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RELIGIOUS OPINIONS—PETITION OF MINISTERS OF THE CHRISTIAN RELIGION FOR FREE DISCUSSION 1 July 1823 - The Works and Correspondence of David Ricardo, Vol. 5 Speeches and Evidence

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RELIGIOUS OPINIONS—PETITION OF MINISTERS OF THE CHRISTIAN RELIGION FOR FREE DISCUSSION 1 July 1823 - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 5 Speeches and Evidence [1819]

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The Works and Correspondence of David Ricardo, ed. Piero Sraffa with the Collaboration of M.H. Dobb (Indianapolis: Liberty Fund, 2005). Vol. 5 Speeches and Evidence 1815-1823.

Author: David Ricardo
Editor: Piero Sraffa

Part of: The Works and Correspondence of David Ricardo, 11 vols (Sraffa ed.)

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First published by Cambridge University Press in 1951. Copyright 1951, 1952, 1955, 1973 by the Royal Economic Society. This edition of The Works and Correspondence of David Ricardo is published by Liberty Fund, Inc., under license from the Royal Economic Society.

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RELIGIOUS OPINIONS—PETITION OF MINISTERS OF THE CHRISTIAN RELIGION FOR FREE DISCUSSION
1 July 1823

Mr. Hume presented the ‘Christians’ petition’ against the prosecution of unbelievers1 and moved ‘That it is the opinion of this House, that Free Discussion has been attended with more benefit than injury to the community, and it is unjust and inexpedient to expose any person to legal penalties on account of the expression of opinions on matters of religion.’ Seconding the motion,

Mr. Ricardo said, he had heard with pleasure a great part of the speech of his hon. friend who had just sat down,2 and the remainder certainly with no inconsiderable concern. The greater part of that speech had been in support of the opinion which he (Mr. Ricardo) held, in common with his hon. friend who had introduced the motion; namely, that no man had a right to dictate his opinions upon abstract questions3 to another, upon peril of punishment for a refusal to adopt them; and his hon. friend had further admitted, that so long as the controversy upon such topics was conducted with decency, it ought not to be prevented by force of law. Now, he lamented that when his hon. friend had thought proper to quote the sentiments of Dr. Paley, he had not given them more at length, for he would, in the writings of that eminent individual, find a more large and liberal spirit of toleration, than he was disposed to admit practically in other parts of his speech.

Mr. Wilberforce.—Dr. Paley distinctly excepts to the treatment of such subjects with levity and ribaldry.

Mr. Ricardo.—That, certainly, was Dr. Paley’s only exception; and he, as well as the other chief ornaments of the church, for instance, Dr. Tillotson and Dr. Porteus, had asserted, in the largest sense, the right of unfettered opinion. If the validity of such opinions were admitted, who could approve of the operation of the law of this country in such matters? Who could sustain those impolitic and unjust prosecutions? What was the prosecution of Carlile for republishing the “Age of Reason?”1 That was not a work written in a style of levity and ribaldry, but a serious argument upon publishing the truth of the Christian religion. Look again at the impending prosecution for eighteen weeks of the same man for publishing Mr. Hone’s parodies,2 which was not abandoned until Hone had himself secured an acquittal on the charge. But, said his hon. friend (Mr. Wilber-force),3 in justification of these public prosecutions, there were some offences which did not directly affect private interest, although they injured the community, and which might go unpunished, were it not for general associations which took cognizance of such matters; and he had talked of obscene writings in illustration of his opinion. But, was there really any comparison between such writings and those upon speculative points of religion, which were the only topics to which this motion applied? They were all agreed that obscene writings ought to be punished. And why?— because they were obviously pernicious to the moral interests of society, and constituted a general and disgusting species of offence. But not so with respect to abstract religious subjects, upon which it was quite impossible to obtain universal assent. No man had a right to say to another, “My opinion upon religion is right, and yours is not only wrong when you differ from me, but I am entitled to punish you for that difference.” Such an arrogant assumption of will was intolerable, and was an outrage upon the benignant influence of religion. They might talk of ribaldry and levity, but there was nothing more intolerable than the proposition which he had just stated, and which was nothing less than the power contended for by the advocates of these prosecutions for mere opinions upon points of faith. Then, what an absurd and immoral mode did the law provide for estimating the credit of a man’s faith before his testimony was legally admissible! When the question was put to a witness, “Do you believe in a future state?” If he were a conscientious man, entertaining seriously such an opinion, his answer must be in the negative, and the law said he should not be heard; but if he were an immoral man, and disregarded truth, and said, “I do believe in a future state,” although in his conscience he disbelieved in it, then his evidence was admissible, and his hypocrisy and falsehood secured him credibility. Now, there would be some sense in the law, if it declined tempting the hypocrisy of the individual, or his fear of the world’s hostility or prejudice, and let in other evidence to establish, from previous knowledge of the individual, whether or not he ought not to be admitted as a witness; but as it stood, it was absurd and ridiculous; and when he (Mr. R.) was charged upon this ground with a desire to do away with the sanctity of an oath, his reply was, “I do not desire to diminish the sacredness of the obligation; but I do desire to get rid of the hypocrisy by which that oath may be evaded.” But then, again, was it possible for a man not to believe in a future state, and yet be strictly moral, and impressed with the necessity of upholding credibility in the common obligations of society? For his part, he firmly believed in the possibility of a man’s being very honest for all the social purposes and essential obligations of the community in which he lived, and still not assenting to the belief of a future state. He fully admitted that religion was a powerful obligation; but he denied it to be the only obligation. It was, in fact, one which was superadded to the general force of moral impressions—it were a libel upon human nature to say otherwise. Tillotson was of that opinion in the following quotation from his works:—“As for most of those restraints which Christianity lays upon us, they are so much both for our private and public advantage, that, setting aside all considerations of religion, and of the rewards and punishments of another life, they are really good for us; and if God had not laid them upon us, we ought in reason, in order to our temporal benefit and advantage to have laid them upon ourselves. If there were no religion, I know men would not have such strong and forcible obligations to these duties; but yet, I say, though there were no religion, it were good for men, in order to temporal ends, to their health and quiet, and reputation, and safety, and, in a word, to the private and public prosperity of mankind, that men should be temperate, and chaste, and just, and peaceable, and charitable, and kind, and obliging to one another, rather than the contrary. So that religion does not create those restraints arbitrarily, but requires those things of us, which our reason, and a regard to our advantage, which the necessity and conveniency of the things themselves, without any consideration of religion, would in most cases urge us to.”1 He read this passage for the purpose of showing, and from a great authority in the church, that the obligation of religion was not alone considered as the influential test of moral truth, and that a man might be very sceptical upon doctrinal points, and yet very positive in the control of moral impressions distinct from religious faith. For instance, there was Mr. Owen of Lanark, a great benefactor to society, and yet a man not believing (judging from some opinions of his) in a future state. Would any man, with the demonstrating experience of the contrary before his eyes, say that Mr. Owen was less susceptible of moral feeling, because he was incredulous upon matters of religion? Would any man, pretending to honour or candour, say that Mr. Owen, after a life spent in improving the condition of others, had a mind less pure, a heart less sincere, or a less conviction of the restraint and control of moral rectitude, than if he were more imbued with the precepts of religious obligation? Why, then, was such a man (for so by the law he was) to be excluded from the pale of legal credibility—why was he, if he promulgated his opinions, to be liable to spend his days immured in a prison? With respect to the exception provided according to his hon. friend (Mr. Wilberforce), for treating such subjects with levity and ribaldry, he must confess, that he thought it a very singular reservation: for what was it, but to say—“You may discuss, if you please, in the most solemn, most serious, and therefore most influential manner, any topic of religion you please; but, the moment you discuss it with levity or ribaldry, that is, in such a manner as to be sure to offend the common sense of mankind, and therefore deprive you of really acquiring any serious proselytes, then the law takes cognizance of your conduct, and makes your imbecility penal.” Was not this a glaring inconsistency? The law allowed the greater evil, the serious and substantial principle of discussion; and it denounced the lesser, which after admitting the first, it ought to have tolerated; and yet his hon. friend had, by his argument, justified and supported so singular a course. There was one passage of this petition which was very forcible, and to which he called the attention of his hon. friend. It was this: —“The reviler of Christianity appears to your petitioners to be the least formidable of its enemies; because his scoffs can rarely fail of arousing against him public opinion, than which nothing more is wanted to defeat his end. Between freedom of discussion and absolute persecution there is no assignable medium.” When this subject was last before the House, unless his memory deceived him, he had heard singular opinions propounded by gentlemen who took a different view of this subject from himself. He thought he had heard it avowed, that the religion which ought to be established in a state, was not that which the majority said they believed, but that the doctrines of which were true. He had heard an observation like that fall from a very respectable quarter.1 It was difficult to argue with any body entertaining such an opinion; for where was the test by which such an argument could be tried? There was not in polemics, as in astronomy, one unerring criterion to which the common credence of mankind bowed: it was not like the rising sun, or any of the other phenomena of nature, which were bound by indissoluble and indisputable laws; but, on the contrary, a subject open to conflicting opinions. Who, then, was to decide upon the truth—who was authorized to say, “My opinion is right, yours is wrong?” If this was impossible, how was the test to be decided? How, for instance, in such a country as Ireland try the question of the truth of what ought to be the religion of the state, against the opinions of the majority of the people? How would, upon that test, the stability of the Protestant religion in Ireland be secured? Or, if it was secured there, merely because the minority thought it the true religion, the same reason and the same duty, would authorize the extension of the principle to India; and why not supplant Mahometanism to establish the doctrines of the Reformation? Into this wide field did the gentleman enter who embarked in such fanciful notions. He begged to be understood as having argued this question, from beginning to end, as the friend of free discussion. He knew the delicacy of the subject, and was anxious to guard himself against being supposed to entertain opinions obnoxious to the bulk of mankind. He repeated, that he only contended for the general right of self-opinion, and for the unfettered liberty of discussion, and hoped that while he was doing so, he should not have, as his hon. friend (Mr. Hume) had had last night,1 certain opinions fixed upon him which he did not entertain, and which it was quite unnecessary for him to countenance, in supporting the line of argument which the subject suggested to him, and which his reason approved.

Mr. Money, opposing the motion, said, that ‘his principal object in rising was, to do justice to an individual who had been alluded to during the debate—he meant Mr. Owen. An hon. member had said, that Mr. Owen disbelieved in a future state. He had communicated with Mr. Owen, and he had great reason to believe that the hon. member had mistaken the opinions of Mr. Owen. He begged the hon. member to state in what part of Mr. Owen’s works he found that opinion promulgated.’

Mr. Ricardo said, that the last act he would commit would be to misrepresent the opinions of any individuals. He had gathered Mr. Owen’s opinions from the works which he had published. After reading the speeches which Mr. Owen had delivered in Ireland and other places, he had come to the conclusion, that Mr. Owen did not believe in a future state of rewards and punishments. It was one of the doctrines of Mr. Owen that a man could not form his own character, but that it was formed by the circumstances which surrounded him—that when a man committed an act which the world called vice, it ought to be considered his misfortune merely, and that therefore no man could be a proper object for punishment. This doctrine was interwoven in his system; and he who held it could not impute to the Omnipotent Being a desire to punish those who, in this view, could not be considered responsible for their actions.1

The motion was negatived.

[The session closed on 19 July 1823.]

12 Feb. 1824

On 12 Feb. 1824 Mr. Hume rose to move for an inquiry into the laws restricting the emigration of artizans, the exportation of machinery and the combination of workmen, and said: ‘At the end of last session he had given notice that he would, early in the present, fulfil his undertaking; and he had done so by the advice, and in hopes of the assistance, of a distinguished individual, whose recent loss the kingdom had to deplore [hear, hear!]. The late Mr. Ricardo was so well acquainted with every branch of the science of political economy, formerly, and until he had thrown light upon it, so ill understood, that his aid on such a question would have been of the utmost value. When he remembered the manner in which his lamented friend had always delivered his opinions, and the candour of moderation he invariably displayed towards his opponents, he might boldly assert, that there was not a member on any side of the House, who would for a moment deny the extent of the loss the country had thus sustained [hear, hear! from all parts of the House]. The general interest of the community was the single object he ever had in view, and through good report and bad report, he had pursued it with the meekest spirit of humility, and the most liberal spirit of inquiry. With regard to the principles which Mr. Ricardo was so capable of expounding, now that time had worn away many of the ruder prejudices against them, he might say, that not a few of those opponents, who had long theoretically resisted his doctrines, would at this time, though perhaps somewhat unwillingly, allow, that many of his predictions had been fulfilled. It was doubtless presumptuous in him to touch matters which his late friend had already so ably treated; and he only had given notice originally of his intention to bring this great subject under the consideration of the House, in the hope and expectation, that he should have enjoyed the benefit of his aid and counsel.’

Mr. Huskisson (President of the Board of Trade), concurring in the motion, said: ‘He was not at all surprised that the hon. member for Aberdeen, in proposing this inquiry, should have regretted the loss which the House had sustained by the death of his valued friend, the late Mr. Ricardo—a gentleman, whom he had also had the pleasure of reckoning among his friends. There was no man who esteemed more highly the acuteness and ability of Mr. Ricardo than he did, and no man who more sincerely lamented his loss. In all his public conduct there was an evident anxiety to do what he thought right, to seek the good of the country, and to pursue no other object; and his speeches were always distinguished by a spirit of firmness and conciliation that did equal honour to himself and to his country.’

RICARDO’S AUTOGRAPH TRANSCRIPT OF HIS OWN SPEECH OF 24 MAY 1819

(see p. xxx)

EVIDENCE ON THE USURY LAWS 1818

NOTE ON THE EVIDENCE ON THE USURY LAWS

The question of the Usury Laws was first raised in the House of Commons, after the end of the war, by Brougham in a speech of 1 February 1816.1 The law then in force was an Act of Queen Anne (12 Anne Stat. 2. c. 16) which limited the rate of interest to five per cent. Following Brougham’s suggestion, on 22 May 1816 Serjeant Onslow, M.P. for Guildford, moved to bring in a bill for their repeal; this bill, which was later withdrawn, was the first of a series of unsuccessful attempts to obtain their repeal. Onslow’s motion was introduced again in May 1817, when it was postponed till the following year.

On 21 April 1818, again on Onslow’s motion, a Committee was appointed ‘to consider the effects of the Laws which regulate or restrain the Interest of Money’.2 The Chairman of the Committee was Onslow himself and among the members were the Chancellor of the Exchequer, Lord Castlereagh, Robinson, Wallace, Huskisson, Sir John Newport, Sir James Mackintosh, Baring, Brougham, Sir Samuel Romilly; Sir Henry Parnell was added to the Committee on 28 April.

The Committee took evidence from twenty-one witnesses representing the commercial and landed interests; the first to be heard was Ricardo. Almost every one of the witnesses declared that the Laws were either injurious, particularly to the landed interest, or inoperative. The Report of the Committee was presented on 28 May 1818 in the form of three Resolutions as follows:

1. That the laws regulating or restraining the rate of interest have been extensively evaded, and have failed of the effect of imposing a maximum on such rate; and that of late years, from the constant excess of the market rate of interest above the rate limited by law, they have added to the expense incurred by borrowers on real security, and that such borrowers have been compelled to resort to the mode of granting annuities on lives, a mode which has been made a cover for obtaining higher interest than the rate limited by law, and has farther subjected the borrowers to enormous charges, or forced them to make very disadvantageous sales of their estates.

2. That the construction of such laws, as applicable to the transactions of commerce as at present carried on, have been attended with much uncertainty as to the legality of many transactions of frequent occurrence, and consequently been productive of much embarrassment and litigation.

3. That the present period, when the market rate of interest is below the legal rate, affords an opportunity peculiarly proper for the repeal of the said laws.1

No action was taken till 10 Feb. 1819 when Onslow again introduced a Bill to repeal the Usury Laws; but on 9 June it was postponed once more. It was revived on 12 April 1821, when it was the occasion of a debate in which Ricardo took part;2 after being deferred several times the bill was dropped. A similar bill was introduced by Onslow in 1823, when Ricardo again spoke in support;3 it was however once more abandoned. Onslow renewed his attempts in 1824 and 1826 with no better success.

The repeal of the Usury Laws took place by stages over a period of years from 1833 to 1854. It began with a clause in the Bank Charter Act of 1833 (3 & 4 Wm. IV c. 98) which exempted bills of exchange, not having more than three months to run, from the operation of the Usury Laws. An Act of 1837 (7 Wm. IV & 1 Vict. c. 80) also exempted bills of exchange of not more than twelve months’ currency; this measure, which was a temporary one, was prolonged by an Act of 1839 (2 & 3 Vict. c. 37) which also exempted loans of more than £10. These measures were further prolonged by Acts of 1843 (6 & 7 Vict. c. 45), 1845 (8 & 9 Vict. c. 102), and 1850 (13 & 14 Vict. c. 56). The Usury Laws were finally repealed by an Act of 1854 (17 & 18 Vict. c. 90).

Ricardo’s Evidence is here reprinted from the ‘Report from the Select Committee on the Usury Laws’, in Parliamentary Papers, 1818, vol. vi.4 Numbers have been prefixed to the questions, and questions and answers printed in separate paragraphs.

MINUTES OF EVIDENCE TAKEN BEFORE THE SELECT COMMITTEE ON THE USURY LAWS

Jovis, 30° die Aprilis, 1818.

Mr. Serjeant Onslow, in the Chair.

David Ricardo, Esq. called in; and Examined.

[1] Has your attention been called to the laws which restrain the rate of interest?

Yes.

[2] Have you that experience, to say, or have you perceived, whether those laws are beneficial or otherwise?

I think otherwise.

[3] In what respect do you think otherwise? It appears to me, from the experience which I have had on the Stock Exchange, that, upon almost all occasions they are evaded, and that they are disadvantageous to those only who conscientiously adhere to them.

[4] Do you think that repealing those laws, would have the effect of raising or lowering the average rate of interest?

I think that the effect would be but trifling; but if any thing, it would tend to lower the rate of interest.

[5] When the funds afford a greater rate of interest than 5 per cent, do not the usury laws injure the commercial part of the world, with regard to discounts?

Not only at that time, but at other times, for it often happens that the price of the funds afford a less rate of interest than 5 per cent, at the same time that the market rate of interest is much above 5 per cent.

[6] But however, in point of fact, during the late wars, have or have not persons engaged in commerce, sustained injuries from the operation of the usury laws?

I should think, that they had sustained injuries in consequence of those laws.

[7] Have you any doubt of it? I have no doubt at all, as far as my experience goes, but those injuries have been diminished by the easy means of evading them.

[8] Of successfully evading them? The evasion of the laws is the effect of the natural order in which these transactions take place.

[9] In what manner evaded? In the particular market with which I am acquainted, namely, the Stock Market, they are evaded by means of the difference between the money price and the time price of stock, which enables a person to borrow at a higher rate of interest than 5 per cent, if possessed of stock, or to lend at a higher rate, if the difference between the money price and the time price, affords a higher rate.

[10] Has that been acted upon extensively? Very extensively; it is the usual and constant practice.

[11] The difference between the money and the time price, is that which is called “continuation;” is it not?

Yes.

[12] Was there not a trial some time ago, as to the legality of “continuation”?

There was.

[13] For some time, did not that trial diminish the practice very considerably, at least so far as making bargains for buying and selling to the same person?

That trial did diminish such bargains.

[14] Will you be kind enough to favour the Committee with your opinion with respect to these laws?

As far as my experience goes in business, nothing is more easy than to evade them; and after that trial to which allusion has been made, the same practice was continued, by altering the quantity of stock, either for money or for time; on all former occasions, the same amount of stock was bought for one period, that was sold for another period; but some timid men, after that trial, thought they were perfectly safe by making those sums different quantities, although they differed but a trifle in amount; and they thought themselves equally safe in buying stock for money of one person, and selling it, at the same instant, for time to another.

[15] Do you think that the supposed or real illegality tends, in any degree, to increase the rate of that Continuation?

The dealing in stock, for Time, is, in many cases, an illegal transaction; and that therefore may sometimes have an effect on the Continuation. A man possessed of money, purchasing stock for ready money at one price, and selling for a future day at a higher price, may make more than the legal rate of interest by so doing; but as he may not be actually possessed of stock at the time of making the time bargain, it cannot be considered, in any shape, as a legal transaction, and he can have no legal remedy against the default of the purchaser.

[16] I beg to ask whether I am to understand that, in general, these transactions by Continuation, are not strictly legal?

In my opinion, the greater part of these transactions are not legal.

[17] And you are of opinion, that that illegality raises the rate at which the borrower obtains the money?

Exactly so; there would be more competition if it was not for that.

[18] In this manner you conceive the usury laws, indirectly, to raise the rate of interest in these transactions, by compelling persons to resort to a practice not strictly legal?

Yes.

[19] Am I to understand that, in point of fact, by this Continuation, nothing is done, but that money is raised at a higher than the legal rate of interest?

The transaction never has that complexion. A man bargains either for the purchase or the sale of stock, for money or time, and the rate of interest is never spoken of; it is the effect of the transaction, but never the avowed object of it.

[20] That I understand; but I wish to ask, whether, in point of fact, the effect is not simply to obtain the use of money at a higher than the legal rate, though that is not the shape of the transaction?

That is generally the object, but it frequently happens that the difference between the money and the time price of stock, may not afford so much as the market rate of interest, and may also be below the legal rate.

[21] I am to understand, therefore, that this is a risk which the lender, so to speak, takes upon himself?

There is no risk whatever in it, as far as regards the rate at which the money is lent or borrowed, because it is known at the time what rate of interest the difference between the money and time prices affords, and because the sum to be received by the lender is thereby defined and settled.

[22] Is not that sum, or rather the profit to be derived by the lender, governed by the market rate of interest at that time?

I can only say, that I think it is not.

[23] How comes it that it is not? When preparations are making for a loan, large sales of stock are made, of which the seller may not be possessed, but which he may expect to replace by the share he may have in the loan to be contracted for; in such case, there may be rather a scarcity than otherwise of ready money stock in the market; the seller, who is not possessed of stock, will sell it at a small addition of price for time, and sometimes even under the money price.

[24] In your opinion can the Government loans, and other public transactions in the funds, be carried on without purchasing and selling stock for Time, and will not the difference between the two prices be governed and depend on the market value of money, and not on the legal rate of interest?

The Government loans could not, in my opinion, be carried on, if Time bargains were disused. The difference between the money price and the time price, does not always depend, as I have before stated, on the market rate of interest. In general, stock is in abundance; and in that case no inconvenience arises in depositing that as a security for money borrowed; but on some occasions stock exists in a degree of scarcity, and then, although the market rate of interest may be high, it may be inconvenient to the borrower to deposit this particular security; consequently the time price will be either very little above, or even below the money price.

[25] I beg to ask if it is within your knowledge, and if it is your opinion, that what you have described as Continuation, or time bargains, embrace any dealings in money at all, or are they not rather speculations between the parties?

In many cases, indeed in most cases, it is a speculation between the parties; but it is constantly had recourse to, as a means of borrowing and lending money.

[26] In times of difficulty, do not the usury laws injure commerce by restricting discounts, and the making of loans to persons engaged in all branches of trade?

In my opinion, they do.

[27] Will you state to the Committee, if you think that any good effect is derived by the public from the usury laws?

I think no good effect is derived from those laws.

[28] Are you aware of any inconvenience that would result from the repeal of them?

None, whatever.

[29] Were there not a considerable number of persons, who formerly lent money upon Continuation, who were deterred from doing so by this trial, in which it seemed to be held by the Court to be usurious?

The trial which took place was concerning Continuation upon scrip receipts, and not on stock. The transactions are similar to each other, but the facility of proof may be different.

[30] Those were actions under the usury laws, were they not?

They were.

[31] But it was, I believe, one action to recover penalties under the usury laws?

It was.

[32] You have already said, that it did deter many persons from continuing to lend money on Continuation?

Yes.

[33] By so deterring them, had it not the natural operation to raise the rate of Continuation?

I consider that rather as a question of science, which must require a good deal of consideration, because the money may be lent by these parties at the legal rate of interest, and thus it may come to the same borrowers by a circuitous route.

[34] If you wished yourself to borrow money on Continuation, should you not be desirous that there should be in the market a great number of persons disposed to lend upon Continuation? Most certainly.

[35] For what reason?

Because it is probable the terms might be somewhat lower.

[36] Does not the power of selling stock for money, and repurchasing it for time, afford great facility to the holders of stock, by enabling them for temporary purposes to procure money, without foregoing the advantage of repossessing their stock at a distant day?

Most undoubtedly.

[37] May not this advantage be considerably more than the excessive interest which the transaction may have obliged them to pay?

Without any doubt at all.

[38] What effect would the abrogation of the usury laws produce upon the financial operations of the Government, in time of war; I mean, in the negociation of loans?

It would rather tend to facilitate them; the Government is not bound by the usury laws, for in allowing discount for prompt payment for a loan, they frequently give considerably more than 5 per cent.

[39] When the legal rate of interest is 5 per cent, and the Government are enabled to borrow at a higher rate of interest, does it not proceed, as a necessary consequence, that they, the Government, are enabled to borrow when individuals are not?

Certainly.

[40] Does not the Government, therefore, obtain in this way, a preference in the money market, and thereby obtain a facility in the negociation of their loans?

If the law was not evaded, such would be the effect; but, as I have already observed, it is completely evaded.

[41] In the negociation of loans, have you ever known the laws for restricting interest to be taken into consideration in adjusting the terms?

Never; and frequently, when loans are raised at an interest below the legal rate of interest, the mode in which the discount on prompt payment is calculated, affords a rate of interest of sometimes 7, 8, or 9 per cent.

[42] Do not takers of loans calculate the advantages which result in Government stock transactions from the habit of evading the usury laws?

Certainly; if those laws were not evaded, the contractor would not be able to give the minister such good terms; his transactions would be cramped, if he were prevented from borrowing at the market rate of interest.

[43] What is the criterion by which you judge the market rate of interest, or is there any criterion at all?

I know of no other criterion than the prices of the public securities, and the facility of raising money for short periods.

[44] Do you not think that the price of the Government securities affords a very good criterion of the market rate of interest?

Not a very good one; their price is a good deal influenced by speculation, and by the anticipation of political and financial events.

[45] I would mean to speak of the average price of these securities, and not of their occasional fluctuations?

I can hardly conceive any times in which these securities are not acted upon by the considerations I have stated.

[46] Would you consider the price of exchequer bills as a criterion?

As a better criterion than the price of the funds.

[47] Would you not rather consider, that discount in the market was a more just criterion than the value of the public funds?

No; because discounts are strictly regulated by the laws of usury.

[48] I mean to confine it to discounts when interest is not above the legal rate, and there are cases when discounts are inferior to the legal rate?

When the market rate of interest is below 5 per cent, then I think that the discount given on a bill is a very good criterion of the market rate of interest.

[49] You have already said, that money may be raised by borrowing on Continuation; does not this give to the holder of stock a greater facility of raising money than other persons possess, who are holders of other property?

I should think it does.

[50] Are you acquainted with the nature of foreign loans? I never was engaged in any.

[51] You do not know what is the discount of bills, or the mode of raising loans in France, Holland and Germany?

No, I do not.

[52] What are the grounds of your opinion of the principle by which the rate of interest is regulated?

It is regulated by the demand and supply, in the same way as any other commodity; but the demand and supply itself is again regulated by the rate of profit to be made on capital.

[53] Do you think there is anything in the nature of money, or of the transactions regarding the borrowing or lending of money, which distinguishes it from other commodities which find their value in the market, according to the proportion of demand and supply?

None, whatever; the market rate of interest for money depends on the proportion between the borrower and the lender of capital, without reference to the quantity or value of the currency by which the transactions of the country are carried on.

[54] Have you, in the course of your transactions, been acquainted with a case, in which any disadvantage could have been derived to the borrower, by the abrogation of the usury laws?

None whatever; on the contrary, the abrogation of the usury laws would, upon all occasions, have been advantageous, in my opinion, to the borrower.

[55] Are you not of opinion also, that their abrogation would be equally advantageous to the lender?

I conceive there are cases in which their abrogation would not be quite advantageous to the lender, because he may exact a premium for the risk which the law imposes upon him.

[56] But except in so far as he exacts a premium for his risk in breaking the law, you are of opinion he can derive no advantage from the usury laws?

I think all his advantages may be referred to that principle.

[57] Do you think that mercantile interests will be injured or served by these restraints of the usury laws upon interest?

I have already given my opinion, that they would be much served by the abrogation of these laws.

[58] If a person who is possessed of considerable capital in this country, or in any other country belonging to the United Kingdom, should wish to make the most of his money, and if he is restrained in this country by the Usury Act, do you not think it would be the means of his transferring his capital to another country, where he would obtain a greater rate of interest, by loan or discount?

Undoubtedly, if the law be not easily evaded.

[59] Do you not believe, that many have been injured by borrowing money upon annuities at a very high rate; and do you not believe, that many have been more injured by these means, than if they could have borrowed money at the market rate of interest?

I have no knowledge of any such transactions; but my opinion is very decided, that they have been more injured by having been prevented from borrowing money at the market rate of interest.

EVIDENCE ON THE RESUMPTION OF CASH PAYMENTS 1819

NOTES ON THE EVIDENCE ON THE RESUMPTION OF CASH PAYMENTS

I.

The Committees

The Suspension of Cash Payments by the Bank of England, which had been effected by the Order in Council of 26 February 1797, and confirmed by the Bank Restriction Act of the same year (37 Geo. III c. 45), was continued by an Act of 1803 (44 Geo. IIIc. 1), ‘until Six Months after the Ratification of a Definitive Treaty of Peace’. After the Peace of Paris however the Resumption of Cash Payments was postponed by successive Acts,1 the latest of which, in 1818, had fixed the date for Resumption as 5 July 1819.

Early in the Session of 1819 the Chancellor of the Exchequer intimated in the House of Commons that he would bring forward a measure for continuing the Restriction Act for a short period; but, soon after, he announced that in consequence of a communication from the Directors of the Bank (who preferred to ‘submit to the Consequences of a Parliamentary Inquiry’ rather than consent to a temporary and inadequate measure)2 he proposed to move for a Committee of inquiry.3 On 2 February 1819, on the motion of the Chancellor of the Exchequer, it was agreed that a Committee of Secrecy consisting of twenty-one members should be appointed ‘to consider of the State of the Bank of England, with reference to the Expediency of the Resumption of Cash Payments at the period fixed by law, and into such other matters as are connected therewith; and to report to the House such information relative thereto, as may be disclosed without injury to the Public interests, with their Observations’. On 3 February the members were chosen by ballot as follows: Lord Castlereagh, the Chancellor of the Exchequer (Vansittart), Tierney, Canning, Wellesley Pole, Lamb, Robinson, Grenfell, Huskisson, Abercromby, Bankes, Sir James Mackintosh, Peel, Sir John Nicholl, Littleton, Wilson, Stuart Wortley, Manning, Frankland Lewis, Ashurst, Sir John Newport.1 Peel was Chairman.

On 4 February the Lords appointed a Secret Committee, with the same terms of reference as the Commons’. The members were: Earl of Harrowby (Lord President), Duke of Wellington, Marquess of Lansdowne, Earl Graham, Earl Bathurst, Earl of Liverpool, Earl of St. Germains, Viscount Gordon, Viscount Granville, Lord King, Lord Grenville, Lord Redesdale, Lord Lauderdale.2

The Commons’ Committee took evidence from twenty-four witnesses between 11 February and 1 May; the Lords’ from twenty-five witnesses between 8 February and 30 April. Sixteen of them, including Ricardo, were heard by both Committees.

II.

The Proceedings of the Committees

The enquiries of both Committees soon became centred round the plan of bullion payments, which had been outlined by Ricardo in the Appendix (1811) to his High Price of Bullion and developed in his Proposals for an Economical and Secure Currency (1816). Ricardo’s plan hd been intended as a permanent system of currency; but the Committees at first considered it only as a temporary device to facilitate the resumption of cash payments. And although in the later stages of the enquiry the plan was discussed as a permanent system, it was eventually as a temporary measure that it was recommended by the Committee and embodied in Peel’s Act. Nevertheless, even after the Act had been passed, Ricardo and his friends retained the hope that the plan might still be adopted permanently.3

Also the scheme, which was adopted, of reducing the price of gold according to a fixed scale until the mint price was reached was an idea of Ricardo; he had suggested it in 1811 in a letter to Tierney4 (now a member of the Commons’ Committee), but not in his published writings.

Some account of the proceedings of the Committees in their early stages is given in his Diary by J. L. Mallet,1 who was in close touch with some of the principal witnesses, particularly William Haldimand2 and Alexander Baring,3 as well as with some of the members. In the entry for 13 February 1819, he writes that he ‘dined at the Marcets with Abercrombie, Sharpe, Ricardo, Mr Geo. Philips, the Rev. Sidney Smith and his wife, Mr and Miss Boddington. In the evening Mr Blake, Sir Edward Coddrington, Dr Wollaston, and other People came in’. The conversation first turned on Parliamentary Reform:

‘The Secret Committees of both Houses respecting the Restriction Act, also became a subject of interesting conversation. Mr Ricardo is more at home here than in the maze of political reform. He had been closeted in the morning with Lord Grenville and Mr Grenfell; discussing various parts of that important subject. Abercrombie, who is a Member of the Committee of the Lower House, also entered with some interesting particulars of the state of opinions in the Committees; for altho’ they are committees of secrecy, every thing that passes there in the morning, is known at night in the great political circles.

‘The examination of William Haldimand (Mrs Marcet’s Brother) before the Lords Committee, for two days successively,1 and during five hours in each day—and the effect produced by his evidence and the information he had given the Committee, was a subject of general remark and congratulation....

‘Lord King sent him a scheme this morning thro’ Mr Thorpe, by means of which the resumption of cash payments would be facilitated. Supposing the period fixed for paying in cash to be 18 months; a scale would be formed of the price at which the Bank would be obliged to purchase Bullion during every week of the intervening space of time. For instance the price of Gold is £4. 4. –: during the first week they would be obliged to purchase Bullion (upon Ricardo’s plan) at £4. 4. The next at £4. 3. 11¾, and so on, till by the reduction of the issues, they had brought the price down to the Mint price of £3. 18. 6. William Haldimand thinks well of King’s scheme, which might in his opinion be adopted with some modifications: but he apprehends that no scheme can prevent the extreme distress which will be felt from the narrowing the discounts of the Bank. The depreciation is reckoned at about 7 per cent...Ricardo does not think that the distress will be so great but in this he differs from all other commercial men.

‘Mr Dorrien, Mr Pole and Mr Harman, the two first of whom are the Governor and Deputy Governor of the Bank, and the latter one of the oldest and ablest of the Directors, have been examined before both Committees, and have made a wretched figure. Mr Pole shewed himself so totally ignorant of first principles, that Huskisson who took the lead in the examination of the House of Commons Committee, looked around him, and observing the impression, stopt short and sat down, not wishing to expose Mr Pole unnecessarily—. And yet these are the men to whom the power is delegated of regulating the currency of the kingdom, and of lowering or raising at their pleasure the market value of every species of property—.

