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 Front Page arrow Titles (by Subject) arrow 8.: TOOKE'S THOUGHTS ON HIGH AND LOW PRICES [1] GLOBE AND TRAVELLER, 4 MAR., 1823, P. 1 - The Collected Works of John Stuart Mill, Volume XXII - Newspaper Writings December 1822 - July 1831 Part I

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Collection: The Collected Works of John Stuart Mill

8.: TOOKE’S THOUGHTS ON HIGH AND LOW PRICES [1] GLOBE AND TRAVELLER, 4 MAR., 1823, P. 1 - John Stuart Mill, The Collected Works of John Stuart Mill, Volume XXII - Newspaper Writings December 1822 - July 1831 Part I [1822]

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The Collected Works of John Stuart Mill, Volume XXII - Newspaper Writings December 1822 - July 1831 Part I, ed. Ann P. Robson and John M. Robson, Introduction by Ann P. Robson and John M. Robson (Toronto: University of Toronto Press, London: Routledge and Kegan Paul, 1986).

Part of: Collected Works of John Stuart Mill, in 33 vols.

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8.

TOOKE’S THOUGHTS ON HIGH AND LOW PRICES [1]

GLOBE AND TRAVELLER, 4 MAR., 1823, P. 1

Thomas Tooke (1774-1858), another founding member of the Political Economy Club, became best known for his History of Prices, 6 vols. (1838-57). His Thoughts and Details on the High and Low Prices of the Last Thirty Years was published in London by Murray in 1823, with the Parts separately issued and paginated. This, Mill’s first published review, appeared in two parts, both headed “Thoughts and Details on the High and Low Prices of the Last Thirty Years,” with subheadings for the first, “Part 1.—On the Alterations in the Currency. By Thomas Tooke, F.R.S.,” and for the second (No. 12), “In Four Parts. Parts II, III, and IV. By Thomas Tooke, F.R.S.” The first part was his first contribution to the newly amalgamated Globe and Traveller. The two-part unsigned review is described in Mill’s bibliography as “A Notice of Part I of Mr. Tooke’s work on High and Low Prices, which appeared in the Traveller of 4th March 1823” and “A notice of Part II of Mr. Tooke’s work on High and Low Prices, which appeared in the Chronicle of 9th August 1823”

(MacMinn, p. 2).

mr. tooke’s new work on the High and Low Prices of the last Thirty Years, promises to be of so great utility in furnishing answers to many of the usual fallacies, on what is called “the Agricultural Question,” that we cannot devote our columns to a better purpose than that of giving a short outline of its contents. The questions, it is true, which regarded the operation of the Bank Restriction, and subsequently of Mr. Peel’s Bill,1 were settled long ago by general reasoning to the satisfaction of every thinking man. As, however, several well-intentioned, but mistaken individuals, have brought forward in opposition to conclusions borne out by the most convincing arguments, certain facts which they assert to be inconsistent with them, we think that Mr. Tooke has rendered a great service to the British public, in proving that of these facts, a great proportion are incorrect, and the remainder perfectly reconcileable to the results of general reasoning.

On the fluctuations of prices during the last thirty years, there are, says Mr. Tooke, two prevailing opinions. The one attributes the high prices wholly to the excess of paper, and the present low ones to the resumption of cash payments. The other ascribes the high prices wholly to the war, and the low ones to the transition from war to peace. The advocates of both opinions agree in attributing very little to the varieties of the seasons.

These opinions Mr. T. considers as erroneous. He enumerates three principal causes of the variations in prices:—

1. Alterations in the currency; 2. War, and the return to peace; 3. Varieties of the seasons. [Pt. I, p. 4.] In the present volume, however, he confines himself to the first of these causes.

It is allowed on all hands that the Bank Restriction, by producing over-issues of paper, raised prices to the extent at least of the difference between the market and Mint prices of gold—that is, to the degree in which more paper was required to buy an ounce of gold than was equal to it in nominal amount. This difference, during the whole period from 1797 to 1814, never exceeded 20 per cent. on the average of three years, and during the first twelve years after the suspension of cash payments, averaged no more than about 4 per cent.

