Online Library of Liberty

A collection of scholarly works about individual liberty and free markets. A project of Liberty Fund, Inc.

Advanced Search

David Ricardo, The Works and Correspondence of David Ricardo, Vol. 5 Speeches and Evidence [1819]

Purchase now from Liberty Fund

0687 05 tp
Title Page
0687 05 toc
Original Table of Contents or First Page

Edition used:

David Ricardo, 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.

Available in the following formats:
LF Printer PDF 6.41 MB This text-based PDF was prepared by the typesetters of the LF book.
EBook PDF 1.93 MB This text-based PDF or EBook was created from the HTML version of this book and is part of the Portable Library of Liberty.
HTML 1.38 MB This version has been converted from the original text. Every effort has been taken to translate the unique features of the printed book into the HTML medium.
Simplified HTML 1.38 MB This is a simplifed HTML format, intended for screen readers and other limited-function browsers.

About this Title:

Speeches and Evidence contains the texts of Ricardo’s numerous speeches. It consists of his speeches given in the House of Commons and evidentiary advocacies before Parliamentary committees. The introduction provides insightful context to the circumstances and events that preceded Ricardo’s appointment as a Member of Parliament and describes his subsequent influence and role on various committees.

Copyright information:

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.

Fair use statement:

This material is put online to further the educational goals of Liberty Fund, Inc. Unless otherwise stated in the Copyright Information section above, this material may be used freely for educational and academic purposes. It may not be used in any way for profit.

Table of Contents:

Edition: current; Page: [i]
volume v
Edition: current; Page: [ii]

plan of the edition

  • volumeI. Principles of Political Economy and Taxation
  • II. Notes on Malthus
  • III. Pamphlets and Papers, 1809–1811
  • IV. Pamphlets and Papers, 1815–1823
  • V. Speeches and Evidence
  • VI. Letters, 1810–1815
  • VII. Letters, 1816–1818
  • VIII. Letters, 1819–June 1821
  • IX. Letters, July 1821–1823
  • X. Biographical Miscellany
  • XI. General Index
Edition: current; Page: [iii]
Edited by Piero Sraffa with the Collaboration of M. H. Dobb
volume v
Speeches and Evidence 1815–1823
liberty fund
Edition: current; Page: [iv]

This book is published by Liberty Fund, Inc., a foundation established to encourage study of the ideal of a society of free and responsible individuals.

The cuneiform inscription that serves as our logo and as the design motif for our endpapers is the earliest-known written appearance of the word “freedom” (amagi), or “liberty.” It is taken from a clay document written about 2300 b.c. in the Sumerian city-state of Lagash.

First published by Cambridge University Press in 1951.

© 1951, 1952, 1955, 1973 by the Royal Economic Society Typographical design © 2004 by Liberty Fund, Inc.

This edition of The Works and Correspondence of David Ricardo is published by Liberty Fund, Inc., under license from the Royal Economic Society.

10 09 08 07 06 05 04 p 5 4 3 2 1

All rights reserved

Printed in the United States of America

Library of Congress Cataloging-in-Publication Data

Ricardo, David, 1772–1823.

[Works. 2004]

The works and correspondence of David Ricardo / edited by Piero Sraffa; with the collaboration of M. H. Dobb.

p. cm.

Originally published: Cambridge: At the University Press for the Royal Economic Society, 1951–1973.

Includes bibliographical references and index.

Contents: v. 1. On the principles of political economy and taxation— isbn 0-86597-965-0 (pbk.: alk. paper)

1. Economics. 2. Taxation. I. Sraffa, Piero. II. Dobb, M. H. III. Title.

hb161.r4812 2004

330.15′13′092—dc21 2002016222

isbn 0-86597-969-3 (vol. 5: pbk.: alk. paper)

isbn 0-86597-976-6 (set: pbk.: alk. paper)

Liberty Fund, Inc. 8335 Allison Pointe Trail, Suite 300 Indianapolis, IN 46250-1684

Text and cover design by Erin Kirk New, Watkinsville, Georgia

Typography by Impressions Book and Journal Services, Inc., Madison, Wisconsin

Printed and bound by Edwards Brothers, Inc., Ann Arbor, Michigan

Edition: current; Page: [v]