‘Lord Liverpool and Lord Grenville take the lead in the examinations of the House of Lords. Canning, Huskisson, and Frankland Lewis in the Commons. Lord Castlereagh asks questions which shew that he does not know the a.b.c. of the subject. Poor Vansittart sits silent and dejected at seeing all his opinions overturned. The Duke of Wellington is very attentive, and writes down all that passes: he made some very pertinent observations to William Haldimand, in a very unassuming and modest manner. Lord Harrowby and Lord Bathurst are also very attentive. Lord Lansdowne, Lord King and Lord Lauderdale understand the subject thoroughly, and afford great assistance. There cannot be a better Committee than in the Lords. The Committee of the Commons is not so good. Huskisson is the only man who undertands the subject thoroughly. Mr Peel who is Chairman is very impartial and intelligent; but he knows little about it. Tierney altho’ a good financier, is not up to the intricacies of the question. It is always a toss up whether good Sir John Newport is right or wrong. Abercrombie can seldom attend. Mr Grenfell is able and well acquainted with the subject; but not of the calibre of Lord Grenville.’

It was on 12 February, during the examination of Haldimand before the Lords’ Committee, that the plan of bullion payments was first mentioned. He was asked: ‘Does the Witness think, that gradual Reduction [in the Amount of Paper Circulation] would be secured by compelling the Bank of England to sell Bullion at the price of 82s. during the first three Months; 81s. during the next three Months and so on in Succession, reducing it in Fifteen Months to the Mint Price?’1 Haldimand asked for time to consider the question and when recalled on 15 February he said: ‘I have consulted two sensible Men, whom I consider to understand the Subject; and I do think, in Concurrence with them, the Plan well calculated to secure to the Public a gradual and certain Restoration of the ancient Value of the Currency.’2

The first reference before the Commons’ Committee to the plan was in a question put to William Ward, a Director of the Bank, on 23 February: ‘What would, in your opinion, be the effect of requiring the bank of England to sell gold and silver bullion, in quantities not less than the value of £100 sterling, to holders of their notes, at the present market price, and to lower the price at a given rate weekly, until it fell to the mint price, provision being at the same time made that the bank should, in each week, buy bullion at a fraction less than the selling price of each week?’ Ward objected that such a plan would not save the Bank from a run ‘occasioned by panic or by politics’.1

It was in the evidence of Swinton Holland, ‘a partner with Baring, Brothers, & Co.’, before the Commons’ Committee on 2 March that the plan was proposed as a permanent measure, and Ricardo named as its author: ‘It having been intimated to me, some days ago, that I was likely to be called before this Committee, I turned my attention to the subject. My opinions are chiefly founded upon Mr. Ricardo’s theory, reduced, as I conceive, to a practical form.’ He then read a paper, which began: ‘In submitting this plan to the consideration of the Committee, I must beg to premise, that the ground work of it is entirely taken from Mr. Ricardo’s admirable pamphlet, “Proposals for an economical and secure Currency;” that if there is any merit in the plan, that merit appertains to Mr. Ricardo. With this gentleman I have not had any communication on the subject, nor have I the honour of being known to him; that I have merely reduced his system into detail and form for practice; and I can venture to assert, as a practical man of business, that there will be little, if any difficulty, in carrying it into effect’.

He proposed that the Bank should be required, within a period to be fixed (and which in a subsequent answer he suggested might be six months from the Report of the Committee), ‘to pay (if demanded) all their notes large and small, if the amount presented, added together, forms a sum total of one hundred pounds; and that the same shall be paid by the ounce of gold, at the option of the bank, either in gold, in specie of the current coin of the realm, gold in ingots, bars, or gold in foreign coin...’

‘Let the period at which the bank is to commence this system be made public, and declared to the world as fixed, absolute, and unchangeable.

‘Instead of 3l. 17s. 10½d. per ounce, let the standard value be declared to be 80s. per ounce; which would require the bank to deliver or pay against £.100 of its notes, exactly 25 ounces of gold of standard fineness, (or in proportion to standard fineness, if delivered in foreign coin)...

‘In order to preserve the equilibrium between paper and gold, and prevent bank notes rising to a premium, the bank must be obliged to deliver its paper to the public, or to the bearer of one ounce or more of gold in bullion, (or coin in its relative proportion per ounce to standard) thereby creating a fixed and invariable market for gold, at 80s. per ounce...

‘This system will require the trade in bullion to be free, unrestricted, and the import and export allowed, without any impediment being thrown in the way thereof.

‘Bank notes will be required to be made a legal tender so long as, and no longer than the bank gives 25 ounces of gold for 100l. in bank notes.’1

The following day, 3 March, Alexander Baring stated before the Lords’ Committee that he had ‘a very favourable Opinion of the Plan of Currency suggested by Mr. Ricardo, as combining the two Desiderata of an extensive Paper Circulation, with Security against its Depreciation.’2

Meanwhile Ricardo had been in touch with members of the Committees and was expecting to be examined. On 28 February he had written to Trower: ‘The inquiry into the state of our currency, and exchanges, is proceeding in both houses very satisfactorily. I have had many conversations with several of the Committees of both Houses—with Lord Grenville, Marquis of Lansdown, Lord King, Mr. Huskisson, Mr. F. Lewis, Mr. Grenfell and others. All have a very perfect knowledge of the subject, and all agree that the progress of the public in comprehending the question has been very great. The Bank Directors themselves have improved, and they are far behind every other person. I confidently rely on measures being taken to place our currency in a satisfactory state. I am told that I shall be examined.’3

On 4 March he gave evidence before the Commons’ Committee and outlined his plan. It is curious that in his evidence, both to the Commons’ and to the Lords’ Committees (below, p. 379, Q. 21 and p. 422, Q. 21) Ricardo recommended that the Bank should have the option of paying their notes either in specie or bullion; whilst in the subsequent debate in the House of Commons he opposed Ellice’s amendment which gave to the Bank just such an option (above, p. 11). Perhaps Ricardo at first took it for granted that, Bullion payments being more advantageous to the Bank, the latter would not normally exercise the option of paying in specie; and later, when the reluctance of the Bank Directors to operate the plan became apparent, he thought it necessary to make Bullion payments obligatory.1

Thereafter most of the witnesses before the Commons’ Committee were asked for their opinion on the plan of bullion payments. N. M. Rothschild, on 8 March, to the question whether he was acquainted with ‘the plan proposed by Mr. Ricardo for the regulation of the payments at the bank’, replied: ‘I cannot recommend it, because, in case any news comes from abroad that there is the smallest chance of a war, every one will come at once and take out gold bars; a man may fetch a hundred thousand pounds worth of gold bars out of the bank in five minutes; but if you pay in cash, the bank will find out this, and they must count the cash; and in the course of a short period the government will hear of this, and the bank may be protected.’2 He added that there would be many other difficulties in the plan; in particular, there was the danger of silver bars cased over with gold being passed for gold bars.

Two questions put to Lewis Lloyd, a banker, on 9 March, stress the distinction drawn by the Committee between the plan of bullion payments and the ‘graduated scale’.

‘A plan has been suggested to this Committee for the resumption of cash payments, which is known by the name of Mr. Ricardo’s plan; have the goodness to state to the Committee whether you have formed any opinion upon that plan?—It certainly has appeared to me as unexceptionable a plan as any I have heard suggested; it seems to remove some of the difficulties which would attend a resumption of cash payments.

‘There has been another modification of that plan suggested, which would have this effect, that the bank should immediately or at the expiration of three months commence the payment of its notes in cash, but that they should pay in coin at the market price of gold, and that there should be a gradual reduction of the price of the gold which they should pay, until the market price of gold was reduced to the mint price; do you conceive the adoption of that plan would facilitate the resumption of cash payments?— I have paid very little attention to that, and am not able to give an answer; as to the other, I read the work, and it seemed to me to suggest an ingenious plan to counteract some of the objections which have occurred to the resumption of cash payments.’1

On 11 and 12 March Alexander Baring was examined on ‘Mr. Ricardo’s plan’.2 He said that ‘The plan in question is, in fact, no other than that of the bank of Hamburgh, only substituting a currency of paper in lieu of a transfer of book debt; and the bank of Hamburgh has always been found, from long experience, the best institution for preserving the standard of value; the payments of the bank of Hamburgh are solely in silver bullion.

‘Supposing such a plan once adopted, and the price of gold and the exchanges to have continued steady for some time, under the operation of this plan; would not such a state of things afford a great facility for the return to the ancient system of this country, if such return should still be thought more desirable?—The plan would certainly bring with it no expense, and could at any period be got rid of without difficulty; at the same time, as one of its merits is to carry on the circulation with the least possible amount of bullion, of course, the supply for returning to the system of coin, would not be very great; at the same time it is my opinion that such a system would make London the great mart for gold and silver bullion in the same manner as the bank of Hamburgh has given that advantage to the city of Hamburgh for silver.

‘You have probably heard that another plan has been suggested for the resumption of cash payments, with reference to the present actual price of gold, and varying the amount at which the issues should be made from time to time, in proportion as the price of gold shall come nearer to the mint price; setting aside the question of good faith, which is involved in the first step of such a plan, do you think in other respects that it is practicable and advisable? —I should think not; I do not think the bank could be placed in a state of cash payments much earlier, by making a small difference in the price at which they would begin to pay, than by abiding by the old standard; there might be some facility, but not sufficient to justify so great a novelty.’1

On 17 March John Smith, a London banker and a member of the House, questioned on ‘Mr Ricardo’s suggestion’, agreed that it would be advantageous to country banks. Asked for his opinion of ‘the merits of that plan generally’ he answered that he felt ‘favourably disposed towards it’.2

Ricardo was again examined, apparently at his own request, on 19 March, when he delivered a paper in which he suggested that, if it was decided that a currency partly made up of gold coin was desirable, a ‘moderate seignorage’ should be charged on gold coin.

Two more witnesses were examined by the Commons’ Committee on the plan. Vincent Stuckey, a country banker, on 22 March, agreed that ‘the plan for the resumption of cash payments, commonly called Mr. Ricardo’s’ would ‘afford a facility both to country bankers and to the bank of England’. Asked further ‘What are the inconveniences which you consider would arise from this change in the mode of paying the notes of the bank of England?’, he replied ‘I am not aware of any inconvenience which can arise; I think it would be attended with very considerable convenience to pay the larger sums in bullion: it appears to me to be a very great improvement on a well-regulated paper currency; and it has always struck me, that at the resumption of cash payments by the bank, the above would be by far the best plan I ever heard of: I think it would do away a great part of that which many dread, a great and general demand for guineas; and after a year or two, seeing how the plan answered, the circulation of coin might be introduced, if found necessary.’3

Thomas Smith, an accountant,1 asked on 24 March ‘Have you heard and considered of a plan, which is generally known by the name of Mr. Ricardo’s plan, for the resumption of cash payments?’ replied ‘I wrote a reply to it a few weeks after it was published’.2 To the question ‘Do you think the plan of Mr. Ricardo preferable to the one for the resumption of cash payments, in the sense in which cash payments are ordinarily used?’ he replied ‘I conceive Mr. Ricardo’s plan to be perfectly illegal, and to be impossible to be put in practice without risking the destruction of the bank, and the ruin of the country’. He then explained his own views on a standard of value and criticised at length Ricardo’s plan.3

The Lords’ Committee recalled Baring on 10 March and asked him: ‘Supposing it were now the Determination of Parliament to restore to the Country, as quickly as may be safe and practicable, the Advantages of a Circulating Medium, regulated by a Metallic Standard of Value; would it in your Opinion be advisable to adopt for the Purpose the following Proposal, either wholly, or with any and what Variations, viz.

1st, That the Bank should be subjected to the Delivery of uncoined Gold or Silver, at the Mint Standard and Price, in Exchange for their Notes, instead of the Delivery of Coin:

2dly, That the Bank should also be obliged to give their Paper in Exchange for Standard Gold or Silver, at fixed Prices, taken somewhat below the Mint Price:

3dly, That the Quantity of Gold or Silver to be so demanded in Exchange for Paper at the Bank, and the Quantity to be so sold to the Bank, should be limited, not to go below a fixed Amount:

4thly, That the most perfect Liberty should be given at the same Time to export and import every Description of Bullion:

5thly, That the Mint should continue open to the Public for the Coinage of Gold Money:

6thly, That the same Privilege of paying Notes in Bullion should either be extended to the Country Banks, or that the Bank of England Notes (their Value being thus secured) should be made a legal Tender?’

Baring replied: ‘the Plan which I consider as by far the most perfect, and to which I know no Objection of any Sort, and which I am not sure that I should not prefer even to the old State of Currency, if that State could be easily returned to, is the Plan alluded to in the Question.’1

Richard Page,2 a general merchant, asked on 17 March ‘Are you acquainted with Mr. Ricardo’s plan?’ answered ‘I have read it’ and added that under this plan ‘you have got one sort of Currency for every rich Man, and another sort of Currency for a poor Man ... you give the rich Man the best, and you give the poor Man the worst.’3

Thomas Tooke was examined on 22 March. In reply to a question on the restoration of the value of Bank of England paper he said: ‘I have heard of no Measure better adapted, than one which has been suggested, of obliging the Bank by an Act of the Legislature to sell Gold Bullion at certain stated Prices progressively downwards, till it shall have reached the Mint Price; because I conceive, that there would be very great Danger of any Measure short of this failing of its Effect, as no Words merely conveying the Promise of a Resumption of Payments in Specie can satisfy the Public that it will actually take place at the Period fixed’.4 On being asked whether he thought it possible to effect the restoration by stages so as to reach the mint price by 5 July 1820, he expressed the hope that this might be effected in a shorter period and stressed the disadvantages attending a long interval: ‘These Disadvantages are the Suspence and more or less Uncertainty in undertaking all commercial Operations, which may be influenced in their Results by the State of the Currency while they are in Progress.’5

Asked further: ‘Have you considered whether, after the Value of Bank Paper had been brought back to the Mint Standard, it would be more expedient that the Bank should thenceforth pay in Coin, on the same Footing as before the Restriction, or that their Payments should continue to be made not in Coin but in Bullion, at the Mint Standard?’ he delivered in answer a written paper: ‘The Plan of a Circulation of Paper, convertible into Gold Bullion only at the Mint Price, is admirable for its Ingenuity and Simplicity, and there can be no Doubt of its Convenience and Cheapness. It is particularly well calculated to serve as an intermediate Measure for limiting and regulating the Paper Circulation, till Arrangements can be made for establishing the whole Currency on a permanent Footing. But if proposed in itself as a permanent System, I cannot but consider it as objectionable. A Circulation so saturated with Paper would be liable to Abuse, and to a Suspension of the Check of partial Convertibility, on lighter Grounds than if the Currency consisted of Coin and of strictly convertible Paper. And, taken in a general point of view, it must be admitted, that a Basis of so frail a Material, resting so exclusively on Credit and Confidence, is exposed to the Danger of frequent Derangement, and in some conceivable Cases to total Destruction. But, above all, is the Objection arising from the extended Inducement to Forgery. And independent of these Objections to an exclusive Paper Currency, it strikes me that many Contingencies and Exigencies might arise, wherein an abundant Stock of the precious Metals might be of essential Advantage. Upon the whole, therefore, in as far as I might be permitted to give an Opinion, it would be in favour of a Return to Payments in Coin.’1 The rest of Tooke’s paper discussed the question of a seignorage on the gold coin. He agreed with the remark of Ricardo, in the Principles of Political Economy,2 that with a seignorage of five per cent the currency might be depreciated to that extent before coin were demanded and he supported the remedy proposed by Ricardo that Bank notes should be made payable in bullion, though not in coin, at the mint price. He suggested, as an improvement, that the gold bars should be issued by the Mint, instead of the Bank, ‘because, independently of other Advantages, the high Prerogative of the Crown, as the Source from whence every Thing like metallic Money should emanate, would be preserved, as in fact the Bar Gold thus stamped, and thereby acquiring additional Value, would be the simplest and cheapest Form of metallic Money.’1

Meanwhile the necessary permission from the House of Commons enabling Ricardo, as a member of the House, to appear before the Lords’ Committee had been asked by the House of Lords on 17 March and granted by the Commons on 19 March.2

On 24 March Ricardo appeared before the Committee, and his examination was resumed when they next met on 26 March.

Before concluding their hearings the Lords’ Committee recalled the Bank Directors to ascertain their views on the plan, which had come under discussion since their first appearance. On 31 March Jeremiah Harman, a former Governor, said: ‘The Plan suggested would be a great Change in our ancient Monetary System, without an adequate Object, as it strikes me; and no one can foresee all the Consequences it might lead to.’3 He also objected to the adoption for a period of a scale of gradually reduced prices on the ground that it ‘would be a virtual Re-opening at £3. 17s. 10½d.’ Moreover ‘it would oblige the Bank to go into the Bullion Market at a very great Disadvantage, and subject it to be the Sport of Bullion Dealers and Exchange Jobbers.’4

Samuel Thornton, also a former Governor, recalled on 2 April, expressed himself in favour of the plan of bullion payments on a graduated scale as a temporary measure: it would facilitate the ultimate resumption of cash payments, and it would allow a considerable saving of the precious metals. He suggested January 1820 as the earliest period at which the Bank could commence bullion payments at the market price, and twelve to eighteen months from that date before payments could be made at the mint price. He thought that it would be ‘a necessary Part of the Plan to pay on a graduated Scale’ to relieve the Bank from the liability to pay in cash their notes dated prior to 1817.5

The Governor, George Dorrien, heard again on 5 April, agreed that the plan of bullion payments would be a security to the Bank and would be a check on any sudden run upon it, and approved the principle of a graduated scale; he thought that bullion payments could not be begun before a year and a half and that a further twelve months would be required to bring down the price to the Mint standard.1

III.

The Reports

The First (or Interim) Reports of both Committees, issued on 5 April, merely stated that they would shortly present a plan for the Resumption of Cash payments; but in the meantime they recommended, as a matter of urgency, the adoption of a measure to suspend the engagements entered into by the Bank, in 1817, to pay in gold coin its notes of an earlier date than 1 January 1817.

A bill to this effect was immediately brought in by Peel; it passed through all its stages in the House of Commons on the same day (5 April),2 and in the House of Lords on the following day, when it received the Royal Assent.

By this time Ricardo knew that his plan would be recommended in the final reports of the Committees. In a letter to M^cCulloch of 7 April, referring to the latter’s review of Economical and Secure Currency in the Edinburgh Review for December 1818, he wrote: ‘You have I am sure been the means of affording the most useful instruction, to many members of the Committees of both houses, and as for myself, I am under great obligations to you, for my plan might have slumbered, or have been forgotten, if you had not rescued it from oblivion, and said more in its favour than I had been able to do. You will be pleased to know that an investigation into the probable results of adopting that plan, or some modification of it, has formed one of the leading subjects of examination, by both Committees, and from the speech of Mr. Peel, as well as from those of Mr. Canning, and the Marquis of Lansdown, I have very little doubt but that it will be recommended, as a temporary, if not a permanent measure, in both reports.’3

The Second (and Final) Report of the Commons’ Committee was presented and ordered to be printed on 6 May, and that of the Lords’ Committee on 7 May.

Mallet in his Diary indicates how the Committees reached their decision:

‘The Committee of the Lords was unanimous with the exception of Lord Lauderdale who stuck to his own theory: the Committee of the Commons unanimous with the exception of Tierney and Mr Manning. Tierney from factious motives, and ignorance of the question: Manning as a Bank Director of the old school. There were no doubt many Members of the Lords Committee and some Members of the Commons Committee who went into the measure with their eyes shut and great terror and reluctance; but the weight of talent and influence carried them on. All the first men were agreed, including Lord Wellington.—Lord Castlereagh and Vansittart lagged behind: Ned Cooke, Lord Castlereagh’s right hand, was at the very time writing the most alarming pamphlets:1 Lord Harrowby and Lord Bathurst were dragged into the measure: but Lord Liverpool, Lords Grenville, Wellington and Lansdowne, Peel and Canning being agreed, no paper administration could be formed, and the reluctant multitude were obliged to yield. It will ever resound to the credit of Peel to have taken so honourable and decided a line: he went into the Committee, as he said himself,2 without any opinions; and if he had any bias it was against the proposed measure. He had always voted with Vansittart; and his Father Sir Robert Peel entertained so decided an opinion, that he proposed the resolutions and the Petition in the London Tavern,3 and presented the Petition to the House, warning them of their danger, and lamenting the error of his son...

‘In forming their Committees, Ministers had no plan in view: but the inclinations of the majority by the Cabinet being adverse to Cash payments, they took care (as they thought) to secure a majority in their favour: But so difficult is it to guard all avenues, when they need not be guarded, that two of the Members of the Commons Committee, who were appointed to form an antibullion majority, Sir John Nicholls and Mr Ashurst, were both friends to a general resumption of Cash payments. The one is a decided Ministerial Member; a sort of devoted adherent: the other a Tory Country Gentleman: they were not people likely to have either read or thought much upon the subject; and all that was expected of them was to be upon the Government side if it came to a counting of noses: but it so happened that they had read and had opinions of their own, and that those opinions were sound, so that they immediately sided in the Committee with those Members of administration who were favourable to a better system of currency.’

The recommendations contained in the Second Report of the Commons’ Committee were as follows:

‘That, after the 1st May 1821, the Bank shall be liable to deliver a quantity of Gold, not less than 60 ounces, of standard fineness, to be first assayed and stamped at His Majesty’s mint, at the established mint price of £3. 17s. 10½d. per oz. in exchange for such an amount of Notes presented to them as shall represent, at that rate, the value of the Gold demanded:

‘That this liability of the Bank to deliver Gold in exchange for their Notes, shall continue for not less than two nor more than three years, from the 1st May 1821; and that at the end of that period, Cash Payments shall be resumed:

‘That on a day, to be fixed by Parliament, not later than the 1st February 1820, the Bank shall be required to deliver Gold, of standard fineness, assayed and stamped as before mentioned, in exchange for their notes (an amount of not less than 60 ounces of Gold being demanded) at £.4. 1s. per ounce, that being nearly the market price of standard Gold in bars on an average of the last three months.

‘That on or before the 1st October 1820, the Bank shall pay their Notes in Gold of standard fineness, at the rate of £.3. 19s. 6d.; and on or before the 1st May 1821, as before mentioned, at the ancient standard rate of £.3. 17s. 10½d.’1

Those of the Lords’ Committee were:

‘1. That provision should be made by Parliament for a repayment of the debt of Government to the Bank to a considerable amount, and that a part of that repayment should take place some time antecedent to the first period which may be fixed for the commencement of bullion payments by the Bank:

‘2. That from and after the 1st of December 1819, or at latest the 1st of February 1820, the Bank of England shall be required to pay its notes in gold bullion duly assayed and stamped in His Majesty’s Mint, if demanded, in sums of not less than the value of 60 ounces, at the price of £4 1s. per ounce of standard bullion; that on the 1st of November 1820, or at such other period as may be fixed, the price shall be reduced to £3 19s. 6d., unless the Bank shall have previously reduced it to that rate, it being always understood that the price, when once lowered, shall not again be raised by the Bank; and that on the 1st of May 1821, the Bank shall pay its notes, if demanded, in gold bullion, in sums of not less than the value of 30 ounces, at the price of £3 17s. 10½d. per ounce of standard bullion:

‘3. That a weekly account of the average amount of notes in circulation during the preceding week, shall be transmitted to the Privy Council; and a quarterly account of the average amount of notes in circulation during the preceding quarter, shall be published in the London Gazette:

‘4. That for two years, from and after the first of May 1821, the Bank shall pay its notes in gold bullion only at the Mint price; and that whenever Parliament shall think proper to require the Bank to pay its notes in coin, notice thereof shall be given to the Bank one year before hand, such notice not to be given before the first of May 1822.’1

Commenting on the plan recommended by the Commons’ Committee, Ricardo wrote to M^cCulloch on 8 May: ‘The Committee have deviated in two points from the plan as originally suggested—they think that the bars of bullion delivered by the Bank, in exchange for notes, should be assayed, and stamped, at the Mint; and they have advised that after 1823, at the latest, we should revert to the old system of specie payments. Perhaps, in both instances, they have done right, for the Bank persisting in the most determined opposition to them, they were under the necessity of having the bullion stamped that it might be legally called money of a large denomination, and that the Bank might not raise a clamour against them for having imposed upon that corporation the obligation of paying in Bullion, from which they said their charter protected them. In the second place they had to contend with public prejudice, and perhaps too with prepossessions which they themselves felt in favour of coin. If no inconvenience is suffered from the working of this plan for the next 5 years, the Bank will be amongst the foremost in contending that it should be adopted as a permanent system.’1

A set of Resolutions based on the recommendations of the Committees were moved by Peel in the House of Commons on 24 May2 when Ricardo made his first important parliamentary speech; they were adopted on the following day. Peel’s Bill, which embodied the Resolutions, received the Royal Assent on 2 July 1819.3

IV.

The ‘Ricardoes’

The plan came into effect on 1 February 1820 when the Bank resumed gold payments at 81s. per ounce in ingots of 60 ounces of gold of standard fineness, stamped and assayed at the Mint.

From the beginning the ingots had caught the public imagination and were referred to in the press as one of the oddities of the day. ‘The proposed Ingots have already obtained a name. They are called Ricardoes from their inventor, as the gold Napoleons were named from Bonaparte.’4 ‘Mr Ricardo’s ingots were the fashionable novelties of the day, like the automaton chess player,5 or the fair Circassian6 .’7 When they actually came into existence, in 1820, the market price of gold being below 81s, the demand for them was only as collectors’ pieces: ‘The Bank resumed bullion payments on 1st February, in ingots (to the amount of 300l.), commonly called Ricardos; and I understand that in the first three days only three were applied for. One for Lord Thanet, one for a country banker, from curiosity, and the other I know not for whom. The price of gold is from two to three shillings below the Mint price, which accounts for this little demand.’1

Some more details came to light as a result of an article on ‘Ricardo’s Ingot Plan’ by Dr. Bonar in the Economic Journal for September 1923. The following number of the Journal (December1923) announced the discovery in the Coins and Medals Department of the British Museum ‘not indeed of the ingot itself but of an impression in bronze from the die which was used to stamp it. An undated ticket lay under it, on which were written in a contemporary hand the words:

Stamp for striking gold ingots according to the suggestion of Mr. Ricardo.

‘It would have been more correct to say impression of a stamp.

‘The diameter of the object is 34 mm.; that of the actual die as shown by the edge of the circular impression is 32 mm. The impression is of a G.R. crowned, as in the engraving above ... The above engraving is of the actual size.

‘In the same way it has been discovered by the Bank of England, that in the early months of 1820 the Mint delivered to the Bank 2028 gold bars of 60 ounces each. Of these 13 were sold, to 12 different purchasers, viz.:

(a) 3 in February 1820 at £4 1s. per standard oz.
(b) 3 in October 1820 at £3 19s. 6d.
(c) 7 in May 1821 at £3 17s. 10½d.

The remaining 2015 were returned to the Mint.’

The plan of bullion payments virtually came to an end in April 1821, when an Act was passed (1 and 2 Geo. IV, c. 26) to anticipate by one year the operation of the clause which allowed the Bank to pay their notes either in coin or in bullion. In May 1823, under the terms of the Act of 1819, payment in coin became obligatory.

V.

The Reports of the Lords’ and Commons’ Committees, with Minutes of Evidence and Appendices, were printed in Parliamentary Papers, 1819, vol. iii.1 The Lords’ Reports with Minutes of Evidence and Appendix were ordered to be reprinted on 15 February 1844, and an Index was added. These are the official editions in folio. An unofficial edition, in octavo, of the Commons’ Second Report and Minutes of Evidence was published by Charles Clement, London, in 1819.

Ricardo’s evidence is reprinted below from the official edition of 1819. The original arrangement and spelling have been retained; except that in the Commons’ evidence (by analogy with the more convenient arrangement of the Lords’ evidence) numbers have been prefixed in square brackets to the questions, and each question and answer, which in the original are printed as a single paragraph, have been separated.

MINUTES OF EVIDENCE TAKEN BEFORE THE SECRET COMMITTEE ON THE EXPEDIENCY OF THE BANK RESUMING CASH PAYMENTS

Jovis, 4° die Martii, 1819.

The Right Honourable Robert Peel, in the Chair.

David Ricardo, Esquire;

A Member of the House; was Examined.

[1] Do you conceive that the paper currency of this country is now excessive, and depreciated in comparison with gold, and that the high price of bullion and low rate of exchange, are the consequences, as well as the sign, of that depreciation?

Yes, I do.

[2] The following is an extract from a publication of your’s: “Why will not the bank try the experiment, by a reduction in the amount of their notes of two or three millions for the short period of three months? if no effects were produced on the price of bullion and the foreign exchanges, then might their friends boast, that the principles of the bullion committee were the wild dreams of speculative theorists;”1 do you still adhere to the opinion expressed in that extract?

Yes, I do.

[3] From July to December 1817, the average amount of bank of England notes in circulation, appears to have been £. 29,210,000; from July to December 1818, the amount appears to have been £. 26,487,000; in the latter period, the price of gold was higher than in the former, and the exchanges were more unfavourable to this country, so that the reduction in the issues, though carried to the extent of £. 3,000,000, produced no effect upon the exchange and on the price of gold; how do you reconcile these facts with the theory?

When I gave the opinion that has been stated, it was on the supposition, that no commercial causes were at that time to operate on the price of bullion or on the exchange, being firmly convinced, that a reduction in the amount of notes, under those circumstances, would raise their value to any point which might be desired; I am fully aware that there are other causes, besides the quantity of bank notes, which operate upon the exchanges; but I am quite sure, that from whatever cause a bad exchange arises, it may be corrected by a reduction in the amount of the currency.

[4] Then ought there not to have been an addition to the statement above referred to of words to the following effect; provided other causes do not counteract the effect of the reduction?

Clearly; I was speaking with respect to a given time; I did not mean to assert, that at all times and under all circumstances a reduction of bank notes would improve the exchange.

[5] What are the causes to which you refer? Those causes, I conceive, are various; there may be a great increase in the capital of a country, which may so increase the quantity of commodities to be circulated, that there may be required more circulating medium at one time than at another; there may be a great diminution in the value of gold and silver, generally, in Europe, which may make it possible, with the same commerce, to maintain an increased amount of circulation; I consider, in all cases, that the quantity of circulation must depend upon its value, and the quantity of business which it has to perform.

[6] Then do you consider the high price of gold to be a certain sign of the depreciation of bank notes?

I consider it to be a certain sign of the depreciation of bank notes, because I consider the standard of the currency to be bullion, and whether that bullion be more or less valuable, the paper ought to conform to that value, and would, under the system that we pursued previously to 1797: there is an instance of the truth, I think, of the opinion which I am maintaining, in the year 1782, when, by a return made by the bank, it appears that there was a reduction of, I believe, three millions of bank notes in the space of a few months; that reduction was probably also accompanied by a reduction in the metallic part of our currency, there being then no notes under ten pounds in circulation, but of that we can have no knowledge; this proves to me, that in order to make the value of the paper conform to the value of bullion, the bank were under the necessity of reducing the amount of their currency.

[7] The price of gold being lower when the amount of bank of England notes in circulation was twenty-nine millions than when it was twenty-six millions, and you considering the price of gold to be the criterion of the depreciation of bank notes, to what other causes do you attribute the rise in the price of gold when there had been a diminution to the extent of three millions in the amount of bank notes?

It seems to me, that when we compare two commodities together, gold and paper for example, it is impossible to say, when they are varying, whether the one is falling or the other is rising. If gold was rising in the general market of the world at the time stated, it is evident that it might exceed more than before the value of paper currency, although the latter was reduced in quantity and increased in value; they would both rise, but gold would rise most. By the operation of country banks, the whole currency might have been increased, although that part of it issued by the bank of England was diminished. Confidence and credit may have prevailed to a high degree, which are substitutes for currency. I am of opinion, that we have never sufficiently attended to the variations that may take place in the value of the metal itself, by which we estimate the value of our currency; there are a number of commercial causes, as I have already said, which I think affect the value of gold, and when I say the value, I do not mean the value as compared with paper, but the value as compared with commodities generally. I think every tax has some influence upon the value of the precious metals, and either occasions their exportation or importation. I think that every improvement in machinery has a tendency to produce similar effects; but as I have before observed, from whatever cause it may arise that paper exceeds the value of bullion, whether from the increase of paper, from the rise in the value of gold, or from any other cause whatever, it can always be corrected by a reduction in the amount of the paper circulation, and such was the uniform practice before the year 1797.

[8] Do you think that a reduction of bank of England paper will certainly produce a fall in the price of gold?

I do; I should rather say, a reduction in the amount of the whole circulation of the country; but here again it is possible that there might be a reduction of the bank circulation without a corresponding reduction in the country circulation, and it might even be possible that there might be an increase of such country circulation, not that I expect that any such result would follow, for I consider that the reduction of the bank of England circulation would be immediately followed by a reduction of country circulation; but it is not physically impossible.

[9] Do you think that the amount of country bank circulation will vary with the amount of bank of England circulation?

In all common cases I think it will; but I believe that there are exceptions to that general rule, arising from the more or less credit of the country banks; there is of course always a contention between the country banks and the bank of England, to fill as many districts as they can with their respective notes. The bank of England or the country banks may be more successful at one period than at another, but provided every thing were to remain the same in that respect, I have no doubt that a reduction of the London circulation would occasion a reduction of the country circulation. I should observe also, that with respect to the public, it is a matter of very little importance whether the whole reduction should be in the bank of England issues, or should be partly of the bank of England issues and partly of the country bank issues: it is a question of importance, as it refers to the interest of the country banks and the bank of England, but the public have no interest in it whatever: the inconvenience which they would suffer, if any, would arise from the reduction of the whole amount of the circulating medium, it being of little importance from which fund that reduction was made.

[10] The bank of England circulation has fallen, from the last half year of 1817, as compared with the present time, from £. 29,210,000 to about £. 25,000,000; that is, there has been a reduction between that half year and the present time, to the amount of £. 4,000,000; as the diminution has been gradual, and has operated for 15 months, ought it not to have produced its effect on country bank circulation?

I think it ought in common cases, and must have done so in the present case, if no counteracting causes have particularly operated; of which I know nothing, nor can know nothing.

[11] As then there has been an actual diminution of bank of England paper, to the amount of four millions within that period, and there ought to have been a corresponding reduction in the amount of country bank paper, does it not strike you as somewhat inconsistent with the theory, that the price of gold is at present higher than it was at the period when the circulation of the bank of England was four millions greater than it is now?

It does not in the least shake my confidence in the theory, being fully persuaded that such an effect must have followed, if it had not been counteracted by some of those causes to which I have already adverted.

[12] What are the causes which have, in your opinion, practically operated to countervail the effect of this reduction of the circulating medium?

The facts are not sufficiently within my knowledge, to give any plausible explanation of them; but I am persuaded that there are other causes, besides the mere amount of paper, which will so operate, and I therefore infer, that some of them have now been acting.

