen, as compared with commodities, because the standard might have risen in value in a still greater proportion. When he said, that the currency was relieved from depreciation to such and such an extent, did he say that the currency had not altered in value? The question of the value of the currency was quite a different thing from the question of depreciation; and if the hon. member could prove that gold had changed in value 40 or 50 per cent, he (Mr. R.) would allow that there was a proportionate increase of value in the currency. The hon. member asked why gold was a better standard than corn or any other commodity? He (Mr. R.) answered, that gold had always been the standard of the country; and if we had not passed the fatal law of 1797, we should have continued to this moment with a metallic standard. But, would it have been said on that account, that gold had not altered in value? If, while we had continued a metallic currency, any other country which had had a paper currency had been returning to a metallic standard, the hon. gentleman might have come down, as he did now, and said, that on account of the purchase of gold that had been made, the value of that metal had been enhanced and that the pressure of money taxes had been proportionately increased. But, did the hon. member mean seriously to contend, that corn was less variable in value than gold [Hear, hear!]? Let him propose, then, that the Bank directors should pay their Bank-notes at a certain rate in quarters of corn instead of sovereigns; for that was the bearing of his assertion [Hear!]. The hon. gentleman talked of the impossibility of the cultivators of the soil having recourse to land of inferior quality, but the hon. gentleman did not correctly state the argument. It was not that cultivators were always driven by the increase of population to lands of inferior quality, but that from the additional demand for grain, they might be driven to employ on land previously cultivated a second portion of capital, which did produce as much as the first. On a still farther demand a third portion might be employed, which did not produce so much as the second: it was manifestly by the return on the last portion of capital applied, that the cost of production was determined. It was impossible, therefore, that the country should go on increasing its demand for grain without the cost of producing it being increased and causing an increased price. If the hon. member saw in the present state of things only the consequence of the change in the value of money, he gave no reason for the amount of the distress. Let them suppose his (Mr. Ricardo’s) own case. He was possessed of a considerable quantity of land, the whole of which was unburthened by a single debt. Now, according to the hon. member, he and the tenants on that land would have only been injured to the amount of the increase which the change in the value of money had made in the burthen of taxation. But they were, in point of fact, injured much more. The hon. gentleman was mistaken as to the fact, when he said there was little variation in the price of grain in the last century. In the first 62 years of the last century the average price of the quarter of wheat had been 32s.; but, in the years from 1784 to 1792 it had been 45s.—a very considerable increase on the value of corn. But, he would not rest on any scattered facts what was so evident in principle, as that the extension of cultivation must extend the cost of production of corn. The hon. member had said, that the effect of taxation laid on the land was the same as if the farmer had to support an additional man from whose labours he reaped no benefit. That he (Mr. R.) acknowledged was the effect of all taxation [Hear!]. The hon. member had seemed to think that he would deny this. On the contrary, no one could assert the mischievousness of taxation more strongly than he would. He would never consent that one sixpence should be taken out of the pockets of the people that could be avoided. But he was not, therefore, so blind as to say that taxation was the cause of all the present distress [Hear, hear!]. It was truly said, that the effect of taxation on the landholder was the same as if he had to maintain an additional man: but was not this also the case of the merchant and the manufacturer? [Hear!] If taxation, then, were the sole cause of distress, the distress would press on all alike. The theory of the hon. member was, therefore, totally insufficient to account for what they now witnessed. The hon. gentleman had asked, whether the price of corn would not be doubled if the currency were paper, and taxation were doubled? If tithes were doubled, poor-rates doubled and all taxes affecting especially the growth of corn were doubled, the effect would certainly be to increase the price of corn to that amount; but the country might be taxed generally without producing that alteration. The hon. gentleman had said that he (Mr. Ricardo) advised the abandonment of the land. Now he did not advise the abandonment of it while it was profitable; but he did undoubtedly advise farmers not to grow a commodity that would not yield them a remunerating price. He would give similar advice to the clothier and to the ship-owner, if their circumstances were similar. He would not now enter into a discussion of the particular propositions about to be brought before the committee. He was content to have answered, however inadequately, the very able speech of the hon. gentleman, and he sat down with declaring that he did not entertain the slightest doubt of the validity of the principles he had maintained.
The House having resolved itself into a committee, the Marquis of Londonderry said that personally he should feel no alarm if the resolutions of either Mr. Huskisson or Mr. Ricardo were adopted; the former had shown a disposition to modify his general principles and ‘the hon. member for Portarlington, too, had acted with as much accommodation as could be expected from a person who held so high the principles to which he gave his authority.’ But the great mass of the committee thought that the ports should not be opened when wheat was under 80s., and they ought not to legislate against the sentiments of the country; he would propose that the ports should open at 65s. with a duty of 15s. and a fluctuating duty of 5s. per quarter of wheat [cp. his previous proposal p. 155]. Sir T. Lethbridge proposed a duty of 40s. per quarter on wheat; he trusted the House would not be led away by ‘the abominable theories of political economists.’ Sir F. Burdett attacked the government for having brought forward a measure against their own conviction, and withdrawn it when they saw that it was not well received. He thought that there ought to be no duties at all. ‘He could not agree with the hon. member who spoke last in his denunciation of the principles of political economy; nor could he comprehend what the hon. member meant by political economy, when he so abused it, unless he thought that it meant low prices.’ The fall of prices was not due to the superabundance of produce or to importation, but to the diminution in the quantity of currency occasioned by the Act of 1819, ‘the most fraudulent transaction that ever disgraced any country.’ His argument was this: ‘A decrease in the quantity of an article might raise its price beyond the proportion of that decrease. But the currency had been diminished to a great extent. During the war the bank circulation rose to about 30,000,000l., and the circulation of country paper amounted, on calculation, to 40,000,000l. more, making together 70,000,000l. Taking the circulation of the country to be about a tenth part of its income, then a diminution of one per cent in the value [? quantity] of the circulating medium would depress prices 10 per cent.’
Mr. Ricardo, being of opinion that the sufferings of the agriculturists were in a great degree owing to the corn laws, considered the present a fit opportunity for saying a few words upon that subject. Even if he were fully to agree with gentlemen who ascribed the present distresses to the change in the value of the currency and the weight of taxation, still he thought those gentlemen must admit that the corn laws, considered abstractedly without any reference to those two questions, were calculated to produce great evils. One of the principal of these evils was, the unnaturally high price of corn in this country over all other countries. The hon. baronet had admitted, that superabundance would occasion a great fall in the value of corn as well as all other articles. And here he must observe, that there appeared to be a little inconsistency in the arguments of the hon. baronet. In one part of his speech the hon. baronet admitted that a super-abundant production of corn would occasion mischief to the extent in which it was at present experienced. [Sir F. Burdett dissented.] The hon. baronet now said he did not admit this; but he certainly understood him to do so, and to apply the argument to the change in the value of the currency; for he said that those who contended, that the increase of an article beyond a certain limit, would occasion a fall in price greater in proportion than the increase which had taken place, must admit that an alteration in the value of the currency will produce a change in the value of commodities, greater in proportion than the alteration in the value of money. Although he (Mr. R.) was of opinion, that a superabundant supply of an article produced a sinking in the value of the article greater than in proportion to the additional quantity, yet he did not apply this argument to money. He would put a case to the House, to show how a superabundant supply of an article would produce a sinking of its aggregate value much greater than in proportion to the surplus supply. He would suppose, that in a particular country a very rare commodity was introduced for the first time—superfine cloth for instance. If 10,000 yards of this cloth were imported under such circumstances, many persons would be desirous of purchasing it, and the price consequently would be enormously high. Supposing this quantity of cloth to be doubled, he was of opinion that the aggregate value of the 20,000 yards would be much more considerable than the aggregate value of the 10,000 yards, for the article would still be scarce, and therefore in great demand. If the quantity of cloth were to be again doubled, the effect would still be the same; for although each particular yard of the 40,000 would fall in price, the value of the whole would be greater than that of the 20,000. But, if he went on in this way increasing the quantity of the cloth, until it came within the reach of the purchase of every class in the country, from that time any addition to its quantity would diminish the aggregate value. This argument he applied to corn. Corn was an article which was necessarily limited in its consumption: and if you went on increasing it in quantity, its aggregate value would be diminished beyond that of a smaller quantity. He made an exception of this argument in favour of money. If there were only 100,000l. in this country, it would answer all the purposes of a more extended circulation; but if the quantity were increased, the value of commodities would alter only in proportion to the increase, because there was no necessary limitation of the quantity of money. The argument of the hon. baronet, to which he had before alluded, was therefore inapplicable. With respect to the subject more particularly before the House; namely, the evils of the present corn laws, he was of opinion that the farmer would suffer an injury from having too abundant crops. But to look at the other side of the question. Suppose the farmer should have scarce seasons, and that his corn should rise; just at the moment when he would be about to reap the benefit of this circumstance, the ports would be opened, and corn would pour in in unlimited quantities. These evils had been pointed out in the most able manner in the agricultural report, and in the resolutions of his right hon. friend (Mr. Huskisson), to some of which he should be sorry if the House did not agree. In his opinion, not the resolutions of the noble marquis, nor even those of his right hon. friend, and still less those of hon. members on his own side of the House, were at all adequate to remove the evils complained of. How was the evil of an habitually higher price in this country than in foreign countries to be remedied? By making the growing price in this country on a level with that of other nations. If his propositions should be agreed to, for imposing a duty of 10s. upon imported corn, and granting a bounty of 7s. upon exported corn, he thought it impossible that the price of wheat in this country could ever be materially higher than that of foreign nations. If abundant harvests should occur here, the farmer would have his remedy in exportation. In fixing the duty of 10s. upon imported corn, he had been guided by what he thought the circumstances of the case required. He did not intend that the House should adopt the duty of 10s. all at once. In the present distressed state of the agriculturists in this country, and taking into consideration the abundant supply of grain on the other side of the water, he was willing to give the farmer protection up to 70s., and then open the ports for importation, commencing with a duty of 20s. In his own opinion, this duty of 20s. would amount to a total exclusion of foreign corn, but he selected it, because, under the existing laws, all importation was prohibited, and therefore he was not making the situation of the consumer worse than at present, at the same time that he was securing a gradual approach to what he considered right principles. He would state the grounds upon which he calculated the duty of 10s. He found it stated in the evidence given before both Houses, that the whole of the charges which the farmer had to pay, which were principally tithes and poor-rates, amounted to about 10s. per quarter. The hon. member for Wiltshire said last night, that he desired no more than to have a duty placed upon the importation of corn, calculated on the taxes which fell on the landed interest. He did not understand the calculations of that hon. member, but he called upon him to refute his if he could. If the hon. member admitted their correctness, he should expect the support of his vote. He recommended the imposition of the duty upon imported corn, for the reasons he had before stated, namely, the protection of the farmer in the event of a bad harvest. He contended that he was vindicating the cause of the farmers more effectually than many gentlemen who called themselves their friends.—It was necessary for him to make a few observations upon that part of his plan which provided for the introduction of foreign corn, now in bond, into the home market, subject to a duty of 15s. whenever the price of wheat should reach 65s. The hon. member for Oxford had said, that this measure would be destructive of the agricultural interest, and that it would reduce the price of corn to 47s. But the farmer had the remedy in his own hands. When the price of wheat should arrive at 64s., if he apprehended the influx of foreign grain, he would be in possession of the market, and might dispose of his corn to advantage. He had selected 65s. in order to secure the farmer from being placed in competition with the holders of foreign corn in bond and in foreign countries at the same time; he would first have to cope with the former, and if the price should afterwards rise to 70s. he would then compete with the latter. It might be right to observe, that a duty of 10s. would be fully adequate to protect the farmer even when the ports were opened. According to the evidence before the committee, there appeared to be little danger of the country being over-whelmed by importations. The noble marquis had stated, that the expense of bringing corn from abroad to this country amounted to 10s. per quarter. But Mr. Solly, in his evidence, calculated that the expense of growing of corn in the interior of Germany, together with all the charges consequent upon its carriage to this country, would amount to 2l. 16s. The duty of 10s. upon importation would increase this sum to 3l. 6s. Now, the member for Cumberland was of opinion, that 65s. was a fair protecting price; and if so, why did he and other members object to the duty of 10s., which would secure them against importation until the price of wheat should be at least 65s.? He could not understand upon what principle the agriculturist could object to his propositions. He was willing to give them not only a remunerating price of 70s., but a duty of 20s., and yet they thought that was not adequate protection. He would take this opportunity of informing the House, that Mr. Solly, to whose evidence he had referred, understanding that the noble marquis had asserted, that the last harvest in Silicia had been so very abundant that it was not considered worth while to reap it, had instructed him (Mr. R.) to state, that so far from having had an abundant harvest, the inhabitants were reduced to the necessity of buying seed-wheat. The noble marquis’s propositions did not appear calculated to remove the existing evils, but rather to confirm them. They would tend to encourage the agriculturist in speculating upon high prices, and would thus produce the same round of evils. He also objected, though in a less degree, to the propositions of his right hon. friend. His right hon. friend proposed a duty of 15s. on imported corn without any drawback upon exportation, the consequence of which would be, to make the price of corn in this country habitually 15s. higher than in foreign countries. Nobody had more clearly shown the evil of such a circumstance than his right hon. friend, and therefore he was exposed to the charge of inconsistency for having proposed a measure calculated to produce it. The drawback which he (Mr. R.) proposed, would operate in favour of the farmer when he would stand most in need of assistance. He declined entering upon the question of the currency, but he could not avoid making one observation on that subject. Some gentlemen seemed to think that the contraction of two or three millions of the currency had never before the present time taken place. In the report of the committee of 1797, it was stated, that in 1782—at which time the Bank paper in circulation did not amount to more than 8,000,000l. or 9,000,000l. in addition to coin—an actual reduction of 3,000,000l. of the amount of the money in circulation took place.