  • List of Speeches page vii
  • Prefatory Note xi
  • Introduction to the Speeches in Parliament xiii
  • Lord Brougham’s Sketch of Ricardo in Parliament xxxii
    • Session 1819 1
    • Session 1819–1820 28
    • Session 1820 42
    • Session 1821 70
    • Session 1822 123
    • Session 1823 246
  • Note on the Evidence on the Usury Laws 335
  • Minutes of Evidence taken before the Select Committee on the Usury Laws, 30 April 1818 337
  • Notes on the Evidence on the Resumption of Cash Payments 350
  • Minutes of Evidence taken before the Secret Committee [of the House of Commons] on the Expediency of the Bank resuming Cash Payments, 4 March 1819 371
    • 19 March 1819 401
    Edition: current; Page: [vi]
  • Minutes of Evidence taken before the Lords Committees appointed a Secret Committee to enquire into the Resumption of Cash Payments, 24 March 1819 416
    • 26 March 1819 439
  • Note on two Papers on Parliamentary Reform 489
  • Observations on Parliamentary Reform 495
  • Defence of the Plan of Voting by Ballot 504
  • I. Draft of a Letter to a Newspaper on the Effects of Peel’s Bill 515
  • II. Notes on Western’s ‘Second Address to the Landowners’, 1822 522
  • Index of Persons in Volume V 529
  • plates
  • David Ricardo, from a marble bust made at Florence in the studio of Vincenzo Bonelli in 1822 (photograph taken in the hall at Gatcombe in 1932) facing p. xxxiv
  • Ricardo’s autograph transcript of his speech of 24 May 1819 on the Resumption of Cash Payments, as prepared by him for Hansard with the aid of newspaper cuttings (from a volume of autographs described on p. xxx, n. 2) facing p. 332
Edition: current; Page: [vii]