[13] Then supposing the bank to make a further reduction, beyond the present amount of their issues, might not the operation of the same causes prevent the good effects to be expected from that reduction?

It is quite possible, but I do not think it probable.

[14] Have the goodness to state why you think it probable, that the same causes that must have operated to produce that effect in the former case, should not continue to produce it in the case assumed?

Because, in commerce, it appears to me that a cause may operate for a certain time without our being warranted to expect that it should continue to operate for a much greater length of time; and being fully persuaded that a reduction in the quantity of such a commodity as money must either raise its value, or prevent its falling in value, I am sure that a reduction of the quantity of currency, provided it be sufficient in degree, will operate in raising its value, whatever countervailing causes may contribute to oppose it.

[15] Do you think there is any perfect assurance that if the bank of England were to reduce its issues to the extent of two or three millions below their present amount, the consequence would be a fall in the price of gold, and the restoration of the exchange, or might not the other causes which affect the price of gold and the rate of exchange possibly countervail the effect of the reduction of the issues?

Certainly, they might countervail the effect of the reduction of the issues, but provided they were sufficient in degree the reduction would be sure to bring the two together; there are two commodities which we are comparing with each other, namely, bank notes, and gold; the variation in the relative value of these two commodities may be caused by an increase in the quantity of paper, or by a fall in the value of gold; in the former state of our circulation, whenever it proceeded from either of those causes, a reduction in the amount of paper was the remedy, and must at all times I think be the remedy.

[16] Take then a considerable period, when the amount of bank notes in circulation was very nearly the same; it was so for three half years, from July 1815 to December 1816 namely, about twenty-six millions and a half; at the beginning of that period the price of gold was 4l. 16s. an ounce, it fell to 4l. 11s. 4l. 9s. 4l. 7s. 4l. 3s. 4l. 2s. 4l. 1s. 4l. 0s. 3l. 19s. and 3l. 18s. 6d.; there was no interruption in the regular gradation of the fall of gold, and there was no variation in the average amount of bank notes in circulation, do you attribute the fall in the price of gold to an alteration that took place in the value of gold?

Most undoubtedly; and by returns that have been made at different times to Parliament, we observe the relative value of gold and silver to differ very materially at different times; now to what cause can this possibly be attributed, but to an alteration in the real value of one of them? in which ever metal that alteration of value takes place, provided it be the standard, it will either warrant an increase or a diminution of paper.

[17] Do you know what have been the greatest limits of the variation in the relative value of gold and silver; within a given period, supposing three years, have they ever varied one per cent within that period?

I should say six or seven, speaking from the slight recollection I have at this moment on the subject; I only mention these circumstances to show the Committee that it is quite possible that there may be variations in the value of the precious metals, which would produce such effects, as it appears the object of the present examination to explain.

[18] But supposing there has been, during the same period, a corresponding fall in the price of silver, then, evidently, that cause which you assign as possible to account for a fall in the price of gold has not operated?

I should then say, that whatever cause had operated, had equally operated on the two metals, instead of operating on one exclusively.

[19] Do you not conceive, that the most perfect state to which a currency can be brought is, that by which the public are secured against any variations in the value of the currency other than those to which the standard is subject, and in which the circulation is carried on by the least expensive means?

Certainly.

[20] Have you turned your attention to any plan by which these desirable objects may be best attained?

Yes, I have.

[21] Have the goodness to favour the Committee with your opinions upon that subject?

My opinion is, that the bank of England should have the liberty of either paying their notes in specie or in bullion at the mint price of 3l. 17s. 10½d.; by which means the paper currency could never fall below the value at which the coin stood previously to 1797.

[22] What quantity of gold ought a person to be at liberty to demand, in exchange for paper?

That appears to be a regulation which should be left to the bank to decide on; it is, comparatively, of very little importance.

[23] Would it not be necessary to have a regulation of law?

Undoubtedly there should be a regulation of law; but whether the quantity should be 20 ounces, or 50 or 100, I have scarcely any motive for making a choice; the object would be equally effected by taking either quantity.

[24] Do you think it would be politic to impose, at the same time, upon the bank, the necessity of issuing paper in exchange for gold tendered to them?

That is a measure not absolutely necessary; but I think it would be a great improvement to the system, if that regulation were adopted.

[25] The object of it would be, to prevent a rise in the value of the bank note above the price of gold?

Exactly so; which the bank can now effect.

[26] Might not the object be answered by giving every person an option to go to the mint, and receive coin in exchange for the bullion?

Which would do just as well, if you could readily turn bullion into coin or into paper, the object would be equally effected.1

[27] Would you advise, that notes below 5l. should be continued in circulation?

Under those circumstances there necessarily must be notes of 1l. and 2l.

[28] Would you advise bank notes to be made a legal tender?

I would certainly.

[29] Would you leave to the country bankers the power of issuing notes payable on demand, in bank of England notes?

I would.

[30] And not subject them to the necessity of paying in coin?

Certainly not.

[31] Would you repeal the laws respecting the exportation of coin?

Undoubtedly.

[32] And leave the trade in bullion and coin perfectly free? Perfectly free; and also a perfect liberty to any man to melt the coin if he thought proper.

[33] What regulation would you advise to be adopted with respect to foreign coins?

When I say that the public should have the privilege of buying and selling bullion to the bank, I have in my mind bullion of the standard of England; but if allowance be made for the alloy in the foreign coins, according as they may be more or less fine than the standard of England, it appears to me of small importance whether these dealings be in those coins or in bullion.

[34] Would not that be an additional convenience? I think it would.

[35] Could you assign any period of time, at the expiration of which this plan, in your opinion, could be safely resorted to?

I think it ought to be immediately resorted to, either at the price of 3l. 17s. 10½d. or at some other price; because I consider that our currency is in a very unsatisfactory state, while the bank have the power of increasing or diminishing the circulation, and altering its value at their pleasure; and therefore, whatever regulation might be resolved on, with respect to the time of paying in the standard of the country, I should certainly recommend the adoption of this plan at some other price in the interval.

[36] That is, that the bank should be under an obligation of paying their notes on demand in gold, at the present market price of gold for instance, and of making a gradual reduction in the price of gold which they should issue, until the market price of gold corresponded with the mint price?

Precisely so; but under those circumstances the price at which the bank should be obliged to buy gold I think should not be fixed above that price, at which it should be a permanent regulation.

[37] Would you propose that price to be something below the mint price?

Exactly so; in what degree below I have scarcely the means of judging; the bank would be better able to fix that price than I should; it should be very little below.

[38] Would you propose, that the price at which the bank should be compelled to purchase gold, should be the same or something lower than that at which in succession they issue it, according to the operations that would take place in a graduated scale?

I have already mentioned, that I should rather recommend that the price at which they should buy gold, should be under the present mint price, which is 3l. 17s. 10½d. and fixed now once for all.

[39] Would not the bank in that case have it in their power to make a sudden change in the value of the circulation, by a more sudden reduction in the amount of their notes than might be desirable?

Within those limits they might; but after intrusting the bank with the great powers which they have had for twoand-twenty years, I should not be very fastidious in intrusting them with this small power at the present moment.

[40] But if that was objectionable, might it not be counteracted by providing that they shall purchase at, or nearly at, the same price at which they issued gold?

Certainly not at the same price, but at a price under that.

[41] If the bank, after the resumption of cash payments, continued to issue one and two pound notes, would not their issue tend greatly to diminish the quantity of gold which would be necessary for the purposes of circulation, when compared with that quantity which was necessary previous to the restriction?

Certainly; if the public liked a paper currency, consisting of one and two pound notes, better than one consisting of the gold coins, then this regulation would be nugatory; but if they did not, it would secure a power to the bank of filling that part of our circulation with one and two pound notes, and thereby preventing the public from demanding coin as substitutes for those notes.

[42] Do you think there would be any difficulty whatever in procuring such a supply of gold as, under the circumstances you have supposed, would be adequate for the supply of this country?

According to the view which I take of this question, I think there would be no provision of gold necessary beyond that which the bank must now have, however small it may be.

[43] That is, supposing they immediately commence the payment in gold, at about the present market price?

Or at any price; having a firm opinion that the bank, by the reduction in the amount of their notes, can raise their value to any assignable limit, it does appear to me that they can always keep the value of their paper on a par with the value of bullion, at whatever price the Committee might choose to fix it.

[44] Would it not be necessary, nevertheless, that they should have at all times a considerable supply of gold to meet the demands upon them, although the market and mint price of gold should correspond?

That would certainly be desirable, but the bank would be regulated by the same rules by which they were guided at the time they were paying in a metallic currency. I do not think it would be prudent on the part of the bank not to have a provision of bullion, because there are intervals during which the paper may not immediately attain that value which it finally will attain in consequence of its reduction, and during that interval they would be subject to demands for bullion.

[45] Does not that assume that the reduction of the issues of the bank of England, would necessarily and immediately lead to a reduction of country bank paper?

Undoubtedly; I have already explained to the Committee that it appears to me that there might be a greater reduction of the bank of England paper in some cases, and a less reduction of country bank paper; but it is a mere question of degree; the bank might, under some circumstances, be obliged to make a greater reduction of their paper, in order to keep the value of paper currency generally on a par with the value of bullion.

[46] Might not the circumstances of the country be such as to make a reduction of issues at some particular period, in order to have the effect of reducing the price of gold exceedingly embarrassing to trade?

It undoubtedly might be; that is an evil to which all currencies are subject; every country that carries on its circulation by means of the metals is liable to that inconvenience, and it would be no other to which the public would be exposed if the plan suggested were adopted.

[47] Are you aware that there is at present a considerable stagnation in trade, and that there has been a great reduction of prices in consequence?

I have heard so; but I am not engaged in trade, and it does not come much within my own knowledge.

[48] Would not the effect of a reduction of the issues of the bank be a further reduction in the prices of commodities?

I should certainly expect so, because I consider a reduction in the amount of bank paper to be raising the value of the medium in which the prices of those commodities are estimated.

[49] Explain in what degree you think it would take place?

I should think, to the amount of about five or six per cent; I measure it by the extent of the excess of the market above the mint price of gold.

[50] Do you think a diminution of the circulation produces a diminution of prices in exact arithmetical proportion?

I think it has a tendency so to do, but it does not act exactly so nicely as that.

[51] Does it reduce the prices of all commodities equally? I think not, in consequence of the inequality of taxation, otherwise I think it would.

[52] Might not the reduction of prices to the amount of five per cent, consequent on a reduction of the issues of the bank, be particularly embarrassing, if it took place at a period when there appears to have been so great a reduction of prices in consequence of other causes; namely, the excess of speculation, and the stagnation resulting from that?

An alteration in value of five per cent does not appear to me very formidable; but of this matter I do not profess to know much; I have had very little practical knowledge upon these subjects.

[53] When merchants have a want of confidence in each other, which disinclines them to deal on credit, is there not a greater demand for money?

Undoubtedly.

[54] Then if this is a period when there is a greater demand for money on account of a want of confidence, does it not follow that it would be an inconvenient period for reducing the means of accommodation?

It appears to me that that very circumstance would make a smaller reduction efficacious for the purpose; a demand for currency in consequence of want of confidence, I should think a legitimate demand; it would enable the bank to keep their circulation at a higher level than they would be able to do, if there had not been a demand from such a cause.

[55] Supposing such a reduction of the issues of the bank to take place as would restore the market price of gold to the mint price, there would be, in your opinion, an improvement in the value of the currency of about five per cent?

Exactly so.

[56] Would it not be necessary to raise the same nominal amount of taxes to defray all that portion of the public expenditure which is applied to the payment of the public creditor?

Undoubtedly.

[57] Would not the increased burthen of such taxes upon the people be in proportion to the increase in the nominal value of the money?

Certainly.

[58] You are aware that by the act, providing for a new silver coinage, the act of 56 George 3, cap. 68, there has been an alteration in the relative value of gold to silver, from 15,059. 2. 1. to 14,121. making a difference of nearly six per cent in the relative intrinsic value of our gold and silver coin; do you think this difference so made, will have the effect of banishing gold coin from this country, provided silver coin be a legal tender to the amount only of 40s. and provided the mint retains the power in their hands of regulating the amount of silver coin?

It appears to me quite impossible, at whatever relative value these two metals might be, while guarded by the regulations which have been mentioned.

[59] Are you of opinion that it would be desirable to keep the intrinsic value of our gold coin as near the intrinsic value of bullion as possible?

My first preference is to have nothing but a paper circulation, and the expedient I have proposed had that for its object; but provided we have a metallic circulation, then I conceive nothing can be more desirable than to keep the value of the coin at as near as possible to the value of bullion.

[60] The price of gold in April 1815 was 5l. 7s. an ounce, and in April in the following year it was 4l. 1s. an ounce, making a difference of 1l. 6s.; supposing the average price of other commodities in the country, as measured in bank notes, to have been the same at those two periods, would you then infer, from that state of things, that bank notes were depreciated in April 1816, as compared with April 1815, in the proportion of the difference between the prices of gold, namely, 1l. 6s.?

Yes, I should.

[61] Though the price of all other articles remained the same as measured by bank notes?

Though the price of all other articles remained the same.

[62] You have stated, that a currency, of which gold is the standard, is subject to considerable variations, which arise in the variable value of gold in exchange as compared with other commodities; can a standard of currency, more invariable in its value than the value of a certain quantity of gold, be established by any system yet discovered?

By none that I have ever even imagined.

[63] Would it be possible, by fixing from time to time the amount of bank notes which should circulate, to obtain a circulation any thing approaching in steadiness of value, to one which was attached to the value of a metallic standard?

I do not know any means whatever by which we can certainly ascertain the value of any one commodity; but in practice bullion appears to approach the nearest to an invariable standard.

[64] Are not the Committee then to conclude it to be your opinion, that the standard value of the currency, since it has ceased to be exchangeable for specie on demand, has been infinitely more variable than it would have been if it had remained on the same footing on which it stood previously to the year 1797?

Yes; my opinion is, that it has undergone more variations than it would have done if it had been regulated by a metallic standard.

[65] As compared with gold?

As compared with either gold or silver; I have no preference for either.

[66] You have stated it to be your opinion, that the reason why a reduction in the amount of bank notes to the amount of three millions had not been accompanied by a corresponding fall in the price of gold and a rise in the exchange, must have proceeded from other natural counteracting causes; you also stated that you believe, for the most part, a reduction in bank of England paper would produce a corresponding reduction in country bank paper; if country bank paper had been withdrawn, in consequence of such a panic as you describe, in the years 1816 and 1817, and if some of those districts in which country bank paper had before circulated in consequence of that operation, had been filled in a greater or a less degree by bank of England paper, is it not probable that a re-issue of country bank paper might, in consequence of restored confidence in the country, have driven that bank of England paper back into London circulation, and by that means materially counteracted the effect of the decrease in the bank of England issues, both in reducing the prices of gold and raising the exchanges, and also in limiting the amount of country bank paper circulation?

I think, undoubtedly, it would; the more contracted the circle is in which the bank of England notes circulate, the more effect must an increase or reduction of their quantity occasion. I wish also to remark, that in some of the accounts of the amount of bank notes in circulation at certain periods which I have seen, the one and two pound notes vary, very remarkably, relatively to the notes of a higher value, which may be occasioned (not that I know that it is) by the increased or diminished credit of the country banks. It appears, in 1815, that the amount of notes above five pounds was about thirteen millions, while those under five pounds were above nine millions; in January 1818, the amount of notes above five pounds is above sixteen millions, and those under five pounds about seven millions and a half, and from some of the accounts which have been laid before the House of Commons, the same sort of inequality appears to affect the notes of the amount of ten and twenty pounds, which may be supposed to be that description of notes which, as well as those of five pounds and under, are used chiefly in the country circulation, upon occasions of the discredit of the country banks. I have not examined these relative proportions, with a view to explain the difficulty that the question has now started, but I remark it as a circumstance which I do not know well how to explain; but it may be connected with the situation of the country banks.

[67] Do you believe that the issue of bank notes from the bank, upon the purchase of bullion, may be carried on to a greater extent with more security, and without producing the same effect upon the circulation, as to excess or diminution, than when issued by any other of their ordinary modes?

It appears to me to make no sort of difference, whether the issues be made in the way of discounts, by advances to government, or in the purchase of bullion; it is the numerical amount which will produce the effect.

[68] Do you conceive that a standard of value would be more variable if measured by a reference to two metals, namely gold and silver, as was formerly the case in this country, and is now the case in some other countries, than if confined to one metal only?

Yes, I think it would be more variable if measured by two metals.

[69] If then one metal is preferable as affording a less variable measure, which metal would you recommend?

I find some difficulty in answering that question; there were reasons which at one time induced me to think that silver would have been the better metal for a standard measure of value, principally on account of its being chiefly used in the currencies of other countries;1 but as I have understood that machinery is particularly applicable to the silver mines,1 and may therefore very much conduce to an increased quantity of that metal and an alteration of its value, whilst the same cause is not likely to operate upon the value of gold, I have come to the conclusion, that gold is the better metal by which to regulate the value of our currency.

[70] Although the currency of other countries may be usually measured in silver?

I think that fact is of no importance whatever in practice; it is of no inconvenience to trade, I imagine.

[71] Does not the circumstance of the measure of value in one country being in gold, and in another with which it trades being in silver, occasion a frequent fluctuation of the real par of exchange?

Not only in the real par, but in the market rate of exchange also.

[72] It appears, by the accounts already referred to, that the price of gold in this country in April 1815 was £. 5. 7s. and in April 1816 £. 4. 1s. being a difference of from 25 to 30 per cent, such price being always measured in our paper currency, do you know whether, during the same period, any such variation, or any variation in the price of gold took place in France, or in any other continental country?

It appears to me that in France there can be no variation in the price of the metal which is the standard of the currency; and with respect to the variations in the other metal which is not the standard of the currency, it must at all times be confined to the variations which take place in the relative value of the two metals generally in Europe.

[73] If then it should appear that, during the period referred to, no variation whatever has taken place in the price of gold in Paris, would you infer from that circumstance that the variation in the price of gold between April 1815 and April 1816 arose from the variation in the value of paper, and not of gold?

Every fall in the price of the standard metal is immediately corrected in France by a reduction in the amount of the circulation; if no similar reduction takes place under the same circumstances in our circulation, there must necessarily be a redundancy and an excess of the market above the mint price of gold; in a sound state of the currency the value of gold may vary, but its price cannot.

[74] The variation you alluded to in your answer to a former question, is what you meant by the depreciation of the paper in your answer to a question before put to you?

From whatever cause may arise the difference in the value between paper and gold (and I have enumerated several,) I always call the paper depreciated when the market price exceeds the mint price of gold, because I conceive that there is then a greater quantity of circulating medium than what there would have been if we were obliged to make our paper currency conform to the value of coin, and which we are obliged to do, whenever the bank pay in specie.

[75] Do you consider the difference between the market and mint price of gold to be the criterion of the depreciation of bank notes?

Strictly so.

[76] Then taking the three months of the last year, January, February and March, the average amount of banknotes in circulation was thirty millions, twenty-nine millions, and twenty-eight millions; in the three last months of the year, October, November and December, the amount was twenty-six millions, twenty-six millions, and twenty-five millions; so that the average amount in December was less than the average amount of January by five millions; in the last three months the price of gold was higher than in the first three months; do you consider that bank notes were more depreciated at the latter period than the former?

I consider they were more depreciated in the latter period than in the former, provided at that time the price of gold was higher.

[77] Do you not consider that coin or bullion are distinguishable from bank notes in this important respect, that the coin or bullion, being the medium of universal value, operates in the nature of a bill of exchange, whereas the bank note does not possess this quality; must not, therefore, the value of the coin and bullion follow the rate of the exchange, whilst the bank note cannot be influenced by such operation?

Certainly; a bank note not payable in specie is confined to our circulation, and cannot make a foreign payment; a bank note payable in specie is the same thing as coin or bullion.

[78] May not this distinguishing quality between the bank note and the bullion, explain the difference of value, without its following, that the bank note is depreciated for any purposes of measuring the value of commodities within the country?

No, I think it cannot; the term “depreciation,” I conceive, does not mean a mere diminution in value, but it means a diminished relative value, on a comparison with something which is a standard; and therefore I think it quite possible that a bank note may be depreciated, although it should rise in value, if it did not rise in value in a degree equal to the standard, by which only its depreciation is measured.

[79] Are you of opinion, that the bank could have permanently continued their payments in specie, from the year 1797, when they discontinued so to do?

It appears to me, that all banks are subject to be affected by panics, against which no prudence can guard, and that in 1797 such a panic had taken place; but I have some doubts whether, if the bank had resolved to pay to their last guinea, that panic would not have subsided, and the bank have been able to carry on its transactions in the way that it had done up to that period.

[80] Would you not have thought it a very dangerous experiment to try, as the failure of the attempt would have led to an absolute stoppage of payment?

It would have led only to the crisis which has actually taken place.

[81] You have stated an opinion, that the contraction of issues of paper would at all times restore the price of gold to the mint price, and render the exchange favourable to the country, supposing the balance of payments of the country to be against us, in what manner would you have them paid?

It appears to me, that a reduction in the amount of currency may always restore the price of bullion to the mint price, but I have not said, that that will always restore the exchange to par; although, if that reduction were carried still further, I believe it would restore the exchange to par; but under some circumstances, the price of bullion would be in such cases, for a short time, under the mint price.

[82] You have stated, that you consider a very small quantity of gold in circulation, or bullion, necessary for the bank to resume its operations?

That is on the supposition of an arrangement taking place, by which the bank shall not be compelled to pay in specie, but to pay its notes on demand in bullion; I think, that in that case, a very small quantity of bullion would be necessary to enable the bank to carry on its operations.

[83] Assuming that the balance of payments should be against this country, must the payment not necessarily be made, either in specie or in bullion?

It appears to me, that the balance of payments is frequently the effect of the situation of our currency, and not the cause.

[84] You must be convinced, that between two trading countries, there must be a balance one way or the other?

Those purchases and sales appear to me to be guided a great deal by the relative value of the currencies of the two countries; that any cause which shall operate to encrease the value of one, would have an effect upon its commercial transactions with the other, and consequently the exchange would be affected by an increase or diminution in the value of the currency of either.

[85] Would you infer then, that because at the present time cotton, coffee, and various other articles, are in this country particularly low, it would be either advantageous or desirable to send them to France or to the continent?

That must depend, I conceive, upon the fact, whether those articles are higher in France and other countries than they are here.

[86] The fact being decidedly that they are lower in France?

Then of course it could not be advantageous to send them from this country to France.

[87] Then is there any other way of paying, but by bullion or by specie?

By limiting the amount of paper, we should alter the value of cottons, and those other goods which are referred to, and we might in that case make our payment by the exportation of those goods, which at their present price it appears we cannot pay in.

[88] Then do you think that it can be a prudent measure, that as circumstances may fluctuate, the trade of the country is to be so starved as to produce an operation upon the price of gold?

It appears to me, that a reduction in the price of gold can never be brought about but by a reduction in the quantity of currency, by an increased use and demand for it, or by a fall in the general exchangeable value of gold; and if it be brought about by a reduction of paper, it must always be attended by what is called starving the circulation.

[89] Do not you think that the remedy might be often worse than the disease?

Undoubtedly there are cases in which I think the remedy would be worse than the disease; but this does not appear to me to be one of that sort.

[90] Can you state any particular time at which you think it would be preferable that the bank should undertake to pay in coin or bullion at the mint price?

It is difficult for me to define strictly at what time, but I have not much apprehension of any ill consequences from their doing it in a few months; at the same time I acknowledge there will be some little difficulty in it, but a difficulty which does not appear to me very formidable, and one for which we would be more than compensated by the possession of a currency regulated by a known and fixed standard.

[91] Do you think there is any inconvenience to the mercantile world and the public interest generally, resulting from the state of uncertainty and fluctuation in which things are now placed, and must probably remain, until the bank has resumed cash payments?

I think a very serious inconvenience results from the state of uncertainty: one of the evils attending a paper currency not convertible, is, that it encourages over-trading, and leads us into some of those difficulties into which we should not be plunged, if our paper were corrected by the issues of metals.

[92] Do you think there is any thing in the present state of the commercial world, which makes it so little desirable that it should be operated upon by a fall in prices, to the amount of five per cent, which you think must accompany the measures to be taken for the resumption of cash payments, as to make it desirable that the inconveniences which you describe to accompany a continuance of that system, should be endured for a longer period than to the first of March 1820?

I am of opinion that it should not continue longer than that period.

[93] Did not over-trading take place very frequently before the restriction on cash payments at the bank?

I believe there is always a disposition to over-trading; that it was very much encouraged by the peculiar circumstances in which we were placed during the last war, from the modes in which we were obliged to carry on trade, and that those habits have in some degree continued with us, but that they are rather encouraged by a paper system than otherwise.

[94] Do not you believe that over-trading was very much encouraged by the system of country banking, although their notes were convertible into cash on demand?

It appears to me, that the country banks can never add to the amount of circulation permanently, and therefore I think they can hold out no encouragement to over-trading.

[95] Do you mean, in case their notes are convertible into coin?

Yes; when they are not convertible, of course their level is higher, as well as the London circulation.

[96] Was there not occasionally a temporary excess of country bank notes at the time they were payable in cash, which gave occasion to speculations and over-trading?

I conceive there are never any proofs of excess, but a high market above a mint price of bullion, and I never saw such an excess previously to 1797, nor never heard of such a thing; it is not imaginable by me.

[97] Would you consider a great number of bankruptcies as any indication of over-trading?

A number of bankruptcies may be a proof of over-trading, but not a proof of a redundant circulation.

[98] Even if those bankruptcies could be clearly traced to a connection with country banks?

Even if those bankruptcies could be clearly traced to a connection with country banks, I should only say, that the issuers of country paper were not the right sort of issuers.

[99] Do you believe that the restriction on cash payments holds out a greater temptation and affords greater facilities for over-trading, than would exist, were the bank to pay in cash?

It appears so to me, because men rely more confidently on renewing the discounting of their bills.

[100] You have stated, that the stagnation of trade, and a general decline of prices, would produce a similar effect, with a positive reduction in the amount of our circulation, would that effect be with reference to the foreign exchanges to bring them nearer to a par?

Certainly.

[101] May not the result of that effect now operating, be to bring the market to the mint price of gold, without any interference of the legislature with respect to the amount of issues of the bank of England?

It is a circumstance that may very probably occur, but whether it will or not, I have no sufficient facts to judge by, although it is quite consistent with the view I take of the general question of currency.

[102] Under a given continuance of that stagnation of trade, and of that depression of price, do you think it more probable that it will occur, than that it will not?

I find some difficulty in answering that question, I have no decided opinion upon that point; the effect may already have been produced, and therefore it may cease to operate any further; all those causes seem to me of a very uncertain nature, and they cannot be very easily traced or followed.

[103] When there is a tendency to a general fall of prices, is not money locked up just as commodities are accumulated in the opposite state of things, and for the same reason, the expectation of profit by holding the article for a better market?

It appears to me, that no man would willingly lock up his money, he would endeavour to make it as productive as he could; he would not purchase commodities if he expected a fall of those commodities, but he would be glad to lend his money at interest during the interval that it was necessary for him to keep it.

[104] The exchange having been favourable to this country, when the bank suspended its payments in 1797, is it not possible that by a more liberal and extensive accommodation to trade and country bankers, by discount, the bank might at that period have afforded such aid to the country circulation, as would have checked the alarm and relieved the distress?

I have great doubts on that question; it appears to me that it was an alarm from foreign causes, and a desire to hoard, and I have some doubts whether an extension of circulation would have quieted those fears.

[105] Does not it often happen that a variety of opinions may be entertained as to the period when commodities have come to their lowest state of depression, and of course one person may be a seller and another a buyer, both on different views of the same object, namely, profit?

Certainly; but it is the balance of those opinions which either raises the commodity or lowers it.

Veneris, 19° die Martii, 1819.

The Right Honourable Robert Peel, in the Chair.

David Ricardo, Esquire, A Member of the House, again Examined.[106] There are some points on which the Committee understand you have further information to give to them.

[The witness delivered in the following paper.]

“I request to be allowed to amend a part of the evidence which I had lately the honour of giving before this Committee.

“When I was last examined, I was asked,1 whether it would not be an improvement of the present mint regulations, if the mint were to keep a supply of coined gold, which they should exchange without the least delay, and without any deduction, for equal weights of uncoined gold; to which I answered, that it would be an improvement, that every thing which tended to equalize the value of gold coin and gold bullion, made the currency approach more near to perfection, and that such a regulation could not fail of producing a beneficial result.

“I adhere to that answer as far as regards our circulation; but I ought to add, that by making gold bullion exchangeable without delay, and without loss, for gold coin, there would be a great inducement offered to all exporters of gold, to exchange their bullion for coin previously to its exportation. Gold coin carries on its face a certificate of its fineness; it is divisible into small sums, and it would, for these reasons, possess advantages as an article of merchandize over gold bullion. Our mint would not only be called upon to coin gold without charge, for the internal circulation of England, but also the additional quantity which might be required for exportation, and which would, in the case supposed, be acquired without any additional expense. This is the inconvenience which would attend a money absolutely free from seignorage, free even from the loss of interest, which on the present system arises from the delay of the mint in returning coin for bullion, and which may strictly be called a small seignorage. But a coin with a seignorage has also its inconveniences, for the mint is not the only place from which money is issued. The bank have the undisputed power of increasing the quantity of currency, and thereby of diminishing its value to its intrinsic worth. If silver, for example, were now the standard of our currency, and therefore a legal tender to any amount, the bank might issue their paper till they raised the price of silver bullion to 5s. 6d. per ounce, (the current value of the silver coin) without inconvenience to themselves; they might then reduce their issues, till silver fell to 5s. 2d.; and thus they might alternately raise and lower the price of silver, between the limits of 5s. 6d. and 5s. 2d. as often as to them it might appear expedient. If there were no seignorage on the silver coin, and it were immediately exchangeable for silver bullion on the demand of the holder of bullion, it is evident that the price of silver would not rise above, nor fall below 5s. 2d. the mint price; but then the mint might, as I have before stated, be called upon to coin all the silver that might be exported. If it be decided, that under all circumstances, a currency, partly made up of gold coin, is desirable, the most perfect footing on which it could be put, would be to charge a moderate seignorage on the gold coin, giving at the same time the privilege to the holder of bank notes, to demand of the bank, either gold coin or gold bullion at the mint price, as he should think best, in exchange for his notes; if he preferred gold bullion for the purpose of exportation, as he probably would on account of its greater intrinsic value, it would be exported without any disadvantage to the country; if he preferred the coin on account of its more convenient form, and its certified fineness, which is barely possible, he could not obtain it without paying all the charges of its fabrication. If this plan were adopted, the seignorage should be at least sufficient to cover all the expenses of manufacture, and might with perfect safety be extended to that point at which it would just be insufficient to make the imitating of the coins a profitable employment.1 This appears to me to be the best plan for a currency, consisting partly of the precious metals; but I am still of opinion, that we should have all its advantages, with the additional one of economy, by adopting the plan, which I had the honour of laying before the Committee when I was last before them.”

[107] What seignorage do you think would be sufficient to protect the coin of the country, according to the suggestions which have been made in the paper which has just now been read?

That is a practical question, to which I am not qualified to give an answer.

[108] Do you know what seignorage is taken upon the French gold coin?

No, I am not acquainted with the regulations of the French mint.1

[109] Do you think that, under a currency partly consisting of paper convertible into coin at the option of the holder, and partly of gold coin, such occasional fluctuations in the market price of gold would frequently occur, as to make it an advantageous speculation to export the gold coin?

If there were no seignorage, there could be no variation in the price of gold; but it might nevertheless be exported, on account of the exchange being unfavourable; if there were a seignorage, then the price of gold might vary to the amount of that seignorage.

[110] Must not fluctuations, from the rate of exchange or other causes, frequently happen?

The value of gold coin and of gold bullion can only differ on account of the greater intrinsic value of the one or the other; if an ounce of gold is coined into 3l. 17s. 10½d. and is delivered at the mint in exchange for bullion, without any delay, I think the one must be precisely of the same value as the other, there could be no preference, and therefore no rise in the price of gold; but if a seignorage be taken from the gold coin, so as to make 3l. 17s. 10½d. in gold coin of less weight than an ounce of bullion, then the price of bullion might rise above the mint price to the amount of that difference.

[111] May not such demands for gold occur in foreign countries, as we have heard there was lately in Russia, so as to give a higher value to gold exported to that country, than it would obtain in France or in this country?

Undoubtedly; because more goods would in such case be given for gold by Russia than by France, but its price would continue unaltered in this country.

[112] If you measure gold or coin which is here taken as equivalent to gold, and the gold bears a higher value in Russia than the goods, will it not cause a draw for gold upon this country in such a state of things?

If it bears a higher value in goods, it will make the exchange unfavourable to this country, and will cause an exportation of coin or bullion.

[113] They will be sent out, if it is more advantageous to send them than woollen or cotton goods; if there is a seignorage, you keep the gold coin at home until there is a great fluctuation in the exchanges?

If there is a seignorage, it will depend upon this circumstance; namely, whether the coin be passing at its nominal or at its intrinsic value; by proper regulations the coin may be sustained at its nominal value, but by bad management, by putting too great a quantity of currency into circulation, you may sink its value to the value of the metal which is in it, and then it will be immediately exported on the turn of the exchange.

[114] Supposing the plan which you have suggested, of the bank paying in gold bullion at the present standard of 3l. 17s. 10½d. an ounce, all sums demanded in their notes above a limited amount, say £. 100, and supposing sovereigns to be coined at such a brassage as would raise the standard of gold coin to 4l. an ounce, and that such coin were made a legal tender to the amount of £. 100 only, or whatever might be the lowest amount in notes for which bullion could be demanded at the bank, would not this modification of your plan of payment in bullion, afford the double advantage of an invariable standard in bullion, and of a gold coin for the purposes of currency, without exposing the country to the risk of such coin being melted down or exported?

Entirely; I think it would quite exempt us from any such risk, and the price of gold under such circumstances, could, in my opinion, never be above 3l. 17s. 10½d.; but the question supposes an advantage by possessing a gold currency, which I do not consider as such.

[115] Assuming that it should be thought expedient to combine your plan of the bank paying its notes above a certain amount in gold bullion, with the maintenance of a certain proportion of gold coin in currency, would not such a modification as the former question suggests, be the most advisable mode of affecting such object?

The very best, and the one which I have, under such circumstances, recommended in the paper I have delivered in this morning. I have there said, that under such a system, I should be favourable to any amount of seignorage which did not expose the coin to the risk of being imitated in this or any other country.

[116] Do you think that the difference between 3l. 17s. 10½d. the standard price in bullion, and 4l. the proposed standard for the coin, would expose the coin to such a risk?

I think it would not.

[117] Should you be disposed to push the seignorage further than the 4l.?

It is difficult for me to estimate what proportion of encouragement would be sufficient to set people to work upon the imitating coin; it is a thing in which I have no experience, and I cannot give a more correct opinion than any other individual.

[118] Do you see a strong objection to a seignorage approaching very nearly the present market price of gold?