The debate was resumed on 8 May when Mr. J. Benett proposed a duty of 24s. on foreign wheat. Mr. Lockhart said, ‘he conceived the proposition of the hon. member for Portarlington was altogether unsound. It would have the effect of throwing much of the poor land out of cultivation; a measure so destructive to those interested in it, that had he not known the amiable disposition of that hon. member, he should be disposed to question his motives.’ Mr. Western said that it would be in vain to seek any remedy until they had repealed the Act of 1819. ‘He could not too often repeat that the higher the money price of corn the lower would be the labour price in real effect. By raising the money price of corn, they would practically lighten the weight of taxation, and reduce the real price upon the labourer.’ He would not refuse permission to import foreign grain, if the state of the country required its introduction; but it was most important not to be dependent upon other powers for any considerable share of the supply. Mr. Bankes said that a free trade ‘might be right, but it was not the system under which the country had acquired its wealth and power. That system was one of restriction, upon all articles of home produce, and upon none more than corn. They might be much wiser than their ancestors; but he was not disposed to consider them such fools as modern philosophy would make them out to have been.’ He thought ‘the country was more manufacturing than was good for it already’ and deprecated ‘the liberal doctrines of the day’. He concluded by reminding the House of the fable of the bundle of sticks; ‘if they became disunited, and suffered the political economists to pull one out of the bundle, they would all be broken. Let them look to agriculture as the chief stick, and protect it as far as lay in their power. But above all, let them continue to follow in the course by which their ancestors had made a small country become a great one’. Mr. Brougham had no objection to the principle of Mr. Ricardo’s resolutions, but he thought his permanent duty of 10s. too small. That duty was calculated on the ground that the farmer was peculiarly burdened to that amount by the tithes and poor-rates; but this was not all, because ‘the agriculturists, more than any other class, were affected by the taxes imposed on those commodities which were consumed by the labouring classes, because more labour was used in producing the same amount of produce in value by the farmer, than by the manufacturer, or any other individual.’
9 May 1822
The debate being resumed, Lord Althorp moved as an amendment to Mr. Ricardo’s resolutions that a fixed duty of 20s. per quarter be imposed on the importation of wheat (instead of 20s., decreasing in ten years to 10s.) and a bounty of 18s. per quarter be allowed on exportation (instead of 7s.).
Mr. Ricardo was surprised at his noble friend’s proposing such an amendment. He could not see upon what principle his noble friend could justify raising the bounty on exportation to 18s. a quarter. For his own part, he did not think that any bounty would often be called into operation. Whenever it should, 7s. would be quite enough. His noble friend, the learned member for Winchelsea, and the hon. member for Corfe-castle, both agreed in one objection against his resolutions—that he had not made sufficient allowances for the effect of indirect taxation on the agricultural interest, which, according to their statement, was more affected by it than any other interest. Their statement to a certain extent, might be true; still he thought they had exaggerated. The principle upon which he had made his calculations was, that the price of every commodity was constituted by the wages of labour, and the profits of stock. Now, the noble lord’s argument was, that in manufactured commodities the price was constituted of only a small portion of wages, and a large portion of the profits of the stock; whilst, in agricultural commodities, the case was exactly the reverse. If the noble lord could substantiate such a proposition, he would agree that he was entitled to the allowance he demanded. All that he doubted was, whether the fact were so. He doubted whether the proportion of labour was greater in agriculture than in manufactures. The right way of coming to a sound determination upon that point was, by considering in what the dead capital of both consisted. If he could show that the dead capital in agriculture bore the same proportion to its whole capital, that the dead capital in manufactures did to its whole capital, then he thought that his noble friend’s proposition would no longer be valid. His learned friend, the member for Winchelsea, had said, that almost all the produce of the land was made up of labour. His learned friend, however, seemed to have forgotten that there was a great deal of capital in buildings, in horses, in seed in the ground, besides in labour. It was true that the manufacturer had a great proportion of his capital in his machinery; but, even though that were taken into consideration, he must still say, that the proportion of his noble friend was not made out so clearly as it ought to be; and that he was therefore only entitled to a small allowance. Now, in allowing a duty of 10s., he thought that he had made an ample allowance; and he had made that allowance, too, on the principle, that all the poor-rates as well as all the tithes fell exclusively upon the agricultural interest. He now stated, however, that the agricultural interest was not entitled to the full allowance of all the poor-rates, inasmuch as a part of them was paid by the manufacturers, although much the greater part, he would allow, was paid by the agricultural classes. He was persuaded that if he had kept to that principle, the allowance to the agricultural interest would not have been more than 7s. Now, he had allowed them a duty of 10s., and therefore, in the 3s. that there was over, he had made ample compensation for any errors that he might unintentionally have committed. He would now say one word to the hon. member for Corfe-castle (Mr. Bankes), regarding the lecture which he had read him (Mr. R.) upon political economy. The hon. member had talked much of the wisdom of our ancestors. He willingly allowed that there was much wisdom in our ancestors: but at the same time he must ever contend, that the present generation had all their wisdom and a little more into the bargain. [Hear, hear.] If the argument of the hon. member were to be considered as valid, there was an end at once to all hopes of future improvement. The present generation had invented steam-engines and gas-lights, and had made several other useful and beneficial discoveries, and he trusted that they would never be stopped in their progress to knowledge by being told of the wisdom of their ancestors, or be convinced that they were in the most flourishing condition possible because the system of their ancestors was called most wise and excellent. Undoubtedly this country was a great country, and had of late years increased its capital to a great extent. But in arguing upon that point, the hon. member for Corfe-castle might as well have employed this argument as the one which he had used; he might as well have said, “We have increased in wealth, whilst we have been contracting a great national debt; therefore, the national debt is a great blessing, and it would be a bad thing to get rid of it.” [Hear, and a laugh.] That argument was quite as valid as the argument which the hon. member had actually used.—The hon. member then proceeded to state, that one argument urged against a free importation of corn, which appeared to him not to deserve the slightest attention, was this—that England ought not only to be a self-supplying, but also an exporting country. Now he wished to press one point upon their consideration, and that was—that it was the great interest of a country which grew a commodity for the use of another, to keep the market open for the sale of it. Now, if we were to raise a large supply for the purpose of sending our raw produce to a foreign country, in what a situation should we be placed if the market were to be shut against it? What a glut would then be forced into the home market! He would contend, that the ruin which such an event would produce, would be so great that no minister, nor sovereign, would be able to remedy it. The hon. member for Corfe-castle had also lamented that we were becoming too much of a manufacturing country. The hon. gentleman might, perhaps, think that a manufacturing country could not be so happy as an agricultural country. But he might as well complain of a man’s growing old as of such a change in our national condition. Nations grew old as well as individuals; and in proportion as they grew old, populous, and wealthy, must they become manufacturers. If things were allowed to take their own course, we should undoubtedly become a great manufacturing country, but we should remain a great agricultural country also. Indeed, it was impossible that England should be other than an agricultural country: she might become so populous as to be obliged to import part of her food; but instead of lamenting over that circumstance, he should think it a proof of prosperity and a subject of congratulation. There would always be a limit to our greatness, while we were growing our own supply of food: but we should always be increasing in wealth and power, whilst we obtained part of it from foreign countries, and devoted our own manufactures to the payment of it. The hon. member for Corfe-castle had asked, whether our farmers were to be transformed into manufacturers, and our ploughmen into mechanics? From that question, any stranger who had walked into the House might have supposed that a proposition had been actually made to throw open our ports, and to change all at once our entire course of policy. But had any proposition of that nature been even hinted at? The hon. member for Oxford (Mr. Lockhart) had done him the honour of stating, that he believed that he (Mr. R) would not willingly inflict misery upon his country; but had added that he believed his resolutions would have such a tendency. But when he proposed a monopoly for the agriculturist up to 70s. (and the hon. member for Wiltshire admitted that 67s. was a remunerative growing price), and a duty of 20s. on the first opening of the ports, and a gradual reduction of it to a fixed and permanent duty of 10s., could it be fairly said that he was proposing a scheme to turn the capital of the country from agriculture to manufactures? It had been well observed by an hon. member, that it was totally impossible that the direction of our capital could be changed in that manner. The security against it was to be found in the necessity of our growing our own corn—a necessity which would always prevent us from becoming too much of a manufacturing country. The fact was, that his resolutions, if adopted, would gradually employ a small portion more of the capital of the country in manufactures, of which the result would be beneficial to all classes of the community, as it was only by the sale of our manufactures that we were enabled to purchase corn.—He had never heard any answer attempted to his argument respecting the miserable situation into which the farmer would be plunged under a system of protecting duties. The high prices of corn exposed the farmer to great and peculiar risks. Now, none of the representatives of the agricultural interest in that House had ever ventured to assert that the farmer was not liable to the risks which he had pointed out as likely to arise from the variation of prices: none of them had attempted to show that his view of the danger was absurd and chimerical; and, as they had not done so, he was greatly confirmed in that view which he had originally taken. The hon. member for Wiltshire had stated, that we could obtain a large supply of foreign corn at 25s. per quarter. Now, he held in his hand a letter from Mr. Solly, in which that gentleman declared, that in all the evidence which he had given before the committee, he had not spoken of the then accidental price, but of the remunerating price, on the continent; and his learned friend (Mr. Brougham) had justly observed, that it was the remunerating price on the continent that regulated the price here. Now, he believed that his learned friend had understated that remunerating price. His learned friend had stated it at 45s.; he believed it to be 10s. more; for his learned friend had made no allowance for the profits of those who brought it here, which, in the opinion of Mr. Solly, were at least 6s. a quarter. The chief reason, however, for his mentioning the letter of Mr. Solly was, that Mr. Solly had said that Memel (from which one of the witnesses before the committee had derived his information) was not a port from which any great quantity of corn was shipped—not above 20,000 quarters a year, and that of inferior quality. Now, he wished to ask the House, if not more than 20,000 quarters were shipped from Memel, and those too of an inferior quality, whether such a fact would justify them in passing such a legislative measure as his hon. friend had proposed? The assertion, therefore, that foreign corn could be obtained at 25s. per quarter, was unworthy of attention for a single moment.—The only farther observation which he had to make was, with regard to what had fallen from the noble marquis. The noble marquis had said, that the measures which he had recommended to the House had been carried in the committee, almost without a dissentient voice. Now, he (Mr. R.) had stated his opinions in the committee, and for the sake of his own character and consistency, he would take the liberty of restating them to the House. He had gone into that committee with the opinion that the agricultural classes were in a state of great and overwhelming distress—that any relief which could be held out to them, ought to be held out —and that he would give them such relief; but on condition, that he should, in his turn, receive a pledge that some better measures of legislation should be instantly resorted to. He had been disposed to give the agriculturists every thing they required. They had a prohibition at present; and they could not have more. Indeed, he had been ready to adopt any proposition that the committee might originate, so long as the committee expressed a willingness to propose some more salutary measures of legislation to the consideration of parliament. The committee had held out to him a hope that they would do what he advised; they told him that they would insert something in their report which would satisfy him upon that point; and, in consequence of that declaration, he had given a conditional assent to the measures they had proposed. When he saw the report, and found that it contained no such clause as he had anticipated, the conditional assent that he had given to their propositions was immediately dissolved; and he refused to concur in the report of the committee, because it contained nothing of the nature which he had hoped it would contain. The hon. member for Hertford had said, that the evidence of those persons who imported corn was to be taken with some allowance, because their views of interest, however honest the individuals might be in intention, were likely to bias them. He did not mean to quarrel with that observation; for in most cases he allowed it to be well founded. He wished, however, to be permitted to apply it to those who had to decide in that House upon this most important subject. Let him remind them, that they had a great interest in it; let him caution them not to be led away—not to be improperly biassed—by any views of their own personal advantage. Let him implore them to recollect that they were legislating for the happiness of millions, and that there was no evil so intolerable as the high price of human food. [Hear!] He was astonished to hear the hon. member for Essex declare, that it was matter of indifference to him whether prices were high or not; and that he wanted to have corn for little labour and for low prices. He went along with the hon. member in that sentiment; but then he was astonished to find, that the hon. member, when they came to a measure that was calculated to give them low real prices, flew off in an opposite direction, and declared that we ought to grow our own corn, and that it was only upon particular occasions that we should suffer it to be imported. Such a declaration, if acted upon would render it impossible to obtain low prices in a country increasing in population like our own: indeed, the only way of getting low real prices, with which he was acquainted, was, to divert part of the capital of the country in such a way as to increase its manufactures.
After further debate. Mr. Western said that in the present state of the currency he would refuse to legislate on the question of corn. ‘Were not the prices of corn on the continent, for the last twenty-five years, estimated in our paper currency, and, therefore, liable to all its fluctuations?... Would it not, then, be unwise to look at those prices as the foundation of any prospective regulation?’
Mr. Ricardo denied that the price of corn on the continent was liable to the fluctuations of our currency.
The committee then divided on Lord Althorp’s amendment, to fix a permanent duty of 18s. on wheat: For the amendment, 24. Against it, 201.
A second division took place on Mr. Ricardo’s propositions for a duty of 20s. per quarter of wheat, when the price shall rise above 70s., to lower 1s. a year for ten years, and for 10s. being the permanent duty, and 7s. the bounty afterwards: Ayes, 25. Noes, 218.
- list of the minority
- Athorp, lord
- Birch, Jos.
- Brougham, H.
- Barnard, lord
- Beaumont, T. W.
- Becher, W. W.
- Carter, J.
- Davies, col.
- Denison, W. J.
- Evans, W.
- Haldimand, W.
- Hume, J.
- Lamb, hon. G.
- Lamb, hon. W.
- Langston, J. H.
- Marjoribanks, S.
- Maberly, J.
- Newport, sir J.
- Philips, G.
- Rumbold, C. E.
- Robinson, sir G.
- Smith, G.
- Scarlett, J.
- Thompson, W.
