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THE CURRENCY JUGGLE 1833 - John Stuart Mill, The Collected Works of John Stuart Mill, Volume IV - Essays on Economics and Society Part I 
The Collected Works of John Stuart Mill, Volume IV - Essays on Economics and Society Part I, ed. John M. Robson, Introduction by Lord Robbins (Toronto: University of Toronto Press, London: Routledge and Kegan Paul, 1967).
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THE CURRENCY JUGGLE 1833
Dissertations and Discussions, I (2nd ed., London: Longmans, 1867), 42-55. (Hereafter referred to as D&D, with edition, volume, and page numbers.) Headed: “The Currency Juggle.” Reprinted from Tait’s Edinburgh Magazine, II (Jan., 1833), 461-7 (unsigned), where the same title carries a footnote: “Evidence of Thomas Attwood, Esq. before the Committee of the House of Commons, on the Bank Charter” (Parliamentary Papers, 1831-32, VI, 452-68). Identified in JSM’s bibliography as “An article headed the Currency Juggle in the 10th numb. of Tait’s Magaz. Jan. 1833. (N.B. The foot-note at the end is not mine)” (MacMinn, 24). In his Autobiography (128), JSM refers to the reprinting of the article in D&D. There are no corrections or variants indicated in the Somerville College copies of the article in Tait’s and in D&D.
To the editor of Tait’s he wrote (7/11/32) in part: “I am highly gratified by what you say of my paper on Currency, and no less so at the notes you propose to add as from yourself, as I agree with you so decidedly and so warmly on both points that if we could have known each other’s minds before I wrote the article, I would gladly have touched upon those collateral questions in the text” (Earlier Letters, Collected Works, XII, 130).
The following text, taken from the 2nd ed. of D&D (the last in JSM’s lifetime), is collated with that in D&D, 1st ed. (London: Parker, 1859), and that in Tait’s. In the footnoted variants, D&D, 2nd ed., is indicated by “67”; D&D, 1st ed., by “59”; Tait’s by “33”.
The Currency Juggle
all friends of ‘the Movement’—all persons, be they Ministers, Members of Parliament, or public writers, who look for the safety and well-being of England, not through the extinction, but through the further progress of apoliticala reform—commit, in our opinion, an egregious blunder, if they devote themselves chiefly to setting forth what innovations ought not to be made. Once open a door, and mischief may come in as well as go out—who doubts it? But our fears are not on that sideb: improvementb , and not conservation, is the prize to be striven for just now. c The tide of improvement having once begun to rise, we know that froth, and straws, and levities of all kinds, will be floated in multitudes up the streamd; but it is not the business of Reformersd to watch for their appearance, and break each successive bubble the moment it shows itself on the surface. eThese may be lefte to burst of themselves, or to be swept away by the efforts of such as feel themselves called upon by their duty to make that their occupation. Be it ours to find ffitf work for the new instrument of government; it is enough that our silence testifies against the unfit. No one can suffice for all things; and the time is yet far distant when a Radical Reformer can, without deserting a higher trust, allow himself to assume, in the main, the garb and attitude of a Conservative.
There are, however, cases in which gthis wholesomeg rule of conduct h must be departed from, and the i evil incurred of a conflict between reformers and reformers in the face of the common enemy. Purposes may be proclaimed by part of the multitudinous body of professed Radicals, which, for the credit of the common cause, it may be imperative upon their fellow-Radicals to disavow; purposes such as cannot even continue to be publicly broached (not being as publicly protested against) without jserious mischiefj . In this light we look upon all schemes for the confiscation of private property, in any shape, or under any pretext; and upon none more than the gigantic plan of confiscation which at present finds some advocates—a depreciation of the currency.
In substance, this is merely a roundabout (and very inconvenient) method of cutting down all debts to a fraction. Considering it in that light, it is not wonderful that k fraudulent debtors should be its eager partisans; but what recommends it to them should have been enough to render it odious to all well-meaning, even if puzzle-headed, persons. That men who are not knaves in their private dealings should understand what the word depreciation means, and yet support it, speaks but ill for the existing state of morality on such lsubjectsl . It is something new in a civilized country. Several times, indeed, since paper credit existed, governments or public bodies have got into their hands the power of issuing a paper currency, without the restraint of convertibility, or any limitation mofm the amount. The most memorable cases are those of Law’s Mississippi scheme, the Assignats, and the Bank Restriction in 1797. On these various occasions a depreciation did in fact take place; but the intention was not nprofessedn of producing one, nor were its authors in the slightest degree aware that such would be the effect. The important truth, that currency is lowered o(cæteris paribus)o in value, pby beingp augmented in quantity, was known solely to speculative philosophers, to Locke and Hume. The qPracticalsq had never heard of it; or if they had, disdained it as visionary theory. Not an idea was entertained that a paper-money which rested on good security—which rrepresentedr , as the phrase was, real wealth—could ever become depreciated by the mere amount of the issues.