  • speeches in the house of commons

  • Poor rates misapplication bill, 25 March 1819 page 1
  • First Report from the Bank of England committee—Cashpayments bill, 5 April 1819 2
  • Mr. Lyttelton’s motion respecting state lotteries, 4 May 1819 3
  • Sinking fund, 13 May 1819 4
  • Poor rates misapplication bill, 17 May 1819 6
  • Bank of England—Resumption of cash payments, 24 and 25 May 1819 7
  • Exchequer bills, 2 June 1819 18
  • The Budget, 9 June 1819 20
  • Bank advances bill, 16 June 1819 23
  • Excise duties bill, 18 June 1819 23
  • Seditious meetings prevention bill, 6 December 1819 28
  • Sir W. de Crespigny’s motion respecting Mr. Owen’s plan, 16 December 1819 30
  • Motion for papers respecting the Bank of England and Exchequer bills, 22 December 1819 35
  • Petition of the merchants of London respecting commercial distress, 24 December 1819 37
  • Commercial restrictions—Petition of the merchants of London, 8 May 1820 42
  • Agricultural distress, 12, 25 and 30 May 1820 47
  • Irish protecting duties, 2 and 8 June 1820 57
  • Loan—Ways and means, 9 June 1820 58
  • Bank of England accounts, 13 June 1820 62
  • The Budget, 19 June 1820 63
  • Committee of supply, 21 June 1820 67
  • Cotton weavers, 28 June 1820 68
  • The Coronation, 3 July 1820 69
  • Supply—Bank of Ireland, 2 February 1821 70
  • Trade of Birmingham—Petition of the merchants, 8 February 1821 71
  • Corn averages, 26 February 1821 78 Edition: current; Page: [viii]
  • State of the revenue—Repeal of the house and window duties, 6 March 1821 79
  • Mr. Gooch’s motion for a committee on agricultural distress, 7 March 1821 81
  • Bank cash payments bill, 19 March 1821 91M
  • Bank cash payments, 28 March 1821 98
  • Public accounts, 29 March 1821 100
  • Agricultural horses tax, 5 April 1821 101
  • Timber duties, 5 April 1821 102
  • Bank cash payments bill, 9 April 1821 105
  • Usury laws, 12 April 1821 109
  • Bank cash payments bill, 13 April 1821 110
  • Timber duties bill, 16 April 1821 110
  • Reform of Parliament, 18 April 1821 112
  • Poor relief bill, 8 May 1821 113
  • Ordnance estimates, 31 May 1821 114
  • The Budget, 1 June 1821 115
  • Ill-treatment of horses bill, 1 June 1821 122
  • Address on the King’s speech at the opening of the session, 5 February 1822 123
  • Mr. Brougham’s motion on the distressed state of the country, 11 February 1822 124
  • Savings banks, 18 February 1822 128
  • Motion for a committee on the agricultural distress,
  • 18 February 1822 129
  • Ways and means, 22 February 1822 138
  • Navy five per cents, 25 February 1822 140
  • Agricultural distress, 5 March 1822 141
  • Banks of England, and of Ireland, 8 March 1822 143
  • Distress in Canada, 13 March 1822 144
  • Motion respecting the simplifying and better arrangement of the public accounts, 14 March 1822 145
  • Mr. Curwen’s motion respecting the duties on tallow and candles 20 March 1822 146
  • Extra post—Petition of Mr. Burgess, 2 April 1822 148
  • Agricultural distress, 3 April 1822 148
  • Agricultural distress and the financial and other measures for its relief, 29 April 1822 155
  • Naval and military pensions, 1 and 3 May 1822 160
  • Agricultural distress report, 7, 9 and 13 May 1822 162 Edition: current; Page: [ix]
  • Absentees, 16 May 1822 186
  • Colonial trade bill, 17 May 1822 188
  • Navigation bill, 20 May 1822 190
  • Naval and military pensions, 24 May 1822 191
  • Bank charter, 31 May 1822 193
  • Naval and military pensions, 3 June 1822 193
  • Corn importation bill, 3 and 10 June 1822 195
  • Navigation bill, 4 June 1822 197
  • Mr. Western’s motion concerning the resumption of cash payments, 12 June 1822 198
  • Labourers’ wages, 17 June 1822 218
  • Irish butter trade, 20 June 1822 218
  • Warehousing bill, 21 June 1822 220
  • The Budget, 1 July 1822 220
  • Mr. Western’s motion respecting the altered state of the currency, 10 July 1822 223
  • Foreign trade of the country, 12 February 1823 246
  • Bank balances, 18 February 1823 247
  • Financial situation of the country, 21 February 1823 248
  • Agricultural distress—Surrey petition, 26 February 1823 251
  • Mr. Whitmore’s motion respecting the corn laws, 26 February 1823 256
  • Mr. Maberly’s motion for the reduction of taxation, 28 February 1823 259
  • National debt reduction bill, 6, 11 and 14 March 1823 266
  • Merchant vessels apprenticeship bill, 13 March 1823 273
  • Mutiny bill—Foreign relations, 18 March 1823 274
  • Coal duties, 21 March 1823 275
  • Warehousing bill, 21 March 1823 275
  • Merchant vessels apprenticeship bill, 24 March 1823 276
  • Petition from Mary Ann Carlile for release from imprisonment, 26 March 1823 277
  • Crown debtors—Contempt of court, 10 April 1823 281
  • Military and naval pensions bill, 18 April 1823 281
  • Merchant vessels apprenticeship bill, 18 April 1823 282
  • Lord John Russell’s motion for a reform of Parliament, 24 April 1823 283
  • Scotch linen laws, 7 May 1823 290
  • Tallow, 7 May 1823 291 Edition: current; Page: [x]
  • Spitalfields silk manufacture acts—Petition for the repeal thereof, 9 May 1823 292
  • Law of principal and factor—Petition for an alteration there of, 12 May 1823 292
  • Importation of tallow—Petition for an additional duty on, 12 May 1823 294
  • Beer duties bill, 12 May 1823 294
  • Silk manufacture bill, 21 May 1823 295
  • East and West India sugars, 22 May 1823 297
  • Malt and beer tax, 28 May 1823 301
  • Wages of manufacturers—Use of machinery, 30 May 1823 302
  • Irish tithes composition bill, 30 May 1823 304
  • Reciprocity of duties, 6 June 1823 305
  • Silk manufacture bill, 9 and 11 June 1823 306
  • Mr. Western’s motion respecting the resumption of cash payments, 11 June 1823 309
  • Beer duties bill, 13 June 1823 322
  • Usury laws repeal bill, 17 June 1823 323
  • Religious opinions—Petition of ministers of the Christian religion for free discussion, 1 July 1823 324
  • Hume’s and Huskisson’s speeches in memory of Ricardo, 12 February 1824 332
  • speeches on various occasions

  • I. General court of proprietors of the Bank of England, 21 March 1811 461
  • II. General court of proprietors of the Bank of England, 21 December 1815 463
  • III. General court of proprietors of the Bank of England, 8 February 1816 465
  • IV. General court of proprietors of the Bank of England, 18 March 1819 466
  • V. Meeting on Mr. Owen’s plan, 26 June 1819 467
  • VI. Gloucester County meeting, 30 December 1820 469
  • VII. Meeting at Hereford in honour of Joseph Hume, 7 December 1821 471
  • VIII. Westminster reform dinner, 23 May 1822 474
  • IX. General court of the East India Company, 12 June 1822 475
  • X. General court of the East India Company, 19 March 1823 478
  • XI. Westminster reform dinner, 23 May 1823 484
Edition: current; Page: [xi]


This volume of Ricardo’s Works is devoted to the spoken word: it contains his speeches in the House of Commons, his evidence before Parliamentary Committees and other speeches and addresses on various occasions. These have never before been collected, or indeed reprinted from the contemporary records. Yet McCulloch, who had experience of Ricardo’s ‘easy, fluent and agreeable’ style of speaking and conversing, held that in clearness and facility ‘his speeches were greatly superior to his publications.’