- Whitmore, W. W. Teller
- Ricardo, D.
The committee then divided on the Marquis of Londonderry’s resolutions: Ayes, 218; Noes, 36.
13 May 1822
When the report of the committee on the Marquis of London-derry’s resolutions was brought up, Mr. Western referred to ‘the hasty and peremptory contradiction he had received on a former night on the subject of prices from the hon. member for Portarlington.’ Mr. Philips hoped ‘that his hon. friend (Mr. Ricardo) would bring forward his resolutions year after year; convinced that time would prove the correctness of his positions. The more his hon. friend was known, the more he would be respected, and the more universally recognized, by all who had sense or candour, as one of the most original and wisest writers, and one of the soundest thinkers on the subject of political economy.’
Mr. Ricardo, in explanation of the allusion which had been made to his statement of the average prices of foreign corn, by the hon. member for Essex, begged the House would bear in mind, that there were two authorities on that subject that were quoted from, who differed much in their items. The calculations of Mr. Solly were made in conformance with the variations of our paper currency, and were, therefore, always higher than those of Mr. Grade, who made his calculations upon a fixed exchange. He had built his argument on the latter, and it would be found that whilst he was quoting from one paper, the hon. gentleman was quoting from another, and thus the misunderstanding arose. He therefore hoped he should be acquitted of any intention to mislead.
Mr. Attwood controverted in detail Mr. Ricardo on this point, and launched into another attack upon Peel’s Act of 1819. Mr. Peel replied to Mr. Attwood’s attempt to ‘overwhelm him with his sarcasm’ that ‘as he was to share that sarcasm with his hon. friend, the member for Portarlington (if he might be permitted, on account of the respect which he felt for that hon. gentleman’s great talents and high character, to use a term which he certainly had no right to use from long intimacy with him), he would only observe, that he was willing to share it, so long as he shared it in such company.’
Mr. Ricardo then submitted his resolutions for the sake of having them recorded on the Journals. Mr. Ricardo’s resolutions were negatived; the resolutions of the Marquis of Londonderry were then agreed to.
[See further, on the corn bill, below, p. 195.]
16 May 1822
Sir T. Lethbridge presented a petition from 600 respectable inhabitants of Somerset, praying for a tax on absentees who had taken up their residence in foreign parts. He said that it was calculated that in Paris alone there resided 10,000 families of English, Irish and Scots; they were spending large sums and by transferring the money to France they gained an advantage of 25 per cent.
Mr. Ricardo wished to set the hon. baronet right, as to the state of the exchange, which was now, he could assure him, very nearly at par; and it was impossible it could be far otherwise, because with a metallic circulation in this country and in France, the exchange could never vary more than from ½ to ¾ per cent. As to the petition, he should be sorry to see its prayer granted; because a tax on the property or income of absentees, would hold out a direct encouragement to them to take away their capital, as well as their persons. Now, we had at any rate their capital, which was useful, though not so useful as if they also stayed at home. What most surprised him was, that the hon. baronet should bring such a petition forward, at the very time that he was proposing in the agricultural committee a resolution which might make all the articles of life, and provisions in particular, attainable at the dearest rate. The hon. baronet was for high duties; the imposition of which would be the readiest means of compelling people of small fortunes to quit the kingdom. Of all the evils complained of, he (Mr. R.) was still disposed to think the corn laws the worst. He conceived that were the corn laws once got rid of, and our general policy in these subjects thoroughly revised, this would be the cheapest country in the world; and that, instead of our complaining that capital was withdrawn from us, we should find that capital would come hither from all corners of the civilized world. Indeed, such a result must be certain, if we could once reduce the national debt—a reduction, which, although by many considered to be impracticable, he considered by no means to be so. That great debt might be reduced by a fair contribution of all sorts of property—he meant, that, by the united contribution of the mercantile, the landed, and he would add, the funded interest, the national debt might be certainly got rid of. If this were done, and if the government would pursue a right course of policy as to the corn laws, England would be the cheapest country in which a man could live; and it would rise to a state of prosperity, in regard to population and riches, of which, perhaps, the imaginations of hon. gentlemen could at present form no idea. [Hear, hear.]
COLONIAL TRADE BILL
17 May 1822
This bill had been introduced by the President of the Board of Trade in order to remove some of the restrictions on the trade of the West Indian and North American colonies: it allowed American ships to trade with certain ports, and it allowed British ships to export from the colonies direct to foreign countries, instead of through the United Kingdom. The debate however turned on the sugar duties, which favoured the West Indies against the East Indies. On the second reading Mr. Ellice spoke in support of the bill and referred to the injustice to which the West Indian planters and settlers had been subjected by the alteration in the currency.
Mr. Ricardo rose, in the first instance, to make one observation on the subject of the currency. Though the facts were not known to him, he could not help suspecting the correctness of his hon. friend, respecting the payments in the West Indies. That persons in the West Indies who, in 1815 paid a debt of 100l. with 155l. of their currency, should now have to pay 227l., while that currency was not itself altered in value, seemed to him incredible. He would go on, however, to another subject. If he had wanted an argument in favour of a free trade, he should not have gone farther than the speech of his hon. friend. He had painted the system exactly as it was. He had told them that the ship-owners were burthened with peculiar charges; that to compensate themselves for these charges, the ship-owners were allowed to saddle unnecessary expenses on the West Indians; that the West Indians were not allowed to refine their sugar, but were obliged to send it over with a quantity of mud, in order to employ and encourage our shipping; that they, in their turn, had a monopoly given them of the supply of the home market, where the consumer got his sugar burthened by the cost of all these charges. The system throughout was of the same nature. Vexatious and unnecessary burthens were cast upon one class, and that class was allowed to relieve itself by preying upon some other. An hon. member had put a very proper question; when he was told that the people of England were taxed for the sake of the West Indians, the hon. member had asked, who got this million and a half, when the West Indians could barely keep their estates in cultivation? No one got it. That was what he (Mr. R.) complained of. The people of England paid grievously for their sugar, without a corresponding benefit to any persons. The sum which they paid was swallowed up in the fruitless waste of human labour. The hon. member for London had said, that they should pay the same price for their sugar, whether they taxed it or not. Now it was not possible this could be the case. The hon. member might as well have said, that if they did not lay a tax on tea, the Chinese would raise the price of it equal to the present price burthened with the tax. The general principle that regulated price where free competition operated was, that a commodity would be sold as cheap as the producers could afford. Unless, therefore, our admission of the East India sugars could add to the cost of producing them, there could be no increase of price. The case of the West Indies was precisely similar to that of the corn laws. As in the latter case we were protecting our poor soil from the competition of the rich soil of other countries, so were we to protect the poor soil of the West Indies from the competition of the rich soil of the East Indies. The mischief in such cases was, that there was much human labour thrown away without any equivalent. He fully agreed, that there would be the greatest possible injustice in sacrificing the vested interests of the West Indies; but it would be cheaper to purchase our sugar from the East Indies, and to pay a tax directly to the West Indies for the liberty of doing so. We should be gainers by the bargain; because there would be no waste of human labour. As he thought a monopoly was a disadvantage on either side, he saw no reason for opposing the present bill, which approached, to a certain degree, to free trade. We could not too soon return to the sound principle; and if we once arrived at it the House would no longer be tormented with these discussions, and with constant solicitations to sacrifice the public good to particular interests.
20 May 1822
Early in the Session Mr. Wallace (Vice-President of the Board of Trade) had introduced the Navigation Act Amendment Bill, which removed many of the restrictive provisions of the Navigation Laws. On the report stage,
Mr. Ricardo considered it a happy omen that so many gentlemen were now of opinion that our system admitted of improvement. The only complaint he had against the bill was, that it did not go far enough.
[See further, below, p. 197.]
NAVAL AND MILITARY PENSIONS
24 May 1822
No contractors having come forward for the pensions plan approved by Parliament [see above, p. 160] the Chancellor of the Exchequer introduced a modified form of that plan. He proposed that the fixed annuity should be paid to trustees accountable to Parliament; that the trustees should undertake to pay the pensions; and that they should be empowered in each year to sell as much of the annuity (or otherwise borrow from the public) as was necessary to make up the deficiency. He announced that the sums released would be used for reducing the duties on salt (from 15s. to 2s. per bushel) and on leather, and for repealing the Irish window tax and the tonnage duty on ships. Mr. Hume moved as an amendment to the financial measures that the sums required be taken from the Commissioners of the National Debt instead of being raised by loan or annuities [cp. above p. 161].
Mr. Ricardo said, he was most ready to commend the conduct of ministers where he found it prudent and proper; and in the proposed remission of taxes he thought they had acted judiciously in listening to the general prayer of the people. But, when he offered this commendation, he must decline concurring in any terms of excessive gratitude. He confessed, that he owed no gratitude to ministers for giving the people what was, in fact, their own money. If, indeed, the ministers had framed any plan for giving the people any portion of money which did not really belong to them, then would be the time to offer them fervent gratitude. But he thought that ministers, in coming down with all that earnestness to announce the remission of taxes, had not dealt quite fairly with the House. It looked as if they wished to induce the House to assent to those parts of their proposition which were bad, under the cover of those parts which were good. Now, he thought it was the duty of that House to separate the bad from the good, and by its vote to get rid of the former altogether. Under that view, he should support the amendment. He regretted much that any portion of the salt tax was continued, he did not wish that any nucleus should remain, because they well knew with what vigour, under the management of the exchequer, it would spread. [Hear, hear.] As to the present plan for meeting the dead expenditure, it was nothing more or less than an annual loan, in the contracting for which either a profit or a loss, as in all other loans, must follow. To the public, then, at last they must go for that loan; and as there was no ascertained stock in which it was to be funded, it would be of course less marketable, and consequently a greater profit must be held out to the contractor. Why then not keep that advantage to the country? There was another fallacy: for as the period of 45 years approached to a termination, what was to prevent the chancellor of the exchequer of the day, from converting these annuities into a perpetuity? He did expect the vote of the hon. member for London. That hon. member had qualified his support to the former plan, by hoping that the chancellor of the exchequer would take advantage of the present high price of the funds, in making his bargain for the public. Now, by the proposed scheme, the sale of the annuities was to be annual, and of course the purchases. Being thus made from year to year, such sales and purchases must be subjected to the contingency of war, and the depreciation of the price of stocks. Besides, if the market failed the right hon. gentleman, he must issue Exchequer bills, and add to the unfunded debt. If war subsequently occurred, he would then have to fund at a greater expense.
Mr. Hume’s amendment was lost on a division and the resolutions were agreed to.
[See further p. 193 below.]
31 May 1822
Mr. Grenfell presented a petition against the proposed renewal of the Bank of England charter [cp. p. 156, n. 3, above] and remarked on the ‘immense profits’ made by the Bank during the last twenty years and ‘their tyrannous conduct towards government and towards the public’.
Mr. Ricardo did not complain of the Bank directors for making the concern as profitable as possible; but he complained of ministers for having made such improvident bargains with the Bank, as to enable that establishment to make those enormous profits. He should oppose to the utmost the renewal of the Bank charter, because he was satisfied that every farthing made by the Bank ought to belong to the public. Even if a paper currency were wanted, ministers could accomplish the object more advantageously for the public without, than with the assistance of the Bank of England.
NAVAL AND MILITARY PENSIONS
3 June 1822
On the report stage of the revised measure, Mr. Hume having again moved his amendment [cp. above, p. 191], Mr. Grenfell said that should the amendment be rejected he would propose a clause empowering the Commissioners for the National Debt to purchase the proposed annuities. The Chancellor of the Exchequer acquiesced in this suggestion.
Mr. Ricardo said, that the plan was neither more nor less than sending one set of commissioners into the market to sell stock, and another set into the market to buy stock; and even the chancellor of the exchequer now understood that fact so fully, that he was about to support a clause which would enable these two sets of commissioners to deal with one another. And here he would remind the House of an expression used by the right hon. gentleman on first bringing forth his plan. The right hon. gentleman then assured the House, that he was not so young in office, as to make a proposal to parliament unless he had good ground to believe that he could make a bargain upon the terms which he stated. And what had the right hon. gentleman done since? Why, he had been forced to tell the House, that there had been an error in his calculations—that he had never supposed that he could make a bargain with any body for 2,800,000l., but that the bargain would cost considerably more. Then look at the present situation of the country. The chancellor of the exchequer said, that the sinking fund was 5,000,000l. Yes; but he had for a long time maintained the delusion of its amounting to 16,000,000l. Now, as he had tardily acknowledged that the 16,000,000l. was a delusion, and that the real fund was only 5,000,000l., so he might hereafter acknowledge that the 5,000,000l. was a delusion, and that the fund was in reality only 3,000,000l. The plan of the hon. member for Aberdeen, was simple and easy to be effected; then why not adopt it, in place of such a complicated operation as that proposed by the chancellor of the exchequer?
Mr. Hume’s amendment was negatived. Mr. Curwen then moved as an amendment that the whole duty on salt be repealed. The Chancellor of the Exchequer opposed it and said that if the salt tax were repealed, either some new tax must be imposed or ‘the integrity of the sinking fund must be invaded [A laugh!].’
Mr. Ricardo said, it was asserted by ministers that the annuity scheme was no infringement on the principle of the sinking fund. If so, instead of forty-five let the period of that scheme be extended to fifty or sixty years, and that would afford a sufficient sum to enable parliament to remit the whole of the salt duty.
Mr. Curwen’s amendment was negatived and the original motion agreed to. The bill was then passed.
[See further below, p. 281.]
CORN IMPORTATION BILL
3 June 1822
The new corn bill based on Lord Londonderry’s resolutions [cp. above, p. 155], having been brought in, Mr. Canning proposed the addition of a clause to allow the taking of foreign corn out of the warehouse for being ground into flour for exportation. Sir T. Lethbridge opposed the clause as likely to promote the introduction into the home market of foreign corn in the shape of flour.