But now, this is understood and reckoned upon, and is the very foundation of the scheme. sEverybody, with a few ridiculous exceptions, now knowss , that increasing the issues of inconvertible tpaper,t lowers its value, and thereby takes from all who have currency in their possession, or who are entitled to receive any fixed sum, an indefinite aliquot part of their property or income; making a present of the amount to the issuers of the currency, and to the persons by whom the fixed sums are payable. This is seen as clearly as daylight; and udo men thereforeu recoil from the idea? No; they coolly propose that the thing should be done; the novæ tabulæ issued; the transfer to the debtor of the lawful property of the creditor, and to the banker, of part of the property of every vonev who has money in his purse, deliberately and knowingly accomplished. And this is seriously entertained as a proposition sub judice; quite as fit to be discussed, and as likely, à priori, to be found worthy of adoption, as any other.
At the head of the depreciation party are the two Messrs. Attwood, Matthias and Thomas: the first wa Tory, andw nominee of the Duke of Newcastle: his brother, the chairman of the Birmingham Union, one who, as a man of action, willing and able to stand in the breach, the organizer and leader of our late victorious struggle, has deserved well of his country. But the ability required for leading x a congregated multitude to victory, whether in the war of politics or in that of battles, is one thing; the capacity to make laws for the commerce of a great nation, or even to interpret the ycommonesty mercantile phenomena, is another. If any one still doubts this truth, zhe may learn it fromz Mr. Thomas Attwood’s evidence before the Bank Committee.
Mr. Attwood has there given vent to speculations on currency, which prove that on a topic to which he has paid more attention than to any other, he is yet far beneath aevena his recent antagonist, Mr. Cobbett.[*] Mr. Cobbett, in truth, sees as clearly as any one, that to enact that sixpence should hereafter be called a shilling, would be of no use except to the bpersonb who owed a shilling before, and is now allowed to pay it with sixpence. And, it being no part of Mr. Cobbett’s object to produce any gratuitous evil, he has ccommonc sense enough to see that it would be absurd, for the sake of operating upon dexistingd contracts, to render all future ones impracticable except on the footing of gambling transactions, by making it impossible for eany onee to divine whether the shilling he undertakes to pay will be worth a penny or a pound at the time of payment. Mr. Cobbett, therefore, is for calling a spade a spade, and cancelling, avowedly, a part, or the whole, as it may happen, of all existing debts; permitting the pound sterling to be worth twenty shillings, as before. Future creditors would thus have the benefit of knowing what they bargained for, though they might, indeed, feel a slight doubt whether it would be paid. In this scheme there is only knavery—no folly; fsave thatf of expecting that a great act of national knavery should be a national benefit. Mr. Attwood, on the other hand, is for the robbery too; but then it has not so much the character of a robbery in his eyes; for if it gbeg done in htheh way of a depreciated ipaper currencyi , such a flood of wealth, he jimaginesj , will be disengaged in the process, that the robber and the robbed, the lion and kthek lamb, lwilll lie down lovingly together and wallow in riches. At the bottom of the fundholder’s pocket, Mr. Attwood expects to find the philosopher’s stone. As great a man as Mr. Attwood, the King of Brobdingnag, declared it to be his creed, that the man who calls into existence two blades of grass where monlym one grew before, deserves better of his country than the whole tribe of statesmen and warriors. Mr. Attwood has the same exalted opinion of the man who calls two pieces of paper into existence where only one piece existed before.
There phas been, and is,p one sophism, which has enabled many well-intentioned qpersonsq to disguise from their own consciences the real character of the contemplated fraud upon creditors. This sophism r has some superficial plausibility. More than half (it is argued) of the National Debt, as well as a great multitude of private engagements, were contracted in a depreciated currency; if, therefore, the interest or principal be s paid without abatement, in money of the ancient standard, we are paying to t public and private creditors more than they lent.
To this fallacy there are as many as three or four sufficient refutations, every one standing on its own independent ground. But the most conclusive and crushing of them all is not unfrequently overlooked, such is the shortness of men’s memories, even about the events of their own time. Many who abhor the “equitable adjustment,” join in condemning the restoration of the currency in 1819; uconcedeu that Peel’s Bill[*] plundered all debtors for the benefit of creditors; but vurgev , that the present fundholders and other creditors are, in great part, wnot the same personsw who reaped the undue benefit; and that to claim damages from one set of xpersonsx , because another set have been overpaid, is no reparation, but a repetition of injustice. This is, indeed, true and irresistible, even though it stood alone: there yneedsy no other argument: yet there zisz another, and a still more powerful one.