The volume, apart from the introduction to the Speeches, was to a large extent prepared before the war. Its making-up into page proof was interrupted by war-time restrictions in 1943, and was completed after the end of the war in 1946. The editorial introductions and notes, from the nature of the material, are rather more extensive than in other volumes. More frequent quotation has been made from the unpublished diaries of John Lewis Mallet, and special acknowledgement for permission to do so must be made to the late Sir Bernard Mallet. It has also seemed appropriate to include Lord Brougham’s sketch of Ricardo in Parliament, a first-hand though not unprejudiced view.

In the preparation of this volume much valuable assistance was given by Mrs Barbara Lowe.


Edition: current; Page: [xii] Edition: current; Page: [xiii]


Summary. I. Entering Parliament, p. xiii. II. Ricardo in Parliament, p. xix. III. Committees on which Ricardo Served, p. xxiii. IV. How the Speeches were Reported, p. xxvii. V. The Speeches in the Present Edition, p. xxxi.

I.: Entering Parliament

Ricardo entered Parliament in the early part of 1819 after he had retired from the Stock Exchange and had written his main works on Political Economy. He remained a member of the House of Commons until his death in September 1823, after five years of active parliamentary life marked by constant attendance and frequent speeches.

The first suggestion that Ricardo should enter Parliament is in a letter from James Mill in the autumn of 1814, urging him to place himself ‘in that situation in which his tongue, as well as his pen might be of use.’1 This was at the time when Ricardo had just acquired Gatcomb Park with the intention of giving up business activity in the City. This intention could not be immediately carried out because of ‘the immense concerns in business’2 which entirely occupied him in the spring and early summer of 1815. In August of that year Mill writes again: ‘You now can have no excuse for not going into parliament, and doing what you can to improve that most imperfect instrument of government.’ He adds, ‘in a short time you would be a very instructive, and a very impressive speaker.’3 Ricardo’s reply was characteristic: ‘Your parliamentary scheme is above all others unfit for me,—my inclination does not in the least point that way. Speak indeed! I could not, I am sure, utter three sentences coherently’.4

In October 1816 Mill reverted to the subject, when, in connection Edition: current; Page: [xiv]with the absence of Francis Horner from Parliament, which he deplored, he wrote: ‘You ought indeed to be in parliament, and you must at any rate make arrangements for it at the general election.’1 At the end of November of that year Ricardo declined ‘an earnest invitation to become a candidate for the representation of Worcester’, where a vacancy had occurred. Confronted with the need to answer by return of post, and with the danger of being ‘hurried into all the horrors of a contested election’, his ‘decision was as prompt as the occasion required’2 and Mill in reply expressed full agreement with the decision to decline the offer. ‘If I were in your situation (Mill wrote), the rottenest Borough I could find would be my market, with nothing to do but part with a sum of money.’3

A year later, in December 1817, Edward Wakefield, a friend of Mill who acted as land agent to Ricardo, was negotiating for the borough of Portarlington: the seat for which Ricardo was eventually returned in 1819. This was a typical pocket borough in Ireland, in the patronage of the Earl of Portarlington.4 Ten years earlier, on 28 April 1807, when a General Election was imminent, we find Wellington, then, as Sir Arthur Wellesley, Chief Secretary for Ireland, writing from Dublin Castle: ‘Lord Portarlington is in England, and the agent who settled for that borough upon the last general election was Mr Parnell.5 We have no chance with him, and it would be best to arrange the matter with Lord Portarlington. I heard here that he had sold the return for six years at the last election, and if that should be true, of course we shall not get it now.’6 In fact, at the General Election on 23 May 1807 William Lamb (afterwards Lord Melbourne) was returned for Portarlington as an opposition member; but appears to have Edition: current; Page: [xv]‘lost his seat in 1812 for his support of catholic emancipation’.1 At the General Election of 1816, however, another oppositionist, Richard Sharp, a close friend of Ricardo, was returned for the seat and still held it at the time of Wakefield’s negotiations.