Mr. Ricardo agreed, that if the clause could not be introduced with a full security against the flour coming into the home market it ought not to be admitted; but, if that security could be found, it would be most unjust to deprive the holders of foreign corn of it. He thought the bill of the noble lord would be a great improvement on the present law. The hon. member for Cumberland founded all his arguments on the value of corn in pounds sterling; but he (Mr. R.) did not regard the pound sterling. He was anxious that the people should have an abundant supply of corn and an increase of their comforts, and he thought a greater freedom in the trade calculated to produce those effects. He differed entirely from the hon. member, as to the ill effects which it would have upon the demand for labour.
The clause was agreed to.
On the question that 70s. be the permanent price at which wheat shall be imported, Mr. Whitmore moved to substitute 64s.; Mr. Wodehouse moved to substitute 75s.
Mr. Ricardo expressed his surprise at the proposition of the hon. member for Norfolk; since the most active supporters of the agricultural interest had declared that 67s. would afford adequate protection to the farmer. He thought the proposition of the hon. member for Bridgenorth deserving the support of the House. High protecting prices would only benefit the landlord at the expense of the rest of the community, not excepting even the farmer.
The original clause was agreed to.
10 June 1822
On the report stage, Lord Londonderry said that as there was so strong an opinion against the clause for grinding foreign wheat, he would oppose it.
Mr. Ricardo said, that unless the agriculturists could show that injury would arise to them from the adoption of the clause, parliament should not hesitate to give to the foreign importer the proposed relief.
The house divided on the clause: Ayes, 21; Noes, 116. Ricardo voted for the clause. The bill was then passed.
4 June 1822
Mr. Wallace moved the third reading of this bill [cp. above, p. 190].
Mr. Ricardo said the Right Honourable Gentleman opposite (Mr. Canning) had adverted to the improving state of the silk trade with Bengal, in consequence of the protecting duties afforded to it. If a partial impulse were given to the trade from such a cause, he (Mr. R.) should consider it rather a subject of regret than of satisfaction. It was curious to hear the contradictory statements which were advanced in that House; for it was at once contended that it was necessary to protect Agriculture, because the Manufacturers were protected, and that to take off protecting duties from the Manufacturers, was a measure highly detrimental to the Agricultural interest. It was impossible that both these propositions could be true. He should vote for the present Bill, and he gave his sincere thanks to the Right Honourable Gentleman opposite for the pains he had taken during its progress.
The Bill was read a third time and passed.
MR. WESTERN’S MOTION CONCERNING THE RESUMPTION OF CASH PAYMENTS
12 June 1822
On 11 June Mr. Western moved that a committee be appointed to consider the effect which the resumption of cash payments had had in producing the present agricultural distress. He concluded his speech by recommending a revision of the standard and the adoption of ‘a system which should give to the products of industry of every description the same relative money price, which they commanded during the suspension of cash-payments, and secure a fair and reciprocal remuneration for the general industry of the country.’ Mr. Huskisson moved as an amendment a resolution which had been adopted by parliament in 1696: ‘That this House will not alter the standard of gold or silver, in fineness, weight or denomination.’
The debate was adjourned to the following day when, after other speakers, Mr. Leycester said he would support the motion for a committee, although he must protest against any attack upon Mr. Peel’s bill, which he regarded as ‘a measure founded in wisdom.’ Mr. Haldimand noticed that many charges had been brought against the Bank, and said that ‘all of them appeared to him unfounded, save one;’ which was, ‘that the Bank of England, looking forward to the resumption of cash payments, had accumulated a large quantity of gold in its coffers, and by so doing had, as the hon. member for Portarlington observed, appreciated the currency.’ On the circulation of Bank paper he remarked, ‘that so long as the Bank was ready to pay its notes in gold, the House had no reason to complain whether there were five millions more or less of their notes in circulation.’
Mr. Ricardo said, that he agreed in a great deal of what had fallen from his hon. friend who spoke last, and particularly in his view of the effect of the preparations made by the Bank for the resumption of payments in specie; it was undeniable, that the manner in which the Bank had gone on purchasing gold to provide for a metallic currency, had materially affected the public interests. It was impossible to ascertain what was the amount of the effect of that mistake on the part of the Bank, or to what precise extent their bullion purchases affected the value of gold; but, whatever the extent was, so far exactly had the value of the currency been increased, and the prices of commodities been lowered. His hon. friend had said, that whilst the Bank was obliged to pay its notes in gold, the public had no interest in interfering with the Bank respecting the amount of the paper circulation, for if it were too low, the deficiency would be supplied by the importation of gold, and if it were too high, it would be reduced by the exchange of paper for gold. In this opinion he did not entirely concur, because there might be an interval during which the country might sustain great inconvenience from an undue reduction of the Bank circulation. Let him put a case to elucidate his views on this subject. Suppose the Bank were to reduce the amount of their issues to five millions, what would be the consequence? The foreign exchanges would be turned in our favour, and large quantities of bullion would be imported. This bullion would be ultimately coined into money, and would replace the paper-money which had previously been withdrawn; but, before it was so coined, while all these operations were going on, the currency would be at a very low level, the prices of commodities would fall, and great distress would be suffered.— Something of this kind had, in fact, happened. The Bank entirely mismanaged their concerns in the way in which they had prepared for the resumption of cash payments; nothing was more productive of mischief than their large purchases of gold, at the time to which he alluded. They ought to have borne in mind that, until the year 1823, the bill of his right hon. friend (Mr. Peel), did not make it imperative on the Bank to pay in specie.—Until the arrival of that period, the Bank were only called upon to pay in bullion, and in 1819, when the bill passed, their coffers contained a supply amply sufficient to meet all demands, preparatory to the final operation of the right hon. gentleman’s bill. That bill he had always considered as an experiment, to try whether a bank could not be carried on with advantage to the general interests of the country, upon the principle of not being called upon to pay their notes in coin, but in bullion; and he had not the least doubt that, if the Bank had gone on wisely in their preliminary arrangements—if, in fact, they had done nothing but watch the exchanges and the price of gold, and had regulated their issues accordingly, the years 1819, 1820, 1821 and 1822 would have passed off so well with the working of the bullion part of the plan, that parliament would have continued it for a number of years beyond the time originally stipulated for its operation. Such, he was convinced, would have been the course, had the Bank refrained from making those unnecessary purchases of gold which had led to so many unpleasant consequences. But it was said by his hon. friend (Mr. Haldimand), that the Bank had since 1819 kept up their circulation to the same level as before 1819, and that, therefore, they had not caused the favourable exchange, and the influx of gold. He denied this—he denied that their issues were now as large as in 1819; but allowing, for the sake of argument, that they were so, he should still make it matter of charge against the Bank, that they had not increased their issues, so as to operate on the foreign exchanges, and prevent the large importations of gold. With reference to the conduct of the Bank on that occasion, it had been said on a former evening, by an hon. Bank director, (Mr. Manning), in the way of justification, that they were not left masters of their own proceedings— that the numerous executions for forgery throughout the country, had made the public clamorous for a metallic circulation so as in a measure to compel the Bank to precipitate the substitution of coin for their one and two pound notes; but the Bank lost the benefit of this argument, by the opposition which they made throughout the discussions of the committee and the House in 1819, against every description of metallic payments.—He believed, indeed, that after they had accumulated gold in large quantities, they thought it expedient to substitute it in the form of coin for the one and two pound notes, and also for the reason which they had given; but this consideration did not lead them to limit their issues and to purchase the large quantities of gold; and it was of the effect of such limitation and of those purchases which he complained, and against this charge they had made no defence, nor could they make any. After their remonstrances to the committee, and to the chancellor of the exchequer, on the subject of the ill consequences of restricting their issues, why did they promote the evil which they deprecated—why make those purchases for amply filled coffers—why take a step so inevitably leading to mischief? He could ascribe it to one cause only, namely, that they were ignorant of the principles of currency, and did not know how, at such an important moment, to manage the difficult machine, which was intrusted to them. He was surprised, after what had been said by the hon. member for Shaftesbury (Mr. Leycester), of the character of Mr. Peel’s bill, that he should have come to the conclusion of voting for the appointment of a committee. If the past measures, so far as parliament had acted in this bill, were right, for what purpose was the committee? The declared object of the motion was to alter the standard, and he could not see, how, after the hon. gentleman’s argument in favour of adhering to the present standard, he could vote for a motion tending to such an alteration. It had been said by his hon. friend the member for Newton (Mr. H. Gurney), that they had begun at the wrong end— that they should in the first instance, have called on the private bankers to pay their notes in specie, and afterwards on the Bank of England to pursue the same course. Such a proposition, he thought, would have been absurd. The Bank of England had the power, by regulating its issues, of depreciating or increasing the value of the Bank note just as they pleased—a power which the country banks had not. The Bank of England could depreciate, as was the case in 1812 and 1813, their one pound note to the value of 14s., or they could increase it to the value of two sovereigns by an opposite course, provided the Mint, by coining, did not counteract their operations. It was impossible, therefore, and if even possible, it would be most unjust, to require private banks to call in their notes and to pay in specie, leaving at the same time this great Leviathan, the Bank, to continue its paper issues at will, and not subject to the same metallic convertibility.
In touching upon this subject, he must say that his opinion had been much misunderstood, both within and without the walls of parliament; and if it were not too great a trespass upon the indulgence of House, he should wish to take this opportunity of explaining himself. In doing so he could not do better than refer to an observation which had fallen from the hon. alderman (Heygate) in the course of the debate. He had said, that if gold were the index of the depreciation of the currency, then his (Mr. Ricardo’s) argument founded upon it might be good, and that the sacrifice of 3 or 4 per cent in establishing the ancient standard was small in the estimate of the advantages attending it: but he (the hon. alderman) did not concur in the opinion, that gold was the index of the depreciation of the currency. Now, the whole difficulty in reference to this part of his opinions was, as to the meaning of the word “depreciation:” it was quite evident that the hon. alderman and himself attached a different sense to that word. Suppose the only currency in the country was a metallic one, and that, by clipping, it had lost 10 per cent of its weight; suppose, for instance, that the sovereign only retained 9-10ths of the metal which by law it should contain, and that, in consequence, gold bullion, in such a medium, should rise above its mint price, would not the money of the country be depreciated? He was quite sure the hon. alderman would admit the truth of this inference. It was quite possible however, that, notwithstanding this depreciation, some of those general causes which operate on the value of gold bullion, such as war, or the mines from which gold is annually supplied becoming less productive, that gold might be so enhanced in value, as to make the clipped sovereign comparatively of greater value in the market than it was before the reduction in its weight. Would it not then be true that we should possess a depreciated currency, although it should be increased in value? The great mistake committed on this subject was in confounding the words “depreciation” and “diminution in value.” With reference to the currency, he had said, and he now repeated it, that the price of gold was the index of the depreciation of the currency, not the index of the value of the currency, and it was in this that he had been misunderstood. If, for instance, the standard of the currency remained at the same fixed value, and the coin were depreciated by clipping, or the paper money by the increase of its quantity, five per cent, a fall to that amount and no more, would take place in the price of commodities, as affected by the value of money. If the metal gold (the standard) continued of the same precise value, and it was required to restore the currency thus depreciated five per cent, to par, it would be necessary only to raise its value five per cent, and no greater than that proportionate fall could take place in the price of commodities. In these cases he had supposed gold always to remain at the same fixed value; but had he ever said that there were not many causes which might operate on the value of gold as well as on the value of all other commodities? No, he had not, but just the contrary. No country that used the precious metals as a standard, were exempted from variations in the prices of commodities, occasioned by a variation in the value of their standard. To such variations we had been subject before 1797, and must be subject to again, now that we have reverted to a metallic standard. In the plan which he had proposed, there was nothing which could cause a demand for gold, and therefore he had been justified in anticipating a variation in the price of commodities, from adopting it, of only five per cent, the then difference between the value of gold and of paper. If, indeed, it had been necessary to purchase gold in order to revert to a metallic standard, then he would allow that a greater difference than 5 per cent would take place in prices, but this was wholly unnecessary; because we had adopted a gold standard, were we therefore to be exempted from those variations in the prices of commodities which arose from the cheapness of their production at one period compared with another? Was the discovery of new improvements in machinery, or a superabundant harvest, or any of those general causes which operate to reduce price, to have no effect? Were the injudicious purchases of the Bank to have no effect on the value of gold? Did he deny that in the present state of the world, the occurrences in South America, might have impeded the regular supply of the precious metals to Europe, have enhanced their value and affected the prices of commodities all over the world.
It had been imputed to him that he entertained the extravagant idea, that if a metallic standard was adopted, from that moment commodities were never to vary more than 5 per cent. A proposition so absurd he had never maintained—his opinion on that subject had never changed, and, if not intruding too much on the time of the House, he would quote a passage from a pamphlet he had published in 1816, on the subject of his plan of bullion payments, to show the House what that opinion had then been:—
“When a standard is used, we are subject only to such a variation in the value of money as the standard itself is subject to; but against such variation there is no possible remedy; and late events have proved that, during periods of war, when gold and silver are used for the payment of large armies, distant from home, those variations are much more considerable than has been generally allowed. This admission only proves that gold and silver are not so good a standard as they have been hitherto supposed; that they are themselves subject to greater variations than it is desirable a standard should be subject to. They are, however, the best with which we are acquainted. If any other commodity less variable could be found, it might very properly be adopted as the future standard of our money, provided it had all the other qualities which fitted it for that purpose; but while these metals are the standard, the currency should conform in value to them, and, whenever it does not, and the market price of bullion is above the Mint price, the currency is depreciated.”