The restoration of the ancient standard, and the payment, in the restored currency, of the interest of a debt contracted in a depreciated one, was no injustice, but the simple performance of a plighted compact. All debts contracted during the Bank Restriction were contracted under as full an assurance as the faith of a nation could give, that cash payments were only atemporarilya suspended. At first, the suspension was to last a few weeks, next, a few months; then, at bfarthestb , a few years. Nobody ceven insinuated a suggestionc that it should be perpetual, or that, when cash payments were resumed, less than a guinea should be given at the Bank for a pound note and a shilling. And to quiet the doubts and fears which would else have arisen, and which would have rendered it impossible for any Minister to raise another loan except at the most ruinous interest, it was made the law of the land, solemnly sanctioned by Parliament, that, six months after the peace, if not before, cash payments should be resumed. This, therefore, was distinctly one of the conditions of all the loans made during that period. It is a condition which dhas not beend fulfilled. Instead of six months, more than eas manye years intervened between the peace and the resumption of cash payments. fThe nation, therefore, hasf not kept faith with the fundholder. Instead of having overpaid him, we have cheated him. Instead of making him a present g(as is alleged)g of a percentage equal to the enhancement of the currency, we continuedh, on the contrary,h to pay his interest in depreciated paper iseverali years after we were bound by contract to pay it in cash. And be it remarked, that the depreciation was at its highest during a part of that jveryj period. If, therefore, there is to be a great day of national atonement for gone-by wrongs, the fundholders, instead of having anything to kpay back, shouldk be directed to send in their bill for the principal and interest of what they were defrauded of during lthe first years of the peacel . Instead of this, it is proposed that, having already defrauded them of mpartm of a benefit which was in their bond, and for which they gave an equivalent, we should now force them to make restitution of the nremainder.n
That they gave an equivalent is manifest. The depreciation odid not attain its maximum untilo the last few years of the war; indeed, it never amounted to anything considerable till then. It was during those years, also, that p the largest sums were borrowed by the Government. At that time the effects of the Bank Restriction had begun to be well understood. The writings of Mr. Henry Thornton, Lord King, Mr. Ricardo, Mr. Huskisson, Mr. Blake,[*] &c. and the qReportq of the Bullion Committee,[†] had diffused a very general conviction that the rcurrency was in fact depreciatedr , and that the Bank Directors acted on principles of which that evil was the natural consequence. Does anybody imagine that the loans of those years could have been raised, except on terms never before heard of under a civilized government, if there had been no engagement to pay the interest or the principal in money of any fixed standard; but it had been avowed, to whatever point the arbitrary issues of the Bank might depress the value of the pound sterling, there it would be suffered to remain?
What avails it, then, to cavil about s paying more than twast borrowed? Everybody uwho borrows at interest, and keeps his engagement, pays more than he borrowedu . The question is not, have we paid more than we borrowed? but, have we paid more than we vcontractedv to pay? And the answer is, we have paid wlessw . The fundholder, as the weaker party, has pocketed the injury; he only asks to be spared an additional and far greater one. We xcovenantedx to pay in a metallic standard; we therefore are bound to do it. To deliberate on such a question is as if a private person were to deliberate whether he should pick a pocket.
So much for the substance of the fraud. There is, however, no political crime so bad in itself but what may be made still worse by the manner of doing it. To rob all creditors, public and private, is bad enough in all conscience; but, for the sake of robbing existing creditors, to give to a set of bankers the power of taxing the community to an unlimited amount at their sole pleasure, by pouring forth paper which could only get into circulation by lowering the value of all the paper already issued; what would this be but to erect a company of public plunderers, and place all our fortunes in their hands, merely because they offer to lend us our own money, and call the twofold operation “affording facilities to trade?” It were better worth our while to settle a Blenheim or a Strathfieldsaye upon every banker in England. yPecuniary transactionsy would shortly come to an end; in a few months we should be in a state of barter. No zonez in his senses would take money in exchange for anything, except he were sure of being able to lay it out before the next day. aEvery onea would begin to estimate his possessions, not by pounds sterling, but by sheep and oxen, as in the bpatriarchal timesb .