The approach to Wakefield had been made by an agent of the Earl of Portarlington with the object of raising a loan on the security of the Portarlington estates including the borough.2 The Earl had already borrowed large sums on annuities,3 and his estates had been assigned to trustees, one of whom was Sir Henry Parnell, his brother-in-law and an opposition member of Parliament. It was intended to use the proposed loan to pay off the annuities encumbering the estates. The amount required was ‘from 10 to £20,000’.4 Wakefield offered to lend the money on condition that he could nominate the member for the borough at ‘the market price of the day’, this price to be determined by ‘some distinguished and honourable member of the house ... —say such a person as Mr. Grenfell’.5 He thereupon wrote to Ricardo that, if these terms were accepted, the seat would be placed at his service.6

The Earl’s agent, however, proceeded to enquire whether Ricardo, if elected, would vote with the Ministers; and on receiving Wakefield’s reply that ‘politics must not be named— but perfect freedom’, the negotiations came to an end, on the Edition: current; Page: [xvi]ground that ‘Lord Portarlington found there was nothing to be got by returning an opposition man’.1 The fact, noted by Wakefield, that the Earl’s agent (N. Kirkland) was cousin of Charles Arbuthnot, Patronage Secretary in the Government, suggests that it was he, even more than Lord Portarlington, who was anxious to secure the return of a ministerialist.

A number of other seats were also considered about this time.2 Nothing resulted, however, from these negotiations, and by the time of the General Election Ricardo had become reconciled to having no seat. He writes to Malthus on 24 June 1818: ‘I believe it is now finally settled that I am not to be in Parliament, and truly glad I am that the question is at any rate settled, for the certainty of a seat could hardly compensate me for the disagreeables attending the negociation for it’;3 and to Trower on 27 June: ‘My own endeavors to get a seat in the House have not been attended with success, but I believe that amongst all those who are disappointed, in a similar manner, there is not one more resigned than I am. I could meet with nothing where I should not have had a contest, which I was exceedingly unwilling to encounter’.4 At the General Election, on 11 July 1818, the sitting member, Richard Sharp, was again returned for Portarlington.

Soon after the General Election independent negotiations were started by Brougham; and although these were again for the Portarlington seat, they do not seem to have been connected with the previous negotiations of Wakefield.5 The first that Ricardo heard of it was at the end of August 1818, when after a visit of Mill to Gatcomb they went to Gloucester together, where Mill received a letter from Brougham containing a definite offer in Edition: current; Page: [xvii]connection with the seat. To this Ricardo promptly consented, on ‘the terms proposed’, subject only to his solicitor seeing that ‘all is right and secure’.1 On receipt of Ricardo’s answer Brougham wrote: ‘I have arranged all about Ricardo’. He had seen Sir Henry Parnell and ‘we settled everything as he (R) could wish—The titles will take some little time—but all is sure.’2 The terms were that Ricardo should make a loan of between £20,000 and £36,000 against a mortgage on the Portarlington estates, and should pay £4,000 for the seat ‘secured for four years’ (implying the right of re-election in the event of an early dissolution)3 and in addition ‘a chance of sitting 7 years’ (in case of there being no dissolution and Parliament lasting its full term).4 There seems to have been some misunderstanding as to whether Ricardo was to receive the maximum rate of interest fixed by Irish law (6 per cent) or by English law (5 per cent).5 In the event, the loan was of £25,000 and the interest 6 per cent.6

While Ricardo was not actually seated until February 1819, the delay was not due to the disagreement about terms or to the long drawn-out difficulties over the security for the loan. As Brougham had promised Mill, Ricardo was seated ‘the very first day that the forms of Parliament will admit’,7 or very nearly so. For a new writ could not be issued until the new Parliament had met and the fourteen days allowed for presenting election petitions had expired. Parliament was opened by the Regent on 21 January 1819, and the first writs for new elections in vacant seats were Edition: current; Page: [xviii]issued on 5 February. The writ for the return of a member for Portarlington, in the room of Richard Sharp who had accepted the Chiltern Hundreds, was issued on 8 February. Ricardo was returned to Parliament on 20 February 1819, and took his seat on the 26th.1

The arrangements for the loan to Lord Portarlington took a long time to complete. When at last all the legal documents seemed to be in order, difficulties arose on account of the encumbrances which had to be removed to give priority to Ricardo’s mortgage: some of the annuitants refusing to be paid off or to assign their annuities. It was not until the autumn of 1820 that these difficulties were finally overcome, and the £25,000 paid over.2

Within a year of this Lord Portarlington was applying to Ricardo for a further loan of £6,000. This was in order to buy another estate, or more precisely, as Ricardo’s solicitor Crosse put it, ‘to replace a sum given by the Honble Mrs. Damer to his Lordship to purchase the estate but which he diverted to another purpose.’ Ricardo seems to have regarded the estates which were already mortgaged to him as adequate security for the additional loan, but Parnell urged that he should take a security on the new estate, ‘as otherwise it will enable his Lordship to Mortgage it and procure a further loan from some other person.’3