Such were the arguments he had always used, and he still adhered to them. He hoped the House would pardon this personal reference to his own opinion: he was very averse from intruding on their patience; but he was as it were put upon his trial—his plan had not been adopted, and yet to it was referred the consequences which were distinct from it; and he was held responsible for the plan that had been adopted, which was not his, but was essentially different from it. Such was the singularity of his situation, and if the House would indulge him by permitting one more reference to his opinions expressed in that House in the year 1819, he should have done with that part of the argument which was strictly personal. What he had said in his speech, during the former discussion of Mr. Peel’s bill (and he quoted it now from the usual channel of information—the Reports), was this, “If the House adopted the proposition of the hon. gentleman (Mr. Ellice), another variation in the value of the currency would take place, which it was his wish to guard against. If that amendment were agreed to, an extraordinary demand would take place for gold, for the purpose of coinage, which would enhance the value of the currency three or four per cent in addition to the first enhancement.” “Till October, 1820, the Bank need make no reduction, and then a slight one; and he had no doubt that, if they were cautious, they might arrive at cash payments without giving out one guinea in gold. The Bank should reduce their issues cautiously, he only feared they would do it too rapidly. If he might give them advice, he should recommend to them not to buy bullion, but even though they had but a few millions, he would boldly sell.” Such were his expressions in 1819. Had his recommendations been adopted? No. Why, then, was he to be held chargeable for results over and above the effect of raising the currency from the actual state of depreciation at which it stood at the time?
Having explained these personal allusions, he should now say a little upon the general question, which had not, in his opinion, been very fairly argued. A constant reference had been made to the extreme point of the depreciation in the currency, which they knew occurred in the year 1813; and Mr. Peel’s bill had been argued upon as if it had been passed in that year, and had caused all the variation which it was acknowledged had taken place in the currency from that period to the present time. This was a most unfair way of arguing the question, for to Mr. Peel’s bill could only be imputed the alteration which had taken place in the currency between 1819 and the present period. What was the state of the currency in 1819? It was left entirely under the management and control of a company of merchants—individuals, he was most ready to admit, of the best character, and actuated by the best intentions; but who, nevertheless—and he had declared plainly his apprehensions at the time—did not acknowledge the true principles of the currency, and who, in fact, in his opinion, did not know any thing about it. This company of merchants were, then, invested with the management of the great and important concern on which the welfare of the country, and the stability of its best interests, materially depended. They were the men who had the power of making their one pound note worth 14s. or 17s. or 18s. or 19s., as it had successively been, under their guidance, between the years 1813 and 1819. In the latter year, and for four years previous to it, the system had so operated as to bring the currency within something like 5 per cent of its par value. The time was then favourable for fixing a standard which was likely to save the country from the vacillation of such a system as that which had previously so much affected it. The time had then arrived (in 1819) for fixing a standard, and the only consideration was as to the selection of the particular standard which ought to be adopted. They had two courses of proceeding open to them on that occasion; one was either to regulate the standard by the price of gold at the moment, or to recur to the ancient standard of the country. If, in the year 1819, the value of the currency had stood at 14s. for the pound note, which was the case in the year 1813, he should have thought that upon a balance of all the advantages and disadvantages of the case, it would have been as well to fix the currency at the then value, according to which most of the existing contracts had been made; but when the currency was within 5 per cent of its par value, the only consideration was, whether they should fix the standard at 4l. 2s., the then price of gold, or recur at once to the old standard. Under all the circumstances, he thought they had made the best selection in recurring to the old standard. The real evil was committed in 1797, and the opportunity of mitigating its consequences was lost by the conduct subsequently pursued by the Bank; for even after the first suspension, they might, by proceeding upon right principles in managing their issues, by keeping the value of the currency at or near par, have prevented the depreciation which followed. It might be asked how they could have done so? His reply was, that quantity regulated the value of every thing. This was true of corn, of currency, and of every other commodity, and more, perhaps, of currency, than of any thing else. Whoever, then, possessed the power of regulating the quantity of money, could always govern its value, and make the pound note, as he had said before, worth fourteen shillings or two sovereigns, unless the mint, by opening to coin for the public, counteracted the operation of the Bank issues. By pursuing a wise and prudent course, the Bank might have so regulated its affairs, as to have prevented the currency from sustaining any depreciation from 1797 downwards; they might, in fact, have governed the market-price of bullion, and the foreign exchanges; but, unfortunately, they had not taken the steps necessary for that purpose.
With respect to the bill of 1819, he must say, that he never regretted the share which he had taken in that measure.— [Hear, hear.] Remarks had frequently been made upon an opinion which he (Mr. Ricardo) had given of the effect which had been produced on the value of gold, and therefore on the value of money, by the purchases made by the Bank, which he had computed at five per cent, making the whole rise in the value of money ten per cent. He confessed that he had very little ground for forming any correct opinion on this subject. By comparing money with its standard, we had certain means of judging of its depreciation, but he knew of none by which we were able to ascertain with certainty alterations in real or absolute value. His opinion of the standard itself having been raised five per cent in value, by the purchases of the Bank, was principally founded on the effect which he should expect to follow, from a demand from the general stock of the world of from fifteen to twenty millions worth of coined money. If, as he believed, there was in the world twenty times as much gold and silver as England had lately required to establish her standard on its ancient footing, he should say that the effect of that measure could not have exceeded five per cent. The hon. member, who had brought forward this motion had disputed the propriety of the standard recognized by Mr. Peel’s bill, and contended, that the value of corn would have formed a better and more fixed standard. His reason in support of such an opinion was, that the average price of corn, taken for a series of ten years, or for longer periods, furnished a standard less liable to variation than the standard of gold. He did not perfectly comprehend that part of the hon. member’s argument. Either he meant that the country ought to have a fixed metallic standard, regulated by the price of corn each year, as deduced from the average of the ten previous years, or else by an average for ten years, determinable at the expiration of every ten years. Now, in any way in which the average could be taken, according to either plan, there would be a sudden and considerable variation in the value of the currency. To-day, for example, the standard might be fixed with reference to the price of corn, when its average price was 80s. per quarter, and to-morrow, if that were the period for correcting the standard of money by such a regulation, it might be necessary to alter it to 85s. or 90s., thus causing a sudden variation in all money payments from one day to another. [Mr. Western here signified his dissent.] He was extremely sorry to have mistaken the hon. member, and he would not press this part of his argument. He must, however, say, that to take the average price of corn, as the best measure of value, was a most mistaken principle. The hon. member had, indeed, quoted in support of such a measure of value, the concurring authorities of Locke and Adam Smith, who had asserted that the average price of corn, during a period of ten years, was a less variable standard than gold; and in support of the opinion, the prices taken according to such an average were quoted. But the great fallacy in the argument was this—that, to prove that gold was more variable than corn, they were obliged to commence by supposing gold invariable. Unless the medium in which the price of corn is estimated could be asserted to be invariable in its value, how could the corn be said not to have varied in relative value? If they must admit the medium to be variable—and who would deny it?—then what became of the argument? So far from believing corn to be a better measure of value than gold, he believed it to be a much worse one, and more dependent upon a variety of fluctuating causes for its intrinsic value. What was the real fact? In populous countries, they were compelled to grow corn on a worse quality of land than they were obliged to do when there was not the same demand for subsistence. In such countries then, the price must rise to remunerate the grower, or else the commodity must be procured from abroad by the indirect application of a larger capital. There were many causes operating on the value of corn, and therefore making it a variable standard.—Improvements in husbandry; discoveries of the efficacy of new manure; the very improvement of a threshing-machine, had a tendency to lower the price. Again, the different expense of production, according to the capital necessary for cultivation, and the amount of population to be supplied with food, had a tendency to augment the price. So that there were always two causes operating and contending with each other, the one to cheapen and the other to increase the price of the commodity; how, then, could it be said to furnish the least variable standard?—[Hear, hear.] It was a part of Adam Smith’s argument that corn was a steadier criterion, because it generally took the same quantity to furnish one man’s sustenance. That might be; but still the cost of production did not the less vary, and, that must regulate the price. Its power of sustaining life was one thing: its value was another. He fully agreed with the hon. member for Essex, that there were various causes operating, also, on the value of gold, some of which were of a permanent, and others of a temporary nature. The more or less productiveness of the mines were among the permanent causes; the demands for currency, or for plate, in consequence of increased wealth and population, were temporary causes, though probably of some considerable duration. A demand for hats or for cloth would elevate the value of those commodities, but as soon as the requisite quantity of capital was employed in producing the increased quantity required, their value would fall to the former level. The same was true of gold: an increased demand would raise its value, and would ultimately lead to an increased supply, when it would fall to its original level, if the cost of production had not also been increased. No principle was more true than that the cost of production was the regulator of value, and that demand only produced temporary effects. The hon. member (Mr. Western) had entered into elaborate statements of the amount of taxation at different periods, estimated in quarters of wheat, and from this statement he inferred an enormous fall in the value of money. Now, if these calculations, and the mode of applying them, were of any value, they must apply at all times as well as at the present. Let the hon. member, then, extend his calculations a little over former times, and see how his reasonings applied. If reference were made to three particular years which he should name, the hon. gentleman’s calculation would look a little differently to what it did at present. The price of wheat was, in 1796, 72s. per quarter; in 1798 (only two years afterwards) it fell to 50s.; in 1801 it rose as high as 118s.—[Hear!]. This was the enormous fluctuation of only three years. Here, then, the House had the experience of so short a period as three years, and of the variations of price in that time. The hon. gentleman, in his argument, had assumed, that the price of wheat was to be permanent as it now stood. He (Mr Ricardo) thought it was by no means likely to be permanent; he anticipated that it would rise; and, indeed, if the present was not a remunerating price, it was impossible that it should not rise; for in no case would production go on, for any considerable length of time, without remunerating prices. The alteration in the price of the quarter of wheat, then, in three years, was as the difference between 50s. and 118s. But, in 1803, the price fell again to 56s. In 1810 it attained 106s. and in 1814 was reduced to 73s. The variations, in short, were infinite and constant—[Hear!]. Then, with regard to the price of flour, he had ascertained, that in the year 1801, in the month of July, the Victualling office at Deptford paid 124s. for the sack of flour. In December of the same year they paid only 72s. In December, 1802, they paid for the same commodity and quantity, 52s.; in December, 1804, 89s.; and in subsequent years the price per sack was successively from 99s. to 50s., in short, as uncertain as possible. All these details tended to show that the price of corn was perpetually fluctuating and varying; and it would only be wonderful if such were not the case. The hon. gentleman had said, that he hoped no member of that House would, with a contrary conviction on his mind, refuse, from motives of mistaken pride or prejudice, to acknowledge any former error into which he might have fallen in the consideration of these subjects. He (Mr. R.) could assure the hon. gentleman, that so far as he himself might be supposed to be concerned, he would not allow any foolish pride of the sort to operate with him. The hon. gentleman had remarked, at some length, on the evidence which had been furnished to that House by Mr. Tooke, with respect to the effect of an abundance of commodities lowering prices. Those prices were said to have fallen considerably more than ten per cent; but Mr. Tooke expressly said, that of the commodities he mentioned, there was not one, for the depreciated value of which, when it exceeded ten per cent, he could not well account. The quantity of all articles of consumption which had been brought into our markets, during the time of which that gentleman spoke, exceeded the quantity furnished in any former period; and there were some of the imported articles, the prices of which had continued to fall ever since, as sugars and cotton. But surely this could not be matter of surprise, when the House looked at the augmented quantity. The hon. gentleman had dwelt much on the injury which he conceived the country had sustained in consequence of loans that had been contracted for, at periods when the prices of the public funds were low, and which were now to be redeemed when the prices were high; and to make the disadvantages still more apparent, the calculation of the hon. gentleman was made in quarters of wheat at the corn prices of those times. The hon. gentleman said, “in order to pay that stock at the present value of money, I require such an additional number of quarters of corn.” Any body who heard the hon. gentleman’s speech would naturally have supposed that the rise in the price of the funds was necessarily connected with the increased value of the currency. But this could not be so; if the value of the currency had any thing to do with it, the contrary effect would take place. But the alteration in the value of the currency had nothing to do with this question; if the dividends were paid in a more valuable medium, so was the price of stock estimated in the same valuable medium; and if the dividend were paid in the less valuable medium, so also was the price estimated in the like medium. During the American war, the three per cent consols were as low as 53; and afterwards they rose to 97. At that time there had been no tampering with the currency. What, therefore, could the value of the currency have to do with the price of the funds? If a man wanted money upon mortgage now he could raise it at four per cent; whereas, during the continuance of the late war, he not only gave seven or eight per cent, but was obliged to procure the money, after all, in a round-about manner. The whole of the argument might be reduced to the statement of a single fact, which was this—they who invested sums of money in the funds at this day would get a low interest in return; those who had invested during the war had obtained a large interest.—With respect to an argument which had been advanced by the hon. member for Shrews-bury (Mr. Bennet) he could not concur in it. It was contended by his hon. friend, that the whole loss on the recoinage of money in king William’s reign, when it was restored from a depreciated to a sound state, was about two millions and a half; and he estimated the inconvenience and loss to individuals at that sum. But his hon. friend forgot that contracts in all countries existed in a much larger proportion than money, and consequently the loss must have been much greater than his hon. friend had estimated. The contracts might, in fact, be twenty or fifty times the amount of money, and therefore the interests of particular parties would have been affected accordingly. It was quite clear, that any alteration effected in the value of currency must of necessity, now as well as at all other times, affect one party or the other to such contracts; but this was an effect perfectly natural and inevitable.