Mr. Attwood opines, that the multiplication of the circulating medium, and the consequent diminution of its value cdoc not merely diminish the pressure of taxes and debts, and other fixed charges, but dgived employment to labour, and that to an indefinite extent. If we could work miracles, we would not be niggardly of them. Possessing the power of calling all the labourers of Great Britain into high wages and full employment, by no more complicated a piece of machinery than an engraver’s plate, a man would be much to blame if he failed for want of going far enough. Mr. Attwood, accordingly, is for increasing the issues, until, with his paper loaves and fishes, he has fed the whole multitude, so that not a creature goes away hungry. Such a depreciation as would cause wheat to average ten shillings the bushel, he thinks, would suffice; but if, on trial, any labourer should declare that he still had an appetite, Mr. Attwood proffers to serve up another dish, and then another, up to the desired point of satiety. If a population thus satisfactorily fed should, under such ample encouragement, double or treble in its numbers, all that would be necessary, in this gentleman’s opinion, is to depreciate the currency so much the more.
It is not that Mr. Attwood exactly thinks that a hungry people can be literally fed upon his bits of paper. His doctrine is, that paper money is not capital, but brings capital into fuller employment. A large portion of the national capital, especially of that part which consists of buildings and machinery, is now, he affirms, lying idle, in default of a market for its productions; those various productions being, as he admits, the natural market for one another, but being unable to exchange for each other, for want e of a more plentiful medium of exchange, just as wheels will not fturnf with a spare allowance of oil. It was suggested to him, by some member of the Committee, that a small nominal amount of currency will suffice to exchange as many commodities as a larger one, saving that it will do it at lower prices; which, however, when common to all commodities, are gexactlyg as good to the sellers as high prices, except that these last may enable them to put off their creditors with a smaller real value. Mr. Attwood could not help admitting this; hbuth it failed to produce any impression upon him; he could not perceive that high prices are in themselves no benefit, he could not get iiti out of his head that high prices occasion “increased consumption,” “increased demand,” and thereby give a stimulus to production.[*] As if it were any increase of demand for bread, to have two bits of paper to give for a loaf instead of one. As if being able to sell a pair of shoes for two rags instead of one, when each rag is only worth half as much, were any additional inducement to the production of shoes.
Whenever we meet with any notion more than commonly absurd, we expect to find that it is derived from what is miscalled “practical experience;” namely, from something which has been seen, heard, and misunderstood. Such is the case with Mr. Attwood’s delusion. What has imposed upon him is, as usual, what he would term “a fact.” If prices could j be kept as high as in 1825, all would be well; for, in 1825, not one well-conducted labourer in Great Britain was unemployed. kThek first liberty we shall take, is that of disbelieving the “fact.” In its very nature, it is one which neither Mr. Attwood, nor any one, can personally know to be true; and his means of accurate knowledge are probably confined to the great manufacturing and exporting town which he personally inhabits. Thus much, however, we grant, that the buildings and machinery he speaks of were not lying idle in 1825, but were in full operation: many of them, indeed, were erected during that frantic period; which is partly the cause of their lying idle now. But why was all the capital of the country in such unwonted activity in 1825? Because the whole mercantile public was in a state of insane delusion, in its very nature temporary. From the impossibility of exactly adjusting the operations of the producer to the wants of the consumer, it always happens that some articles are more or less in deficiency, and others in excess. lTo rectify these derangements, the healthy working of the social economyl requires that in some channels capital should be in full, while in others it should be in slack, employment. But in 1825, it was imagined that all articles, compared with the demand for them, were in a state of deficiency. mAn unusual extension of the spirit of speculation, accompanied rather than caused by a great increase of paper creditm , had produced a rise of prices, which not being supposed to be connected with a depreciation of the currency, each nmerchant or manufacturern considered to arise from an increase of the effectual demand for his particular article, and o fancied there was a ready and permanent market for palmostp any quantity of that article which he could produce. Mr. Attwood’s error is that of supposing that a depreciation of the currency really increases the demand for all articles, and consequently their production, because, under some circumstances, it may create a false opinion of an increase of demand, which false opinion leads, as the reality would do, to an increase of production, followed, however, by a fatal revulsion as soon as the delusion ceases. The revulsion in 1825 was not caused, as Mr. Attwood fancies,[*] by a contraction of the currency; the only cause of the real ruin, was the imaginary prosperity. The contraction of the currency was the consequence, not the cause, of the revulsion. So many merchants and bankers having failed in their speculations, so many, therefore, being unable to meet their engagements, their paper became worthless, and discredited all other paper. An issue of inconvertible bank notes might have enabled these debtors to cheat their creditors; but it would not have opened a market for one more loaf of bread, or one more yard of cloth; because what makes a demand for commodities is commodities, and not bits of paper.