At the time of the General Election of 1820, which followed the death of George III, there were reports that Ricardo was to contest the County of Gloucester; but these he denied, saying that he would never have consented to ‘embark on so perilous an undertaking’ as that of contesting a county with ‘an old and powerful family’ (namely, that of the Duke of Beaufort).4 As he Edition: current; Page: [xix]wrote to Trower: ‘My late constituents at Portarlington appear to be a very good tempered set of gentlemen, and will I am sure elect me without hesitation to the next Parliament.’1 He was, in fact, returned again for Portarlington on 27 March 1820.2

II.: Ricardo in Parliament

‘If I could, without much trouble, get into the New Parliament I would’, Ricardo had written to Trower in 1818. ‘I should neither be Whig nor Tory but should be anxiously desirous of promoting every measure which should give us a chance of good government. This I think will never be obtained without a reform in Parliament.’3

His attitude in the House on political questions was summed up after his death by the Globe and Traveller newspaper4 as follows: ‘Mr Ricardo was generally regarded as a moderate oppositionist. He was, however, the most decided and thorough Reformer within the walls of Parliament. With respect to government he had embraced the principles of Bentham. He was invariably found at his post on the Opposition benches, and, on every division, he voted on the side of the people.’ On these subjects his speeches were few, the principal ones being that on Lord John Russell’s motion for a Reform of Parliament on 24 April 1823 and his last speech for Free Discussion of Religious Opinions on 1 July 1823.

It was to economic subjects that most of his speeches were devoted. He entered on his parliamentary career with a considerable reputation as the originator of the currency plan embodied in Peel’s Bill of 1819;5 and on the occasion of his first important speech, which was on the Resumption of Cash Payments, Edition: current; Page: [xx]‘he did not rise until he was loudly called upon from all sides of the House.’1 However, following his proposal of a tax on capital to pay off the national debt, which was regarded as a ‘wild sort of notion’ even by his own friends,2 the attitude of the House towards him underwent some change, and he came to be looked upon as a theorist. As he wrote to McCulloch in the summer of 1820: ‘I am treated as an ultra reformer and a visionary on commercial subjects by both Agriculturists and Manufacturers. Do you not observe that even Mr. Baring, the professed but I think lukewarm friend of free trade, did not nominate me on his committee.’3

With the growing severity of the depression in agriculture his speeches became increasingly concerned with the relation of Peel’s Bill (and of the monetary policy that had followed it) to agricultural distress. Here he frequently found himself on the same side as the Government in his speeches, in repelling the attacks of the country gentlemen who attributed the depression to the effects of that measure and to the burden of taxation. At the same time, he opposed the Ministers when they found a remedy for the situation in protection. In the later years of Ricardo’s parliamentary career there was a gradual transition of the Tory Government towards a more liberal commercial policy, under the auspices of Wallace, Huskisson and Robinson,4 and with it the removal of a number of restrictions on trade; as a result at this stage Ricardo is found speaking more frequently in support of government measures.

It may be noted that shortly before his death Ricardo had promised his friend Joseph Hume that he would assist him in his proposed motion against the laws restricting the emigration of artizans, the exportation of machinery and the combination of workmen. And when Hume introduced the motion on 12 February Edition: current; Page: [xxi]1824, he opened his speech with a commemorative passage on Ricardo, with which Huskisson associated himself; this is quoted on p. 332 below.

The record of Ricardo’s votes is necessarily incomplete. At that time (and until 1836) only the numbers in divisions were recorded officially, while the names were ignored. On questions of special interest, however, it was usual for members of the opposition to give their list to the reporters, thus securing publication of their own names in the newspapers and in Hansard.1 During Ricardo’s period in Parliament (from 26 Feb. 1819 to the end of the Session of 1823) Hansard records 224 such opposition lists, and Ricardo appears in 167 of them.2 In a contemporary analysis of the lists of the minorities on 36 questions (selected as being of particular importance) divided upon in the Sessions of 1821 and 1822, Ricardo appears in 28—only six members appearing more frequently.3

These figures probably understate Ricardo’s regularity in attendance, since there were occasions, however rare, when he refrained from voting with the Opposition.4 Of 9 questions on which, exceptionally, both majority and minority lists were recorded in 1821 and 18225 Ricardo appears in all of them on the side of the Opposition, with the exception of one (the vote on the Roman Catholic claims, discussed below) in which he is not included in either list.6

His votes at the end of the debates in which he took part (when known) are as a rule recorded in this volume at the end of each speech. Some of his votes on other occasions are also of interest. His first recorded vote in the House (on 2 March 1819) was in support of Mackintosh’s motion for reducing the number of offences subject to capital punishment; and he voted again for similar motions on 23 May and 4 June 1821 and 21 May 1823.