I feel some difficulty in mentioning any seignorage, as being within the proper limits; many persons can give better information than I can upon that subject.

[119] Do you believe that, under such a system as you have just described, any considerable quantity of gold coin would be likely to be required for the use of this country?

That is a difficult question to answer; I should apprehend that the taste of the public for paper is now so confirmed, that they would have little inducement to demand gold coin, and in that case a very small quantity would be sufficient for all the purposes of circulation.

[120] With a gold currency upon our present mint regulations, namely 3l. 17s. 10½d. per ounce, and if the export of coin and bullion were free, would it not be likely that exporters would prefer coin of that description to bullion for their exportation?

They would prefer gold coin.

[121] Under the system of a seignorage upon the gold coin, would not coin be the last article of gold to be exported; and would not the exporters in every instance prefer bullion to coin for their exportations?

That must depend upon the current value of the money. Unless some such restriction, as has been mentioned, should be adopted, I think it is as probable that coin might be exported as bullion, because the bank might increase the amount of their issues, till they lowered the value of their paper to the intrinsic value of the gold coin.

[122] Referring to a former question respecting the demand of gold for Russia; and supposing, after that demand shall have been satisfied, that there should be a demand in this country for gold, should we not possess the same power of bringing that gold from Russia to England in exchange for our commodities, which you have stated might have taken place by an exchange of Russian goods against gold from this country?

I think that all countries have the means of purchasing the commodities which they want, gold among the number, and therefore there is no demand for gold [that] could exist in this country, which we should not have the means of supplying.

[123] Do not you think, that a rich country possesses greater means of acquiring and retaining gold within itself, than a poor country?

I think it will require more, and it will have greater means of obtaining that increased quantity.

[124] Do you not believe, referring to the trade manufactures and products, domestic and colonial, of this country, that it possesses the means of acquiring gold to an extent greatly beyond what is possessed by Russia, Austria, or any other continental power?

I believe it has; but I consider that in some measure a disadvantage, inasmuch as we have a greater quantity of currency forced upon us than I should desire to see employed; I always consider the currency as the dead part of our stock.

[125] Supposing the system of this country be to possess a great quantity of gold, does not this country possess superior means for that purpose to the continental countries just referred to?

A manufacturing country, I conceive, has always advantages over an agricultural country, in the means of supplying itself with bullion; and as no country is so highly manufacturing as this, I of course think it has the most ample means of supplying itself with any quantity of bullion that it may desire to have.

[126] Do not our colonial possessions add to those means? Undoubtedly, as far as colonial productions are exportable commodities generally in demand in other countries.

[127] As it will require a hundred pounds to be enabled to draw any quantity of gold bullion from the bank, will not the possessor of a less sum in bank notes than £100 be placed in a worse situation, with respect to the value of the sum which he possesses, than the possessor either of £. 100 or a larger sum; assuming in the question the sum of £. 100 arbitrarily, as the lowest for which bullion may be demanded?

The object which I had in view, was to regulate the value of the whole currency, by securing a control over its quantity; and it appears to me that by giving the power to persons possessing large notes only to demand gold in exchange for them, the quantity would be always effectually reduced to the wants of circulation, and therefore it never can happen, except on occasion of a panic, when every man is striving to turn his bank notes into bullion, that the person possessed of a less sum than £. 100 can be relatively in a worse situation than the man possessed of £. 100 and more, and even in the case of a panic, I think there would be dealers ready to purchase the one and two pound notes with bullion, at a price, very little below the mint price, knowing, as they would know, that as soon as they had accumulated a hundred pounds of those notes, they could go to the bank and demand bullion for them at the mint price. As there would be competition in this trade as well as there is in all others, the difference between the value of a £. 1 note, as compared with notes of a larger amount, would be so trifling as not to be worth considering.

[128] Would not the plan exclude the possessors of notes under £. 100 from converting them into bullion?

Certainly, in any other mode than by sale or bargain.

[129] You have stated that in case of a panic, dealers would purchase the small notes till they amounted to the £. 100, for which bullion could be demanded; in what commodity would the dealers purchase those £. 100 notes?

In bullion; the supposition is, that the man possessing a large note would have the privilege of getting bullion for his note, which the man with the smaller note would not have.

[130] How is he to pay in bullion; by that being divided into parts, and given to the holders of the notes?

Yes.

[131] In what shape is a note to the amount of £. 5 to be paid in bullion?

I conceive £. 5 worth of bullion can be sold as well as £. 500 worth.

[132] Is not a state of panic precisely that state of things which baffles ordinary speculations, with respect to the circulating medium; is it not very difficult to take precautions which can guard against all the possible consequences of alarm in the public mind?

I think it utterly impossible to provide against the effect of panic, on any system of banking whatever.

[133] What would be the effect produced, if the bank, instead of paying the supposed sum of £. 100 intirely in gold bullion, were entitled, or were liable to pay a small part of it, say in the proportion of five per cent, in the silver coin with its present seignorage?

That would have partially the effect of making either of the two metals the standard, instead of one exclusively, and which, in my opinion, would be attended with very great inconvenience.

[134] Would not such partial payment in silver coin in the case of panic afford relief to the holders of small notes, and afford time to the bank to protect itself against, and to counteract such panic?

The question supposes that silver is a legal tender as well as gold, which alters the state of things, and would be a worse system than that which is at present established.

[135] Either there will be an attempt to accumulate the small notes into sums of £. 100, or there will not; if there is not, will it not be a proof that bank notes are considered equally valuable with gold; if there is, will not the competition equalize the value of the small note and the great one?

If there is not an attempt to accumulate the small notes into sums of £. 100, it will be a proof that the small notes are equally valuable with the large; and if there is, there could be only that small difference in their value to which I have before alluded, the profit of the dealer.

[136] Do you think there would be as much difference between the premium that would be required to convert the small notes into large ones, as the difference between £. 3. 17s. 10½d. the mint price for bullion, and £. 4. for specie?

Perhaps nearly the same.

[137] You have said, that in case there should be any strong desire, from any cause, in the holders of small notes, to turn them into bullion, they would be enabled to do so through dealers, who would collect those small notes in order to carry them into the bank, when they amounted to £. 100; is not the reason for using gold coin, that by the stamp the person to whom it is presented is immediately aware of its quality?

That is the advantage of using coin, but an advantage superseded in modern times by the more economical use of paper.

[138] In case I were the holder of a one pound note, and wished to change it into bullion from one of those dealers, how could I ascertain that what he gave me in bullion was of the value that it purported to be; could I do it without an assay, or without the same modes which are taken to demonstrate the value of coin?

Not unless you had full confidence in the dealer; but this is a state of things which I apprehend could never happen and which it is not necessary at all to guard against.

[139] It was understood that your answer, in which you state, that the holders of small notes would get them exchanged into bullion by applying to dealers, was given with a view to show that the holders of those notes would have a remedy which would place them upon the same footing as those persons presenting a certain sum of £. 100?

Yes, in the extreme case of a panic; but I consider that a very extreme case.

[140] Is it not essential to the execution of your plan, that bank notes should be made a legal tender?

Yes, undoubtedly. I wish to make one observation here; that in the evidence I gave the last time I was examined, I think the price of £. 3. 17s. was mentioned1 as the price at which the bank should be compelled to buy bullion; but I wish the Committee to understand, that that was an arbitrary price, not one that I fixed on, or think the very best that could be settled; my opinion rather inclines to its being considerably more than £. 3. 17s. somewhere about £. 3. 17s. 6d.

[141] In case your plan was adopted, and no legal coinage of gold was to take place, would it not be probable, that there would be a circulation, to a certain extent, of foreign gold coin in the country?

I think not; for I can see no advantage that would attend the introduction of foreign coin.

[142] It is understood to be a part of your plan, that the bank should be at liberty to pay the notes of a certain value, presented to them, either in bars of gold, or foreign gold at its intrinsic value?

Yes.

[143] In that case would not a considerable quantity of foreign coin be probably issued by the bank?

Certainly.

[144] Do you think that would be required only for the purpose of exportation, or that some of it would remain in the country?

I think it would be required only for the purpose of exportation, or the manufacture of gold articles.

[145] Supposing the bank to be obliged to pay their small notes, when tendered to an amount less than £. 100, in sovereigns, at the value of £. 4 per ounce, would such a regulation tend to facilitate the plan which has been in contemplation?

It would, in my opinion, be no hindrance whatever to it, though not so economical always supposing that the large notes are to be exchangeable for bullion.

How do you suppose the value of the bars of gold should be ascertained, to the satisfaction of the person receiving them at the bank, and the person to whom he may afterwards dispose of them?

There are many transactions of that sort now taking place between the public and the bank, and I do not expect there will be any more in consequence of adopting my system: the mode which the bank now follow is, to advance a certain sum immediately on the sale of the gold; a portion of the bar of gold is then sent to the mint to be assayed, and, as soon as the quality of it is ascertained, the bank pay the remainder of the money, and the seller is quite satisfied, I believe, with that process.

[147] That answer is quite satisfactory, as to the purchase of gold by the bank; but put the case of a person going to receive a bar of gold at the bank, how is the receiver to be assured that that bar of gold is of the proper assay; and still more, how is the person to whom he may dispose of it the next day to receive a similar assurance?

Every bar of gold that the bank have purchased will have been assayed, and I think that the purchaser would always take it upon that report, without any further assay.

[148] Without any stamp?

I think so; but if it were advisable to put a stamp upon it, that might be done in the roughest possible way. Dealings in bullion are not similar to a man’s taking a piece of money from another, whom he cannot afterwards trace, but the transaction is with a person he knows, and if he has any suspicions that the bar is not so valuable as is represented, even when he has it in his possession he may have it assayed, and if it is found deficient in the fineness for which he agreed, he can make his remonstrance, show the stamp, and satisfy the seller that it is the very identical bar which had been delivered to him; I think there would be no more difficulty in those transactions than in those that are now daily taking place in the purchase and sale of bullion between private individuals, and I have never heard of any difficulty arising from that source.

[149] It would then have become the standard of value? Although a standard of value, I think it would never be used as money; all our transactions in bullion would be confined to our foreign trade, and to the uses for our own manufactures, that is exactly the amount of our trade in bullion at this moment.

[150] You have admitted that a rich country has greater facility to procure a large supply of gold; will not a poor country, exporting largely, and importing few goods, necessarily produce an exchange favourable to such poor country, and naturally bring gold into the country, without reference to the country being rich or poor?

It seems to me, that exportation of goods on balance is the effect of the value of gold, and not the cause of it.

MINUTES OF EVIDENCE TAKEN BEFORE THE LORDS COMMITTEES APPOINTED A SECRET COMMITTEE TO ENQUIRE INTO THE STATE OF THE BANK OF ENGLAND, WITH REFERENCE TO THE EXPEDIENCY OF THE RESUMPTION OF CASH PAYMENTS AT THE PERIOD NOW FIXED BY LAW

Die Mercurii, 24° Martii 1819.

The Lord President in the Chair.

Mr. David Ricardo is called in, and examined as follows:

1. What is your Line of Business?

I am in no Business now; but I have been all my Life in the Money Market on the Stock Exchange.

2. Would it, in your Judgment, be safe and practicable for the Bank of England to resume Payments in Cash on the 5th of July next?

I think it perfectly safe and practicable; but not without some little Inconvenience, which must attend the Resumption of Cash Payments whenever it shall take place.

3. State your Grounds for that Opinion? An alteration of the Price of Commodities, to the Amount of even Four per Cent., must be attended with some little Inconvenience.

4. On what Grounds do you form the Opinion, that the only Inconvenience attendant on the Measure, would be a Reduction of the Price of Commodities of no more than Four per Cent?

I consider the Price of Commodities to depend on the Quantity and Value of the Medium by which they are estimated; and as I consider that Medium to be now depreciated Four per Cent. on Comparison with the Mint Price of Bullion, I consider that a Reduction in the Amount of the Currency to the Amount of Four per Cent., would lower the Price of Commodities to that Amount. I mean a Reduction of Four per Cent. in the Amount of all the Paper Currency now in Circulation.

5. Supposing the Amount of Bank of England Notes to be now 25 Millions, and that they were reduced One Million; and that a proportionate Reduction took place in the rest of the Circulating Medium of the Country; would that have the Effect of raising the Value of the whole Currency Four per Cent., and thereby lowering Prices to the same Amount?

I should expect such a Consequence to follow, if no Commercial Causes were operating on the Value of the Currency; if such Causes were operating, the Reduction required might be either more or less. I wish also to observe, that a Reduction in the Amount of Notes of Four per Cent. will not produce a Rise in the Value of the Currency of exactly Four per Cent., but something very near to that Amount.

6. What do you mean by any Commercial Causes operating on the Value of the Currency?

The Quantity of Currency required to circulate Commodities must depend on the Value of that Currency; if, therefore, any Causes should operate to raise the Value of Gold generally in the World, a less Quantity of Gold would be necessary for the Circulation of the same Quantity of Commodities in England; and under such Circumstances a greater Reduction than Four per Cent. in the Quantity of Paper would be necessary; an Extension of Trade also, or an Increase of Capital, may make a greater Quantity of Currency necessary at one Period than at another, and might therefore diminish the Proportion necessary to be reduced.

7. Are you aware that there was a Reduction of Bank Notes in Circulation during the Course of 1818, to the Amount of Three Millions, without any apparent proportionate Increase in the Course of that Year of the Country Paper; how do you account, under these Circumstances, for the Exchanges being more unfavourable, and the Price of Gold higher, at the End of 1818, than at the Beginning of that Year?

Facts of this Kind I find it very difficult to account for; but I should think it might have been owing to the diminished Trade, and to a Rise in the general Value of Bullion in the World.

8. Might it not, in a considerable Degree, be accounted for by the Operations going on in the Money Markets on the Continent, and more particularly those at Paris and Petersburgh, towards the Close of last Year?

Not unless those Operations had a Tendency to increase the general Value of Bullion, which might be affected by a Reduction of the Paper Circulation of the Continent, and by the Substitution of Gold and Silver Coin.

9. Might not the Effect of these Operations at Paris and Petersburgh, and other Places on the Continent, be to induce Individuals to make large Remittances from this Country for the Purpose of assisting the Operations which were going on in those Places?

Certainly; but whether those Remittances should be made in Bullion or Goods, would depend on their relative Value; and if Gold was preferred, it proves to me, that the Value of Bullion was affected by those Transactions on the Continent.

10. Do you recollect the Fall which took place in all Prices in the Year 1816? Was not that Decline in the Prices much more considerable than any Decline you anticipate now, from an Endeavour to raise the Value of the Currency to a Par with Gold?

Much more considerable; one of the Causes which operate on the Value and the Quantity of Currency, I have omitted to mention, namely, the varying State of Credit, which considerably affects the Quantity necessary to perform the same Business, and which I think operated in the Year mentioned.

11. Paper having been, in the Middle of 1815, at upwards of 20 per Cent. Discount, and we having it in Evidence, that Gold at the latter End of 1816 would have been at the Mint Price, had it not been sustained by the Bank at the Price of £3 18s. 6d.; do you not think that the Pressure which the Country sustained at that Period must be much greater than what it will now sustain from Paper resuming its Value upon a Par with Gold, it being now at a Discount of only 4 per Cent; and can you state any Proportion which the Difficulties of one Period are likely to bear in relation to the Difficulties of the other?

I think the Pressure sustained at that Period was much greater than would be experienced now by a Reduction of 4 per Cent. in the Amount of the Currency. At the same Time, I do not think that the whole Difference in the comparative Value of Paper and Gold in 1815 and 1816, is to be ascribed to the Rise in the Value of Paper only, but also to a Fall in the Value of Gold, arising from some of those Causes I have mentioned. I find it quite impossible to assign a Proportion between the Difficulties of the Two Periods.

12. Do you suppose, that from the Middle of 1815 to the Commencement of 1817, a Fall took place in the Price of Gold through the World?

I am wholly unacquainted with the Fact, such is the Opinion I should form; and my Reason is, that there did not appear any proportionate Fall in the Prices of Commodities and the Price of Gold in this Country. The Value of Gold and Paper was equalized, probably by a Rise in the Value of Paper, and a Fall in the Value of Gold.

13. Can you infer a general Fall in the Price of Gold through the World, from the State of the Prices of Commodities in this Country solely?

Quite impossible.

14. The Question and Answer No. 4. are repeated; would the Fall of Four per Cent. be the only Inconvenience resulting from the Reduction of the Circulating Medium necessary to precede or accompany the Resumption of metallic Payments by the Bank?

I think it would not be the only Inconvenience; whatever affects the Value of the Currency, must affect the relative Interest of Debtor and Creditor; but I know of no other Inconvenience.

15. Do you conceive that the Amount of Trade, Capital, and Revenue, and the Amount of Currency required, must necessarily bear any fixed Ratio or Proportion to each other?

Certainly not; I think the Proportion must depend on the Economy in the Use of Money, which again must depend on the State of Credit at the Time.

16. Must not these Proportions also be affected by the general State of Wealth and Population, at any Two Periods in which the Comparison is to be made?

I think it must. The more dense the Population, the less, all other Circumstances being the same, will be the Amount of Circulating Medium required.

17. Must it not also be in some Degree affected by the Nature of the Transactions?

I do not see that that would affect it.

18. Do not different Branches of Commerce require different Proportions of Circulating Medium, in proportion to the different Quantity of Capital invested, and Profits made?

They probably may.

19. Are you of Opinion that the Circumstances to which you have alluded in your former Answer, (No. 15.) have so far operated in the Course of the last 20 Years, as to make it practicable to carry on the Business of the Country with an Amount of Currency not numerically greater than that which existed previous to the Bank Restriction, notwithstanding the apparent Increase of Trade, Capital, and Revenue?

I think the numerical Amount of Currency required at this Time is greater than what was required previous to 1797; but the Proportion of that Currency to the Transactions to which it is applied is less now than at the former Period.

20. Do you know any Practice, tending materially to economise the Use of the Circulating Medium in the Conduct of our Transactions, introduced since the Beginning of 1815?

No, not since that Period.

21. What Means would you recommend to be adopted to enable the Bank, at the earliest practicable Period, to pay their Notes in Cash or Bullion?

The Measure which I should recommend would be, to give the Bank the Option of paying its Notes on Demand in Gold Bullion, or in Coin, at the Mint Price of £3 17s. 10½d.; at the same Time requiring of them to purchase Standard Gold at the Price of £3 17s. 6d. to any Extent.

22. What are the peculiar Advantages which you think would attend this Plan, in preference to a simple Resumption of Cash Payments?

First, it would exempt the Bank from providing a Quantity of Gold necessary to replace all the smaller Notes which are now circulated in London and the Country. Secondly, it would obtain for the Bank, and therefore for the Nation, all the Advantages which a Capital equal to the Amount of all the small Notes would produce.

23. Referring then to Question and Answer No. 21, do you mean that the Bank should be obliged to pay each Note on Demand in Coin or Bullion, at its Option; or would you limit the Obligation to Notes of a certain Amount, and to what Amount?

I would limit the Obligation on the Part of the Bank to Notes of £50, £60, or £100 Value, or to a Number of smaller Notes amounting in the Whole to such a Sum. The Object which I have in view, is to regulate the Value of Currency, by having an effectual Controul over its Quantity. I have no Preference for any Sums I have stated, provided they may not be too small.

24. Is that Part of your Plan, which requires the Bank to purchase Gold at £3 17s. 6d., in your Judgment necessary to it; or would not the same Object be obtained by the Mint being opened to the Public for the Purpose of coining Gold, or by Government reserving to themselves the Power of coining and issuing Gold Coin?

That Part of my Plan is not necessary. My Object would be equally effected by either of the other Modes. I prefer my own only because it is more economical, and because it would be of more speedy Operation.

25. Have you formed any Estimate of the Saving by the Plan you propose, when compared with the Resumption of Payments in Cash as before the Restriction?

The Saving must depend entirely on the Preference of the Public for metallic Circulation: if they continued to use Paper in smaller Payments, on the Supposition of the Bank paying in Coin, as it did before 1797, there would be no Saving at all by my Plan.

26. What Amount of Bullion would it be necessary for the Bank to be possessed of on your Plan, for the Purpose of regulating the Amount of their Notes; and what would be the Amount of the Coin that the Bank should be possessed of under the old System, for the Purpose of enabling them to pay their Notes in Coin?

On both Plans I think the Quantity would be the same, but what the Quantity should be, must depend on the Knowledge of the Bank of the true Principles of Currency; because they have always the Power to regulate the Price of Bullion, by limiting or increasing the Quantity of their Notes. My Answer applies to the habitual Reserve the Bank would be obliged to keep up, according as the Currency was settled upon one or the other Plan.

27. What would be the Amount of the Difference of the Bullion and Coin which the Bank would have to provide, for enabling them to open, under the one Plan or the other?

If the Bank were to limit their Circulation till they had raised the Value of their Notes to an Equality with the Value of Bullion, it would perhaps be necessary, or they might think it prudent, to provide a sufficient Quantity of Coin against the extreme Case of their being called upon to replace all the small Circulation of the Town and Country with Coin, if Cash Payments be resumed on the old Plan. On my Plan no such Provision of either Coin or Bullion to replace small Notes would be necessary. In the First Case, an Amount of 15 Millions might probably be required, merely for the Purpose of answering the smaller Notes, and a further Reserve of Coin for larger Notes.

28. What in your Judgment would be the necessary Reserve of Coin for the larger Notes according to the old Plan, and what would be the Amount of Bullion to answer the Demand according to your Plan?

I have already observed, they would in my Opinion be equal, and must depend on the Knowledge of the Bank of the Principles of Money. I should think that a Reserve of Three Millions would under good Management be amply sufficient upon a Supposition of 24 Millions of Bank of England Notes in Circulation.

29. Would not the Object of your Plan be most completely effected by there being no Gold Coin in Circulation, unless it should be necessary for the Government to issue a Proportion of such Coin, in consequence of the Bank having reduced their Issues of Paper too low?

The Object of my Plan would be most completely effected by there being no Gold Coin in Circulation; and the latter Measure would be unnecessary if the Bank were obliged to purchase Gold.

30. Would not such an Obligation be a much better Security for the Public against too reduced an Issue, than any Discretion, wherever vested and however guarded?

Much better; it can be done so rapidly, and so certainly in proportion to the Demand for Money.

31. Is not, in one Case, the Operation performed by the necessary Effect of such a Provision, constantly operating on the Interests of the Bank itself, set in Motion by the Interests of Individuals; while, on the other, it must depend on the Judgment to be formed on the particular Circumstances of the Case?

It is certainly so.

32. What Security is there that the Bank would always be able to purchase Bullion at that Rate, and therefore would always be able, by the Notes issued for such Purchases, to keep up a Sufficiency of Circulating Medium?

I am of opinion, that the Bank, by regulating the Quantity of their Paper, would either lower the Price of Bullion to £3 17s. 6d.; that is, to one of the Limits mentioned; or raise it to the other Limit of £3 17s. 10½d.

33. If such Circumstances, as you have alluded to in your former Answer, as raising the general Value of Gold Bullion in the World, should again occur, and if other Circumstances, to which you have also alluded, in the State of Commerce between this and other Countries, should also again occur, and produce, as far as any of these Causes can effect it, a considerable Increase of the Price of Gold Bullion, and a very unfavourable State of Exchange, would it not require a Reduction of the Issue of Bank Notes proportionably great, to keep down Gold Bullion to this Price in spite of the Tendency of all these Circumstances to raise it?

Certainly, in every such Case it would be incumbent on the Bank to raise in an equal Degree the Value of their Paper, which could only be done by a Reduction in Quantity. In 1783, there was in a few Months, on a very small Circulation of Paper, a Reduction in the Amount of Bank Notes of about Three Millions, the Bank being then compelled to make the Value of their Paper conform to the Value of Gold Bullion.

34. Can you conceive the Existence of any other real Standard of Value, besides Bullion, out of which that Inconvenience would not arise in the same or a greater Degree?

None.

35. What, in your Opinion, would be the Convenience or Inconvenience of allowing the Bank the Option of paying either in Gold or Silver Bullion, according to some fixed Proportion of Value established between them; establishing at the same Time only one of the Metals as the fixed Standard or Measure of Value, to which the other Metal should be made to conform by a Review of the Proportion at regular fixed Periods, according to the relative Prices of the precious Metals, as then ascertained in the Markets of the World?

The greatest Inconvenience would result from such a Provision. I consider it a great Improvement having established one of the Metals as the Standard for Money. The Bank and all other Debtors would naturally pay their Debts in the Metal which could at the Time be most cheaply purchased, and at certain fixed Periods the Currency might be suddenly increased or lowered in Value, in proportion to the Variation in the relative Value of the Two Metals from one of these Periods to the other. I find, from a Paper I have in my Hand, extracted from Mushet’s Tables, which, I believe, will be found correct on a Comparison with Official Documents, that frequently in the Space of Two or Three Years the relative Value of Gold and Silver has varied as much as from 9 to 15 per Cent. From 1777 to 1779, the relative Proportion varied from 13.191 to 15.01, a Difference of 9 per Cent. From 1782 to 1785, it varied from 13.04 to 15.07, a Difference of 15 per Cent. From 1782 to 1809, it varied from 13.04 to 16.49, a Difference of 25 per Cent. The greatest Inconvenience would result in raising or lowering suddenly the Value of the Currency to so great an Extent.

36. Considering the great Variation in the relative Value of Gold and Silver, and considering that Silver is the Standard Measure in most other Countries, what will be the Advantage in our having Gold as the Standard Measure in Value in this Country, on the Supposition of your Plan being adopted, which supersedes the Necessity of a Gold Circulation?

My only Reason for preferring one Metal to the other is its being less variable in Value. I had at one Time thought Silver would be less variable; but having heard that Machinery is particularly applicable to the working of Silver Mines, and cannot be applied to increase the Quantity of Gold, I now think that Gold is the more invariable Metal.2

37. Supposing this Country has a Gold Standard, and other Countries a Silver Standard, shall we not experience from the Variations of Gold and Silver, in our Intercourse with other Nations, the same Difficulty in the Exchanges, which our internal Circulation would sustain if the Bank had the Option, as is supposed, of paying in either of the Two Metals?

I think we should; the Inconveniences would be of the same Nature, but the Exchanges would be regulated accordingly.

38. If we had a Gold Standard, and other Countries continued to have a Silver Standard, would it be possible to state the Par of Exchange for any Length of Time together?

It would be quite impossible. But that I do not think a Matter of the least Importance; and with respect to the Inconvenience before mentioned, it would not exist if all the Debts to this Country and from this Country were contracted in our Currency: they would exist only on the Supposition that they would be contracted partly in British Currency and partly in Foreign Currency.

39. If all Debts were contracted in our Currency, would it not be an Extension to Foreign Countries of our Standard?

As far as we were concerned in Trade with them.

40. Is that the Practice in contracting Debts in Foreign Countries?

I should think not; they are as often contracted in the Currency of the one Country as in that of the other; the Advantage in the Payment may be in our Favour or against us, that is Matter of Chance.

41. Would not the Inconvenience of leaving the Advantage or Disadvantage in Payments to be a Matter of Chance, be corrected by our adopting a Silver Standard?

Certainly.

42. Would not our adopting Silver as the Standard of Value, and as the general Medium of Circulation, have in some Degree an Effect, which you have stated as a Benefit attending your Plan, viz. the keeping in Circulation more Bank Notes, than our adopting a Gold Standard, and paying in Gold Coin, as before the Restriction?

Certainly.

43. Is it intended to form an essential Part of your Plan, that the Bank of England Note, and the Country Bank Note, should circulate after the Bank has begun to pay in Bullion, upon the same Footing as at present?

It is an essential Part of my Plan.

44. Would the Plan, of requiring from the Bank the Delivery of Gold Bullion in Exchange only for large Sums in their Notes, be compatible with the Circulation of a certain Quantity of Gold Coin, if that were judged desirable?

Quite compatible; the Gold Coin should, in that Case, be subject to a Charge equal to the Expence of Coinage, but not sufficiently high to afford Temptation to false Coining. The Advantage of making the Coin very perfect, and immediately procurable in Exchange at the Mint, without any Delay or any Deduction, for an equal Weight of Gold Bullion, would be considerable, as far as regards our internal Circulation; but it would expose us to an additional Charge, as all Exporters of Bullion would be desirous of exchanging their Bullion for Coin, previous to its Exportation; the coined Metal being of course more valuable than an equal Weight of Gold Bullion. All the Advantages of a metallic Circulation would be obtained by allowing such a Charge on the Coin, and giving the Option to the Holder of Bank Notes, of demanding at the Bank either Gold Bullion or Gold Coin subject to such a Charge, in Exchange for his Note. If no such Privilege be allowed, of demanding Bullion from the Bank in Exchange for Notes, the Bank, by augmenting their Issues, might sink the Value of the whole Currency, and therefore of the coined Part of it, to the intrinsic Value of the Metal of which it is composed.

45. Would it not be more convenient that the Demand for Money coined, on the Principle stated in your last Answer, should be made at the Mint only, and not at the Bank in Exchange for their Notes; and that the Mint should keep in Readiness for that Purpose a certain Quantity of Gold already coined?

The Effect would be the same; but I think the Plan suggested by the Question would be an Improvement.

46. In that Case, would it be expedient to subject the Bank to the Obligation of paying small Sums in Coin, or would it be more advisable to make its small Notes completely a legal Tender?

Under those Circumstances, I think small Notes should be exchanged for Coin at the Bank, if required.

47. Might it not be sufficient if the Bank were discharged from the Obligation of paying Coin in any Cases for their small Notes, except when presented in large Sums; and would not the Facility which Individuals would thus have of procuring Coin for their small Notes from Bankers and others who could present them in large Sums for Payment in Bullion, and obtain Coin for that Bullion from the Mint, be sufficient to keep in Circulation a certain Quantity of Gold Coin, and to prevent any Discredit of small Notes?

Bankers would be under no Obligation to give Coin for small Notes; and I do not see any other Advantage in making large Notes exchangeable for Coin, but to give the Public the Option of using Coin instead of small Notes. I think the small Notes could never fall into Discredit, while you have the Power of regulating the Quantity of large Notes, by the Obligation imposed on the Bank to pay their Notes to a large Amount in Bullion.

48. Is it a necessary Part of the proposed Plan that the Trade in Bullion and Coin should be wholly free, and the melting of Coin, as well as its Exportation, be permitted by Law?

It is; and on any Plan of Currency I think such a Regulation would be desirable.

49. Would it not also be necessary, that the internal Traffic as well as the Foreign Trade in all Bullion should be completely free?

Certainly.

50. If the Mint were obliged to keep in reserve a certain Quantity of Gold ready coined, would it not be necessary, in order to secure the Public against great Expence, to make a Charge upon the Coin equal, not only to the Expence of Coinage, but to the Loss of Interest upon the probable Quantity of Coin there to be kept in reserve?

I think the Charge should be as high as it could be, consistently with the Object of not encouraging false coining.

51. Supposing then that Gold Coin should be issued at 80s. per oz., that is 2s. 1½d. above the Mint Price, of which Advance one Part should be considered as Seignorage, and the other Part as the strict Cost of Manufacture; supposing in this Proportion, 1s. 6d. per oz., viz. 4½d. each Sovereign, be considered as Seignorage, and 7½d. per oz. as the Brassage; will you state, in case such Coin by Wear should lose Part of its legal Weight, whether it will not be just to allow the Whole of what may be called Seignorage, subjecting the Holder only to the Loss of Weight and Cost of Manufacture?

I think it would be unjust to deduct from the Holder of light Money any thing but the mere Loss of Weight.

52. Suppose, in any Country, Gold were declared by Law the Standard of Value, and that Gold de facto engrossed the Circulation in Exclusion of all Silver Money, would not the Course of Exchange with that Country regulate itself with Reference to its Gold Money?

Certainly, the Course of Exchange would be regulated with Reference to the relative Value of Gold and Silver.

53. Supposing, in any Country, Silver were declared the Standard of Value, and Silver were de facto in Circulation to the Exclusion of all Gold Money, would not, in such a Country, the Exchange regulate itself with Reference to its Silver Money?

It would.

54. With the Exception of War and Conquest, can Foreign Commodities ever be acquired, but in Exchange for something which has been manufactured or produced at Home, either immediately or after Two or more different Exchanges?

They can be procured in no other Manner.

55. Is it not sound Policy to encourage the Importation of Manufactures, or Raw Materials which a Country does not itself produce, with a View to encourage the Increase of its own Produce and Manufactures, which must go Abroad in Quantities similar in Value to the Value of what it acquires?

It is the soundest Policy to make the Trade both of Import and Export as free as possible, as that will be the Means of giving us the greatest Abundance of Articles for our own Consumption.

56. Have you not stated, that if the Bank was to resume Payments in Bullion upon your Plan, it would be exempted from providing Gold necessary for circulating its small Notes to a given Sum, say 15 Millions; and that the general Wealth of the Country would be increased by enriching the Bank in consequence of this Saving?

I have said so, and I think so.

57. Do you believe the following Account to be an accurate Account of the Profits of the Bank since the Restriction, viz.

	£
In Bonuses and Increase of Dividends	7,451,136
New Bank Stock (£2,910,600) dividedamong the Proprietors	7,276,500
Increased Value of Capital of £11,642,400, (which on an Average of 1797 was worth 125, and which is now worth 250), that is	14,553,000
Making in all, on a Capital of £11,642,400, a Gain in 19 Years of	£29,280,636

I have no Reason to doubt it; I believe it is accurate as far as I recollect. Part of that increased Value is derived from the increased Value of all funded Property.

58. Suppose we were to resume Cash Payments under a Plan which required that the Bank should provide themselves with only Three Millions of Treasure, would not there be a Demand for 15 Millions less of the Produce and Manufactures of this Country, than would be created by imposing on the Bank the Necessity of providing 18 Millions?

Yes, there would; but as we should export these Commodities without procuring a Return of any other which would contribute to our Advantage, the Gold would not be a very desirable Importation.

59. Would not the additional Demand for 15 Millions enrich our Manufacturers, who are the greatest Sufferers by the present State of the Circulation?

In the same Way as if we were to throw those 15 Millions of Manufactures into the Sea, which would also create a Demand for them.

60. Does it signify to our Manufacturers, after they have found a Sale for their Manufactures in France, whether the Purchaser uses them, or throws them into the Sea?

It is of no Importance to them, but of the greatest Importance to the Country, inasmuch as in that Case we should have 15 Millions less of productive Capital.

61. Do you mean to say, that if we sold those 15 Millions for Gold, we should not acquire a Value equal to them in Exchange?

We should acquire a Value equal to them in Exchange; but as such Gold would be a dead Stock, it would be no Advantage or Profit.

62. Do you think it would be advisable to adopt a Plan, under the present Circumstances of the Country, the Consequence of which would be to enrich the Bank, who has been such an inordinate Gainer by the Restriction, at the Expence of abstracting a Demand for 15 Millions worth of their Commodities from our Manufacturers, at a Time, when they have been the greatest Sufferers by the Restriction, and are likely to be great Sufferers by the Resumption of Cash Payments?