To recur to the question before the House, he must say, that the motion of the hon. member for Essex was calculated to awaken and renew the agitation, which he had hoped would, ere this, have subsided. It was calculated to do much mischief—[Hear!]. If there were any chance of the hon. gentleman’s motion obtaining the support of the House, its success must be attended with the effect which, on the preceding evening, his right hon. friend (Mr. Huskisson) had ably pointed out. Every person would be eager to get rid of money which was to be rendered liable to an excessive and immediate depreciation. Every one would be anxious to withdraw it, as it were, from a currency of which he must anticipate the fate; he would be directly embarking it in gold, ships, goods, property of any kind that he might deem more likely to retain a steady value than money itself. He (Mr. R.) believed that the measure of 1819 was chiefly pernicious to the country, on account of the unfounded alarms which it created in some men’s minds, and the vague fears that other people felt lest something should occur, the nature of which they could not themselves define. That alarm was now got over; those fears were subsiding; and he conceived, that as the depreciation in the value of our currency, which a few years ago was experienced, could not possibly return upon us in future, if we persevered in the measures we had taken, it would be the most unwise thing in the world to interfere with an act, the disturbance of which would unsettle the great principle we had established. He did flatter himself, that after the suffering which the country had undergone, in consequence of the Bank Suspension bill, a measure of a similar character would never again be resorted to. His hon. friend (Mr. Bennet) had stated, that the depreciation in the value of the currency was in 1813 about 42 per cent. He thought his hon. friend had much overstated the amount of the depreciation. The highest price to which gold had ever risen, and that only for a short time, was 5l. 10s. per ounce. Even then the Bank-note was depreciated only 29 per cent, because 5l. 10s. in Bank-notes could purchase the same quantity of goods as the gold in 3l. 17s. 10½d. of coin. If, then, 5l. 10s. in Bank-notes was worth 3l. 17s. 10½d. in gold, 100l. was worth 71l., and one pound about fourteen shillings, which is a depreciation of 29 per cent, and not 42 per cent, as stated by his hon. friend. Another way of stating this proposition might make it appear that money had risen 42 per cent; for if 14s. of the money of 1813 were now worth 20s., 100l. was now worth 142l.; but as he had already observed, nothing was more difficult than to ascertain the variations in the value of money—to do so with any accuracy, we should have an invariable measure of value; but such a measure we never had, nor ever could have. In the present case, gold might have fallen in value, at the same time that paper-money had been rising; and therefore, when they met, and were at par with each other, the rise in paper-money might not have been equal to the whole of the former difference. To speak with precision, therefore, of the value of money at any particular period, was what no man could do; but when we spoke of depreciation, there was always a standard by which that might be estimated. Another argument of his hon. friend greatly surprised him: he objected to the amendment of his right hon. friend (Mr. Huskisson), because it did not give him sufficient security that the standard would not be at some future time altered. He appeared to fear that recourse might, on some supposed emergency, again be had to the measure of 1797. In short, his hon. friend was for adhering to the standard fixed by Mr. Peel’s bill; and yet, in the same breath, added, as it appeared to him (Mr. R.) most inconsistently, that he would vote for the motion of the hon. member for Essex, which professedly went to alter that standard.
After several other speeches, the House, at three in the morning, divided: for Mr. Western’s motion, 30; against it, 194. Mr. Huskisson’s amendment was then agreed to.
17 June 1822
Mr. Littleton presented a petition ‘from the miners, iron-makers, and coal-masters of Dudley, praying that the House would enjoin a more strict observance of the law, which directs that labourers should be paid only in money, and not in provisions or other commodities.’
Mr. Ricardo thought it impossible to renew so obnoxious an act. Mr. Owen prided himself upon having introduced the provision system. He had opened a shop at New Lanark, in which he sold the best commodities to his workmen cheaper than they could be obtained elsewhere; and he was persuaded that the practice was a beneficial one.
IRISH BUTTER TRADE
20 June 1822
Sir N. Colthurst moved ‘that an additional duty of 10s. per cwt. be imposed on foreign butter imported into this country.’ Mr. Robinson opposed the motion.
Mr. Ricardo said, the Irish gentlemen complained of want of protection, but what their rule of protection was he could not imagine. In this instance they had a protecting duty of 25s. per cwt.; but he supposed they would not be satisfied unless they had a complete monopoly of the trade. In his opinion, the proposition ought to have been the other way. Parliament ought to be called on to get rid of this protecting duty by degrees , by which means the trade would be rendered really beneficial to the country. The House was assailed on all sides for protecting duties. One day they were assailed by the butter trade, then by the dealers in tallow, then the West India planters complained, and the shipping interest also demanded legislative interference. But what did Adam Smith, that great and celebrated writer, say on this subject? His words were—“Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident, that it would be absurd to attempt to prove it. But in the mercantile system, the interest of the consumer is almost constantly sacrificed to that of the producer; as if production and not consumption were the end of all industry and commerce.” No man could doubt the truth of this proposition. With respect to the application now made to the House, it was founded on a petition from the city of Dublin, which falsely stated, that the trade in butter had fallen off considerably. So far from that being the fact, it was, with the exception of one or two years, one of the greatest years of exportation that had ever occurred.
The motion was negatived.
21 June 1822
Mr. Wallace moved that the consideration of this bill [see below, p. 275] be postponed till next session.
Mr. Ricardo expressed his regret, that the right hon. gentleman had been induced to postpone this measure. He hoped he would take into his serious consideration the state of the silk trade, which was now labouring under peculiar disadvantages, and which might compete successfully with foreign countries, if the present high duties, which gave so much encouragement to contraband traffic, were reduced. The Spitalfields act was another grievance to which this trade was exposed, which he hoped government would see the necessity of repealing.
1 July 1822
The Chancellor of the Exchequer having brought forward the Budget,
Mr. Ricardo said, that the chancellor of the exchequer had held out great hopes of what was to be expected from the sinking fund, and had stated, that a mere accident only had prevented all those hopes from being realized this year, but that next year we should receive its full and effective benefits. He (Mr. R.) feared, however, that we should go on as we had done, and that some accident or other would continue to prevent us from enjoying those benefits which the chancellor of the exchequer had so flatteringly held out. If the committee took the account in the way in which the chancellor of the exchequer wished them to view it, there would appear a surplus of 5,000,000l. this year, and, that in 1824 there would be a surplus of 6,000,000l. The right hon. member had, however, come at last to that point from which he (Mr. R.) wished to start, namely, that without a surplus of revenue over expenditure there could be no real or effective sinking fund. Now let the committee observe the manner in which the chancellor of the exchequer had made out the existence of such a surplus in the present year. He said that we had a surplus of 4,961,000l. But, how stood the fact? Taking the total exchequer deficiency at 14,144,000l. and deducting it from 15,481,000l., the sum to meet it, there would remain only 1,400,000l. as a real and effective sinking fund this year. “Oh!” said the chancellor of the exchequer, “We have by accident to pay the Bank 530,000l. this year, but next year we shall have no such incumbrance, and therefore our surplus will be complete.” He wished to know by what process of calculation the chancellor of the exchequer could make out his 5,000,000l. this year? The revenue of the country was 53,087,000l., the expenditure was 51,119,000l. making a surplus of 1,968,000l.; this appeared to be the entire surplus of the year; but “No,” said the chancellor of the exchequer, “we have 700,000l. saved by the alteration of the five per cents.; we have also to make allowance for 2,600,000l. received.” How this could be brought in under the head of surplus revenue he could not perceive. A sum of five millions might be easily made out; but would the committee call it a surplus of revenue? Then, again, the right hon. gentleman stated, that in 1824 there would be a surplus of 6,000,000l. But how was it to be obtained? It was to be obtained by taking credit for 4,875,000l. which was to be received from the trustees of half-pay and pensions. Now he would ask, whether there were no payments to be made on the other side of the account? The chancellor of the exchequer must know, that money so obtained could not be looked upon in the light of receipts at all. The receipts in 1824 were calculated at 52,400,000l. and the expenditure at 50,600,000l. so that the real surplus on the 5th Jan. 1824, would be 1,800,000l. He agreed, with his hon. friend (Mr. Ellice) respecting the im-policy of diminishing our funded, while we increased our unfunded debt. He should recommend a diametrically opposite course of proceeding. Adverting to what had been said relative to the Bank having reduced its rate of interest, he expressed his satisfaction at having heard the chancellor of the exchequer say, that the usury laws were unfair. There was no period at which an alteration in those absurd laws could be so properly and effectively introduced as the present, when they were, in fact, a dead letter, the market price of the loan of money being lower than the legal price. But he could not believe, that the reduction of interest made by the Bank had any general effect upon the value of money in the market, or upon the price of land, or of any commodity. If the Bank had doubled its circulation, it still would have no permanent effect upon the value of money. If such a thing had taken place, the general level of interest would be restored in less than six months. The country only required, and could only bear, a certain circulation; and when that amount of circulation was afloat, the rate of interest would find its wholesome and natural level. Undoubtedly he was very glad to hear that the Bank had at length begun to discount at 4 per cent.; and he thought they should have done so long before. Had they persisted in demanding 5 per cent, they would have been without a single note to cash.
MR. WESTERN’S MOTION RESPECTING THE ALTERED STATE OF THE CURRENCY
10 July 1822
Mr. Western, pursuant to notice, introduced his resolutions on the state of the currency; but, several members being absent, he proposed to move the first seventeen now, without debate, and to bring forward the last one on a future day.
Mr. Ricardo said, he could not agree to any of the resolutions in their present form; several of them contained mistakes in fact, and all of them were pervaded by an erroneous principle.
Mr. Huskisson strongly objected to the postponement of the discussion. Mr. Western then proceeded with his motion.
[The text of Western’s Resolutions given below is taken from Ricardo’s copy of the original parliamentary paper, which was annotated by him apparently for use while speaking, and which is preserved among his papers; Ricardo’s underlinings and the marginal comments written on this copy are also reproduced. ]
1st. true2d. —not true3d:
Descriptive of the distressed state of the Agricultural part of the country;—the effects of the altered state of the Currency on the general amount of Taxation; and the relative situation of the Public Creditor and the Public, under such altered state of the Currency.
True, but by what caused.What suffering would there have been had there been no taxes.
1.—THAT the Select Committee appointed last Session to inquire into the petitions complaining of the distressed state of the Agriculture of the United Kingdom, reported, That it was with deep regret they had to commence their Report by stating, that in their judgment the complaints of the petitioners were founded in fact, and that at the price of corn, at that time, the returns to the occupiers of arable farms, after allowing for the interest of their investments, were by no means adequate to the charges and outgoings; and that a considerable portion thereof must have, therefore, been paid out of their capitals:— That the price of grain having experienced a still further depression, viz. from 55s. 6d. per quarter of wheat to 45s.; and all other grain and all other articles having undergone a similar or greater decline, the insufficiency of the receipts of the farmers to cover their charges must be proportionably increased, which is further confirmed by the numerous petitions on the table of the House, representing in the strongest terms their aggravated and excessive distress; and that in consequence thereof, the labourers in many districts are destitute of employment and the consequent means to purchase food, and have broken out into acts of violence and aggression, and for which the lives of some have been forfeited under sanction of the law.
Is it possible justly to ascribe the distress in Ireland to any thing connected with the currency.
2.—That it appears by the papers relating to the state of Ireland, laid before this House by His Majesty’s command, that serious disturbances had broken out in that country, of which the demand and collection of rents had been, on the part of the insurgents, the alleged causes; and subsequent information has been received, that the labourers in agriculture, from a partial failure in the crop of potatoes, together with a total want of employment, and consequent means to purchase other food, are in the most calamitous and deplorable situation; and that many have died from the want of nourishment, whilst the price of provisions still continues so low, as not to afford to the occupiers of land the means of defraying the various charges to which they are subject.
No such words in the Report.not true
3.—That in the same Report of the Select Committee of last Session, it is stated, “that the measures “taken for the restoration of the currency have con“tributed to lower the price of grain and other com“modities generally, and consequently to cause a “severe pressure upon the industry of the country, and “not only to have occasioned a proportion of the fall “of prices here, but to have produced a similar, “though not equal, effect in other countries; and, in a “degree, to have deranged the markets of every part “of the civilized world.”—That in proportion as all commodities, whether the produce of the soil, manufactures or commerce, have experienced a depression of their money value; so must the proprietors have suffered a direct injury; and whatever may be the degree, it is impossible that the commercial and manufacturing classes of the community can long continue to prosper, whilst the cultivators of the soil are rapidly sinking into ruin and decay, and the labourers suffering in consequence of the want of their usual employment.
Not before 1800An important admission.4. 6. 8—10 p.c.4. 11. 2. or 15 p.c. depreciation.—13° bushels1797 to 1816 8 bushels ⅞ bushel
4.—That soon after the passing of the Act of 1797, by which the Bank of England was restricted from paying its notes in specie, the antient metallic standard of value having been thus departed from, the currency of the country, composed of bank notes, became depreciated, which depreciation was evinced, and may be estimated by the amount of bank paper money above 3l. 17s. 10 d. necessary to purchase anounce of gold; and which fluctuating from that sum to 5l. 11s. was, on the average of eighteen years to 1816, 4l. 10s. 10d. thence to 1819, 4l. 1s. and the last 10 years of the war, 4l. 16s. 1d. That this depreciation may be further and more accurately estimated by the price of commodities, particularly of wheat, at different periods, by which it will also appear, that the value of gold was reduced by the issue of paper, which became its nearly exclusive substitute; that the price of wheat, according to the Eton College tables, upon the average of 150 years prior to the commencement of the late war, whether calculated in periods of 10 or 50 years, had not exceeded 46s. per quarter, and an ounce of gold would consequently, during all that time, exchange for 13 bushels and a half; that from 1797 to 1816, the average price of wheat fluctuated from 50s. to 125s. per quarter, the average of the last eight years of the war being 101s. 9 d. and the average of the whole period 81s. 10d. and an ounce of gold would therefore only exchange for 8 bushels seven eighths; that the price of grain thus became, in its nominal or money value, nearly double its amount at any former period; the rent of land and commodities acquired a similar additional value, and consequently all possessors of fixed incomes sustained an injury to the extent of such alteration.
Wheat 10 years ending1735—1.15.21745—1.12.11755—1.13.21795—2.14.3Rental annihilatedPaying off debt.