Edition: current; Page: [xxii]

He also voted for Bennet’s motions for the abolition of punishment by flogging (30 April and 7 July 1823). Throughout the special session called after Peterloo in 1819 he voted against the measures known as the ‘Six Acts’, in addition to speaking against one of them; and later (on 8 May 1821) he voted for the repeal of another, the Blasphemous and Seditious Libels Act. He supported Sir Francis Burdett’s motion, on 16 May 1821, for an investigation into the Peterloo massacre. He voted against the Irish Insurrection Bill on 7 and 8 February 1822 and against its continuance on 8 July of the same year and on 12 May 1823; and he seconded Hume’s motion for abolishing the office of Lord-Lieutenant of Ireland on 25 June 1823. On foreign affairs he voted for Mackintosh’s motion (21 February 1821) on the action of the Powers of the Holy Alliance with respect to the revolution in Naples; for Lord W. Bentinck’s motion (21 June 1821) concerning the affairs of Sicily; and for Hume’s motion (14 May 1822) on the state of the Ionian islands where martial law had been proclaimed. He voted against the Foreign Enlistment Bill (on 3 and 10 June 1819) and against the renewal of the Alien Bill (on 7 July 1820 and again on 1 July 1821).

The fact that Ricardo does not appear in the list of members who voted on Plunket’s motion for the Roman Catholic claims which was adopted on 28 February 1821 (either in the majority or in the minority which in this case are both given) is curious:1 the more so since we know from a letter to Trower that he was present at the debate and that he was unreservedly in favour of the motion.2 Professor Cannan, in his essay on ‘Ricardo in Parliament’, has conjectured that he remained neutral, and asks: ‘Can it have been due to some compact with the power which gave him his seat for Portarlington?’3 It is true that some members for Irish constituencies, in fear of offending their Edition: current; Page: [xxiii]Protestant patrons, refrained from voting for the Catholic claims, or if they voted felt that they did so ‘at the imminent hazard of their seats’;1 and it was in fact the seat of Portarlington which, as we have seen above (p. xv), William Lamb lost in 1812 for supporting Catholic emancipation. All this lends plausibility to Cannan’s suggestion. On the other hand it is clear from what we know of the negotiations by which Ricardo acquired his seat that there were no political conditions attached. The financial situation of Lord Portarlington had disastrously deteriorated since 1812, and Ricardo had been able to negotiate from the strong position of the lender of a large sum. But the decisive consideration is that during the period 1819–1823 Hansard did in fact give on a second occasion the list of those voting for the claims of the Roman Catholics, and Ricardo’s name appears in this list (namely that on Brougham’s motion of 26 June 1823 in support of a petition ‘from the Roman Catholics of Ireland complaining of the Inequality in the Administration of the Law’).2

A more probable explanation is that the omission of Ricardo’s name in the case of Plunket’s motion was due to a mistake in the division list. We have seen above that these lists were entirely unofficial; they were also often inaccurate, and on the occasion in question there were said to have been several omissions.3

III.: Committees on which Ricardo Served

While he was in Parliament, Ricardo was a member of several Select Committees, which are listed below. He was appointed to the first of these within a few days of taking his seat, but after that Edition: current; Page: [xxiv]for nearly two years he was not on any other committee. (As we have seen above, Baring refrained from nominating Ricardo for his Foreign Trade Committee in 1820; and although nominated for the Agricultural Committee of 1820, he was not in fact appointed to it.1) In his last session, however, we find him so busy with committees every morning that these, together with his regular attendance in the House, (as he wrote to Trower in July 1823)2 ‘fully occupied’ his time.

Poor Law Committee. The Select Committee on the Poor Law was appointed on 9 February 1819. Ricardo was added on 1 March. Chairman, Sturges Bourne. It heard evidence between 19 March and 28 June from 3 witnesses. Reported on 30 June1819. The immediate recommendations of the report were limited to the removal of impediments to ‘the free circulation of labour’ and emigration; it also recommended, however, that ultimately parishes should be freed from ‘the impracticable obligation of finding employment’ for all who need it, and that relief should be confined to those unable to work.