In whatever way Compensation was made to the Manufacturers, I should regret that we should think it necessary to make so great a Sacrifice of national Profit and Income, which I think we should be doing if we consented to make 15 Millions of our Capital totally unproductive.

63. Supposing we were to adopt a Plan which should annihilate that Demand for 15 Millions of our Manufactures, do you suppose that that Portion of Wealth would at all exist, in so far as it is composed of Manufacturing Labour?

I think it would; because the Quantity of Labour employed and Commodities produced must be in proportion to the Capital we have; and there can be no Production without occasioning an equal Consumption. In this Case, I think we should consume the Commodities ourselves; in the other Case, they would be consumed by others.

64. Do you mean to say, that an extra Demand for the Commodities of the Country would not produce any Increase of its Manufactures?

I should very much doubt whether it would; the sole Difference would be, with respect to what Commodities would be produced, and to the more advantageous Exchange we should make, by having a more extended Market.

65. Do you mean, that you doubt whether an Increase of Foreign Demand has not always a Tendency to increase the Production and Wealth of a Nation?

In no other Way than by procuring for us a greater Quantity of the Commodities we desire in Exchange for a given Quantity of our own Commodities, or rather for a given Quantity of the Produce of our Land and Labour.

66. Do you then think that it is true, as a general Principle, that the Demand does not regulate the Production of a Country, and that the Increase of the Demand does not add to its Wealth?

An Increase of Demand is serviceable to a Country, inasmuch as it procures for it a more extensive Market, and enables it to get a greater Quantity of Foreign Goods in Exchange for its own; but the Amount and Value of the Commodities produced, whether the Country possess Foreign Trade or not, is always limited by the Amount of Capital employed; and therefore Foreign Trade may alter the Description of Commodities produced, but cannot increase their aggregate Value.

67. Is it possible, then, there should exist an increased Foreign Demand to the Extent of Five Millions, for Cotton Goods for Example, without an Increase of their Price in the Home Market immediately taking place?

Certainly not; but those Cotton Goods cannot be produced unless Capital be withdrawn from other Employments.

68. Do you not know, that when the Demand for our Manufactures is great in this Country, the very Credit which that Circumstance creates enables the Manufacturer to make more extended Use of his Capital in the Production of Manufactures?

I have no Notion of Credit being at all effectual in the Production of Commodities; Commodities can only be produced by Labour, Machinery, and raw Materials; and if these are employed in one Place they must necessarily be withdrawn from another. I am not denying the Advantages of Foreign Trade; but I wish to reduce those Advantages to what I consider their just Value.

69. Have you never known Machinery, raw Materials, and Labour, paid for by any Individual who used them to a greater Extent than the Capital he actually possessed, by Means of the Credit he commanded?

Yes; but if he had not had that Credit, it would have been in the Power of somebody else to have employed them.

70. Whence would that other Person have obtained that Capital, if you suppose that the Capital of the Country is always employed, and that Foreign Demand cannot therefore produce a greater Quantity of Manufacture or rude Produce, which is limited by the Quantity of our Capital?

Credit, I think, is the Means, which is alternately transferred from one to another, to make use of Capital actually existing; it does not create Capital; it determines only by whom that Capital should be employed: the removing Capital from one Employment to another may often be very advantageous, and it may also be very injurious.

71. If Credit always represents an existing Capital, what Advantage does this Country derive from the Institution of Banks of Credit, which is not enjoyed by Countries who have only Banks of Deposit?

The Disadvantage to which those Countries are exposed which have Banks of Deposit only, is, that they are obliged to use a Part of their Capital unproductively; whereas those which have Banks of Credit use their whole Capital productively, except such Part as is kept in Reserve to answer Demands.

72. Am I then to understand, that in Countries which have Banks of Credit, there is never any Capital employed productively, of which there does not exist a similar Quantity of either productive or unproductive Capital, that might be applied to the same Object?

I do not understand the Question: for my Supposition is, that there is no Capital used unproductively, where Banks of Credit exist in a great Degree of Perfection: I think the whole Capital is used productively.

73. Are not the Capitals invested in Land, for Example, capable of Two Uses. 1. Is it not productively used, as vested in Land. 2. May not Money be raised by Credit on that Land, which may be applied to the Purposes of Manufactures?

The Question supposes Two Capitals, the Land, and the Instruments employed in Manufactures; the Money which circulates them forms no Part of the productive Capital, it determines only by whom it shall be employed.

74. May not a Man get Credit from a Bank of Credit on the Security of his Capital, which is profitably employed, whether vested in Stock or in Land, and may he not by means of that Credit purchase or create an additional Quantity of Machinery and raw Materials, and pay an additional Number of Labourers, without dislodging Capital from any existing Employment in the Country?

Impossible; he can purchase Machinery, &c. with Credit, he can never create them. If he purchases, it is always at the Expence of some other Person; and he displaces some other from the Employment of Capital.

75. Are you then of Opinion that there never can be made in any Country Two Uses of the same Capital; one to acquire an annual Revenue, which it produces by the Modes in which it is invested, and the other to acquire a Capital on Credit, which may also be profitably employed by the Person who acquires it, and which will be so whenever there is an increased Demand for Commodities?

Capital can only be acquired by saving. It is impossible that one Capital can be employed by Two Persons at the same Time, or for Two Objects: the greatest Advantage will be sought and obtained at all Times by the Employer of Capital.

76. Will not a great Diminution of the Demand for Commodities prevent his obtaining those Advantages from his Capital, which a great Increase of the Demand for them would secure?

It may, as far as regards the particular Commodity; but if there be a less Production of one Commodity, the Production of another would in a Degree be encouraged.

The Witness is directed to withdraw.

Die Veneris, 26° Martii 1819.

The Lord President in the Chair.

Mr. David Ricardo is called in again, and further examined as follows:

77. Supposing the Plan of the Bank paying its Notes in Bullion, at the Mint Price, as explained in your preceding Examination, to be adopted by the Legislature, will you state your Opinion as to what Period it would be most advantageous to fix for the Commencement of such a System?

It would be difficult to fix on any one Period as most advantageous; but as I think the Effects of a Return to Cash Payments have been already in a great Degree borne, I should not think that there would be any great Difficulty attending the commencing the Bullion Payments even as early as July next.

78. Are you of Opinion that it would be more advantageous to require the Bank to commence this System by Payment of its Notes in Bullion at the Mint Price, or that any Facility would be given to the Plan, by the Adoption of a graduated Scale, by which they should pay at first at the present Market Price, and at Prices successively reduced at stated Periods, until they came down to the Mint Price?

Facility would be afforded by a graduated Scale, commencing at the present Market Price. By far the most important Consideration with me is, preventing the Currency being depreciated, as compared with Bullion, below the present Rate of Depreciation, and by adopting the graduated Scale you would have complete Security upon that Point. At the same Time, I think we should attain the ultimate Result of reducing the Price of Bullion to the Mint Price of £3 17s. 10½d., before the Time to which the Regulation might apply.

79. Would it not therefore be necessary, in the Adoption of such a graduated Scale, to allow the Bank a Discretion to accelerate, but not to retard, the successive Reduction of Prices at which they would give Bullion in Exchange for their Notes?

I think such would be a very good Regulation.

80. Supposing the Bank had Power to accelerate the Rate of Reduction, might not those who were in the Knowledge of the Intention so to accelerate it, take Advantage of that Knowledge, which they would be precluded from doing, if it was to take place at fixed Days?

Such an Effect might possibly take place in a slight Degree. But I have already said, that I think the ultimate Effect would be anticipated, and as every Person would be certain that in a short Space of Time Gold would fall to the Mint Price, they would not be induced to make Purchases above that Price, notwithstanding a premature Reduction in the Price of Gold by the Bank, below that fixed by the Scale.

81. State your Opinion, supposing the System of successive Reduction were adopted, at what Time that Operation might be safely commenced, and how long the Interval ought to be from thence to the Period of Payment at the Mint Price?

I think it could not commence too soon; and with respect to the Interval, it appears to me a Matter of slight Importance; probably Twelve Months would be a good Period. I cannot conceive that the Fall in the Value of Commodities to the Amount of Four per Cent. would be a very formidable Operation, or one likely to be attended with serious Consequences.

82. Do you, having stated that you think that they might begin to pay at the Mint Price on the 5th of July next, suppose that there would be any Advantage derived from postponing that Obligation, by adopting a graduated Scale, other than to save the Funds of the Bank?

I think there would be other Advantages, besides saving the Funds of the Bank; for when I said that on the 5th of July next the Bank might without Difficulty commence paying in Bullion at the Mint Price, I supposed the Bank was to retain the same unlimited Power of increasing their Issues, between this Time and the 5th of July, that they now have. On the Principle of a graduated Scale, commencing at the present Market Price, I concluded that the Regulation of making them pay at the Market Price would be adopted immediately; with that Security, I think there are Advantages in deferring the ultimate Reduction to the Mint Price.

83. If the graduated Scale was to be adopted, so as to afford that Security at the earliest possible Period in which an Act of Parliament could be passed, do you think there would be any Danger to the Public from accelerating the Gradations of that Scale, so as to come to the Payment in Bullion at the Mint Price by the 5th of January 1820?

I think that no Danger would attend the coming to the Mint Price by the Beginning of next Year; in every Change of this Sort, there is some Advantage in making it as gradual as possible.

84. Do you recollect whether within these last Eight Years we have not frequently seen the Circulating Medium of the Country undergo much more formidable Changes with respect to Value than 4 per cent., within a shorter Period than Six Months, judging of the Value of the Circulating Medium by the Price of Gold?

In my Opinion it has undergone much greater Variations than 4 per Cent.; and in the soundest State of our Currency, it would be liable to such Variations.

85. From what Causes could it undergo Variations, exceeding that Amount, if the Currency were restored to its soundest possible State?

It would not undergo any Variation, as compared with the Standard; but I mean, that the Standard itself might undergo Variations exceeding that Amount; the whole Currency is of course subject to all the Variations of the Standard.

86. In that Case, would not the Currency of other Countries, in an equally sound State, undergo similar Variations?

Certainly; the Inconvenience, as far as regarded England, would not be less on that Account; I consider any Variation in the Value of the Currency as an Evil, from producing a Variation in the Prices of all Articles.

87. Is there not this Difference between the Case of a Variation occasioned by Causes peculiarly affecting England, and that of a Variation occasioned by Causes affecting equally all Countries enjoying a sound State of Currency; that in the First Case, the Exchange between this Country and those Countries would be affected; in the Second, the Exchanges between England and those Countries would not be affected?

In the First Case, the Exchanges would be affected; in the Second, they would not, if the Causes operated on all Countries at once; but Scarcity and increased Value of the precious Metals might take place in one particular Country, which would ultimately affect their Value in all; but in the Interval, the Exchange would be affected. The Circumstance of the Exchange being unfavourable, does not seem to me to be any Disadvantage to us.

88. Do you believe, that if this Plan were adopted of Payments in Bullion, according to a graduated Scale of Reduction, there are any Circumstances arising, either from the general State of the Bullion Market, or from any other Causes whatever, which are likely to create Dangers and Difficulty to the Bank in their procuring such Quantities of Gold, and at such Prices, as this Plan would require?

None whatever. The Bank would always have the Power of keeping the Price of Gold rather below that which was fixed by the Scale; and therefore the Price of Gold might gradually be reduced to the Mint Price, without the Bank being under any absolute Necessity of exchanging one Ounce of Bullion for its Notes.

89. If, contrary to all reasonable Expectation, any unfore-seen Contingency of such a Tendency as stated in the preceding Question should by Possibility arise, would not the Plan of a graduated Scale, operating as above proposed for the next 12 Months from the present Time, afford to the Legislature the fullest Opportunity of meeting and providing for such a Case as its Exigency might require?

It certainly would.

90. Is it not also a great Advantage of such a Plan, that nearly the whole Progress of its Operation, and that of our Currency as connected with it, would thus be brought successively under the View of Parliament, instead of its being left to the Discretion of the Bank, until the Arrival of the Time ultimately fixed for Payment in Cash or Bullion at the Mint Price, without any such Gradation?

That would be a considerable Advantage.

91. Having stated that a Circulation of 24 Millions of Bank Notes might be conducted with Three Millions of Bullion; do you not think, that it might be injurious to the general Credit of the Bank, for Parliament to legislate upon the Supposition that it would require one Twelvemonth for them to provide a Sum in that Proportion to any Currency which the Country may require?

The Wealth of the Bank is so well established as a Fact in the Opinion of the Public, that I do not think such a legislative Measure would in the slightest Degree affect the Credit of that Body.

92. Would not the Facility of dispensing with the Gold Coin in Circulation, according to the Plan you have suggested, operate as a Saving of the general Stock; so that a Country which adopted it might be considered, as in that Proportion, richer than a Country which did not?

That is the precise Advantage which I expect to follow from that Measure.

93. Supposing all, or most other Countries successively to adopt the same Plan of Paper Currency, regulated only by the Price of Bullion; must not that Circumstance, by occasioning a great Diminution in the Demand for that Bullion, and consequently lowering its Value throughout the World, ultimately occasion a Depression in all Currency, and a considerable Rise in the nominal Prices of all Commodities?

For a short Time the Value of Gold would be affected, and it would be lowered by such a general Regulation; but, in my Opinion, it would not ultimately be depressed; the Value of Gold and of all other Commodities depending on the Cost of Production, that is, on the Quantity of Labour necessary to produce them, which is not supposed to be either increased or diminished.

94. Supposing Two Countries in every other respect enjoying the same State of Wealth, but with this Difference that one possesses a Circulating Medium which is conducted with Three Millions of Bullion, and the other, over and above the same Degree of Wealth in every Thing (except in Circulating Medium), has a Circulating Medium of Eighteen Millions of Bullion, which of these Two Countries in your Opinion possesses the greatest Wealth?

The Country possessing the Eighteen Millions; but if they had any Intercourse with each other, it would be impossible for the Twenty-one Millions, the Aggregate of the Two Circulations, to be divided in these Proportions.

95. You have stated that a Reduction of Paper in Circulation, to the Amount of nearly Four per Cent., would be necessary, in order to restore the Currency to the legal Standard of the Mint; would those Reductions have any very sensible Effect on the general Rate of Interest or Discounts?

Reduction or Increase of the Quantity of Money always ultimately raises or lowers the Price of Commodities; when this is effected, the Rate of Interest will be precisely the same as before; it is only during the Interval, that is, before the Prices are settled at the new Rate, that the Rate of Interest is either raised or lowered.

96. Are we to understand that, when Money is lent, Capital is advanced, and that Interest only can be effected by the Abundance or Scarcity of real Capital, combined with the Opportunity of employing it?

Precisely so; Money is only the Medium by which the Borrower possesses himself of the Capital which he means ultimately to employ.

97. State what in your Opinion is the Difference between that State of Things, in which a Stimulus is given by fictitious Capital arising from an Over-abundance of Paper in Circulation, and that which results from the regular Operation of real Capital employed in Production?

I believe that on this Subject I differ from most other People. I do not think that any Stimulus is given to Production by the Use of fictitious Capital, as it is called.

98. State what in your Judgment are the Effects on Agriculture, Commerce, and Manufactures of a superabundant Issue of Paper?

Under some Circumstances it may derange the Proportions in which the whole Produce of Capital is divided, between the Capitalist and the Labourer; but in general I do not think it even affects those Proportions. It never I think increases the Produce of Capital.

99. Has such Issue, in your Judgment, any Tendency to the Encouragement of the Commerce or Industry of any People?

I think none, excepting that by affecting the Proportions into which Produce is divided, it may facilitate the Accumulation of Capital in the Hands of the Capitalist; he having increased Profits, while the Labourer has diminished Wages. This may sometimes happen, but I think seldom does.

100. Has not the Increase of Prices during the progressive Depreciation of Paper a Tendency to produce Over-trading, and excessive Speculation?

I think Over-speculation has rather been encouraged by the Facility with which Speculators have been enabled to raise Money upon Discount, in consequence of the progressive Increase of Paper Issues. This Facility would be in a great Degree destroyed, as soon as the full Effect of any given Abundance of Issue on Prices was felt.

101. Is not that Facility, while it exists, wholly given at the Expence of Persons already holding Paper previously in Circulation; or of those who may be compellable by Law to receive it at Par for Payments previously stipulated for, in Money of account?

It is only given at their Expence.

102. Are you of Opinion that the occasional Success of Speculators, and Over-traders, even when beneficial to themselves, is advantageous to the Community, or that such individual Benefits are overbalanced by the general Evils of such a System?

The Public are only interested in the Abundance of Production; these will not be increased; and therefore, if one Party gains, it must be at the Expence of another.

103. Is not the Irregularity of the Distribution, and the Inequality of the Demand, under the System supposed in the last Answer, very injurious to the Country?

Frequently.

104. From what Circumstance do you draw the Conclusion, at any particular Period, that there is a Superabundance of Circulating Medium?

From the Market Price of Gold exceeding the Mint Price in those Countries where Gold is the Standard, and the unfavourable State of the Exchanges.

105. Is not the Market Price of Gold, and the State of the Exchanges, liable to vary, when there is no Variation in the Amount of the Circulating Medium?

The Rate of Exchange is; but the Market Price of Gold I think is not.

106. Does not the Market Price of the precious Metals vary at Hamburgh, when there is no Variation in the Amount of the Circulating Medium; but Payments are made by a Transfer of Credit on the Bank, representing a given Quantity of Silver of a given Fineness?

The utmost Limits of Variation to which Silver would be subject at Hamburgh, would be the Difference of Price at which the Bank purchases Silver, and the Price at which it sold it. And if the Bank of England were to fix the Price of £3 17s. 10½d. for the Rate of Gold, and the Price of £3 17s. 6d. for the Purchase of Gold, as proposed, I think that Gold could never vary but between those Limits.

107. Are not the Rates of Exchange affected by the Balance of Payments on all Accounts?

Yes, within the Limits of the Expence attending the Transmission of Gold.

108. Must not therefore a Part of the Depression of the Exchange between any Countries, be attributable to a Cause independent of the Amount of the Circulating Medium?

Very frequently, but the real Exchange would be in favour of the Country, while the nominal Exchange is against it.

109. Can you therefore conclude, from the Degree to which the Exchange is at any Moment against any Country, that the whole Per-centage of that unfavourable Exchange is owing to the Amount of its Circulating Medium?

A Part may be owing to other Causes. There is no unfavourable Exchange, which might not be turned in our Favour, by a Reduction in the Amount of Currency; it might not however be wise to make such a Reduction.

110. If a considerable Portion of such unfavourable Exchange were at any Time owing to the Balance of Payments being against us, would not a Reduction of our Circulating Medium, grounded on a Supposition that the unfavourable Exchanges was owing to its Excess, be productive of considerable Distress?

It might; but the best Criterion of an Excess of Circulation, is the Agreement of the Market Price of Gold with the Mint Price.

111. Would you then conclude, that when such Agreement exists there can be no Excess in our Circulating Medium?

There might be a temporary Excess in our Circulating Medium, but it would be attended with such a State of Exchange, as would make it profitable for Individuals to export Bullion, or Coin, which would have the Effect of reducing the Circulating Medium to its proper Limits.

112. Can such a State of Exchange be compatible with an Equality between the Mint Price and Market Price of Bullion?

If there was no Seignorage on Coin whatever, nor any Delay in returning Coin for Bullion at the Mint, it is quite compatible.

113. Would you conclude, then, that when not only the Market Price of Bullion does not exceed the Mint Price, but the Exchanges are also favourable or at Par, that there is no Excess of Circulating Medium?

It is quite possible, that under such Circumstances there might be a Deficiency of Circulating Medium, but there could not be any Excess.

114. You have stated that you consider the abundant Issue of Paper as having given Facilities to Speculation; do you conceive, that if on the Balance such Speculations have been unsuccessful, it would have been possible for so large an Increase to have taken place in the internal and external Commerce of the Country, as has occurred within the last 20 Years?

I think the Increase of the external and internal Commerce of the Country totally independent of those Causes.

115. To what Causes then do you attribute it?

To the Discovery of improved Machinery, and to the Industry and Ingenuity of our People.

116. You have stated that the most important Consideration in the Mode of returning to Cash Payments, was preventing the Currency being further depreciated; and if the graduated Scale were adopted you think the ultimate Effect would be anticipated; and with the Security which the Adoption of the graduated Scale would give, that the Bank must ultimately pay in Bullion at the Mint Price, there were Advantages in deferring the Period of the ultimate Reduction to that Price. Do you think, on the whole, that any Inconvenience would arise from prolonging that Period beyond the Period of 12 Months from July next, with a Security that at the different Stages of it the Plan would be put into Execution, sufficient to counterbalance the Convenience which such a Prolongation would give, by giving further Time to the Bank to increase its Treasures, by allowing more gradual Reduction of its Issues, and by enabling all Persons engaged in Commerce to accommodate their Transactions gradually to the new State of our Circulation?

I think the Advantages to be derived from a Prolongation of the Period would preponderate, provided the Public had complete Security, by obliging the Bank to sell Gold at the present Market Price, against a further Excess of Paper Circulation. I say the present Market Price, because I am averse to entrusting the Bank, for even the next Three Months, with the Power of raising the Price of Bullion.

117. Would not the Danger be completely obviated by providing, that on the 5th of July next the Bank should pay its Notes in Bullion at the present Market Price, and not at the Price at which it may then be?

Nothing could prevent it but gross Misconduct on the Part of the Bank.

118. Do you think the Balance of the Advantage of Prolongation would extend to a Period of Two Years from July next?

I think Two Years an ample Time; I should say a less Period; but it may be prudent to consult the Fears of even the most timid.

119. If the Period were to be so prolonged, what would in your Opinion be the best Gradation of Scale, both in Price and Time?

I should think the Price of Gold should diminish 6d. per Ounce at stated and equal Intervals.

120. Do you not think, that the longer the Time allowed the Bank for the Payment of their Notes in Cash or Bullion at the Mint Price, the more necessary the graduated Scale would be, as a Security to the Parliament and to the Public for the Accomplishment of their ultimate Object?

Certainly; without it we should not have complete Security that the ultimate Object would be attained.

121. As Part of the Advantages, to which you look, as facilitating the Operation of the Plan of a graduated Scale, arise from the Certainty which Dealers in Bullion will have, that Bullion will in a short Time be brought down to the Mint Price; would not those Advantages be in some Degree diminished, even by deferring the Period of that ultimate Operation for 6 or 12 Months longer than could really be necessary?

The Advantages would be diminished by deferring the Period: and I am only reconciled to a further Length of Time by a Consideration of the Fears which I think many People very unreasonably entertain.

122. As far, therefore, as your own Judgment goes, should you prefer the Period of One or of Two Years for the Operation?

I should prefer One Year.

123. Do the Prices of Commodities conform to the Fluctuations in the Market Price of Gold, or does not a Length of Time elapse before such Conformity takes place?

They do not immediately conform, but I do not think it very long before they do.

124. If the Prices of Commodities have not already fallen to a Level with the present Market Price of Gold, is it certain there will not be a greater Reduction in their Prices than 4 per Cent., on the Market Price of Gold falling to the Mint Price?

I think the Prices of Commodities fall from a Reduction of the Paper Circulation quite as soon as Gold falls. If the Prices of Commodities and of Bullion have not already fallen in proportion to the Reduction of Paper, I should think that, to make the Value of Bullion and Paper agree, a less Reduction of Paper would be necessary.

125. If the Bank should for their own Security think proper to make a further Reduction of their Notes to the Amount of Three Millions, between this Time and the Month of July next, what Effect would this have upon the Prices of Commodities?

I think a greater Effect would be produced on the Prices of Bullion, on the Currency and on the Prices of Commodities, than what is necessary to bring Bullion down to the Mint Price. Both Bullion and Commodities might probably fall 8 or 10 per Cent. No such Fall could take place if the Mint were open, or the Bank were obliged to buy Bullion at £3 17s. 6d. The Bank could not then reduce the Circulation Three Millions.

126. If, in consequence of large Foreign Payments, the Course of Foreign Exchanges should become more unfavourable, unless counteracted by a great Contraction of Bank Notes, would it not be necessary to make such Contraction for the Purpose of reducing the Market Price of Gold to the Mint Price?

It certainly would; but this is an Inconvenience to which our Currency was always exposed before 1797.

127. Might it not then be necessary for the Bank to make a Reduction of Three Millions between this and the 5th of July, notwithstanding the present favourable Tendency of the Exchanges?

Possibly it might.

128. Supposing the Bank not to think that they could engage with Safety to pay their Notes in Bullion at any specified Period, according to the present Market Price, without previously making a considerable Purchase of Gold, would not such Purchase have a Tendency to increase the Price of Bullion?

I think it would have such a Tendency; but I should not admit this Plea, for I should think it not founded on a Knowledge of the true Principles of Currency, the Purchase of any great Quantity of Gold being wholly unnecessary.

129. Has not the present Suspence of Commercial Transactions, in consequence of the Examination now taking place, the Effect, to a certain Extent, which a contracted Issue of Notes would have had?

I think it has.

130. If then that Suspence were relieved by a Decision one Way or the other, would not the Price of Gold have a Tendency to rise, unless it were counteracted by some further Reduction of Bank Notes?

It would very much depend on the Decision taken.

131. Would not the Danger of any improvident Diminution of Issues by the Bank during the Progress of these Operations, of which we have been speaking, be best obviated by applying to the Period of gradual Reduction the same Principle which you have proposed for Bullion Payments at the Mint Price, viz. an Obligation on the Bank to purchase Bullion at Prices bearing a fixed Proportion to those at which they are to deliver it?

It undoubtedly would; still I am inclined to recommend that the Price at which the Bank should be obliged to purchase Gold, should be at once fixed at £3 17s. 6d. The only Inconvenience that could arise from such a Regulation might possibly be a more rapid Diminution of the Amount of the Currency, than what a graduated Scale would require.

132. But if the Apprehensions of the Bank should so far exceed all just Reasoning on the Subject, as to lead them to make a sudden and excessive Diminution of the Currency, far beyond what the Necessity of the Case might require; might not such a Provision as above stated be useful, not only as a Corrective of the Evil, but also as an Indication to them of the real Circumstances of the Case?

The Provision above stated would afford a complete Security against a sudden and mischievous Reduction in the Amount of the Circulating Medium.

133. How would it afford that complete Security?

Without such a Provision the Bank might diminish their Issues till the Price of Bullion fell to £3 17s. 6d. per oz., with it they could only diminish them till it fell to the Price fixed for the Purchase on the graduated Scale.

134. Might not the Bullion Merchant under such Circumstances, by occasionally bringing forward their Gold to the Bank immediately before the Time at which the Price would be lowered for the Bank to make such Purchases, and by watching the Variations occasioned by the Increase or Diminution of the Issue of Notes, for the Purpose of meeting such Demand, throw great Confusion during the whole Time into the Market Price of Gold; and would not the Uncertainty in which the Bank would be placed, oblige them to withhold the Issue of their Notes on Discount to a considerable Extent?

I think, if the selling Price of Gold and the buying Price of Gold should be fixed too near to each other, the Bank might be exposed to this Inconvenience, but if they differ as much as a Shilling, no great Inconvenience would arise. As to the Question of Discount, the Accommodation to Commerce must depend on the whole Amount of the Circulation, and not on that Part of it which the Bank may issue in that particular Manner.

135. If the Bank were to be the only Market to which Persons would resort for Bullion, as distinguished from Coin, at a fixed Price; might there not be, under extreme Circumstances, a peculiar Run upon the Bank for that Article?

The Run upon them must necessarily be limited by the Amount of their Notes, because it is with their Notes only that the Bullion could be purchased. The Diminution of the Quantity of Bank Notes would increase their Value, and would consequently stop the Demand for Bullion. In this respect we should be precisely in the same Situation that we were previous to 1797, the only Difference would be, that we could then demand Coin, and now we should demand

Bullion; as Articles of Commerce they may be considered as the same.

136. Supposing the Bank to keep no more Treasure than what you consider would be necessary, or Three Millions of Bullion, might not a Run for Bullion to that Amount be made with so much greater Rapidity, than could possibly be made for the same Amount of Coin, as to expose the Bank to greater Danger in the new State of Things, than it could ever have incurred in the former?

Bullion could be drawn out of the Bank in a shorter Space of Time than an equal Amount of Coin, as there would be no Necessity for counting.

137. Might not a Demand for Bullion be made upon the Bank to that Extent, in so short a Space of Time, as not to allow of the Effect which a Diminution of the Quantity of Notes would have in raising their Value, to operate in Time to check such a Run?

I should answer, in no greater Degree than before 1797, and this could only happen in the extreme Case of a Panic, against which no System of Banking can possibly provide.

138. Do you think, on the whole, that the Danger of any such Panic would be increased or diminished, by making Bank Notes payable in Bullion for large Amounts only, or in Coin for the smallest Amounts, as before 1797?

If there is any Difference, I should think that the Danger of Panic would be less in the former Case than in the latter.

139. Would there be, in case of a Panic, less Eagerness to demand Bullion than Coin, if that were demandable?

I think there would be less Eagerness to demand Bullion.

140. Would not such a Demand be made, without any Reference to the Market Price of Gold?

Certainly.

141. Referring to Question and Answer (No. 84), you have stated, that our Currency and Prices have undergone, during the last Eight Years, much greater Variations than what you conceive would be now produced by the Resumption of Cash Payments; was not the Inconvenience which may have resulted at any of those former Periods, from the Fall of Prices, much mitigated by the unlimited Power then possessed by the Bank of increasing its Issues, without any regard to the Price of Gold and the State of Exchanges?

The Variations in the Value of the Currency, and in Prices, have generally been in a different Direction from that at present to be provided against; the Bank having the Power to issue Paper unchecked, could certainly mitigate the Inconvenience resulting from a sudden Fall.

142. When the Bank have lost that Power, might not the same Degree of Reduction of Currency which took place in former Periods produce a greater Reduction of Prices, and of course greater Distress?

Equal Effects would follow equal Amounts of Reduction; but when the Bank was unchecked, they had the Power of arresting that Reduction; an Advantage counterbalanced by other Disadvantages.

The Witness is directed to withdraw.

SPEECHES ON VARIOUS OCCASIONS

1811–1823

I

GENERAL COURT OF PROPRIETORS OF THE BANK OF ENGLAND1
21 March 1811

Mr. Cattley, the first speaker, ‘entered into a vindication of the Bank, against the attacks made upon them by the Bullion Committee, Mr. Huskisson and others. He said that the Bullion Committee should have examined into the causes of the high price of bullion, which they had wholly neglected to do—and it would not be just to require of the Bank to pay their notes in specie, whilst gold was at so high a price’.

Mr. Ricardo ‘then rose, and was proceeding to make some observations on the remarks of Mr. Cattley, when he was reminded by the Governor that there was no question before the Court.’

Mr. Ricardo said, that he would have wished to set the Honourable Proprietor right, with regard to some of the facts which he had stated respecting the Bullion Committee, but as such discussion was not thought admissible he would confine himself by putting a question to the Directors. He said that in the discussion of principles, it was highly essential that the facts by which those principles were ultimately to be tried, should be correctly stated. He had observed, however, that in the papers which had at different times been submitted to Parliament, there appeared facts which were at variance with each other, and of which he hoped the Court would receive some explanation. It appeared, he said, by a paper which was published in the Appendix to the Report of the Secret Committee of the Lords, that in October of the year 1795, the Directors stated the price of gold bullion to be 4l. 3s. to 4l. 4s. per ounce,2 although no traces of any such price could be discovered in any list that was published during that year; on the contrary, the price quoted in December of that year, in the list which Mr. Goldsmid, in his evidence, declared to be authentic, as he himself furnished the prices to it,1 was 3l. 17s. 6d. That further, in 1797 Mr. Newland, in his evidence before the same Secret Committee, had declared that he had known the Bank to give as much as 4l. 1s., 4l. 2s., 4l. 6s., and as high as 4l. 8s. per ounce and when asked on what occasion the Bank gave 4l. 8s. said it was about two years since, speaking then in March 1797.2 Mr. Ricardo said that there was a paper just laid before Parliament by the Bank, in which they stated, not the lowest, not the average, but the highest price which they had given for gold bullion from 1773 up to the present period. In this account it appeared that the Bank had never given more, from 1786 to 1800, than 3l. 17s. 10½d. per ounce.3 He found it difficult to reconcile this seeming contradiction, and he hoped the Directors would explain it.

Mr. Pearse, the Governor, ‘observed in reply, that the price being stated by the Directors to be 4l. 3s. or 4l. 4s. per ounce in the year 1795, did not afford any proof that the Directors of the Bank had purchased at that price. That 4l. 8s. being given, as stated by Mr. Newland, was, he believed, correct—it was by way of experiment in the beginning of the year 1796, and was obtained by their agent in Portugal, but which was discontinued after a small quantity had been purchased. That in a return which they had since made to the House of Commons, they had stated this and some other exceptions.’4

II

GENERAL COURT OF PROPRIETORS OF THE BANK OF ENGLAND1
21 December 1815

Mr. Bouverie moved ‘that an account be laid before a General Court...of the amount of the surplus profits of this Company’.

Mr. Ricardo warmly supported the motion, and wished to recal the Court to the consideration of the real question before them, which appeared to him to be, whether the system to be acted upon should be that which was prescribed by the law of the land, and by the Bank Charter, or whether the Proprietors should be deprived of that participation in the profits to which they were, both by the one and the other, so clearly entitled. It had been contended by the Gentlemen who had preceded him, that on the present extended scale of the commerce of the country, the profits of the Bank, instead of being divided among the Proprietors ought to go to an increase of its capital. Now, though he might be of opinion that a Bank, deriving its profits from the capitals of others, required no such increase of capital for itself, yet it was nevertheless a matter of indifference to him in which of the two modes the accumulated profits should be applied; all he contended for was, that the Proprietors had a right in the production of such accounts as would exhibit the actual amount of such profits, and that it might be a subject of future regulation how they should be disposed of.

Mr. Mellish, the Governor, ‘then rose and said that he felt he should be betraying his duty were he to answer the topics urged by the last speaker, as well as the mover; that the Company had all along placed great confidence in their Directors; and that if any reason were harboured for wishing to withdraw it, he begged that their accusation might be spoken out.’

The question was put, and ‘on a shew of hands was lost by about two to one.’

[The question was raised again before a General Court of Proprietors held on 21 March 1816 to declare a Dividend, when an amendment was moved for the adjournment of the Court until 28 March to enable the Governor and Directors to produce accounts showing the surplus profits. The amendment being defeated, a paper signed by eleven Proprietors, including Ricardo, was delivered to the Governor demanding a ballot on the motion of amendment. The ballot took place on 26 March and resulted in the defeat of the motion by 393 votes to 69.1 ]

III

GENERAL COURT OF PROPRIETORS OF THE BANK OF ENGLAND1
8 February 1816

Mr. Mellish, the Governor, stated that the object for which the Court was called together, was to consider a letter from the Government applying for an extension for two years of the loan of three millions now existing without interest, and for a new loan of six millions at 4 per cent for two years. Ministers intended to propose to Parliament that the restriction on cash payments be continued for one year. The Directors proposed complying with the application of Government. The Governor reminded the Court that ‘their engagements with the country, in so far as it regarded their chartered rights, were now near a termination, and therefore it was absolutely necessary that some understanding should be come to with Government’, in order to effect an arrangement, based on equity and good faith.