It is no slight qadditional motiveq to rejoice in our narrow escape from marching to Parliamentary Reform through a violent revolution, when we think of the influence which would in that event have been exercised over Great Britain, for good or for ill, by men of whose opinions rwhat precedesr is a faithful picture.s
We have no dread of them at present, because, together with the disapprobation of all instructed tpersonst , they have to encounter a strong popular prejudice against paper money of every kind. The real misfortune would be, if they should wave their currency juggle, and coalesce with the clearer-sighted and more numerous tribe of political swindlers, who attack public and private debts directly and avowedly.
But even thus, we do not fear that they should succeed. There are enough of honest upeopleu in England v to be too many for all the knaves; and it is only for want of discussion that these schemes find any favourers among sincere men. The mischief, and it is not inconsiderable, is, that such things should be talked of, or wthoughtw of; that the time and talents which ought to be employed in making good laws and redressing real wrongs, should be taken up in counselling or in averting xa national iniquityx : to the injury of all good hopes, but most to the damage and discredit of the ypopular causey , which is almost undistinguishably identified in the minds of many excellent, zbutz ill-informed and timid people, with the supremacy of brute force over right, and a perpetually impending spoliation of everything which one apersona has and another b desires.c
[a-a]33 the spirit of
[b-b]33 ; else, like so many others, we should be Conservatives. We are as conservative as anybody of what we deem worth preserving; but we have judged that Improvement
[c]33 This being a settled point with us, our conduct shall not vary from it.
[d-d]33 . We regard it as nowise our business
[e-e]33 We leave these
[h]33 which we have prescribed to ourselves
[j-j]33 detriment to public morality
[p-p]33 in proportion as it is
[s-s]33 All mankind, Mr. Rothschild excepted, now know
[u-u]33 thereupon do men
[w-w]33 , of the genuine Tory stamp,
[z-z]33 we refer him to
[[*] ]See Mansell & Co’s. Report of the Important Discussion held in Birmingham, August the 28th and 29th, 1832, between William Cobbett, Thomas Attwood, and Charles Jones. Birmingham: Mansell, 1832.
[e-e]33 a man
[f-f]33 except the folly
[o-o]33 dispose, afterwards, of
[p-p]33 is, there has been, but
[r]33 , we acknowledge,
[[*] ]59 George III, c. 49.
[w-w]33 not the same men
[z-z]33, 59 is
[c-c]33 dared even to insinuate a proposition,
[d-d]33 we have not
[f-f]33 We, therefore, have
[k-k]33 refund, must
[l-l]33 those five years
[o-o]33 became greatest during
[[*] ]E.g., Thornton, Henry. An Enquiry into the Nature and Effects of Paper Credit. London: Hatchard, 1802; Substance of Two Speeches on the Report of the Bullion Committee. London: Hatchard, 1811.
[[†] ]“Report from the Select Committee on the High Price of Gold Bullion,” Parliamentary Papers, 1810, III, pp. 1-232.
[r-r]33 Bank had the power to depreciate the currency without limit
[u-u]33 pays more than he borrows; everybody, at least, who borrows at interest
[y-y]33 Civilization itself
[a-a]33 Each man
[b-b]33 heroic ages
[e]33 , as he seems to think,
[g-g]33 every jot
[h-h]33 still, however,
[[*] ]See “Minutes of Evidence taken before the Committee of Secrecy on the Bank of England Charter,” Parliamentary Papers, 1831-32, VI, pp. 457ff.
[k-k]33 Now, the
[l-l]33 The healthy working of the machinery, therefore,
[m-m]33 The extension of paper credit, called forth by speculations in a few leading articles
[[*] ]Ibid., p. 461.
[q-q]33 enhancement of the motive we have
[r-r]33 the above
[s]33 No man to whom we are less indebted, has it in his power to do so much mischief as these men. Their merits and services do but render their errors the more dangerous.
[w-w]33 so much as dreamed
[x-x]33 an execrable crime
[y-y]33 cause of Radical Reform
[c]33 [footnote, not by JSM; see headnote to this article:] That our opinions may not be misunderstood, we think it right to explain that, while we object decidedly to any legislatorial depreciation of the currency, we advocate free trade in banking, as in everything else, and the unrestricted issue of bank notes, convertible on demand into the precious metals; in short, the Scottish system of Banking, as explained in our article on The Bank Charter, in Magazine No. III. [Tait’s Edinburgh Magazine, I (June, 1832), pp. 291-314.] And while we maintain that the restoration of the currency to a sound state, gives us no right to deprive the fundholder of any part of his stock, we by no means contend that the huge debt shall be allowed to paralyze the national strength for ever. How it is to be disposed of, with the nearest possible approximation to exact justice to every person, must be the subject of future articles.