5.—That the average price of wheat between the years 1797 and 1819 having been, therefore, in that currency about 80s. per quarter, existing leases were formed according thereto; that the average price since 1819 has been 55s. 6d. and last year and this, about 50s.; that, upon the supposition of rent being estimated at one fourth, or two eighths of the gross produce, it is evident, at the price of 50s. being a reduction of three eighths, that so much of the money value of the gross produce is annihilated, as constitutes the present entire rental of the kingdom, and likewise so much of the receipts of the occupier as amount to one eighth; that the tenant is, therefore, liable to utter ruin if held to his engagement, or the landlord to the loss of his income, subject, at the same time, to the payment of all charges and settlements increased in their amount in the ratio of the increased nominal or money price of grain and other commodities; and in case of mortgage to the extent of half the value, at that period, a reduction of rent in proportion to the fall in the money price of produce, places the mortgagee in full possession of the estate.
—doubled.—That war increased taxes, very true, but what is the inference were they increased to the injury of a particular class
6.—That, from the year 1797 to 1816, the country was, with short intervals, engaged in a war of unprecedented expense; the taxes were quadrupled, as well as county and parochial assessments, and a heavy public debt created: That this period was at the same time distinguished by extraordinary efforts of national industry, applied to its agriculture, manufactures and commerce, by a facility and extension of credit in all those branches, giving more immediate activity to capital, and a consequent extent and complication of money engagements beyond all former precedent: That the national debt, which on the 5th of January 1793, was 227,989,148l. at an annual charge of 8,911,050l. progressively increased to the amount of 795,312,767l. of capital of various denominations, on the 5th of January 1822, at an annual charge, inclusive of terminable and life annuities, of 30,015,785l.; and the total of taxes, which on the 5th of January 1793, amounted to 17,656,418l. 11s. 3d. progressively increased, till in the year 1815, it amounted to 78,431,489l.: That, subsequent to the war, it has been reduced; and the total on the 5th of January 1822, was 60,671,025l.
Why calculate this in money at any other rate than£3. 17. 10½£4. 10. 10.
7.—That this taxation has acquired an additional weight by the Act of 1819, and the measures preparatory thereto, the degree of which can in part be ascertained by a comparison of the price of gold, but more justly by the money price of commodities, by which the real value of all payments must be determined: That the equivalent in gold to 60,671,025l. was, in the former period, 13,358,934 ozs.; and, in the present, 15,657,246 ozs.; or in current money of the former period, 71,109,992l.; and that taxation is therefore further and unjustly increased, as paid in gold, 2,298,312 ozs. or 10,438,067l. in money.
8. —That the average price of wheat of the former period having been 81s. 10d. per quarter, the equivalent of the taxes in wheat was 14,228,155 quarters; and the price, since 1819, having been on an average 55s. 6d. the equivalent at that price is 21,863,720 quarters; or, in money, 89,459,050l. and the increase of taxation paid in wheat is consequently 7,035,565 quarters, equal to 28,787,233l.
9. —That it appears from various evidence, given in successive Committees appointed to consider the petitions of the agriculturists, that the wages of labour of an able husbandman, did, during the former period, amount to 15 or 16s. per week; and that, at 15s. the labour of 5,000,000 of persons for 15 weeks, was then equivalent to the discharge of the present taxes: That the price of labour being now reduced to about 9s. per week, the labour of 27 weeks of the same number of persons is now necessary; and which, at 15s. per week, amounts to 101,150,000l.; and that taxation paid in labour is consequently increased to the amount of 40,468,175l.
10. —That it appears by a comparison of the official and declared value of exports of British commodities, that in the year 1814, the declared value of the exports was 47,859,388l. and the official value 36,120,733l. being 32 per cent. of the declared above the official value; and that in 1821, the quantity in official value amounted to 40,194,893l. and the declared value to 35,826,083l. being 11 per cent of the official above the declared, making a total decline in value of 43½ per cent, and the general price currents exhibit a similar decline: That the total amount of taxation in commodities, is therefore equivalent to 87,003,397l. of the former period, and the increased taxation paid in commodities to 26,331,572l.
Report allows the depreciation−+read this
11.—That the further reduction of wheat from 55s. 6d. to 45s. and other agricultural produce, together with any further decline in the money wages of labour, and price of commodities, additionally increases the burden of taxation, as well as all other charges, both public and private, upon the property and industry of the country to an extent proportionate to such further reduction;—and that as wheat never exceeded, upon the average, the present rate in the old money standard, it must be expected that it will on an average there remain, unless enhanced by scarcity; and that the price of commodities, and wages of labour will continue at the money value they now bear, or be further reduced.
What effects? why those which have been enumerated.
12.—Thatsuch effects could not by possibility have been in the contemplation of the legislature, still less of the people of England, at the time of the passing the Act of 1819:—That its destructive consequences are now visible—that individuals held to their contract, either have been or must be ruined; an unexampled revolution of property follow, and the burthens of taxation become absolutely intolerable.
154 millions paid for Sinking fund.
13.—That by the Parliamentary Paper, No. 145, of the present Session, columns 1 and 2, it appears, that from the 5th of January 1798, to the 5th of January 1816, the sum of 459,630,826l. of money, including bills funded, was paid into the Treasury on account of loans, for which an annual charge for interest and annuities was created of 23,860,020l. which sum converted into a three per cent capital, is equal to 795,334,000l.
OutrageousUndue gain! Why undue? When land rose was that an undue gain?
14.—That the average price of gold having been during that period 90s. 10d. the equivalent in gold to the money so lent and capital created, was 101,203,117 ozs.; and the 3 per cent stock being now at 80, the said capital is equal to 140,095,550 ozs. of gold, at the before-mentioned average price of 90s. 10d. and that at the present price of gold of 77s. 6d. to 163,407,306 ozs.: the difference, being 23,311,836 ozs. constitutes an undue gain to the public creditor, at the expense of the public, equal in money to 110,974,694l.
15.—That the average price of wheat having been during the above period 81s. 10d. the equivalent in wheat to the money so lent was 112,333,400 quarters; and the price of 3 per cent stock being now 80, and wheat at the same average, the equivalent would now be 155,533,185 quarters; but at 55s. 6d. the average price since 1819, it is equal to 229,285,478 quarters, or in money, 938,159,330l. being an increased gain of 73,782,215 quarters by the alteration of the currency, or in money 301,892,228l.
Annual charge not 23 but 13 mill.Is this true? Yes, on the supposition that the loans were made in the same medium.
16.—That the annual charge of 23,860,020l. created in the period above stated, was equal to 5,253,502 ozs. and is equal to 6,127,174 ozs. being an increase of 874,192 ozs. or 3,403,886l.: That the above annual charge in wheat was equal to 5,831,370 quarters; is, at the average since 1819, equal to 8,600,000 quarters, or in money 35,196,666l. being an increased gain of 2,799,000 quarters, or in money of 11,328,311l. and that by comparison with commodities and labour, in the proportion of difference of their money value in those two periods, an equally undue advantage to the public creditor is proved to have been given at the charge of the public.
Here is an admission.¼ of a century 1809. £4.—.8.
17.—That all public creditors prior to 1798, and others subsequent, have suffered in proportion to the depreciation that followed their respective loans; that they are therefore entitled, in strict justice, to be paid in money, of value equal to that of those periods, and be indemnified for the diminished value of their income during the interval: That many of those creditors having probably in such a length of time, sold their stock and purchased property, have since undergone another and more fatal injury, by the restoration of the old currency, and consequent diminution of the value of their property so bought; —on the other hand, those who lent their money when the currency was depreciated below the average of the whole period, gained a further undue advantage than is shown by the foregoing statements; and the depreciation was at its greatest extent during the latter years of the war, when the largest proportion of money was lent, and capital created; in addition to which the public have, upon very advantageous terms to the stockholder, redeemed a larger capital debt than existed prior to 1797.
18. —That under all these circumstances, it is evidently and indispensably necessary to take into immediate consideration the destructive effects that have arisen out of the alterations made in the currency, by the Acts of 1797 and 1819, as well respecting the enormous public burthens created and so augmented by the Act of 1815, as the revolution of property in the vast and complicated intercourse of individuals throughout this country occasioned thereby; in order that, by a final arrangement of the currency, as equitable to all parties as circumstances will admit, or by a reduction of taxation equal to the advance occasioned by the Act of 1819, together with the establishment of some principle for the adjustment of private contracts, justice may, as far as possible, be administered to all, and the country saved from a revolution of property, and also from a pressure of taxation beyond the ability of the people to sustain.
[The speech is printed below for the first time from the original transcript in Ricardo’s handwriting, which has been found in the Mill-Ricardo papers. It is four times as long as the corresponding report in Hansard. It must have been written on 11 July, since early on the following day Ricardo left on his Continental Tour.The transcript is unfinished and the conclusion, as indicated below, is here taken from Hansard.]
The first Resolution having been put,
Mr. Ricardo said that if he failed to expose all the errors and fallacies in the Resolution which the honble. gent had submitted to the attention of the House it would be from his inability to give clearness to his thoughts and not because they did not contain errors and fallacies, for he had seldom seen so many contained in so small a compass. The honble. gent. appeared to think if he could shew that prices had undergone a considerable variation during the last 8 years that such alteration must necessarily be imputable to the act of 1819 for restoring the ancient standard of our money. He appeared to think that there was not, nor could be, any other cause for the variation of prices and that it was sufficient to shew that there had been a considerable fall in the prices of various commodities to justify him in proposing a revision of the standard of our currency with the express view of raising such prices. Even according to the Honble. le gentleman’s principles he was bound not only to shew that prices had fallen but that they had fallen in consequence of the measures which had been pursued to give us the benefits of a fixed standard. He had forgotten that at all times we had been liable to fluctuations of prices when we had not meddled with our standard, and what proof did the honble. gent offer that the present fall of prices might not be imputable to some of those general causes which operate on the value of commodities. Because the fund holder received the value of 13½ bushels of corn now for every sum of £3. 17. 10½ in which his dividend was paid, and had only received 7½ bushels for the same sum formerly was it to be inferred that the currency had varied in that proportion? If the argument were good for this country it was valid also for every other, but what would the honle gent. say if it were now proposed in the legislature of France to alter the standard of the currency because a given number of francs received by the public creditor would now purchase 50 or 100 pct. more of wheat than it would purchase in former years. He Mr. Ricardo would follow the honble. gentleman thro’ all his resolutions and he would with the indulgence of the House advert to them in their order. With respect to the distressed state of those connected with the agriculture of the country and which was stated in the first resolution there was no difference of opinion; unhappily it was too well established that such distress existed, but what they differed about was the cause of such distress—the honble. gentleman imputed the whole of it to the alteration in the value of the currency, whereas he and those who agreed with him without denying this as one cause of the distress mainly attributed it to the abundance of the quantity of produce. Corn might fall from various causes, from abundance, from improvements in agriculture which would lower the cost of production, from a deficient supply of the precious metals from the mines,—these were causes which might operate generally in all countries but they never had yet been made the foundation of a proposal for altering the standard of a currency. It must be remembered that the altering the standard of the currency could not affect the agriculturists as a class if they had no taxes to pay. The alteration might be beneficial or injurious to tenants during the continuance of their leases, contracted when money was of a different value, but in the same proportion would it be injurious or beneficial to the landlord with whom such agreements were made, and therefore the whole together would be as rich and no richer than before. This would be the case if we were an untaxed people but that not being the case the raising of the value of money was injurious to this class in proportion as the increased value augmented the taxation of the country. This effect however was general and not partial, and would operate on all classes alike. In his character of a payer of taxes it would operate on the stockholder equally as on all other classes. If then great as our taxation was we deducted the increased amount paid by the Stockholder, the increased amount paid by Merchants, Manufacturers and the possessors of all other property he left it to the house to determine whether the increased amount of taxation which fell upon the agriculture of the country in consequence of any probable alteration in the value of money was adequate to account for the very general distress of that class—to him it appeared impossible that such great effects could follow from such an inadequate cause, but the whole was explained on the supposition of a too abundant quantity of agricultural produce.
The second resolution of the Honble. gentleman referred to the distress in Ireland and he actually ascribed the famine which prevailed in that country to the alteration in the value of the currency. Could the honble. gent. seriously argue that the failure in the potatoe crop which he himself did not deny, to an altered value of currency? But says the honb.le. gentn. the people are dying for want of food in Ireland, and the farmers are said to be suffering from superabundance. In these two propositions the honble. gentn. thinks there is a manifest contradiction, but he Mr. R. could not agree with him in thinking so. Where was the contradiction in supposing it possible that in a country where wages were regulated mainly by the price of potatoes the people should be suffering the greatest distress if the potatoe crop failed and their wages were inadequate to purchase the dearer commodity corn? From whence was the money to come to enable them to purchase the grain however abundant it might [be] if its price still far exceeded that of potatoes. He Mr. Ricardo should not think it absurd or contradictory to maintain that in such a country as England where the food of the people was corn, there might be an abundance of that grain and such low prices as not to afford a remuneration to the grower, and yet that the people might be in distress and not able for want of employment to buy it, but in Ireland the case was much stronger, and in that country there could be no doubt there might be a glut of corn, and a starving people. So much for the second resolution.
The third resolution of the Honble. gentn. was founded on something which he said appeared in the report of the Agricultural committee, and he had marked it by inverted commas, which naturally led those who read it to conclude that the passage was an extract from the Report. A few words in the passage to which he was referring were written in Italics in order as it appeared to give them greater force; after speaking of the effects of the altered value of currency on the price of grain and other commodities the words in italics were these, “and consequently to cause a severe pressure upon the industry of the country”. He Mr. Ricardo was sure the honblb. gent would not knowingly make any misstatement and therefore he concluded it was the mistake of some one who had assisted him in drawing up these resolutions. It appeared that there were no words in the Report which answered to the quotation in this resolution—to much of it the spirit of the Report was at variance and in no part could he find any words which could justify even the inference of the words emphatically written in Italics. Mr. Ricardo here read a passage from the Agricultural Report. But he Mr. R had another observation to make on this resolution[;] it said “That in proportion as all commodities, whether the produce of the soil, manufactures or commerce, have experienced a depression of their money value, so must the proprietors have suffered a direct injury.” In this proposition he could not agree. It is not in proportion to the fall in the money value of commodities that the parties alluded to would be injured, but in proportion as the taxation which they may be called upon to pay shall be really increased by the rise in the value of money. Nothing can in itself be a matter of greater indifference to a producer of commodities than their money prices provided every thing alters at the same time and in the same proportion, and therefore the inference which the honble. gentn. draws and which he would have this house also draw is wholly without foundation.