Mr. Ricardo wished to know whether it was understood that, at the expiration of the period of the loan, the Bank would continue in the custody of the money of the government? He was led to this inquiry by a paper laid before the House of Commons, in which the Directors seemed to claim the custody of the money as a right.2 Now, however, they seemed to have abandoned this claim.

Mr. Mellish ‘declined entering into any discussion on the topic alluded to by the hon. proprietor. He could not be expected to say what would happen two years hence. In the mean time a bargain must be a bargain.’

The motion was put and was ‘carried by a very large majority, there being only two or three hands held against it.’

IV

GENERAL COURT OF PROPRIETORS OF THE BANK OF ENGLAND1
18 March 1819

On the motion for a dividend, an amendment was proposed that no dividend should be declared until ‘an exposition of the funds, income, and expenditure of the Bank should be made to the Proprietors’. The Hon. Mr. Bouverie stated that the Bank had acknowledged the existence of a Reserved Fund, and the Proprietors ought to be informed of its amount. Sir Thomas Turton said that ‘it seemed absurd to vote a given dividend, without knowing the amount of the capital from which it was distributed’.

Mr. Ricardo was of the same opinion, and expressed his confident belief that the Bank were in possession of at least 5,000,000l., in addition to their known capital of 15,000,000l. It was not a fear of their poverty but a jealousy of their riches that had provoked inquiry. Whilst it was clear, therefore, that the proprietors had a right to know the condition of their affairs, it was equally manifest that no injury would arise from the disclosure. A letter which he had received from one of the directors of the Bank of France2 entirely accorded with his views.

After some further discussion Mr. R. Jackson said that demands for increased dividends might result in their restriction by Parliament, as had happened with the East India Company. While he did not doubt the motives of those who brought forward such motions, ‘it was still certain that patriotism, and a desire to impair the profits of the Bank, were not necessarily connected’.

‘Mr. Ricardo and Mr. Bouverie disclaimed any such object as that referred to by the hon. and learned gent., in the conduct formerly pursued at the East India House; and the former desired also to vindicate an absent member of their body1 from any supposed imputation of the kind.’

The amendments were negatived.

V

MEETING ON MR. OWEN’S PLAN2
26 June 1819

‘A very respectable and numerous meeting of both sexes was held in Freemasons-hall, for the purpose of taking into consideration the plan of Mr. Owen.’ The chair was taken by the Duke of Kent. After a speech of Mr. Owen, who explained his plan for the employment and improvement of the poor, the names of those who were willing to be members of the committee to investigate the plan were announced.3

Mr. Ricardo begged to trouble the Meeting with a few observations. As his name was placed upon the Committee, he should state shortly those circumstances in which he agreed and in which he differed from the preceding speaker. He completely concurred with him in the commendations bestowed upon the illustrious personage who presided at the meeting. It was an example of zeal for the public good, and of benevolent intention, worthy of the highest praise. In a limited degree he thought the scheme likely to succeed, and to produce, where it did succeed, considerable happiness, comfort, and morality, by giving employment and instruction to the lower classes. No person could admire more than he did, or appreciate more highly, the benevolence of his friend (Mr. Owen) to prosecute his plan with so much zeal, and at the expense of so much time and trouble. He could not, however, go along with him in the hope of ameliorating the condition of the lower classes to such a degree as he seemed to expect: nor should he wish it to go forth to the public that he thought that the plan would produce all the good anticipated from it by his sanguine friend. As a member of the Committee, he should do every thing in his power to forward the objects for which it was appointed.

At a subsequent meeting, held at the City of London Tavern on 26 July 1819, the Committee was finally appointed, Ricardo being a member. In August the Committee appealed for the subscription of £100,000 for the establishment of an agricultural and manufacturing community as an experiment on the lines of that at New Lanark. On 1 Dec. 1819, as the subscriptions amounted to less than £8,000, the Committee resigned and in a final resolution urged that the Government should facilitate the experiment by granting a portion of the Crown lands and using the funds raised for the relief of the poor.1

VI

GLOUCESTER COUNTY MEETING1
30 December 1820

‘One of the most numerous and respectable meetings of the County of Glocester which has been held for several years took place at the Shirehall, Glocester’. The object of the meeting was to consider an address to the King on ‘the illegal and unconstitutional measures’ taken by the Ministers in the late proceedings against the Queen. Lord Sherborne was called to the chair. The address having been unanimously adopted by the meeting,

Mr. Ricardo came forward and was received with marks of approbation. He said he was sure this meeting felt as he did respecting the conduct pursued on a late occasion in the House of Peers by their noble Chairman and by Lord Ducie2 (Loud cheers). The county he was sure could but feel one sentiment upon that conduct; it was entitled to their fullest and most unqualified approbation (Reiterated cheers). These noble Lords had in an independent and manly manner opposed his Majesty’s ministers during the prosecution of the Queen. It became the county to express their opinion of the conduct of the noble lords who had acted in so independent a manner, and his object at present was to propose to them a vote of thanks (Hear). He would take this opportunity of declaring his hearty approbation of the terms of the address, as well as those used by the gentlemen who had spoken upon it. Indeed, if he had any thing in the way of complaint to urge or cavil with, it was, that the address had not gone as far as it ought to have gone; for it appeared to him that many of the evils of which they complained were to be traced to the present constitution of the House of Commons (Applause). If that house fairly and fully represented as it ought the people at large, the country would not now have to deplore such an accumulation of wrongs (Applause). It would have been quite impossible for ministers to have pursued a career so diametrically opposite to the general opinion of the country; nor would a House of Commons, representing the general voice of the community, have suffered such a departure from the public wishes and interests. Entertaining, as he unequivocally did, such an opinion, he must say that he should have still more approved of the address, if it promptly and plainly recommended that no delay should be lost in making the House of Commons what it ought to be, and what its name imported it should be, namely, a representative of the public voice—an organ acting in sympathy with the tone of popular feeling, and constitutionally embodying and expressing the voice of the country at large in a full and unquestionable manner (Great applause). The hon. gentleman concluded by proposing a vote of thanks to Lords Sherborne and Ducie.

‘The motion was unanimously agreed to and followed by three cheers.’

VII

MEETING AT HEREFORD IN HONOUR OF JOSEPH HUME1
7 December 1821

A meeting in honour of Joseph Hume, M.P. was held at Hereford on 7 December 1821, to present him with ‘a superb silver tankard’ and ‘a hogshead of prime Hereford cider’, in recognition of his efforts in Parliament to lessen taxation and reduce corruption. Mr. E. B. Clive presided.

Addressing the meeting, Mr. Hume urged the people to resume their ancient right of control over their representatives in Parliament—the only remedy for the existing abuses in public expenditure. He later complimented Mr. Ricardo and other members ‘for the zealous assistance they had rendered him in Parliament’, and regretted that Mr. Ricardo had been so unjustly misrepresented as a friend of the fundholder and an enemy of the landowner.

The President spoke next and concluded by proposing ‘the health of one of the first political economists of this or any other age, Mr. Ricardo, who I am happy to say is a considerable freeholder amongst us.’2

Mr. Ricardo said, he felt highly gratified by the manner in which the mention of his name had been received by the respectable company before him, and begged to return his grateful thanks for the honour which had been conferred on him. With respect to the misapprehension of an opinion he had given, alluded to by his Honourable Friend Mr. Hume, he should endeavour in very few words to remove it, as he did not wish to occupy the attention of the company by any thing personal to himself. Thinking, as he did, that the national debt was a most oppressive burden on the industry of the country, he had, in his place in Parliament, expressed his opinion that it would be a measure of wisdom to submit once for all to a great sacrifice in order to remove it, and for that purpose recommended a general and fair contribution of a portion of every man’s property;1 not, as had been said, of the property of the landowner only, but of that of the merchant, the manufacturer, and the fundholder. He should have been ashamed of himself if any thing so unfair could ever enter his mind as that of exonerating the fundholder from the payment of his quota of so equitable a tax. On this subject he should say no more, as he fully agreed with his Hon. Friend, Mr. Price,2 that as this day was set apart for the purpose of acknowledging the services of Mr. Hume, questions wholly extraneous should be avoided. Of Mr. Hume’s services to the public, he entertained as high an opinion as any gentleman present; and as he had seen much of his persevering exertions, he could perhaps speak of them with more accuracy than many others. Mr. Hume’s exertions in Parliament had been unremitting as they all knew; but he had duties to attend also in different committees, and few could have a just idea of the number of documents which he had had to consult. When he considered the variety of accounts which came under his notice, and the voluminous reports which he had read, he believed he might say, that in persevering exertions, Mr. Hume had never been surpassed by any former or present member of Parliament. It was a pleasure to him (Mr. Ricardo) to reflect, that he had voted on all occasions in favour of economy; and while he had a seat in the House of Commons, he would continue to give his Hon. Friend his best support in opposing every wasteful expenditure of the public money. He concurred fully with the Hon. Chairman and with Mr. Hume, that a reform in the representation was of vital importance to the interests of the country.—Without it good government might truly be said to be impossible. To obtain a reform, then, every exertion should be made; but he recommended to those who heard him to consider well what constituted a real and efficient reform of the Parliament; for much error might and did prevail on this important question. The subject might be considered under three views—First, the extension of the elective franchise; secondly, the frequency of elections; and, thirdly, the mode of election. With respect to the first of these, the extension of the elective franchise, he did not consider it the most important object of the three he had mentioned, yet no reform could be an adequate one which did not greatly extend the elective franchise—for he should be contented if it went so far as householder suffrage. Upon the second point, frequency of elections, he should say that without it there would be no check in the hands of the electors against the corruption of the members. If elections were not frequent, we should not very materially improve our system, and if they were, it would be but reasonable to allow each member to act as he thought proper, notwithstanding the known sentiments of his constituents—those constituents would have the power to displace him at the following election. With respect to the third point, the mode of election, he thought that of the greatest importance on a question of real reform. To secure a real representation of the people in Parliament, there must be secrecy of suffrage, or as it was commonly called election by ballot. It was nothing but mockery and delusion to pretend to give the right of voting to a man, if you prevented him from exercising it without control. Let the kind offices and superior talents of those above him in station have their due effect in influencing his will—this was a just and legitimate influence, but do not subject his will to the will of another. If you do it, it is not his vote you obtain, but the vote of another man, and it would be better and more honourable to give it to that man in the first instance. He (Mr. R.) had thought much on this subject: he had attentively considered all the objections which were brought against voting by ballot, but he could see no weight in them. He hoped whenever the important subject of reform came under the consideration of the gentlemen present, they would not fail to pay due attention to this vital security for good government.

‘Mr. R. concluded amid loud cheers.’

VIII

WESTMINSTER REFORM DINNER1
23 May 1822

‘The Independent Electors of Westminster held their 15th anniversary dinner at the Crown and Anchor Tavern, in commemoration of the patriotic struggle, which terminated in the election of Sir Francis Burdett as their representative in Parliament.’ Sir Francis Burdett was in the chair, and, after several other toasts, he proposed the health of ‘Mr. C. H. Hutchinson,2 Mr. Ricardo, and the reformers of Ireland.’ After a speech of Mr. Hutchinson,

Mr. Ricardo, in returning thanks, declared that there was not in the room a more real friend to the cause of reform than he was. He was a friend, not to a sham reform, but a real one, which would give to the people a majority, and more than a majority, in the House of Commons. This desirable and most necessary end might still, he thought, be attained in the House of Commons; not, indeed, by any efforts of the members within doors, but by the exertions of the people without—exertions which would compel attention, and which must be obeyed. He fully agreed with the noble lord (Nugent) that it was a silly question to ask the reformer to put his finger on the page of history which he deemed his model. His plain answer would always be, that the people had a right to demand the best government they could obtain in their own times, and that if their ancestors had refrained from asking it, it was no reason why their posterity should.

IX

GENERAL COURT OF THE EAST INDIA COMPANY1
12 June 1822

A Special General Court of Proprietors of the East India Company was held ‘to consider a Bill pending in Parliament, for consolidating the several Laws relating to the Private Trade with the East-Indies; and also to consider the propriety of concurring in the repeal of the law by which ships under the burden of 350 tons are at present precluded from engaging in such trade from the United Kingdom.’ Mr. C. Forbes, who opened the debate, said that the East-India interest was not as powerfully represented in Parliament as the West-India interest; he thought it would be good policy if all the Directors were provided with seats in the House of Commons.

Mr. Ricardo regretted the absence of the gentlemen who usually spoke from that part of the Court, and more particularly of Mr. Hume, who was obliged to attend a Committee of the House of Commons, and could not, in consequence, take a part in the discussion; he hoped, however, that the Court would favour him with their attention while he made a few observations. The Hon. Proprietor who had just spoken1 had very properly observed, that, in the House of Commons, the interest of the public only should be looked to; that the Members of that House ought not to be swayed by a partiality for the East or the West-India interest. He admitted that it ought to be so; but that man must be blind, who would say, that the House of Commons, as now constituted, performed its duty in that immaculate manner which the Hon. Proprietor described.

Mr. Lowndes rose to order.

Mr. Ricardo assured the Court he would not say another word on the subject. An Hon. Proprietor (Mr. Robertson) seemed to be adverse to opening a free-trade with all European states. If that were the question before the Court, he would willingly meet him on the subject. But the question was not, whether France or Spain should be allowed to enter into the India trade; it was one which entirely concerned English interests. The Gentleman who opened the debate, said he asked only for justice and equality; he wished to be placed on the same footing as the West-India merchant; he did not seek for a monopoly. In those views he (Mr Ricardo) entirely concurred; and, if he wanted to prove their truth and policy, he would refer to the speech of the Hon. Proprietor (Mr. Robertson); for he had shewn that, by taking off restrictions, the trade to the Brazils and to the free-states of South America had increased in a wonderful degree; and, in doing so, he had himself pronounced the warmest eulogium on unrestricted trade. He thought no country could trade advantageously, if she placed restrictions on the commodities with which any state, to whom she was commercially related, could furnish her. It was in vain for the Company to think of sending their goods to India, unless they could take what India was enabled to afford in return. (Hear, hear!) This position was so clear and self-evident, that he wondered any man could doubt it. If all restrictions were removed from the commerce of the country, and it was left to pursue that course which its own active principle would strike out, it would, most assuredly increase in an almost infinite degree. He had no hostility to the West-India interest; on the contrary, he participated in the feelings of regret which their sufferings excited; and if he could assist them, without doing so at the expense of others, he would not be found tardy in affording relief: but he would not support them at the expense of other interests. The buying their sugar at an advanced price was not the only disadvantage which the country suffered from the system. For his own part, he would give to them the difference in price between the East-India and the West-India sugar, as a gratuity, rather than suffer this unjust privilege should be granted to the West-India interest. (Hear, hear!) An Hon. Gentleman (Mr. Carruthers) had protested against the charge that had been levelled at his Majesty’s Ministers, who were said to entertain the intention of giving to one class of persons an unjust advantage over another. That Hon. Gent. seemed to have a very high opinion of his Majesty’s Government. Perhaps he also thought that they meant well. But Gentlemen must shut their eyes, if they did not perceive, that Ministers were not unfrequently obliged to favour particular interests. The power some bodies possessed, the clamour they raised, the interest they commanded in the House of Commons, frequently compelled Ministers to adopt a course which they did not think a proper one. They had an instance of this in the last week. A bill, altering the navigation laws, was passing through the House, and Ministers wanted to carry a clause relative to the importation of thrown silk; but, with all their efforts, they were unable to succeed. In that case Ministers could not carry a point, which appeared to him to be correct. He wished to see a House of Commons free from party, where the interest of the public would alone be considered, in which a deaf ear would be turned to all partial application. (Hear, hear!)

X

GENERAL COURT OF THE EAST INDIA COMPANY1
19 March 1823

After the quarterly meeting the General Court of Proprietors resolved itself into a Special Court, at the request of nine Proprietors (including Ricardo), ‘to take into consideration the present state of the East-India sugar trade’. Mr. C. Forbes moved:

‘That it appears to this Court, that since the repeal by the act of last session of Parliament, of the restrictions formerly imposed on the West-India trade, no pretension exists for any exclusive protection to the sugars of the West-Indian colonies against those of British India.

‘That as the present unequal duties on the sugars of the East and West-Indies terminate in March 1824, this Court do earnestly recommend to the immediate attention of the Court of Directors the necessity of using their strenuous efforts with his Majesty’s ministers, to obtain an equalization of the said duties.’

Mr. Forbes said that Mr. Whitmore intended to bring this subject under the consideration of Parliament after the recess.1 Mr. A. Robertson, opposing the motion, raised again the question of shipping which had been debated the previous year.2

Mr. D. Ricardo said, he could not follow the Hon. Gent. in his observations with respect to ships of small tonnage; at the same time he thought it was a question of very great importance. The Hon. Gent. had entered into a great number of arguments, in order to dissuade the Court from agreeing to the resolution now under discussion. If he had heard the Hon. Gent. in any other place, or if he had been ignorant of his sentiments, he should indeed have conceived that the Hon. Gent. was addressing an assembly of West-India planters, for he (Mr. Ricardo) should use precisely such arguments as the Hon. Gent. had done, in order to overturn their claims. (A laugh!) The Hon. Gent. had stated truly, that when there was a surplus of sugar in this country, prices must be higher on the continent than here, to induce the merchant to export it; but he would ask the Hon. Gent. was that any reason why an unsound principle should be contended for? He would ask of the Hon. Gent., and of those whose cause he espoused, ‘Are you afraid to give equal rights and an equal protection to all classes of His Majesty’s subjects?’ (Hear!) The Hon. Gent. had also stated, very correctly, that the mere enumeration of exports and imports would not give a true idea of the commerce which one particular country carried on with another. They might export to a country, but it did not follow that that country should pay in a direct manner: because the exporting country might wish to receive the proceeds in commodities which were the growth of another state. The Hon. Gent. said, this was a mere question between the agents of different interests: he (Mr. Ricardo) thought otherwise. He viewed it in the light in which it was regarded by the Hon. Director before him (Mr. Bebb), and he could view it in no other. He considered it to be a question in which the public were the great parties concerned; (Hear!) for he should not have appeared in that Court, he should not have interfered, or raised his voice on this question, but in behalf of the public. (Hear!) It might be very true, that the price of sugar was so low as not to encourage its cultivation; it might be very true that it did not fetch a remunerating price: but were not arts resorted to for the purpose of raising the price? It was acknowledged that there were. And was not a hope held out in some publication, that, by diminishing the supply, the planter might get firm hold of the home-market, keep it without a surplus, and then raise the price as he pleased? Now, he would ask, had the people of England no interest in all this? Had they no interest in procuring their sugar from other countries, and preventing the continuance of this most odious monopoly? They were called on, as the ground for their decision, to compare the exports and imports with reference to the East and West-Indies: but that mode did not satisfy his understanding. He asked, what was the object of this measure? It was to procure sugar at a cheaper rate; and, if it were made manifest to him that, by adopting it, they would make sugar cheaper, he would throw open the trade, although they exported millions of manufactures to the country which at present monopolized it. He thought the Hon. Gent. had encumbered the subject with many things which did not belong to it. He took a large view of the question, with reference to the greater likelihood of retaining our East-India or our West-India possessions. If they entered into these subjects, as connected with the question before them, they would be totally unfit to decide on it, so extremely difficult were they of solution; and he must say, that, for his own part, if he could not give a sound opinion on this particular question, without well understanding the subjects which the Hon. Gent. had brought forward, he would not attempt to give an opinion at all; but, if he thought that the East-Indies or the West-Indies would be severed from this country in a month, it would not alter the vote that he would give: for, would it not still be to the interest of India to send her sugars to this country if she were placed under the Government of any other power? Certainly it would; and, therefore, the parties immediately concerned had little to do with this point. (Hear!) He again asserted, that the public interest was concerned. He would go farther than either of the contending parties were inclined to go. He thought no exclusive protection should be granted to either the East or the West-Indies, and that we should be free to import our sugar from any quarter whatsoever. No possible injury could arise from this. The Hon. Gent. also alluded to another subject, but in a manner which he (Mr. Ricardo) was sorry to hear. He professed his love for freedom of trade, as the principle under the influence of which commerce was sure to prosper; but then he made so many qualifications that he quite lost sight of his original proposition. (A laugh!) He would protect the monopoly of the landed interests, he would protect the monopoly of the tea-trade; and several others, all of them, he believed, just as objectionable as the very monopoly they were discussing. With respect to the shipping-interest, no argument appeared to him to be so weak as that adduced by them. They asserted that, by the adoption of this measure, the shipping of the country would be greatly reduced. But could they get sugar from the East-Indies without shipping? and was not the voyage much longer? Every view he could take of this subject proved to him that those interested in shipping, would be particularly benefited by the proposed equalization. There were some other points to which he meant to call the attention of the Court, particularly with respect to cotton. The Hon. Gent. had instanced the cotton-trade, and argued that by the aid of machinery, by importing cotton from America, and by exporting the manufactured goods to India, great injury was inflicted on the manufacturing class in that country. Undoubtedly some injury was done to that class; but one would think the Hon. Gent. would have turned his attention to the accompanying good. He would ask the Hon. Gent. in what commodities those exports were paid for? Those who exported must have got a return in something else they had not before had. If we send cotton goods to India, they must be paid for. Our cotton goods were purchased with other manufactures; new branches of trade were thus struck out, and both countries were ultimately benefited. The one country was employed in making machinery and working it, and the other in fabricating those manufactures by which our cottons were paid for. Instead of pointing out in what line capital should be employed, he thought it would have been as well if the Hon. Gent. had left that point to be settled by the individual. (Hear!) It was undoubtedly very kind of the Hon. Gent. to lecture those who might be inclined to embark their capital in the East-India sugar-trade; (A laugh!) it was very considerate of him to warn them of their danger; and he thanked the Hon. Gent. for his admonition. (A laugh!) But he could not think, at this time of day, when they had advanced so far in commercial knowledge, that the Hon. Gent. was perfectly competent to decide on the manner in which capital should be laid out (Hear!) Indeed, he seemed anxious to apply the customs of the East to the commerce of Europe, and to keep the same system going on, from father to son, without variation, to all eternity. (Hear!) An Hon. Gent. (Mr. Tucker) had alluded to the subject of slaves, and declared that he was proud to be an Englishman, more particularly in consequence of what had occurred in the last few months. In truth, he had reason to be proud of it. No man could possibly value this country more than he did. It had signalized itself gloriously a thousand times. But he confessed that he really was inclined to blush with shame, to hide his face, when West-India slavery was mentioned. (Hear!) It was a stain on the otherwise pure character of the country, which he ardently desired to see wiped away. (Hear!) The question of slavery was one of infinite importance. It well deserved the consideration of the country. He meant to cast no imputation on the planters; it was the infamous custom, the shocking system, against which he directed his reprobation; for, surely it was impossible that any man could, for a moment, reflect on the treatment and punishment of slaves without shuddering. (Hear!) It was this country that had to answer for the continuance of that abominable system. On this day, he believed, a petition would be presented to Parliament by a most benevolent individual (Mr. Wilberforce) in favour of that unfortunate race of men, who were subjected to the horrors of slavery. He hoped the application would produce its just effect, and that this grievous stain would be removed from the national character. (Hear!)

Mr. Robertson explained that ‘he had not attempted to direct individuals how they were to dispose of their capital’.

Mr. Ricardo said, when he spoke of the Hon. Gent.’s offering his advice as to the disposition of capital, he did not mean it in any invidious sense.

XI

WESTMINSTER REFORM DINNER1
23 May 1823

‘The Anniversary Dinner of the Electors of Westminster, in commemoration of the establishment of their Independence in the Election of Sir F. Burdett, took place at the Crown and Anchor Tavern. At five o’clock upwards of 400 persons sat down to a very substantial dinner.’ Mr. J. C. Hobhouse took the chair, in the absence of Sir F. Burdett who was prevented from attending by illness.

The first toast proposed was, ‘The People, the only source of legitimate power’ (applause).

The next was ‘The King, and may he always recollect his declaration, that he holds the Crown in trust and for the benefit of the people’ (with three times cheers).

Mr. Ricardo next rose and said, a toast had been put into his hands, which he should give with the greatest pleasure— ‘The only remedy for the national grievances, a full, fair, free, and equal Representation of the People in the Commons’ House of Parliament.’ To him it appeared that such a representation of the people was absolutely necessary, as a check and security against misgovernment. It was absolutely necessary that we should have a House of Commons which should represent the people fully and efficiently, instead of representing only a small portion of the people of England. Great difference of opinion existed and might very fairly exist as to the extent to which the Elective Franchise should be carried. A numerous class of persons in this country thought that it should be extended to the whole of the people; others thought it would be sufficiently extensive if given only to householders. Between these two opinions there was much debateable ground; he did not think this a point of such essential importance, as some appeared to consider it, and in his opinion there would be sufficient security for good government if the Elective Franchise was extended no farther than to those who paid direct taxes, or who were fairly called householders. What he considered a point of much greater importance was, that to whatever classes the elective franchise might be given, the privilege should be fairly exercised by those classes (applause). They ought not to be in any degree influenced by those who were superior to them in rank or fortune. He did not deny to the higher classes the fair influence arising from talents, property and good offices, but he did deny to them the privilege of dictating to Electors in the exercise of the elective franchise. He did think it of the utmost importance that the elective franchise should be exercised in such a manner as to give the most complete security, that the votes given should be the real votes of the people. It was said by Mr. Fox in the House of Commons, that he should be a friend to Universal suffrage if he knew any mode by which the real votes of the people could be effectually obtained under such a system, but he objected to Universal Suffrage because he was satisfied that it would in reality give a greater power to the Aristocracy than it at present possessed. In that opinion of Mr. Fox, he (Mr. R.) should entirely concur, if he did not think that there was an easy and practicable mode of securing to the people the free choice of their Representatives. The mode he alluded to was that of secret suffrage, or what was commonly called voting by ballot (applause). By the establishment of such a system he was fully persuaded, that we should have a House of Commons which would fairly express the opinions of the people; and that no measures would originate in such a House of Commons which had not the good of the people for their object. It was to him a subject of congratulation that so small a change as this would secure to the people of this country all the blessings of good government. We were not in the situation of other countries, which in order to obtain those blessings were compelled to go through all the horrors of a revolution. We were so happily situated that nothing but a rational and practicable Reform was wanting to put us in possession of all the blessings we could desire. He knew, it was objected to them, that if they had such a House of Commons as this the Crown and the Aristocracy could no longer exist. He believed no such thing; he believed the people of this country were attached to their institutions. Let them have no motive for changing those institutions, and that attachment would remain. Englishmen were not naturally fond of change; they were not a fickle people; on the contrary, they rather endured abuses too long (applause). There was another security for good government, which he should have been sorry to have forgotten on this occasion. Our Parliaments should be frequently chosen (applause). Without frequent Parliaments there was no security for liberty. It could not be denied that we possessed in this country a good deal of practical liberty, though it was not administered in the way which would contribute most effectively to the happiness of the people. While a free press, and the privilege of meeting to discuss their grievances remained, even shackled as those privileges now were, this country could never be said to be entirely without liberty. The perseverance of the Electors of Westminster had set a great example to the rest of the country, and he trusted the time was not far distant when their firm, consistent, and persevering efforts in the cause of Reform would be crowned with success. The Honourable Gentleman concluded by giving ‘A full, fair and free Representation of the People in the Commons’ House of Parliament.’

TWO PAPERS ON PARLIAMENTARY REFORM

NOTE ON TWO PAPERS ON PARLIAMENTARY REFORM

These two papers were published posthumously by M^cCulloch in the Scotsman newspaper.

The Observations on Parliamentary Reform appeared in the issue of 24 April 1824, together with an editorial article which opened: ‘We shall be excused, we trust, for taking some pride, in being able to state, that our leading article of to-day is from the pen of the late Mr Ricardo; and when we have made this announcement, it is almost unnecessary to add, that, from what is due to the memory of the author, as well as to the public, the Essay has been printed verbatim, and without the alteration of a word or syllable, from the manuscript.’

M^cCulloch reprinted it, under the same title, in his edition of Ricardo’s Works, 1846, with the following note: ‘The manuscript of the following Essay on Parliamentary Reform was given by Mr Ricardo, a short time before his death, to Mr M^cCulloch. The latter, not thinking it right that so important a paper should be withheld from the public, printed it in the Scotsman of the 24th of April 1824.’

The Defence of the Plan of Voting by Ballot appeared in the Scotsman of 17 July 1824, which introduced it with the following paragraph: ‘The following Report of one of Mr Ricardo’s speeches in Parliament—most probably the one he delivered on the 24th April, 1823, in the debate on Lord John Russell’s motion—written in his own hand, was found among his manuscripts subsequently to his death. His friends have kindly communicated it to us, and we now publish it verbatim from the manuscript, without alteration of any kind whatever. Mr Ricardo was always a decided supporter of the system of election by ballot; and he has here stated, with that brevity, clearness, and comprehensiveness of view peculiar to himself, the grounds on which he approved of that system. We will not presume to say that Mr Ricardo has entirely obviated all the objections that have been urged against the ballot; but every one will readily allow that his defence of it is most able and ingenious, and that he has said almost all that can possibly be said in its behalf.’

M^cCulloch reprinted this paper, with the note, in his edition of Ricardo’s Works, under the title ‘Speech on the Plan of Voting by Ballot’.

Professor Cannan, referring to M^cCulloch’s supposition that this was a report of Ricardo’s speech on 24 April 1823 in the debate on Lord John Russell’s motion, says: ‘That McCulloch had not taken the most ordinary pains to verify a haphazard conjecture by referring to Hansard is shown by his use of the words “most probably”; that he had not taken the trouble to read the speech which he was reprinting is shown by the fact that it talks of “the Bill”, and is particularly addressed to criticism of two “clauses” in the Bill.1 If Hansard is to be trusted, it was never delivered.’2

Not only was the speech never delivered, but it appears that it was not written for delivery, having been almost certainly composed before Ricardo entered Parliament. The latest date for its composition is fixed by its allusion to the law ‘against the exportation of the coin’ as being ‘on our statute-book’.3 The law was repealed early in July 1819, and its existence could hardly have been used as an argument by Ricardo after 26 May 1819 when Peel’s Resolutions for the Resumption of Cash Payments, which recommended the repeal, were adopted by the House of Commons. Now, between February 1819, when Ricardo took his seat in Parliament, and this date, the question of Reform did not come before the House in any shape.

In 1818, however, when Ricardo was negotiating for a seat in Parliament, the question of Parliamentary Reform was a constant subject of discussion with his friends. In May he had daily walks with Mill in Kensington Gardens, and he wrote to Malthus ‘we could make a very tolerable reformer of you in six walks if your prejudices be not too strongly fixed.’4 Trower, when on a visit to London, joined in some of these walks1 and after his return to the country continued the discussion with Ricardo by letter. In August Mill went on a visit to Ricardo at Gatcomb and in September they were both in London for a fortnight, always continuing their discussions.2

A comparison of the Ricardo-Trower correspondence in the summer of 1818 with the Observations on Parliamentary Reform and the Defence of the Plan of Voting by Ballot points to the two papers having been also written in 1818. This is confirmed by a comparison with his later speeches on Reform, which he actually delivered in Parliament on 18 April 1821 and 24 April 1823;3 in these speeches he put forward proposals identical with those of the Observations and the Defence, but he omitted certain arguments which were relevant to the political situation of 1818 but would have been uncalled for in 1821 and 1823. Thus the argument in favour of the ballot in the letter to Trower of 27 June 1818 that ‘we should get rid of the disgusting spectacle of the lowest blackguards in every town assembling about the Hustings, and insulting in the grossest, and most cruel manner, those respectable candidates against whom their antipathies are excited’,4 which is echoed in the Defence of the Ballot,5 but not mentioned in the later speeches, was occasioned by the behaviour of the mob at the Westminster election in June 1818. Also, both in his letters to Trower of 1818 and in the Observations Ricardo finds it necessary to defend his proposals for Reform against the charge that, ‘by extending the franchise, you open the door to anarchy, for the bulk of the people are interested, or think they are so, in the equal division of property, and they would choose only such demagogues as held up the hope to them that such division should take place’6 —a danger which is not referred to in the speeches of 1821 and 1823. The fears entertained in the disturbed years 1818 and 1819 by ‘those who have property to lose’,7 had by that time largely disappeared.8

If the supposition that the two papers were written in 1818 is accepted, they may be identified as two of the ‘Discourses’ which Ricardo wrote at the instance of Mill as an exercise in speech-making before entering Parliament. In a letter of 23 September 1818, written from Bagshot and occasioned by the successful conclusion of the negotiations for Ricardo’s seat, Mill urges him to familiarise his mind with the things which must go to the composition of ‘good government’. ‘Then’ he writes ‘there will be no fear about the language in which your thoughts will spontaneously clothe themselves. Let those discourses, therefore, which we have so often talked about, be written without delay.’1 He then gives detailed instructions on the method of composition, and adds: ‘When the writing is done, you should talk over the subject to yourself. I mean not harangue, but as you would talk about it in conversation at your own table; talk audibly, however, walking about in your room.’ The discourses were to be sent to Mill, who would be ‘the representative of an audience, of a public’.2 By 26 October Mill had heard from Ricardo that he was about to begin writing,3 and by 18 November, having returned to London, he had received and read two discourses.4 A third discourse was written shortly after, according to a letter from Mill of 4 December, but does not appear to have been sent to Mill.5

The fact that the Defence of the Ballot is in the form of a parliamentary speech suggests that Ricardo wrote it for a fictitious debate on a Bill for the Reform of Parliament in which he imagined himself to be taking part,1 attributing to previous speakers the objections which were then current.2

Since the above has been in proof, the original MS of the two papers has been found with the Mill-Ricardo papers. It consists of a quire written over 38 pages in Ricardo’s hand, containing four items:

1. ‘Extract of a letter from Hutches Trower to D. Ricardo dated 18 Oct^r. 1818.’

2. ‘The answer to the above (dated 2^d. Nov^r. 1818).’

3. Defence of the Plan of Voting by Ballot.

4. Observations on Parliamentary Reform (3 and 4 have no titles in the MS).

This combination confirms the conjecture that the papers were written in 1818.

Besides, from Ricardo’s letter to Mill of 8 November 1818, we learn that of the ‘two discourses’ mentioned by Mill on 18 November one was a copy of the letter to Trower of 2 November and the other ‘a subsequent paper which I have just written’. The latter we may suppose, from the sequence in the MS, to be the Defence. The Observations would then be the third discourse of which Ricardo thought so ill that, after announcing in his letter to Mill of 23 November 1818 that he was sending another of his ‘wise discourses’, he added in the postscript: ‘On looking over the papers which I was going to send you, I am so discontented with it that I cannot send it.’ In the end, however, he sent it: ‘yesterday I dispatched to you the paper on reform ... of which I was ashamed at the moment that I was about to enclose it.’ (Letter to Mill, 28 December 1818.)

