AGRICULTURAL DISTRESS—SURREY PETITION
26 February 1823
Mr. Denison, in presenting a petition from the freeholders of Surrey, referred to the mischief produced by tampering with the currency in 1797 and 1819, and expressed the opinion that ‘some amicable adjustment was necessary throughout the country.’
Mr. Ricardo would not have risen upon this occasion, if the hon. gentleman had not declared, that he wished some amicable arrangement could be made by which that part of the country which was now profiting on account of the loss of the others, might be made to bear its share in the burdens.
He complained that the words which had been used at that and at other public meetings, had been vague as to the advantage of the public creditor. For his part, he was at a loss to see what advantage the fundholder had gained. The argument appeared to him to be made use of rather upon the principle, that by giving your adversary’s argument a bad name, you give your own a good one. Upon such grounds it was contended that the stockholder had met with nothing but gain; but those who had attended to the question, were of a different opinion. If only that which the fundholder was gaining now upon the sums which he had lent after the depreciation, was to be taken into the account, then there would no doubt be a balance in his favour; but, this view of the question would be most unfair. It would be stating the profit on the one side, without the corresponding loss on the other. If both of these were to be taken into the account, it would be found that the stockholder had had nothing more than was just; and that if the interest which he had been paid in depreciated currency, upon capital which when lent had not been depreciated, were to be set against the interest which he was receiving in undepreciated currency now, upon capital which when lent had been depreciated, then, not only would the loss in the one case compensate all that had been hitherto paid in the other, but would actually be equal to a perpetual annuity to that annual amount, which he was at present receiving. Mr. Mushett, of his majesty’s mint, than whom nobody was better able to understand the subject himself, or to afford clear views of it to others, had, in a very luminous publication, demonstrated that this was the fact. A parade was made in the speeches at public meetings, of the 800,000,000l. of debt which had been lent in depreciated currency, and the vast amount of the difference of interest upon it; but it was well known, that about 400,000,000l. of this debt was borrowed before the Bank Restriction bill had operated any depreciation whatever; and another hundred millions had been lent to the government before any considerable depreciation had taken place. Hence there had been 500,000,000l. lent to the public in capital which was not depreciated. Interest in the depreciated currency had been paid upon this for twenty years; and the loss arising therefrom, according to the calculation of Mr. Mushett, was, allowing simple interest, about 27,000,000l.; or, allowing compound interest, and that was the fair allowance, about 12 or 13 millions more. It would appear, that the whole loss which the stockholder had sustained, in consequence of having been paid in a depreciated currency the interest on the sums borrowed, previous to and immediately following 1797, was about forty millions.—Having thus stated the disadvantages to the old public creditor, he should next state what was the calculation of the same authority, as to the advantages since the depreciation had ceased, by the alteration of the currency. That he calculated at two millions per annum. Compare that with the previous loss of forty millions, and by converting that amount into perpetual annuity, we should have the sum of two millions a year. So that the profit and loss would be found to balance each other. Taking, therefore, the respective interests of the stockholder and the payer of taxes, it would be seen, that no injury had occurred to either. Whether his opinion was right or wrong, as to the depreciation that existed at the period of the alteration of the currency, still, on the calculations of Mr. Mushett, it was evident, that to the public creditor, the profits at the one time, though greater, would be balanced by the corresponding losses at the other. He stood not there to defend the alterations that had taken place in the currency. No man had taken greater pains than himself, either within or without that House, to show the absolute necessity of a fixed standard. His hon. friend expressed his regret, that what was called an amicable adjustment had not taken place in 1819, at the restoration of the standard. Why, then, had he not proposed it? It was suggested at that period by a noble lord (Folkestone), in place of reverting to the old standard, to alter it to 4l. 1s. being the amount of the variation between the paper and the price of gold at that time. But, supposing that suggestion to have been adopted, was it to be argued, that a loss of 3 or 4 per cent could have produced all those distresses to agriculture, which the most extravagant opposers of the alteration of the currency attributed to that measure? Their opinions, even as to the amount of the depreciation, were irreconcileable: some stated it at 20 per cent, others contended it was 100; while the most extravagant went the length of asserting, that it amounted to 300 per cent. Suppose, however, that in place of reverting to the ancient standard, it had been increased 100 per cent, did they think no evils would have followed? Would the result, after doubling the amount of all the taxes, have left what now existed—an increasing revenue and a thriving trade? It was not his intention to renew the discussion on that hackneyed topic, Mr. Peel’s bill; but, as such a variety of contradictory opinions had been given on its effects, he would state what was the opinion of a bank director on its efficacy, as it operated on the proceedings of the Bank. Mr. Turner, who had been in the direction for two years, decidedly said, that as to the operations of the Bank, Mr. Peel’s bill remained a dead letter. It had neither accelerated nor retarded payments in specie; except by the payment of ten millions of exchequer bills to the Bank, which enabled it to expend that amount in the purchase of bullion. Taking into consideration the rule by which the bank directors generally admitted they regulated their issues, namely, the application for discounts, and coupling with that the low rate of the interest of money, the circulation would have been the same, and consequently the distress of agriculture as great, even if that bill had never passed.
Lord Folkestone replied, and, ‘with respect to the suggestion he had made, in 1819, of increasing the standard to 4l. 1s., he confessed that now, after mature consideration, he was convinced that that amount of increase would be wholly inadequate to the state of things. That principle was limited to the variation which existed between paper and gold at the particular period. His hon. friend himself then argued on the assumption, that the amount of that variance did not exceed 5 per cent. And here he must be allowed to say, that his hon. friend had not been perfectly consistent with himself; for he had since admitted, that the variance was as great as 10 per cent. He (lord F.) maintained, however, that the depreciation was infinitely greater.’
Mr. Ricardo admitted, that the noble lord was correct, in stating that he (Mr. R.) had on one occasion computed the depreciation at 5 per cent, and that he now found it to be 10 per cent; still, he was not in error. His first computation referred to a payment in bullion; and it would have been correct if the Bank had acted precisely in the spirit of that bill: but, instead of doing so, they had got together a large quantity of gold, which they coined into sovereigns, and then they came down to the House to procure an act, enabling them to get rid of those sovereigns. If the measure of which he approved had been acted on, the depreciation would have been but 5 per cent; because it would have been measured by the price of gold.
Lord Folkestone said, ‘he had supposed the hon. member to have been arguing with reference to Mr. Peel’s bill; but now he discovered, that his argument rested on a measure which existed only in his own imagination.’