I now come to the 4th. Resolution which is an important one, because in it the honble. gent admits that gold is the standard of this country and that the depreciation of paper money is to be estimated “by the amount of such paper money above £3. 17. 10½ necessary to purchase an ounce of gold” a doctrine which I have always maintained but which is now very often in this house and out of it called in question. In this Resolution it is asserted that “soon after the passing of the act of 1797 by which the Bank of England was restricted from paying its notes in specie, the currency of the country became depreciated”. It is only essential to examine into the correctness of this statement because the honble. gentleman in his speech founds an important argument upon it. He was fully aware that to his proposal for altering the standard on account of the benefit which the fundholder of a recent date derived from the increase in the value of money it would be objected to him that the fundholder of 1797 had been a loser in consequence of having received his dividend in a depreciated medium for several years and if compensation was to be made to one party who was the payer of taxes so also should it be made to the old stockholder who had suffered so great an injury. How does the honble. gentn. answer this objection? by denying the justice of his claim? no he admits it but he represents it as so old that it has become antiquated—a strange answer this and I should think that if his claim be a just one the circumstance of its being of 25 years standing does not weaken it. It can never be too late to do justice, but the fact is not as this resolution represents it, the paper money of the country did not become depreciated immediately after the act of 1797—it only began to be depreciated in 1800 and the average depreciation from 1797 to 1809 did not exceed 2½ pct., as measured by the average price of gold £4. —. 8. If then there was any weight in this argument of time, I think I shew that in this case length of time cannot be pleaded and if justice is to be done to one party injured so must it also be to another. On the whole I am prepared to shew that the account between the payers of taxes and the Stockholder is pretty nearly balanced, and that in reality the country is now no more loaded with taxes than it would have been if we had never departed from our metallic standard, but had uniformly adhered to the system which we so regularly followed up to1797. But of this I shall have occasion to speak hereafter. I shall consider the real question to be this—Is the agricultural interest in a worse situation than it would have been if neither of the 2 acts that of 1797 and that of 1819 had never been passed. Did he not in fact gain as much by the effects of the first of these acts as he has lost by the subsequent one? To the solution of this question I shall pay attention before I sit down. In this 4th. Resolution I see it asserted that the price of gold on an average of 18 years was £4. 10. 10. I believe this to be incorrect and that the average was about £4. 5. or £4. 6.—After having admitted that the price of gold was the measure of the depreciation, the honble. gent, in this resolution, recurs to the price of corn as measuring the depreciation. The honb.l gent in his speech said that he hoped he should not be answered by any attempt to shew that he might have been a little inaccurate in his statements of the price of corn, as he knew there would be a difference in the result whether the price was estimated from the Eton tables or otherwise; he, Mr. R, could assure the honbl. gent that he had taken no pains to discover such inaccuracies because he considered the price of corn as having nothing to do with this question. Corn was not now nor never had been the standard of the money of this or any other country. If it were a better standard than that which we possessed it might be a good reason for adopting it in future but hitherto it had not been the standard but gold had and therefore we were bound to measure our payments by gold and by nothing else. As he Mr. R had already observed if the argument from the number of qrs. of corn paid the public creditor now as compared to former years were valid here, it was also valid in France, and therefore tho’ France had uniformly maintained a metallic standard she might now justly alter the standard and pay the public creditor with a smaller number of ounces of silver because they were now equivalent to a greater number of bushels of wheat. Surely the House would not listen to such an argument, nor give countenance to so dangerous a principle. If the agriculturist thought wheat the proper standard, why might not another man think sugar such, or indigo, or cloth. Why might he not say I formerly paid the public creditor with so many pounds of sugar or yards of cloth and now I am obliged to give a greater number. What security have we that these various commodities may not vary in different directions some of them rising others falling. In such case by what rule should we determine to adopt one in preference to the other? But is the honble. gentleman prepared to go through with the standard which he himself proposes? I believe that the stockholder might safely close with the proposal if such were made to him. The average price of wheat for 30 years ending in 1755 was £1. 13. 4, but since 1755 the public creditor has not received within 50 pct. of the quantity of wheat to which he would have been entitled if wheat had been the standard. If the Honble. gentleman[’s] argument be a good one why should not the fundholder have made up to him the value of the amount of corn of which he has been defrauded since 1755 together with compound interest on the same. If corn is to be the measure now so ought it always to have been since the contraction of the public debt and if the honble. gentleman is not willing to admit this he should shew why he would have corn the standard when it is against the Stockholder and in favor of the agriculturists, and why he rejects the same measure when it is in favor of the Stockholder and disadvantageous to the landed interest.
Mr. Ricardo said that the 5th. Resolution also contained a fallacy because it supposed that from the circumstance of the fall in the price of corn and other produce being equal to that amount which formerly constituted rent, that therefore there could not by possibility be any rent at the present moment. This would indeed be true if all the charges of production as well as taxes were to remain at the same money value as before. But could this be the case? Was it possible to believe that with so immense a fall in the value of corn, the cost of production should not be reduced? Would not labour fall with the fall of raw produce? Would not seed and many other expences be also reduced? In fact the price of corn as affected by the currency was of no importance whatever to the agriculturist excepting as he was burthened with fixed money taxes, because all the charges on production would be in proportion to the variations in price from such a cause. This resolution speaks also of the increased charges on the land in consequence of mortgages and other debts being to be paid in money of an increased value. This was undoubtedly true but had not the landholder derived a benefit from this source when money was depreciating and if justice was to be done to all parties would he not have as much to pay on this account as he would have to receive. The Honble.gent kept his eye steadily fixed on the injury which the landed interest had recently sustained,—he wholly forgot the advantage which they had derived from the fluctuating value of money at no very remote period. The 6 th. Resolution of the Hon. gent. Mr. Western told us that during the war the debt had most enormously increased. No one could deny this fact: The war had been a most expensive one, but it left undecided whether that debt had been increased injuriously or unjustly to one particular class: That was the only point in dispute between the honle. gent and himself.
In the 7th. resolution the honbl. gent only asserts what is true that an increased debt must be paid with an additional number of ounces of gold, but in order to ascertain what amount of money such an additional quantity of ounces of gold is equivalent to, why should they not be estimated at the present value of gold, why should the honble. gentleman calculate it at the value of gold of a former period? He Mr. Ricardo must again observe that in proportion as the value of gold had been increased by the act of 1819, he acknowledged taxation had also been increased, but the question here again offered itself on which he should have to observe presently, had it been increased so as on the whole to impose an undue weight on the landed interest? On the 8th. Resolution he Mr. Ricardo should say little, because the honble. gentleman had laid no foundation whatever for his favorite standard of wheat, but if he had, he Mr. Ricardo was at a loss to know on what principle the additional quantity of wheat which the tax payers had to contribute should be estimated in the money price of a former period and not in the money price of the present time. Neither should he Mr. Ricardo make any remark on the 9th. Resolution because as wheat formed a material part of the value on which the wages of labour were expended it was to be expected that labour would vary with the price of wheat. In making labour the standard therefore the honbl. gent. had in fact repeated his former argument respecting a wheat standard. It was not a distinct commodity, affording an additional proof of the alteration in the value of money, but was most particularly governed by the price of wheat almost necessarily rising and falling with it.
In the 11th. Resolution the honble. gentleman assumes that wheat though not a remunerating price is to remain at its present price, but on what ground he has not indeed stated to the house. He Mr. Ricardo was wholly at variance with the honble. gent. on this point, he could not conceive it possible that corn would remain at its present depressed price if it were true as stated by the honb.l. gent. that if it did it could neither afford rent to the landlord nor profit to the farmer. He Mr. Ricardo was fully assured that on such conditions corn could not permanently be grown, and therefore the honble. gentleman’s premises were unfounded or his conclusion must be an erroneous one.
In the 12th. Resolution the House was told that in 1819 when it passed the act for the resumption of cash payments it could not foresee the effects which the former resolutions had enumerated. It would indeed have been strange if it could have foreseen effects which had previously occurred. These resolutions speak of the depreciation as being at its height in 1814. Much of the sufferings of the agriculturist had taken place before 1819 and could not have been the consequence of the act of that year. The question for the House to consider was the effect of the act of 1819. All the former variations in the currency the evils of which no one was more willing to admit than himself had taken place under a system which this act went to put an end to, and it was for putting an end to such a system that it had his warm approbation.—
He Mr. Ricardo had now to animadvert on the 13th. resolution which contained only the trifling error of 154 millions. He was ready to forfeit all the little credit which he might have with the house if he did not prove his assertion. —The honble. gentleman in this resolution has stated that from the 5th. of Jany. 1798 to the 5th. Jany. 1816 the sum of 459 millions of money had been paid into the treasury on account of loans, for which a capital of £795,334,0003 pct. stock was created,—that in payment of this sum a value equal to 101,203,000 ounces of gold was received and to pay the same capital in 3 pct. stock valued at 80 at the present moment 163,407,306 ounces of gold would be necessary: the difference being 23,311,836 ounces, which the honble. gent. goes on to say constitutes an undue gain to the public creditor at the expence of the public equal in money to 110,974,694£. The annual charge created by the debt contracted from 1798 to 1816 the honl. gent states at 23 millions. In the first place 459 millions were not raised from the public between 1798 and 1816 but 154 millions less than that amount. It is true that the loan contractors or stockholders paid the public 459 millions in a depreciated money during that period, but they received in payment of debt in that same money, during the same time, 154 millions, consequently only 305 millions was received, and an additional debt to that amount only was contracted. It was now acknowledged on all sides that the sinking fund was only a nominal one if it did not arise from a surplus of revenue above expenditure. Suppose that the Chancellor of the Exchequer of those days had acknowledged the delusion of the sinking fund, and had listened to the advice often given by his honl. friend Mr. Grenfell of making the sinking fund commissioners subscribe to the loans of the year how much would the contractors have then paid into the treasury? 305 millions and not 459 as stated by the honbl. gent. But the increased charge on the debt between the two periods is 23 millions says the honbl. gent. but what is the fact? it is only 13 millions. But in addition to these errors, and to swell the loss to the public, the honl. gentn. calls that an undue gain to the stockholder which arises from the difference between the price at which he contracted for the various loans during the war, and the present price of 80 to which the 3 pct. have risen after several years of peace. It is something new to hear this called an undue gain made by the stockholder. If the honbl. gentn. had bought an estate for £100,000 which he could now sell for £130,000 would he call the £30,000 an undue gain? If he had purchased French stock at 58 which has now risen to 90 would he call that an unjust gain? and [what] would he think of a French legislator who should seriously propose to diminish the payment to the stockholder on account of such rise? If such a plea was listened to there was an end of all security and good faith, and no man could safely for a moment enter into a contract if government were to consider the profit if he made any an unjust gain.
He Mr. Ricardo would only mention the 14 and 15 resolutions to shew the extravagant conclusions to which the honbl. gentleman had come. He had really submitted to the house a proposition that the stockholder had gained by the alteration in the value of the currency £301,892,000 between 1798 and 1816. The honbl. gentleman first states that the whole amount of money paid for loans during the above period was £459,630,000 which I have proved was in fact only 305,000,000 and yet on this sum he states him to have gained £301,000,000
[Ricardo’s own transcript breaks off here. The conclusion of his speech is reported in Hansard as follows.]
The hon. gentleman seemed to insinuate, that certain individuals were in the habit of making public attacks upon the landlords of this country. The charge could not be brought against him. It was true, he looked upon rents in the same light as he did every other article in the market, liable to fluctuations, and to be regulated according to the demand for the produce of the soil. He had never said that the country would be ruined by a superabundant supply; on the contrary, that the country would greatly benefit by that supply; the greater the supply the greater the comfort. Great supply induced low prices; low prices injured the grower, but gave an advantage to the country. It was not, however, that kind of advantage which he should wish it to possess. On the contrary, he would always wish to see the grower receive a fair remunerating price; because he was convinced, that all classes in the country would go on better and more prosperously when the farmer received a fair remunerating price. But a remunerating price had nothing to do with the state of the currency. If corn were down so low even as 20s. and the price of labour and all other outgoings were regulated by that price, the grower could go on paying his rent as well perhaps as when he received 80s. and when his outgoings were in proportion to that price.—With respect to the advantage that one class had gained over the other by the bill of 1819, he would say, that it certainly was impossible to tamper with the currency of a country, without producing such effects. The payers of taxes had lost at one period and gained at another, in consequence of the fluctuations of the currency; but it was quite remarkable to see how nearly at par stood the loss and gain. In his opinion, the great mischief sprung out of the original error, he meant the bill of 1797.—That was the great error— the measure of 1819 was the remedy. The House acknowledged the mischief of the measure of 1797, and they were bound to support the bill of 1819, which was only intended to remedy the original error. If the House at a fatal moment interfered with that bill, what would be the consequence— what would be the state of London the next day? What wild speculation—what ruin would follow! So strong were the evils that would follow such a step, that he anticipated from that House its decided negative to the motion of the hon. member.
After several other speeches, of some of which, ‘from the lateness of the hour, no report has been preserved’ (Hansard ), the resolutions were negatived; and at four in the morning the House adjourned.
[The session closed on 6 Aug. 1822.]