The text printed in the Scotsman contains occasional changes in wording which, though slight, are not likely to have been introduced by the printer: this suggests that the two papers were printed from copies corrected by Ricardo or possibly by Mill or M^cCulloch. Therefore the text below adheres to that of the Scotsman, except for the correction of a few misprints.

OBSERVATIONS ON PARLIAMENTARY REFORM1
By the lateMr. Ricardo

A monarch, or any other ruler, wishes to have no other check on his actions but his own will, and would, if he could, reign despotically, uncontrolled by any other power. In every country of the world some check, more or less strong, exists on the will of the Sovereign, even in those Governments which are supposed to be the most despotic. In Turkey, and at Algiers, the people or the army rise up in insurrection, and frequently depose and strangle one tyrant, and elevate another in his place, who is checked in his career by a dread of the same species of violence.

The only difference, in this point, between the Governments of countries which are called free and those which are called arbitrary, is in the organization of this check, and in the facility and efficacy with which it is brought to bear upon the will of the Sovereign. In England the Monarch’s authority is checked by the fear of resistance, and the power of organizing and calling forth this resistance is said to be in the aristocracy and the people, through the medium of the two Houses of Parliament.

It is undoubtedly true that the Monarch would not long venture to oppose the opinion decidedly expressed by the House of Commons, and therefore he may be said to be checked and controlled by those who appoint the House of Commons. All great questions are decided in the House of Commons; the House of Lords seldom gives any opposition to important measures to which the other House has given its sanction. Nor, when the constitution of that House is considered, is such opposition necessary, for the House of Commons is not appointed by the people, but by the Peers and the wealthy aristocracy of the country. The really efficient power of Government is, then, in the hands of the wealthy aristocracy, subject, indeed, to an irregular influence which I shall presently explain. What is the consequence of this?— A compromise between the aristocracy and the monarchy; and all the power and influence which Government gives are divided between them. The Monarch has the appointment to all places of trust and profit—to the Ministry—to the army and navy—to the courts of law; he has also the power of appointing to many other lucrative situations, such as ambassadors, heads and subordinates of public offices, &c. &c. Notwithstanding this great power, his measures can be controlled by the House of Commons, and, therefore, it is of importance to Government to get a majority in that House.

This is easily obtained by giving a portion of these lucrative places to those who have the choice of the majority of the House of Commons; accordingly, it is well known that no means are so effectual for obtaining situations of trust and profit from the Crown as the possession of Parliamentary influence; and, as the appetite for lucrative places is insatiable, both in Ministers and their followers, and the oligarchy and their’s, places are often created for the men, and others are frequently continued after they have become unnecessary, for the advantage solely of these favoured individuals. If, then, there were no other check on both these bodies, England would not have to boast of a better Government than what exists in those countries in which it is called despotic. But, happily, there is another check, and that a tolerably efficient one, which is with the people, and would not, without a violent struggle, be wrested from them. The check on this Government, which operates on behalf of the people, is the good sense and information of the people themselves, operating through the means of a free press, which controls not only the Sovereign and his Ministers, but the Aristocracy, and the House of Commons, which is under its influence. This is the great safeguard of our liberties. Every transaction of the great functionaries of the state is, by means of the press, conveyed in two days to the extremities of the kingdom, and the alarm is sounded if any measure is adopted, or even proposed, which might in its tendency be hurtful to the community. This check, then, like others that we have been speaking of, resolves itself into the fear which government and the aristocracy have of an insurrection of the people, by which their power might be overturned, and which alone keeps them within the bounds which now appear to arrest them. The press, amongst an enlightened and well-informed people, is a powerful instrument to prevent misrule, because it can quickly organise a formidable opposition to any encroachment on the people’s rights, and, in the present state of information, perhaps there would not be found a minister who would be sufficiently daring to attempt to deprive us of it. This power, however, is irregular in its operation. It is not always easy to rouse the people to an active opposition to minor measures, which may be shewn to be detrimental to their interests—neither is it powerful, on ordinary occasions, in getting a repeal of those laws, which, however detrimental, have been long in force, and therefore it is in a certain degree braved. In spite of the thunders of the press men continue to be placed in parliament whose interests are often at direct variance with the interest of the people. The offices of state, and the lucrative situations under government, are not bestowed according to merit; bad laws continue to disgrace our statute-book; and good ones are rejected, because they would interfere with particular interests—wars are entered into for the sake of private advantage, and the nation is borne down with great and unnecessary expenses. Experience proves that the liberty of the press is insufficient to correct or prevent these abuses, and that nothing can be effectual to that purpose but placing the check in a more regular manner in the people, by making the House of Commons really and truly the representatives of the people. Of all the classes in the community the people only are interested in being well-governed; on this point there can be no dispute or mistake. Good government may be contrary to the interests of the aristocracy, or to those of the monarch, as it may prevent them from having the same emoluments, advantage, or power, which they would have if government was not busied about the happiness of the many, but chiefly concerned itself about the happiness of the few, but it can never be prejudicial to the general happiness.

If, then, we could get a House of Commons chosen by the people, excluding all those, whether high or low, who had interests separate and distinct from the general interest, we should have a controlling body whose sole business and duty it would be to obtain good government. It is not denied that, in innumerable instances, the interest of the aristocracy and that of the people will be the same, and therefore many good laws and regulations would be made if the aristocracy were to govern without control. The same may be said of the Monarch, but in many important instances they will also be opposed, and then it is that we shall look in vain for good laws and for good government. A reform in the House of Commons then, the extension of the elective franchise to all those against whom no plausible reason can be urged that they have, or suppose they have, interest contrary to the general interest, is the only measure which will secure liberty and good government on a solid and permanent foundation. This is so self-evident that one is surprised that an argument can be offered against it; but, to do the opponents of this measure justice, they do not advance any direct argument against it; their whole endeavour is to evade it.

A House of Commons such as you contend for, they say, would be a good, but how are you to obtain it? Has not the country flourished in spite of the imperfections you mention, and why would you wish to improve what is already demonstrated to be so good? The House of Commons is not chosen by the people generally, but it is chosen by men who have received a good and liberal education—whose characters are unimpeachable, and who are much better judges of what will conduce to the happiness of the people than they themselves are. By extending the franchise you open the door to anarchy, for the bulk of the people are interested, or think they are so, in the equal division of property, and they would choose only such demagogues as held out the hope to them that such division should take place. To which it may be answered, that although it be true that the country has flourished with a House of Commons constituted as ours has been, it must be shewn that such a constitution of it is favourable to the prosperity of the country, before such an argument can be admitted for its continuance. It is not sufficient to say that we have been successful, and therefore we should go on in the same course. The question to be asked is, notwithstanding our success has there been nothing in our institutions to retard our progress? A merchant may flourish although he is imposed upon by his clerk, but it would be a worthless argument to persuade him to keep this clerk because he had flourished while he was in his employ. Whilst any evil can be removed, or any improvement adopted, we should listen to no suggestions so inconclusive as that we have been doing well. Such an argument is a bar to all progress in human affairs.

Why have we adopted the use of steam engines? It might have been demonstrated that our manufactures had flourished without them, and why not let well enough alone? Nothing is well enough whilst any thing better is within our reach; this is a fallacy which can only be advanced by the ignorant or designing, and can no longer impose on us.

What signifies, too, the unimpeachable characters and the good education of those who choose the members of the House of Commons? Let me know what the state of their interests is, and I will tell you what measures they will recommend.

If this argument were good for any thing, we might get rid of all the checks and restraints of law, as far at least as they regarded a part of the community. Why ask from Ministers an account of the public income and expenditure annually? Are they not men of good character and education?

What need of a House of Commons or of a House of Lords? Are they to restrain the Sovereign? Why should you not place the fullest reliance in his virtue and integrity?

Why fetter the Judges by rules, and burden them with Juries? Is it possible that such enlightened and good men could decide unjustly or corruptly? To keep men good you must as much as possible withdraw from them all temptation to be otherwise. The sanctions of religion, of public opinion, and of law, all proceed on this principle, and that state is most perfect in which all these sanctions concur to make it the interest of all men to be virtuous, which is the same thing as to say, to use their best endeavour to promote the general happiness.

The last point for consideration is the supposed disposition of the people to interfere with the rights of property. So essential does it appear to me, to the cause of good government, that the rights of property should be held sacred, that I would agree to deprive those of the elective franchise against whom it could justly be alleged that they considered it their interest to invade them. But in fact it can be only amongst the most needy in the community that such an opinion can be entertained. The man of a small income must be aware how little his share would be if all the large fortunes in the kingdom were equally divided among the people. He must know that the little he would obtain by such a division could be no adequate compensation for the overturning of a principle which renders the produce of his industry secure. Whatever might be his gains after such a principle had been admitted would be held by a very insecure tenure, and the chance of his making any future gains would be greatly diminished; for the quantity of employment in the country must depend, not only on the quantity of capital, but upon its advantageous distribution, and, above all, on the conviction of each capitalist that he will be allowed to enjoy unmolested the fruits of his capital, his skill, and his enterprise. To take from him this conviction is at once to annihilate half the productive industry of the country, and would be more fatal to the poor labourer than to the rich capitalist himself. This is so self-evident, that men very little advanced beyond the very lowest stations in the country cannot be ignorant of it, and it may be doubted whether any large number even of the lowest would, if they could, promote a division of property. It is the bugbear by which the corrupt always endeavour to rally those who have property to lose around them, and it is from this fear, or pretended fear, that so much jealousy is expressed of entrusting the least share of power to the people. But the objection, when urged against reform, is not an honest one, for, if it be allowed that those who have a sacred regard to the rights of property should have a voice in the choice of representatives, the principle is granted for which reformers contend. They profess to want only good government, and, as a means to such an end, they insist that the power of choosing members of Parliament should be given to those who cannot have an interest contrary to good government. If the objection made against reform were an honest one, the objectors would say how low in the scale of society they thought the rights of property were held sacred, and there they would make their stand. That class, and all above it, they would say, may fairly and advantageously be entrusted with the power which is wished to be given them, but the presumption of mistaken views of interest in all below that class would render it hazardous to entrust a similar power with them—it could not at least be safely done until we had more reason to be satisfied that, in their opinion, the interest of the community and that of themselves were identified on this important subject.

This concession would satisfy the reasonable part of the public. It is not Universal Suffrage as an end, but as a means, of good government that the partisans of that measure ask it for. Give them the good government, or let them be convinced that you are really in earnest in procuring it for them, and they will be satisfied, although you should not advance with the rapid steps that they think would be most advantageously taken. My own opinion is in favour of caution, and therefore I lament that so much is said on the subject of Universal Suffrage. I am convinced that an extension of the suffrage, far short of making it universal, will substantially secure to the people the good government they wish for, and therefore I deprecate the demand for the universality of the elective franchise—at the same time, I feel confident that the effects of the measure which would satisfy me would have so beneficial an effect on the public mind, would be the means of so rapidly increasing the knowledge and intelligence of the public, that, in a limited space of time after this first measure of reform were granted, we might, with the utmost safety, extend the right of voting for members of Parliament to every class of the people.

But it is intolerable, because the House of Commons is not disposed to go the full length of what is perhaps indiscreetly asked of them, that therefore they should refuse to grant any reformation of abuses whatever; that against the plainest conviction they should assert that a House of Commons, constituted as this is, is best calculated to give to the people the advantages of good government; and that they should continue to maintain that the best interests of the people are attended to, when it is demonstrated that they not only are not, but cannot be, whenever they are opposed to the interests of those who are in full possession of power, namely, the King, and the Oligarchy, who are bribed to support his government.

DEFENCE OF THE PLAN OF VOTING BY BALLOT1
By the lateMr. Ricardo

Sir—The general question of a reform in the representation of this House, has been so fully discussed, and so ably supported by many honourable gentlemen that have preceded me in the debate, that I shall not detain the House by offering any observations on it, but shall confine myself to the consideration of that part of the subject, which has been little noticed, but which, in my opinion, is of so much importance, that, without it, no substantial reform can be obtained:— I mean, Sir, the changing the present mode of open election for members of Parliament, and substituting in its room the secret mode, or ballot.

In order to appreciate the advantages which will result from the proposed change, it may not be improper to state, as briefly as possible, to the House, the inconveniences attending the present mode of election; that, having the nature of the evil before them, they may be the better able to judge of the efficacy of the proposed remedy. By some, indeed, it may be thought a vain and useless occupation of the time of the House to recapitulate the evils of our present system, for it may with justice be asked, who amongst us is not acquainted with the bribery, the riots, the intoxication, and the immoralities of every description, which take place on the occasion of every general election? These disgusting facts are unfortunately too notorious, yet it may not be unuseful to submit them to the attention of the House.

The scenes which occur at such times, would disgrace a barbarous people. The reign of the law appears to cease, and impunity to be proclaimed for every species of violence. A rude and brutal populace, the offscourings of our population, surround the hustings, and heap every sort of insult and indignity on the candidate who happens not to enjoy their favour. Dirt, filth, and often stones, are thrown at him—the most unmanly attacks are made upon his person, and it is frequently a task of difficulty to his friends to protect him from the effects of their savage and brutal animosity.

Nor is it the candidate only that is thus exposed to their rage, but every elector is applauded, or hissed, caressed, or furiously attacked, as he may favour or oppose by his vote, the favourite of the mob. Idleness and the neglect of work always follow in the train of an election—they are succeeded by debauchery and intoxication, and for a period the country suffers under all the evils of anarchy. I know that these violences are in almost all cases committed by the lowest of the mob, that they are not to be imputed to the electors themselves, but to the assemblage of the idle and disorderly which every great town affords, but the evil is not less serious on that account, and does not less imperiously call on us for a remedy.

These, however, constitute but one portion, and indeed a very inferior portion, of the evil which attends the present mode of election. Bad as it is, if even at this price we obtained a parliament freely chosen by the people, we should have some consolation, although it would be our duty to endeavour to retain the good, and get rid of what was bad in the system. But this consolation is not afforded us, and in addition to the evil which I have already mentioned, we have the far greater one to guard against, which arises from the influence exercised over the voters at elections. Of what use is it to mark with precision how low in the scale of rank the right of voting for members of parliament shall commence, if you take no steps to secure to the electors the right which you propose to accord to them? It is the most cruel mockery to tell a man he may vote for A or B, when you know that he is so much under the influence of A, or the friends of A, that his voting for B would be attended with destruction to him. He cannot justly be said to have a vote, unless he have the free exercise of it, without prejudice to his fortunes. Is this the case at present? Is it not a delusion to say that every freeholder of 40s. a year has a vote for a member of parliament, when in most cases he cannot vote as he pleases, without ruin to himself? It is not he who has the vote, really and substantially, but his landlord; for it is for his benefit and interest, that it is exercised on the present system. Of what advantage would be the reform that is proposed, of extending the elective franchise to all householders, or as others recommend, to all males of twenty-one years of age, if this increased number of electors were to be, as they now are, completely under the influence of the same men, or of men having precisely the same views and interests, as those who play so grand a part in returning members to parliament? The more extended the suffrage, the more influence would be possessed by Peers, and the wealthy aristocracy of the country, and therefore the more certainly should we have a parliament which would be their representatives, and the advocates of their particular interests, and not of the interests of the great mass of the people. In many populous cities, householders are now said to have votes for the representatives of their city; but are not the cases numerous in which they dare not openly exercise the right? Is it to be expected that they will expose themselves to a resentment which will overwhelm them, whether it be from their best customers, the rich consumers, if they are shopkeepers,—the magistrates, if they are publicans,—their employers, if they are clerks, and in subordinate situations,— or any other class, who may be supposed to have an influence over their property? By extending the suffrage, an additional security is afforded against bribery, because the greater the number of electors the more difficult will it be to provide funds for the purpose of directly influencing votes by means of bribes. But it must not be forgotten that bribery is only one of the modes, and by no means the most efficacious mode, by which voters are influenced. Mr. Bentham’s sagacity did not fail to discover that terror was the great instrument of influence and corruption. Votes are more effectually secured by the fear of loss than by the hope of gain. Those whose characters afford security against the offering of bribes, and who would think themselves disgraced by a practice which is universally condemned, do not disdain to make use of the persuasive instrument of fear. In its operation it is silent— it is not necessary to proclaim to the voter the danger which he runs of disobliging his landlord, or patron; it is understood without explanation, and no one who hears me, can doubt of its powerful effects on every occasion. Although, then, by extending the suffrage you weaken the corruptive effect of bribery, you increase that which is produced by alarm and fear, for in proportion as the fortunes of the voter are more humble, the more surely will he be under the influence of those who have the power to sway those fortunes. Happily a security can be found against this influence, but if it could not, I should deem that an improvement which should raise the qualification, and limit the number of voters; for the chance of finding an independent spirit in electors would be increased, if the qualification was raised to £100 per annum, rather than if it continued as it is, or were lowered below 40 shillings. These, then, are the evils against which we have to provide, and the House will readily perceive that those which arise from riots, intoxication, and idleness, are of a different description from those which are the consequence of undue influence exercised over the minds, directly or indirectly, of the electors; and accordingly the bill before you offers two distinct remedies. To obviate the first evil, it is proposed to take the votes throughout the country on the same day, and, instead of the elections being for the whole of a county, and held in one single place, that votes be received in several districts at the same time. To obviate the second, it is proposed that the ballot, or the secret mode of election, be substituted for the open mode.

These two propositions are very distinct, and they should not be, as they often are, confounded; for one might be rejected, and the other adopted. Those, for example, who are of opinion that the public and noisy assemblage of the rabble about the hustings is attended with benefits outweighing the evils which have been stated, might reject that clause which proposes to take the votes by districts, but might nevertheless adopt the other which requires that the election should be by ballot. The people might assemble about the hustings as they now do; they might listen, or not listen, to the speeches of the candidates as their humour might dictate; they might shew all the usual marks of their sympathy or disapprobation, and yet the voting might be secret; and, on the contrary, those who are in favour of open voting, might approve of votes being given in districts, although they rejected the ballot.

According to the best judgment which I can form on this important subject, we ought to adopt both these clauses. That respecting time and place of voting will give us sufficient security against the disgusting exhibitions and riotous proceedings which have hitherto attended elections. Through the medium of the press, the candidate may make known his pretensions; through the same channel, objections may be made to his principles, or to his former conduct—the press is open to all, and the candidates would no longer be subjected to an ordeal which is not a test of merit but of endurance. Because a man has the honest ambition of representing a populous city in Parliament, must he make up his mind to endure all the insults which can be heaped upon him by the lowest of the rabble? It is said, that it is fit his claims should be examined into,—that without preparation he should be called upon immediately to explain what has been ambiguous in his former conduct;—what are his principles on the grand questions which are likely to be submitted to him; and, that he should be called upon to speak on any other matters which may be proposed to him. This might be useful if he presented himself before an impartial tribunal, but those who make this objection, are bound to shew that candidates on both sides are fairly listened to, and that even the semblance of justice is extended to them. One of the arguments now offered in favour of the borough system, and it is one of considerable weight, is, that without such boroughs, many men of merit would never be in Parliament—and why? because they are troubled with modesty; and with the feelings of gentlemen, which makes it intolerable to them to submit to the injustice, the insolence, and the insults of the lowest of the rabble. That we may be sure of the services of these men, then, I demand that this clause be adopted. These public meetings, it has been said, are useful in giving a tone to public feeling, and raising the lowest of the community in his own estimation, by making him feel that he has a share in the government of his country. Can he be said to have this share if he is without a vote? Does he show his importance by spitting at the candidate, by throwing dirt and filth in his face? This is not calculated to raise him in his own estimation; and if it be right that he should have a voice in the government of his country, give him that voice, and allow him to exercise it legally on the same terms with the first elector in the land, but do not delude us or him, by giving him the shadow, and calling it the substance of power!

The other clause, namely, that which establishes the ballot, appears to me to offer complete security against those evils which flow from the influence of power. If voting took place by ballot, all the influence now practised on voters would, in a great measure, cease; for, to what purpose would you threaten a man for the vote he should give, or how could you punish him for it when given, if by the regulation you were absolutely precluded from knowing for which candidate he voted? Establish the ballot, and every elector is from that moment in possession of a real and not of an imaginary privilege. Of what use would it be to threaten a publican with the loss of his licence, a farmer with the deprivation of his lease, a tradesman with the loss of your custom, when you can never know how he voted, unless he chose to communicate it to you? The elective franchise, if it should be thought expedient, might be extended. The very extension would secure you from direct bribery, for no fortune would be equal to bribe a nation of electors, and terror would cease to operate, for it would be in vain to endeavour to mark the victims. An honourable gentleman has said, that if the ballot were established it would not prevent candidates and the friends of candidates from endeavouring to get the promise of votes, and then he observes, that if the electors keep their promises, there will be no advantage from the ballot, as they will vote then precisely as they do now; but if they do not keep their promises, they will be guilty of an immoral act, which may justly be charged on this law. It is the latter proposition only which I am called upon to answer, for if the voters give and keep their promises, no objection can be made to the ballot on that account; it may be said to be useless, but cannot be proved to be pernicious. And with respect to the immorality of not keeping promises, the guilt would lie with those who exacted such unlawful promises. To make a promise of a vote which could not be conscientiously given, would be a crime, but it would be a still greater crime to keep it. The promise is unnecessary upon any other supposition than that of its not being right to perform it. What occasion to exact a promise of any man to do that which his own interest will lead him to do? and in giving his vote he is called upon by duty to act in conformity with his own interest. It may be expedient to instruct such a man, to enlighten him on the subject of his real interest, but here our efforts should cease, and we become criminal if we induce him to act contrary to the dictates of his own conscience, and, instead of condemning him for breaking a promise so criminally exacted and given, the most enlightened morality would teach and require that such promises should be violated. The law does not recommend or encourage any species of crime or immorality,—it is enacted with a view to correct an evil which is an insurmountable bar to good government; it requires that every man shall vote according to his conscience, without any deceit or subterfuge; and shall such a law be given up, because the enemies of good government may take advantage of the respect with which men ought to regard their promises, in order to subvert it. If the end we have in view be good, we must not be diverted from our purpose by any partial evil which may attend the means by which we are to attain it. All punishment is an evil, but is justified by the good end which it is to accomplish. It might much more rationally be objected to the excise laws, that they should not have been enacted because they offer temptations to crimes which would not have been committed but for those laws. And what shall we say of the laws against usury, and against the exportation of the coin? The end of these laws is bad—they are binding only on the conscientious, and have opened a wide door to the commission of the crimes of fraud and perjury. With these laws on our statute-book, are we to be discouraged from making one, which has the happiness of the people for its object, because it would be immoral (as it is alleged) to break a promise unlawfully and immorally exacted. But supposing that the breaking of such promises were immoral, would the practice be of long continuance? Would any man persevere in exacting promises, when he found by experience that the promisers did not consider them binding? He would not be tempted to continue an offence with great trouble to himself, as soon as he found that it was unattended with advantage. The immorality, then, to whomsoever it might attach, would soon be at an end; and the law would be efficacious without even this alloy.

One Hon. Gentleman has observed, that he is prepossessed in favour of open voting, without being able to give any reason why he prefers it. To that Hon. Gentleman I might answer, that I have a different prepossession from him, and the instinct of my mind would be just as good, as an argument, as the instinct of his. In fact one mode of voting can be preferred to another only as means to an end, in themselves they are alike indifferent.

To conclude, Sir, the establishment of the ballot would make this House what it ought to be, the real representatives of the electors, and not the representatives of those whose situation gives them a commanding influence over the will of the electors. I am not now considering whether it would be desirable that the elective franchise should be extended, kept on its present footing, or contracted within narrower limits, for on any of these suppositions, the ballot appears to me to be equally expedient. Whoever may be the electors, the representatives should represent them, and their interests, and not those whose interests may, on many occasions, be in direct opposition to theirs.

APPENDICES

I

DRAFT OF A LETTER TO A NEWSPAPER ON THE EFFECTS OF PEEL’S BILL

[After the meeting at Hereford in his honour (see above, p. 471), Joseph Hume went to Monmouth where he was admitted a freeman of the borough on 10 December 1821. A brief report of the proceedings was given in The Times of 17 December. Ricardo was not present on this occasion, when some of the speakers attacked him for his currency plan to the operation of which they attributed the fall in the prices of agricultural produce.

The following draft letter was intended for an unidentified newspaper which had reported those speeches: there is no evidence of its having been published or even sent.

A similar reply to the same attacks is in Ricardo’s letter to McCulloch of 3 January 1822; the latter used it as material for an article in the Scotsman (see below, IX, 140, n. 2).

The MS, in Ricardo’s handwriting, is in the Mill-Ricardo papers.]

In your account of what passed at the meeting at Monmouth when Mr. Hume was admitted a member of the Corporation of that city it appears that Mr. Moggridge and Mr. Palmer entered pretty fully into the question of the effect which had been produced on the circumstances of farmers by the operation of Mr. Peel’s bill passed in 1819 and Mr. Palmer in particular alluded to the opinion on that subject given by Mr. Ricardo at various times—he said that1

It appears to me Sir that the effects ascribed by those gentlemen to Mr. Peel’s bill by the great rise which has been occasioned in the value of money should rather be ascribed to a great fall in the value of the commodities of which they were speaking viz. Corn, cattle and the other raw produce of the earth. It is at all times exceedingly difficult when two commodities alter considerably in relative value to determine accurately to the alteration in the value of which it is principally to be ascribed, and the least which those gentlemen could have done would have been to have given their reasons for thinking that since 1819 gold had risen so enormously in value as they contended for. It must be recollected that gold is a commodity as well as corn and cattle, and that its price is equally operated upon by the rise and fall in the value of paper money not regulated by any standard. Mr. Palmer cannot deny that in 1819 when Mr. Peel’s bill [was passed]1 a quarter of wheat sold for 2 in paper money, at the same time it sold for £ in gold or for penny-weights in gold. At the present time a quarter of wheat sells for £ in gold or for pennyweights in weight. What is the cause of this difference,—it is owing entirely to the alteration in the value of gold say Mr. Moggridge and Mr. Palmer. I want to know to what cause they ascribe this alteration in the value of gold and on this subject they are silent, they give us no satisfaction whatever. If the question had been asked them at the Meeting when they delivered their opinions they would probably have said it is owing to the contracted quantity of paper currency,—but this would have been far from a satisfactory answer, for they were bound to shew how the contraction of a paper currency acted on the value of gold. Mr. Palmer alluded to the opinions given [by]3 Mr. Ricardo in the following terms—I regret that Mr. Ricardo was not present to answer for himself, but I think it would not be difficult to justify the opinions which were attacked. It will be recollected that Mr. Ricardo wrote a pamphlet to shew that a currency might be regulated by a metallic standard without the use of any other metal as money but silver and copper the latter for payments under a shilling the former4 for payments under a pound. For this purpose Mr. Ricardo proposed that the Bank should be obliged to give gold in bullion in exchange for their notes if of a certain amount on the demand of the holder of them. It was with reference to this plan that Mr. Ricardo was examined before the Committee on Bank Affairs and it is probable that seeing there was no necessity for the use of any gold in the circulation and being satisfied that the Bank had a sufficient quantity of that metal to answer all the demands that could be made on them on such a system of currency he answered that Did Mr. Ricardo mean by this that gold itself could not thereafter vary, and that if it did the currency which was to be1 regulated by the value of gold would not vary with it? quite the contrary, it is evident from the whole of the reasoning of the pamphlet in question that he considered gold as a variable commodity, as well as corn or any other merchandize, but his argument was, “adopt my system which will render all demand for gold unnecessary, and will therefore probably be unattended with any variation in the value of that metal, and then the whole variation in the value of money will be only equal to the difference between the value of paper and the value of gold or 5 pc^t.. You can now buy a quarter of corn with as much gold as is coined into £ for the same quantity of corn you are obliged to give £ in bank notes. Diminish the quantity of bank notes and you will raise them 5 pc. in value and when this is effected you will obtain a quarter of corn for £ in paper as well as in gold—the price of corn in gold will not be altered, its price in paper2 will fall 5 pc^t..” it is for Mr. Palmer to shew what is defective in this reasoning. Mr. Ricardo could not mean to say that no variation should thereafter take place in the value of gold, he must have known full well that the currency of every country regulated by a metallic standard was liable to all the variations of that standard. In Mr. Ricardo’s speeches on Mr. Peel’s bill, to which reference has been made, he said that we should be still liable to have our currency vary in proportion as the metal varied which was the standard, but that this was an inconvenience to which all metallic currencies were exposed—it was one to which France, Holland, Hamburgh and all those countries whose currencies were on the most solid system were exposed, and no case could even be imagined to exempt a currency from such variations.—It may be said that this is a good defence for Mr. Ricardo’s evidence before the committee, when he had reason to think that his plan was the one contemplated respecting the operation of which only he was examined, but it is not equally good for the opinion which he afterwards expressed in his speech when he had seen Mr. Peel’s bill and which was essentially different from his proposed plan as it provided for payments in coin in 1823 and therefore made a demand for gold obviously necessary and the rise of its value certain. To this Mr. Ricardo would probably answer that he saw no such obvious necessity for the demand for gold— that as he understood the bill no specie would be necessary till May 1823 four years distant from the time of discussion and he might confidently reply that if for 3 out of these 4 years his plan had a fair trial it would be found so efficient for all the objects of the most improved currency that the legislature would have altered the law and dispensed with specie payments altogether: In the speech to which allusion has been made I recollect he advised the Bank to sell gold instead of buying it so little did he think the quantity actually in the possession of the Bank inadequate for all the purposes of bullion payments.

Mr. Ricardo cannot fairly be held responsible for the narrow views, and obstinate prejudices of the Bank of England. He could not contemplate that the Bank would so narrow the circulation of paper as to occasion such a rise in its comparative value to gold and the currencies of other countries as to make the influx of gold into this unexampled in amount. He could not foresee that they would immediately provide themselves with so large a1 quantity of gold coin as to make it incumbent on them to apply to the legislature to permit them to withdraw all their small notes and fill the circulation with gold coin even so early as the middle of 1821—this is what Mr. Ricardo could not anticipate—he relied on there being no demand for gold and the Bank by their injudicious measures occasioned a demand for many millions. He supposed that the reverting from a currency regulated by no standard, to one regulated by a fixed one, the greatest care would be taken to make the transition as little burthensome as possible, but the fact is that if the object had been to make the alteration from the one system to the other as distressing to the country as possible no measures could have been taken by the Bank of England so well calculated to produce that effect as those which they actually adopted.

In saying this it must not be supposed that I agree with Mr. Moggridge and Mr. Palmer that any thing like the effect which they compute has been produced on the value of the currency by reverting to specie payments. I am of opinion with Mr. Ricardo that if the Bank had followed the obvious course of policy which they ought to have pursued this great measure might have been accomplished with no other alteration in the value of money but 5 pc^t., but by the course which they did adopt and the demand which they in consequence occasioned for gold bullion they have raised the value of that metal about 5 pc^t. more and consequently that the whole alteration in the value of the currency since 1819 has been about 10 pc^t.. My reason for thinking that the demand for gold has caused a rise of 5 pc. in that metal is nearly the same as that expressed by Mr. Tooke in his evidence before the Agricultural committee. This rise in the value of gold it must always be remembered is not confined to this country, it is common to all, and if the standard of all were gold and not silver, the money of all would have varied 5 pc^t.. What cannot be too often insisted on is that that paper money has only increased in value 5 pc. more than gold—it could not have increased more because it is now on a par with gold and in 1819 and for 4 years before 1819 had not been depressed more than 5 pc. below gold. When Mr. Palmer says therefore that money has altered 50 pc^t. in value in consequence of Mr. Peel’s bill he must mean that Paper money has risen 50 pc^t. and gold bullion 45 pc^t.. If this be true all commodities in this country as well as in every other ought to have varied 45 pc. as compared with gold—Does he or any other man believe this to be the fact? Are the people of France, Germany, Italy, Spain, Holland and Hamburgh obliged to give nearly double the quantities of commodities for the purchase of a given weight of gold. Can the Stock holder with the same money dividend procure double the quantity of all the commodities he desires—it is notoriously otherwise and how men with such good understandings as Mr. Moggridge and Mr. Palmer can be made the dupes of such an absurd theory I am at a loss to conceive.

That raw produce is frightfully depressed no one can deny but that this depression is either wholly or in any very great part occasioned by the rise in the value of money is not made out by any plausible arguments. Corn and raw produce are not exempted from a fall of value more than other commodities and if it be true that they have fallen 50 pc^t. 40 of that 50 pc^t. fall is entirely owing to causes which have operated on their value. Such variations are by no means uncommon. In 1792—wheat was at 39/- in 1800—134/- 1804 52/- 1808 81/- 1812 140/- 1814 67/- 1816—53/- 1817—109/- and it cannot be pretended that these variations were occasioned by the altered value in money. That some part of these variations may be imputed to variations in the value of money is not disputed, but while money varied 10 pc. corn varied 100 pc. and why may not the same have occurred now. Those who deny this are bound to give some reason for their opinion— hitherto they have given none.

II

NOTES ON WESTERN’S ‘SECOND ADDRESS TO THE LANDOWNERS’, 1822

Amongst the pamphlets from Ricardo’s library which are in the Goldsmiths’ Library of the University of London, there is a copy of the Second Address to the Landowners of the United Empire, by C. C. Western, Esq., M.P., second edition, London, Ridgway, 1822, which is annotated by Ricardo.1 The pamphlet was first published late in 1822, when Ricardo was on his continental tour;2 by the end of the year, when Ricardo returned to England, a second edition had appeared; and his notes must have been written after his return.3

The pamphlet contains a violent attack against Peel’s Act of 1819 and against the supporters of the resumption of cash payments. It was referred to by Ricardo in a speech on Western’s motion respecting the resumption of cash payments, on 11 June 1823 (above, p. 317 ff.), when he replied to Western’s accusations.

Ricardo’s notes are written on the margins of the pamphlet and have been partly cut off by the binder. They are here printed in italics.