But it is a common opinion that the Bank Restriction was the cause, not only of a rise of prices to this extent, but of a much greater rise. There is no doubt that many commodities rose in price, not twenty per cent. merely, but as much as cent. per cent. To prove that this rise was owing to the Bank Restriction, and consequently the present low prices to the resumption of cash payments, three arguments are employed:—

1. That the value of the precious metals, in the commercial world, was lowered by the exportation of gold from England, in consequence of the Bank Restriction, and raised again by the re-importation produced by a return to a metallic currency. The value, therefore, of the currency varied more than is indicated by its fall relatively to gold, since gold itself had fallen in value.

2. That the compulsory paper system lowered the value of money by introducing expedients to economise the use of it, which was equivalent to an increase of its quantity.

3. That a progressive rise of prices accompanied a progressive increase of paper, which affords a strong presumption that the latter was the cause of the former.2

Mr. Tooke proceeds to examine these arguments.

The first he answers by showing that the quantity of gold set at liberty by the Bank Restriction was not sufficient to lower the value of gold above one per cent.; that this was compensated by the great demand for gold, for the use of the Continental armies, &c. That in like manner the drain of gold on the Continent, for re-importation into England, was compensated by the cessation of the extraordinary demand. These conclusions he further confirms by an adduction of facts relative to the value of precious metals in France. [Pt. I, pp. 21-42, and 212-15.]

As to the second alleged effect, that of heightening the expedients for economising the circulating medium, Mr. T. admits that it took place; but he proves by conclusive arguments that it did not arise from the Bank Restriction; that, moreover, at the time when it occurred, and for some years after, the amount of currency was not increased, but diminished, while, from the increased money transactions of the country, the demand for currency was increased—two circumstances which fully compensated for the virtual increase of the circulating medium. The expedients for economising the currency are still in operation as before. If they had raised prices, they ought to have prevented them from falling. [Pt. I, pp. 43-50.]

The Bank Restriction is supposed to have further contributed to lower the value of money by increasing the issue of country paper, and thus substituting credit for currency. Mr. T. however, proves, that except to the degree indicated by the price of gold, the increase and diminution of country paper, which took place at various periods during the Restriction, were not simultaneous with the increase and diminution of Bank of England paper, and depended upon causes entirely different. [Pt. I, pp. 50-62.]

Mr. T. next considers the alleged connection between the Bank Restriction and a progressive rise of prices. In order to meet this assertion, he passes in review all the variations of prices which have taken place during the last 30 years: he shows that during the first seven years after the Bank Restriction, instead of a progressive rise, there was a decided fall in the price of corn: that the subsequent fluctuations were in no way dependent on the Bank Restriction, except to the degree indicated by the price of gold; but were referable to other causes. These are, the variations of the seasons, and the variations in the amount of private paper and credit, arising from speculation and over-trading; which Mr. Tooke also analyses, and refers to their real sources. [Pt. I, pp. 63-168.]

He then anticipates an objection, viz. that were it not for the Bank Restriction, these variations of private paper and credit would either not have taken place, or not to so great a degree.—Mr. T. however, proves, from the examples of Hamburg, the United States of America, and this country before the Bank Restriction, that great variations in private credit are by no means peculiar to a system of unconvertible paper money. [Pt. I, pp. 169-76.]

Finally, he inquires into the immediate cause of the present low prices, and shows that they are by no means lower than the excess of supply over demand, which is well ascertained to exist, will account for. [Pt. I, pp. 184-98.]

We must now take our leave of Mr. Tooke for the present; we shall take an early opportunity to resume the consideration of this important subject.3 In the mean time, we earnestly recommend to such of our readers as desire to understand thoroughly the Agricultural and Currency questions, to peruse with attention this well-timed and highly-useful production.

[1 ]37 George III, cc. 45, 91 (1797), known as the Bank Restriction Acts, and 59 George III, c. 49 (1819), introduced by Robert Peel (1788-1850), and known as Peel’s Act.

[2 ]Pt. I, pp. 18-19; Tooke is expounding, in order to refute, the position of Edward Copleston (1776-1849), Provost of Oriel College and Bishop of Llandaff (one of the “several well-intentioned but mistaken individuals” Mill refers to above), in “State of the Currency,” Quarterly Review, XXVII (July 1822), 239-67.

[3 ]See No. 12.