Ricardo’s first comment is occasioned by Western’s discussion of the ‘inconsiderate and hasty course’ which led to the resumption of cash payments in 1819, as proposed by Peel’s Committee. ‘Of the probable consequences of such a course upon the general prosperity of the country,’ writes Western, ‘the Committees of the Lords and Commons, incredible as it may appear, not only made no adequate enquiry, but seemed purposely to turn their backs upon information tendered, and prophetic warnings given by persons who possessed the fairest claims to attention.’ (p. 5.) Ricardo notes: ‘This Committee recommended a recurrence [to]1Cash payments after a period of 4 years. When [they] did so gold was £4.2.—p^r. oz. Mr. Western sup[por]ted a measure which was to make us recur to Cash [payments in a single day] altho’ gold was then £4.15.—p[^r. oz.]’.2

Western then discusses the effects upon the agricultural situation of the measures respecting the currency: ‘Peel’s Bill, I say, is the sole cause of our excessive and unparalleled distress. [Ricardo underlines ‘sole’ and notes: ‘Take notice sole cause! ’] It is not that abundant harvests may not lower the price of corn occasionally to some degree of temporary injury to the growers; but no human being ever heard before of their being ruined by the blessing of Providence on their labours.... It is not a ruinous abundance of corn, but a destructive famine of money that is the bane of the country’ (pp. 6–7). Ricardo notes: ‘See Mr. Western speech 1 March 1816, in which he shews the effects of abundance on price.’3

Western’s remedy is the revision of Peel’s Bill of 1819 and the lowering of the standard, in order to obtain a more abundant currency. The effect would be an advanced money price of commodities, but, he asks, what mischief therefrom? ‘The mortgagee would prefer paying higher for his wheat, and his mutton, &c. with the continuance of an interest of five per cent. for his money. The fundholder would enjoy in security, and upon a good title, what he possessed, instead of risking it by a robbery of the public [Ricardo notes: ‘[R]obbery!’], which can be retained only by force, and not by right. The labourer would again perceive that his labour, which is his property, had some value [Ricardo twice underlines ‘some ’ and notes: ‘[H]as it no [v]alue now? ’]; he would soon find an eager demand for it in the market; and wages, like all other commodities for which there is an increasing demand, would experience a consequent advance.’ (p. 24.) Ricardo notes: ‘[W]hy should an [al]teration in [the] value of [mo]ney cause [an] increased [de]mand for [la]bour? ’

Western quotes Hume in his support: ‘Give us a sufficient currency, and we should be in the situation which Mr. Hume in his Essay upon Money, written nearly 100 years ago, describes a country in which money began to flow more abundantly. “Every thing,” he says, “takes a new face—labour and industry gain life— the merchant becomes more enterprising—the manufacturer more diligent and skilful—and the farmer follows the plough with more alacrity and attention.” ... We are in the situation in which Mr. Hume, contrasting his former picture, shews us, of a country in which the quantity of money is decreasing. “The workman,” he says, “has not the same employment from the manufacturer and merchant—the farmer cannot sell his corn and cattle—the poverty, beggary, and sloth thatmust ensue, are easilyfore-seen.”’ (pp. 24–5.) Ricardo notes: ‘An erroneous view of Mr. Hume’.

On Western’s incidental remark, that ‘A further increased quantity of currency has recently taken place by the advance of about two millions to the Government by the Bank, to make the payments to the 5 per cent. creditors’ (p. 26), Ricardo notes: ‘[Id]eny [t]his.’

Western then considers the question whether the people at large would be sufferers from the rise in prices consequent upon the suggested abundance of money. He admits that when high prices are the consequence of scarcity, they must be ‘considered amongst the most severe inflictions to which a people are subject’ (p. 31). But, ‘High price from abundance of money is purely nominal; as if shillings were rained down from heaven, it would very soon require a great number of them to purchase a loaf of bread, and the price would be high; or if sixpences were proclaimed to be shillings, we should nominally pay as many shillings as we do now sixpences. But from high price so caused, or rather low value of money, no evil follows, no alteration of course takes place in the relative proportion of food, to the number of mouths there are to consume it. The bulk of the people must have an increased quantity of money, before the sellers can obtain the higher price, the demand of the opulent classes being too trifling, hardly indeed varying at all. I have often wished that some of those persons, who keep up the fallacy respecting a high money price, would tell me why the people should not be able to obtain as ample a share of the larger quantity of money as of the smaller; this is the point, which if truth were their object, they would see they were bound to make out, and for their own credit, I earnestly invite them for once, at least, fairly and calmly to make the attempt.’ (p. 31.) Ricardo notes: ‘I do not dispute the principle here laid down but I ask in my turn what injury the people w[ould] suffer if the quantity of money was reduced o[ne] half or three fourths. It is entirely a question.’1

Western continues: ‘Now when debts and taxes are considered, the advantage of a high money price becomes as apparent as the destructive consequences of the lower measure of value are now....The farmer with 40s. for his quarter of wheat, and the labourer with his 8s. per week, must feel the excessively increased difficulty of paying the same taxes as they did when the wheat produced 80s., and the labour 16s. The former are indeed sinking under it, and their labourers participate, as of necessity they must, in the distress of their employers. The renewed burnings in many parts of England, with the resolutions of societies of farmers, published in the newspapers, against the use of thrashing machines, are sufficient proofs that the agricultural labourers are reduced, in those districts at least, to a state of acute misery.’ (pp. 31–2.) Ricardo notes: ‘very sophistical. When wheat is at 40/- the labourer will not receive the same money wages as when it is at 80/-. If the real value of the farmer’s taxation as a grower be increased he can [pass on] that increase to the consumer.’

Western gives an illustration to show that the effect of a rise in the value of money on debtors is out of proportion to the effect of a fall upon creditors: ‘suppose a man with an income of two hundred per annum, arising from the efforts of industry in the production of any species of commodities, and that a portion of his capital is borrowed, the interest of which amounts to one hundred per annum—raise the value of money one half [Ricardo underlines the last seven words and notes: ‘Do you not mean, “double the value of money? ”’], his commodities can only return half their money price, that is to say, one hundred pounds per annum, and this industrious man is obviously left wholly destitute; but this is not all—the creditor receiving only, it is true, the same nominal sum, nevertheless obtains that which enables him to possess himself of twice the quantity of the industrious man’s commodities; in truth he seizes the whole property of his debtor: now lower the value of money and let us see what follows; the industrious man pays the debt with half the quantity of his commodities, their money value being doubled, and his creditor retaining the same nominal sum, can only command half of them; this is horrid injustice: but the man is not left destitute; he retains half his income; there is exactly the difference between the half and the whole’ (p. 34). Ricardo notes: ‘Because the degree of variation is less. In one case you raise the value of £1- to £2- in the other you lower the value of £1- to 10/-’1

Western proceeds: ‘As to calculating the effects of raising or lowering the value of money, without reference to debtors and creditors, it would be absurd; because we know the vast extent of public and private debts, and because all our national establishments, civil and military, are charges upon national industry, and as such, operate as debts; the Monarch and the private soldier, the First Lord of the Treasury, and the lowest Clerk in office, are alike in the predicament of creditors; they suffered by lowering the value of money, but were not ruined [Ricardo notes: ‘fallaci[ous]’]; their suffering was acknowledged and alleviated, if not removed, but they are now, in conjunction with public and private creditors, absorbing the entire fruits of the industry of the country’ (p. 35).

There are no comments on Western’s text after p. 35, but Ricardo underlines certain passages (as reproduced below) which are obviously directed against himself. It is to these charges that he replied in his speech of 11 June 1823 (above, p. 317 ff.).

‘The more I reflect upon the state of this country, its immense public debt and taxes, its unrivalled complication of private debts and engagements, the more I am astonished that the idea should ever have suggested itself to the mind of any Statesmen, to raise the value of the money in which they were created; the measure certainly owes its origin, in chief, to men who were gainers or expectant gainers by it; namely, Ministers receiving salaries from the public, others who wish to be Ministers, and some great monied proprietors were called in, who were supposed to be specially qualified to advise upon such a subject. Difficult, however, as it is to account for such an extraordinary proceeding, I do not entertain a suspicion of any selfish motives on the part of the Ministers or their rivals; and I try to believe the same of the great monied men; but when I see public creditors and mortgagees swallowing up the rents of the landowners, the profits of the tenant, and the general fruits of industry, it requires the fullest effort of charity to believe they did not intend it; if we allow them to be honest, they must all of them be content to be regarded by us sufferers, as extremely ignorant of the subject they not only pretended fully to understand, but exclusively to be the only competent judges of. They told us at first that Peel’s Bill would only produce a difference of three or four per cent. in the money price of commodities; they have now nearly admitted its operation to the extent of fifteen or twenty, which of itself must be allowed to be proof sufficient of ignorance at all events: but the actual amount of degradation is in fact much nearer fifty per cent. than twenty.’ (pp. 36–7.)

‘Some of you have estates which were in cultivation centuries ago, and which now yield nothing: to preserve them in cultivation at all, without any rent, is in various instances actually a burthen. [Ricardo writes three exclamation marks on the margin.] ... Why will you not investigate the question? why give up the exercise of your own understanding? why surrender up common sense to the parade of science? Believe me, the economists and bullionists are not gifted with more sense than other people, though they have more pedantry; their confidence and pretensions are imposing certainly, and I do believe have imposed upon some of our more ingenuous Statesmen; but the mist in which they have involved the subject is disappearing, and the dreadful consequences brought upon us by their advice are fully exposed to view; the practical illustration before our eyes of the terrible mistake the Government has been led into, can hardly longer be denied.’ (pp. 39–41.)

‘No. 5 [of the tables in the Appendix] shews the amount of undue gain of the public creditors, by the alteration of the currency through Peel’s Bill, and which is a distinct breach of faith on the part of the Government towards the people of this country, and a palpable robbery. It really appears to me, that our Statesmen, on either side the House, evince by their conduct, a want of any just comprehension of faith towards the public, who pay taxes. I should have thought their first care, at all events the first care of the House of Commons, should have been, that the public should not pay morethan they borrowed.It is hardly denied by any body, that, at this time, the public are compelled to pay substantially, to the extent of twenty or twenty-five per cent. more than they borrowed, and not one word of complaint is uttered by those guardians of the public purse. It is only for the creditors, and all who receive taxes, that they appear solicitous; and for the preservation of sacred faith towards whom, we hear so much canting declamation.... If these observations find their way to the public, I shall of course undergo the censure of those arrogant pretenders to exclusive good faith; but it is high time to speak out, or we shall be inevitably crushed.’ (pp. 44–5.)

Western reprints in an Appendix a ‘Letter upon the Cause of the Distress in Ireland’, to the editor of the Dublin Morning Post, signed ‘A Native of Connaught’ and dated ‘Killcongoll, July 15, 1822.’; on this letter Ricardo comments: ‘According to this letter, the ruin of the poor tenant is caused by the increased value paid to some of the persons who have an interest in the land. If he retain less of the produce they get more—this will not account for scarcity in the country, nor for the high price of potatoes. What I contend for is that there is no anomaly in a glut of wheat from abundance, and a starving population, when that population lives exclusively on the potatoe.’

[1 ]The petition had been drawn up by an acquaintance of Ricardo, the Unitarian minister Robert Aspland; it was signed by 2,047 members of Christian congregations, of whom 98 were ministers. See Memoir of the Life, Works and Correspondence of the Rev. Robert Aspland, of Hackney, by R. B. Aspland, London, 1850, p. 436.

[2 ]Mr. Wilberforce.

[3 ]Misprinted ‘opinions’ in Hansard.

[1 ]By Thomas Paine. Republished by Richard Carlile, London, 1818.

[2 ]William Hone’s parodies of the Church Catechism, the Lord’s Prayer, the Ten Commandments, the Litany, and the Creed of St. Athanasius, published in 1817.

[3 ]This and the subsequent references are to Wilberforce’s speech on M. A. Carlile’s petition on 26 March 1823.

[1 ]See Sermon LXIV, in The Works of Dr. John Tillotson, late Archbishop of Canterbury, London, 1712, vol. 1, pp. 465–6.

[1 ]See Mr. Bankes’ speech on the Roman Catholic franchise bill, 30 June 1823 (Hansard, N.S., IX, 1341).

[1 ]In the debate on the Roman Catholic franchise bill, Mr. Hume having attacked the Methodists as ‘the Protestant Jesuits,’ Mr. Butterworth had retorted, ‘The sect to which he belonged was highly complimented by the censure of a gentleman who had defended the principles of Carlile in that House.’

[1 ]Some light is thrown on this incident by Mallet, who after reporting the debate in his Diary adds: ‘There the debate closed; but it appears that Ricardo had seen Owen in the morning and had asked him whether he had any objection to have his name and peculiar opinions quoted in support of the prayer of the petition, and that Owen had not only assented to it, but told Ricardo that it would be peculiarly gratifying to him. The fact is that Owen is extremely disregardful of established opinions and of public feeling, and that he delights in any opportunity of asserting his own principles. But being in the House during the debate, when he saw the effect produced by Ricardo’s statement, and the feeling it excited in the assembly, his natural boldness forsook him and a desire of fair fame prevailed; he therefore wrote a few lines to Ricardo in pencil desiring him to explain away what he had said, and upon Ricardo’s declining to comply with his request he applied to Money. Ricardo told me that he was very near stating to the House what had passed between him and Owen in the morning; but his good nature prevailed.’(J. L. Mallet’s MS Diary, entry of 10 July 1823.) On the morning of the day in question (1 July) they had met when Owen had appeared before the Committee on the Employment of the Poor in Ireland, of which Ricardo was a member. (See the Committee’s Report, p. 156.)

[1 ]Hansard, XXXII, 41; cp. also ib. 381.

[2 ]Journals of the House of Commons, 1818, p. 272.

[1 ]Hansard, XXXVIII, 995–6.

[2 ]See his speech above, p. 109.

[3 ]See above, p. 323.

[4 ]The Report and Evidence were reprinted in April 1821 (Parliamentary Papers, 1821, vol. iv).

[1 ]1814 (54 Geo. III c. 99), 1815 (55 Geo. III c. 28), 1816 (56 Geo. III c. 40), 1818 (58 Geo. III c. 37).

[2 ]Minute of the Committee of Treasury, 20 Jan. 1819, in Lords’ Report, Appendix, p. 300.

[3 ]Hansard, XXXIX, 72 and 104.

[1 ]Journals of the House of Commons, 1818–19, pp. 64 and 77.

[2 ]Journals of the House of Lords, 1818–19, p. 43.

[3 ]See Ricardo’s letters to McCulloch of May 1819, quoted below, p. 367–8, and of January 1822, below, IX, 141.

[4 ]Below, VI, 67.

[1 ]The editor is much indebted to the late Sir Bernard Mallet for allowing him to quote this and many other passages from the unpublished MS in his possession.

[2 ]A Director of the Bank, at this time out by rotation.

[3 ]Alexander Baring was the head of the house of Baring Brothers, the magnitude of whose loans to the French Government in 1818 and 1819 complicated the problem of the resumption of cash payments. Baring himself was in Paris during the early stages of the enquiry, when the examination of the witnesses seemed to proceed somewhat aimlessly; a focal point was provided when, on his return to London at the end of February, Baring’s views in favour of a delayed resumption of payments on Ricardo’s plan became known. In the subsequent debate in the Commons the Chancellor of the Exchequer referred to Baring’s evidence as ‘certainly the most important of any’ (Hansard, XL, 739). And The Times in a leader remarked ‘We wish that the Bank had been able to control Mr Baring’s loans, rather than Mr Baring’s loans had controlled the Bank’ (18 May1819). Mallet records in his MS Diary a conversation with Baring in which the latter described his intricate financial operations in Paris and surmises that Baring was apprehensive of an early resumption: ‘Narrower means of credits, a closer system of discounts, a return to a sound currency in this great commercial country, could not fail affecting all Europe for a time; and it is for a time, and for that very time, that Baring wants facilities of every kind.’ (Entry of 2 March 1819.)

[1 ]Friday 12 and Monday 15 February.

[1 ]Lords’ Report, ‘Minutes of Evidence’, p. 44, Q. 35.

[2 ]Lords’ Report, ‘Minutes of Evidence’, p. 47, Q. 52.

[1 ]Commons’ Report, ‘Minutes of Evidence’, p. 78.

[1 ]Commons’ Report, ‘Minutes of Evidence’, pp. 123–4.

[2 ]Lords’ Report, ‘Minutes of Evidence’, p. 107, Q. 35.

[3 ]Below, VIII, 19.

[1 ]It should be noticed that, in spite of Ricardo’s own evidence, the Committees assumed throughout that his plan excluded payments in specie.

[2 ]Commons’ Report, ‘Minutes of Evidence’, p. 160.

[1 ]Commons’ Report, ‘Minutes of Evidence’, p. 171.

[2 ]Commons’ Report, ‘Minutes of Evidence’, p. 189.

[1 ]Commons’ Report, ‘Minutes of Evidence’, p. 191. When recalled on 25 March Baring confirmed this answer; see ib. p. 204.

[2 ]Commons’ Report, ‘Minutes of Evidence’, p. 224–5.

[3 ]Commons’ Report, ‘Minutes of Evidence’, p. 247.

[1 ]Not to be identified with Ricardo’s friend of the same name.

[2 ]A Reply to Mr. Ricardo’s Proposals for an Economical and Secure Currency, by Thomas Smith, London, Richardson, 1816.

[3 ]Commons’ Report, ‘Minutes of Evidence’, pp. 257–9.

[1 ]Lords’ Report, ‘Minutes of Evidence’, pp. 131–2, Q. 167. Later he was questioned about the period in which ‘the Plan of Mr. Ricardo’ could be carried into effect (p. 136–7).

[2 ]Author, under the pseudonym of Daniel Hardcastle, of a series of letters to The Times on the Bank Restriction; see below, VIII, 3, n. 1.

[3 ]Lords’ Report, ‘Minutes of Evidence’, p. 158–9, Q. 79.

[4 ]Lords’ Report, ‘Minutes of Evidence’, p. 179–80, Q. 83.

[5 ]ib. p. 180, Q. 84.

[1 ]Lords’ Report, ‘Minutes of Evidence’, p. 180–1, Q. 89.

[2 ]Above, I, 372.

[1 ]Lords’ Report, ‘Minutes of Evidence’, p. 182, Q. 89.

[2 ]Journals of the House of Lords, 1818–1819, pp. 147 and 157.

[3 ]Lords’ Report, ‘Minutes of Evidence’, p. 221, Q. 88.

[4 ]Lords’ Report, ‘Minutes of Evidence’, p. 222, Qq. 96 and 97.

[5 ]ib. pp. 225–34.

[1 ]ib. p. 243–4.

[2 ]See Ricardo’s speech supporting the bill, above, p. 2.

[3 ]Below, VIII, 20.

[1 ]See An Address to the Public on the Plan Proposed by the Secret Committee of the House of Commons for Examining the Affairs of the Bank, by Edward Cooke, London, Stockdale, 1819.

[2 ]Speech of 24 May 1819, Hansard, XL, 677.

[3 ]The meeting on 15 May 1819 at the City of London Tavern, held to oppose the Reports of the Committees.

[1 ]Commons’ ‘Second Report’, p. 15.

[1 ]Lords’ ‘Second Report’, p. 18–19.

[1 ]Below, VIII, 26–7.

[2 ]The text of the Resolutions is given above, p. 7–8.

[3 ]59 Geo. III. c. 49. An amendment to the original bill had been adopted on Ellice’s motion; see above, p. 8 and n.

[4 ]The New Times, 15 May 1819.

[5 ]The Automaton Chess-Player was on exhibition at No. 4 Spring Garden (Advt. in The Times, 6 Feb. 1819).

[6 ]The Fair Circassian was the name popularly applied to a lady in the suite of the recently arrived Persian Ambassador. Much curiosity had been aroused by the seclusion in which she was kept; ‘hundreds of loungers and dandies’ crowded outside the Embassy in the vain hope of a glimpse of her. ‘The door of her room is constantly guarded by two black eunuchs, who have sabres by their sides. They are her only attendants, being selected to dress and undress her.’ (The Times, 30 April 1819.)

[7 ]The New Times, 15 June 1819.

[1 ]Letter from E. B. Wilbraham, 7 Feb. 1820, in Diary and Correspondence of Charles Abbot, Lord Colchester, 1861, vol. iii, p. 113. Cp. Tooke’s History of Prices, vol. ii, p. 98–9, and Ricardo’s speech of 8 Feb. 1821, above, p. 76.

[1 ]The title of the Commons’ Reports is: ‘Reports from the Secret Committee on the Expediency of The Bank resuming Cash Payments, Ordered by the House of Commons to be Printed, 5 April and 6 May 1819.’

The title of the Lords’ Reports, as printed for the House of Commons, is: ‘Reports respecting the Bank of England resuming Cash Payments: viz. The First and Second Reports by the Lords Committees appointed a Secret Committee to enquire into the State of The Bank of England, with respect to the Expediency of the Resumption of Cash Payments;—with Minutes of Evidence, and an Appendix:—7 May 1819:—Communicated by The Lords, 12th May 1819. Ordered, by the House of Commons, to be Printed, 12 May 1819.’

[1 ]Reply to Bosanquet; above, III, 195.

[1 ]This answer is amended below, pp. 401–3, Question 106.

[1 ]See Economical and Secure Currency (1816), above, IV, 63

[1 ]Alexander Baring, too, in his evidence to the Commons Committee on 12 March 1819, referred to the possibility ‘that the amount of silver may be hereafter increased by the improvement in the working of the South American mines’ (‘Minutes of Evidence’, p. 192). Cp. below, VIII, 3.

[1 ]Questions 26 and 59.

[1 ]A similar proposal had been made on 10 March by Alexander Baring before the Lords’ Committee: ‘I should certainly say that it would be better to have no Gold Coin, if the Question of the Forgery of Paper can be satisfactorily settled. If there should be a Gold Coin, it must be to a restricted Amount, with a Seignorage which may be carried to any Extent, provided it be not sufficient to encourage illegal coining; the Gold Coin would in fact be a Gold Token, and could not affect the Value of the Standard.’ (Lords’ Report, ‘Minutes of Evidence’, p. 132, Q. 167.) Cp. Principles, above, I, 371–2.

[1 ]There are extensive extracts from the regulations of 1803 concerning French coinage, in Ricardo’s hand, among his papers; these however belong to a much earlier period.

[1 ]The price is not mentioned in the earlier part of the evidence as published; cp. Question 36 ff., p. 381 ff. above.

[1 ]Should be ‘13.79’. See Robert Mushet, An Enquiry into the Effects produced on the National Currency and Rates of Exchange by the Bank Restriction Bill..., London, Baldwin, 1810, Appendix.

[2 ]Cp. above, p. 390–1.

[1 ]Report in the Morning Chronicle of 22 March 1811.

[2 ]See ‘Report of the Lords Committee of Secrecy, 1797’ (reprint in Parliamentary Papers, 1810, vol. iii), p. 84.

[1 ]Goldsmid in his evidence stated that the Tables ‘published by Wettenhall are likely to be correct; they are made from our reports to the person who furnishes him with the prices’ (Bullion Rep. p. 36).

[2 ]‘Report ... 1797’, p. 40.

[3 ]See ‘Bank of England, Accounts...’, ordered to be printed 22 Feb. 1811 (No. 5 of these Accounts is ‘An Account of the highest Prices paid by the Bank for Bullion in each Year, from 1773 to 1809, both inclusive’), in Parliamentary Papers, 1810–11, vol. x, No. 22. Cp. above, III, 77, n.

[4 ]See ‘An Abstract Account of the Prices paid by the Bank of England for Gold and Silver Bullion, in each Year, from 1697 to 28 Feb. 1811’, in Parliamentary Papers, 1810–11, vol. x, No. 69.

[1 ]This report, taken from the Morning Post of 23 Dec. 1815, seems more accurate than those in the other newspapers. Ricardo wrote to Malthus on 24 December that the reporters ‘were most carefully excluded from the Court’, and that the Morning Chronicle had imputed to him what he ‘neither felt nor uttered’. For Ricardo’s own account of his speech see the same letter (below, VI, 335–6), and Economical and Secure Currency (above, IV, 106). The report in the Morning Chronicle of 22 December, to which he objected, was as follows: ‘Mr. D. Ricardo argued in favour of the motion; he stated that he was a great friend to publicity; that he attached no blame to the Directors, on the contrary was ready to give his testimony in their favour, but still that the law of the land was paramount to every consideration, and that no argument of advantage such as had been stated by his neighbour (Mr. Payne) could weigh against it; he would acquiesce in any distribution the Bank Directors might choose to make; that Bankers differed from every other trader, they trade with others’ capital, merchants of every degree with their own.’

[1 ]See the Star, 23 and 27 March 1816.

[1 ]Report in The Times, 9 Feb.1816. Ricardo refers to this Court in ed. 2 of Economical and Secure Currency, above, IV, 88, n. Cp. his letter to Malthus of 7 Feb. 1816, below, VII, 19.

[2 ]Mr. Mellish’s Resolutions, which are discussed by Ricardo and reprinted in Economical and Secure Currency, above, IV, 86 and 138.

[1 ]Report in The Times, 19 March 1819.

[2 ]‘Nous pensons comme vous que l’essence d’une Banque comme de toute institution qui repose sur le crédit doit être la publicit´ la plus entière de ses op´rations et la clart´ de ses comptes.’ (Letter from Benjamin Delessert to Ricardo, dated Paris, 13 March 1819; MS in R.P.)

[1 ]Probably Joseph Hume.

[2 ]Report in The Times, 28 June1819.

[3 ]In a letter to Trower of 8 July 1819 (below, VIII, 45–6), Ricardo explains that he was very reluctant to let his name be on the Committee, as he dissented from all of Owen’s conclusions; he was only persuaded by the entreaties of the Duke of Kent, who assured him that he was ‘not bound to approve, only to examine.’ See also his speech in the House of Commons on 16 Dec. 1819, above, p. 30.

[1 ]See The Life of Robert Owen, written by himself, London, 1858, vol. Ia, pp. 237–50.

[1 ]Report in The Times, 1 Jan. 1821. Ricardo’s speech was reprinted in A Selection of Speeches Delivered at Several County Meetings in the Years 1820 & 1821, London, Ridgway, 1822, pp. 47–8. On this meeting, see VIII, 330.

[2 ]On the third reading of the Bill of Pains and Penalties, 10 Nov. 1820, both Lord Sherborne and Lord Ducie had voted in favour of the Queen.

[1 ]Report in the Scotsman, 22 Dec.1821. A similar report of the speech is contained in a pamphlet entitled The Proceedings in Herefordshire connected with the visit of Joseph Hume, Esq. M.P...., Hereford and London, 1822. On the meeting cp. also Ricardo’s letters of 11 Dec. 1821 to Trower and of 3 Jan. 1822 to McCulloch, below, IX, 121 and 141, n. 1.

[2 ]In the letter of invitation, dated Hereford, 10 Nov. 1821, John Allen, Junr., writing on behalf of the Committee, addressed Ricardo as ‘a Herefordshire Free-holder, and one of the very few Members, who on every occasion supported Mr. Hume’s exertions in the House’. ‘The Committee’ he concluded ‘hope that a gentleman who has purchased estates in the County, and whose parliamentary conduct has been long well-known and respected, will honour the occasion by his presence.’ (MS in R.P.)

[1 ]See above, p. 34.

[2 ]Vice-President of the meeting.

[1 ]Report in The Times, 24 May1822.

[2 ]Christopher Hely-Hutchinson, M.P. for Cork.

[1 ]Report in The Asiatic Journal and Monthly Register for British India and its Dependencies, August 1822, vol. xiv, pp. 152–3.

[1 ]Mr. S. Dixon.

[1 ]Report in The Asiatic Journal and Monthly Register for British India and its Dependencies, April 1823, vol. xv, pp. 370–2.

[1 ]See the debate in the House of Commons on 22 May 1823, above, p. 297 ff.

[2 ]See above, p. 475.

[1 ]Report in the Morning Chronicle, 24 May 1823.

[1 ]Below, pp. 508–10.

[2 ]‘Ricardo in Parliament’, Economic Journal, June 1894, p. 251, reprinted in Cannan’s The Economic Outlook, 1912, p. 91.

[3 ]Below, p. 511–12.

[4 ]Letter of 25 May 1818, below, VII, 263.

[1 ]Letter from Trower, 7 June 1818, below, VII, 268, and to Trower, 27 June 1818, ib. 275.

[2 ]Below, VII, 285, 298–9.

[3 ]Above, pp. 112 and 283.

[4 ]Below, VII, 272–3.

[5 ]Below, p. 504–5.

[6 ]Observations, below, p. 499; and cp. to Trower, 27 June and 20 Dec. 1818, below, VII, 273 and 369–70.

[7 ]Below, p. 501.

[8 ]As evidence of how fully the ruling classes had recovered their self-confidence by 1823, a passage from a speech of Robinson, then Chancellor of the Exchequer, describing ‘the condition of those great masses of our population which are congregated in the manufacturing districts’, may be quoted: ‘What was the state of that population three or four years ago, when they laboured under the severe pressure of acknowledged distress, and what is its actual condition? Where is the disquietude, the tumult, the sedition, the outrage of that period? Vanished. What have we in their place? Peace, order, content and happiness.’ (Speech on the Financial Situation of the Country, 21 Feb. 1823; Hansard, N.S., VIII, 201.)

[1 ]Below, VII, 301.

[2 ]ib. 302.

[3 ]ib. 317.

[4 ]ib. 329. Mill promised ‘a more detailed criticism’, but no such criticism is extant. The tenour of the other letters leaves little doubt that reform was the subject of the discourses.

[5 ]ib. 349–50, 358, 364.

[1 ]He may have had before him the report of the debate in the House of Commons on 2 June 1818, on the Resolutions for the Reform of Parliament which had been drafted by Bentham and introduced by Sir Francis Burdett. See Hansard, XXXVIII, 1118– 1185 and cp. Bentham’s Works, ed. by Bowring, vol. x, p. 491 ff.

[2 ]Thus cp. the passage in the Defence of the Ballot that ‘One Hon. Gentleman has observed, that he is prepossessed in favour of open voting, without being able to give any reason why he prefers it’ (below, p. 512) with the allusion to the opponents of the ballot in a letter to Trower of 18 Sept. 1818: ‘I have never heard any solid reasons for their objections:—they are all to be resolved to an antipathy, for which they can give no account’ (below, VII, 299).

[1 ]Scotsman, 24 April 1824.

[1 ]Scotsman, 17 July 1824.

[1 ]Blank in MS.

[1 ]Omitted in MS.

[2 ]Blank in MS, here and below.

[3 ]Omitted in MS.

[4 ]In MS ‘latter’.

[1 ]‘to be’ replaces ‘on his plan’.

[2 ]In MS ‘gold’.

[1 ]‘so large a’ replaces ‘a sufficient’.

[1 ]Bound with other pamphlets in vol. vi of the Ricardo Collection of Tracts. The notes are here reproduced by kind permission of the Goldsmiths’ Librarian.

[2 ]Ricardo left London on 12 July 1822; the first edition of the pamphlet was advertised in the Morning Chronicle of 9 Nov. 1822.

[3 ]On 23 Nov. 1822 Ricardo had written from Paris that he expected to be ‘the object of much personal attack’ from the country gentlemen. See below, X, 349.

[1 ]Cut off by the binder here and below.

[2 ]On Western’s attitude in 1811 see above, p. 316.

[3 ]See the quotation from Western’s speech of 7 (not 1) March 1816, above, p. 318–19.

[1 ]The remainder of the note is cut off by the binder.

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RELIGIOUS OPINIONS—PETITION OF MINISTERS OF THE CHRISTIAN RELIGION FOR FREE DISCUSSION 1 July 1823 - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 5 Speeches and Evidence [1819]

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RELIGIOUS OPINIONS—PETITION OF MINISTERS OF THE CHRISTIAN RELIGION FOR FREE DISCUSSION 1 July 1823

12 Feb. 1824

RICARDO’S AUTOGRAPH TRANSCRIPT OF HIS OWN SPEECH OF 24 MAY 1819

EVIDENCE ON THE USURY LAWS 1818

NOTE ON THE EVIDENCE ON THE USURY LAWS

MINUTES OF EVIDENCE TAKEN BEFORE THE SELECT COMMITTEE ON THE USURY LAWS

Jovis, 30° die Aprilis, 1818.

EVIDENCE ON THE RESUMPTION OF CASH PAYMENTS 1819

NOTES ON THE EVIDENCE ON THE RESUMPTION OF CASH PAYMENTS

I.

The Committees

II.

The Proceedings of the Committees

III.

The Reports

IV.

The ‘Ricardoes’

V.

MINUTES OF EVIDENCE TAKEN BEFORE THE SECRET COMMITTEE ON THE EXPEDIENCY OF THE BANK RESUMING CASH PAYMENTS

Jovis, 4° die Martii, 1819.

Veneris, 19° die Martii, 1819.

MINUTES OF EVIDENCE TAKEN BEFORE THE LORDS COMMITTEES APPOINTED A SECRET COMMITTEE TO ENQUIRE INTO THE STATE OF THE BANK OF ENGLAND, WITH REFERENCE TO THE EXPEDIENCY OF THE RESUMPTION OF CASH PAYMENTS AT THE PERIOD NOW FIXED BY LAW

Die Mercurii, 24° Martii 1819.

Die Veneris, 26° Martii 1819.

SPEECHES ON VARIOUS OCCASIONS

I

GENERAL COURT OF PROPRIETORS OF THE BANK OF ENGLAND121 March 1811

II

GENERAL COURT OF PROPRIETORS OF THE BANK OF ENGLAND121 December 1815

III

GENERAL COURT OF PROPRIETORS OF THE BANK OF ENGLAND18 February 1816

IV

GENERAL COURT OF PROPRIETORS OF THE BANK OF ENGLAND118 March 1819

V

MEETING ON MR. OWEN’S PLAN226 June 1819

VI

GLOUCESTER COUNTY MEETING130 December 1820

VII

MEETING AT HEREFORD IN HONOUR OF JOSEPH HUME17 December 1821

VIII

WESTMINSTER REFORM DINNER123 May 1822

IX

GENERAL COURT OF THE EAST INDIA COMPANY112 June 1822

X

GENERAL COURT OF THE EAST INDIA COMPANY119 March 1823

XI

WESTMINSTER REFORM DINNER123 May 1823

TWO PAPERS ON PARLIAMENTARY REFORM

NOTE ON TWO PAPERS ON PARLIAMENTARY REFORM

OBSERVATIONS ON PARLIAMENTARY REFORM1By the lateMr. Ricardo

DEFENCE OF THE PLAN OF VOTING BY BALLOT1By the lateMr. Ricardo

APPENDICES

I

DRAFT OF A LETTER TO A NEWSPAPER ON THE EFFECTS OF PEEL’S BILL

II

NOTES ON WESTERN’S ‘SECOND ADDRESS TO THE LANDOWNERS’, 1822

RELIGIOUS OPINIONS—PETITION OF MINISTERS OF THE CHRISTIAN RELIGION FOR FREE DISCUSSION
1 July 1823

GENERAL COURT OF PROPRIETORS OF THE BANK OF ENGLAND1
21 March 1811

GENERAL COURT OF PROPRIETORS OF THE BANK OF ENGLAND1
21 December 1815

GENERAL COURT OF PROPRIETORS OF THE BANK OF ENGLAND1
8 February 1816

GENERAL COURT OF PROPRIETORS OF THE BANK OF ENGLAND1
18 March 1819

MEETING ON MR. OWEN’S PLAN2
26 June 1819

GLOUCESTER COUNTY MEETING1
30 December 1820

MEETING AT HEREFORD IN HONOUR OF JOSEPH HUME1
7 December 1821

WESTMINSTER REFORM DINNER1
23 May 1822

GENERAL COURT OF THE EAST INDIA COMPANY1
12 June 1822

GENERAL COURT OF THE EAST INDIA COMPANY1
19 March 1823

WESTMINSTER REFORM DINNER1
23 May 1823

OBSERVATIONS ON PARLIAMENTARY REFORM1
By the lateMr. Ricardo

DEFENCE OF THE PLAN OF VOTING BY BALLOT1
By the lateMr. Ricardo