Agricultural Committee 1821. The Select Committee on Petitions complaining of the Depressed State of Agriculture was appointed on 7 March 1821.3 Chairman, T. S. Gooch. Sat for 14 weeks and heard 42 witnesses. Reported on 18 June1821. The examination of the agricultural witnesses ‘was throughout conducted with great ability by Mr Ricardo, Mr Huskisson, and others’, according to the Scotsman (2 June1821). Ricardo’s letters contain many references to this. He ‘worked very hard’ in the Committee4 ‘against a host of adversaries, in the shape of witnesses, as well as members’.5 Regarding one witness, Thomas Attwood, he says, ‘his claims to infallibility have been sifted by Huskisson and myself’;6 and of another, William Jacob, ‘I ... persevered in my questions to him, till I believe he thought me rude’.7 He himself called two merchants as witnesses, Thomas Tooke and Edward Solly.8 The report was drafted by Huskisson9 but considerably Edition: current; Page: [xxv]altered in Committee in a protectionist direction. Ricardo’s opinion of it will be found below, pp. 151–2, and is summed up in a letter to McCulloch with the words: ‘considering the composition of the committee it is better than could be expected’.1 The report was not debated in the House but referred to the Agricultural Committee of the following year.

A glimpse of what went on inside the Committee is given by two entries in J. L. Mallet’s MS Diary:

‘7 May 1821. Ricardo in the Agricultural Committee. I dined yesterday at Ricardo’s. There was a good deal of conversation upon the agricultural Committee. Ricardo says that they look upon him as a mere Theorist, but that they are very civil and allow him to take his own course with a view of establishing his principles by evidence. As to opinion the Committee is a perfect Babel. There are not two men agreed.

‘10 May 1821. Agriculture Committee. Ricardo is left very much to himself in the Agricultural Committee. Baring who promised to assist him has not taken any share in the proceedings. Huskisson has been of service; and the Government are evidently on his side and wish to resist these greedy and unreasonable Lords of the Soil, as Cobbet calls them; but it is a dangerous task. Lord Londonderry2 spoke yesterday for an hour in the Committee, and Ricardo says that he would have defied any man to have made a tolerable grasp of the real opinion of His Lordship. This is a most happy faculty in Lord Londonderry.’

Agricultural Committee 1822. The Select Committee on the Allegations of the several Petitions presented to the House in the last and present Sessions of Parliament complaining of the Distressed State of Agriculture was appointed on 18 February 1822, largely with the same membership as the Committee of 1821:3 Huskisson although a member did not attend. Chairman, Lord Londonderry. The Committee took no evidence and reported on 1 April 1822. The report which was strongly protectionist gave rise to a prolonged debate in the House which ended in the passing of the new Corn Law (see below, p. 148 ff.). Ricardo discusses this report and contrasts it with that of the Committee of the previous year in Protection to Agriculture, above, IV, 244 ff.

Committee on Public Accounts. The Select Committee on the Public Accounts of the United Kingdom annually laid before Edition: current; Page: [xxvi]Parliament was appointed on 18 April 1822. Chairman, Lord Palmerston. The Committee took no evidence. Reported on 31 July 1822. The report recommended that the accounts should be simplified so as to present as in a balance sheet the income and expenditure of each year. (An attempt had already been made by the Government in this direction at Ricardo’s suggestion; see below, p. 145.)

Committee on Stationery. The Select Committee on the Printing and Stationery supplied to the House of Commons and to the Public Departments was appointed on 14 May 1822. Chairman, Lord Binning. It heard evidence from 54 witnesses. Reported on 30 July 1822. The Committee considered complaints of corrupt practices in the Stationery and Printing Departments and recommended, inter alia, the stamping of all paper used in public offices with ‘a peculiar mark’ to prevent theft.

Committee on Sewers. The Select Committee on the powers vested in and exercised by the Commissioners of Sewers in the Metropolis was appointed on 25 February 1823. Chairman, Peter Moore. It heard evidence from 4 witnesses between 5 March and 19 June. Reported on 10 July 1823, reporting only the evidence, without offering any opinion.

Committee on Law Merchant. The Select Committee on the state of the Law relating to Goods, Wares, and Merchandise intrusted to Merchants, Agents, or Factors was appointed on 15 May 1823. Chairman, John Smith. It heard evidence from 52 witnesses. Reported on 13 June 1823. The Committee’s main recommendation was: ‘That a person possessing a bill of lading, or other apparent symbol of property, not importing that such property belongs to others, shall be considered as the true owner, so far as respects any person who may deal with him, in relation to such property, under an ignorance of his real character.’ (This corresponded with Ricardo’s opinion as expressed in a speech on 12 May 1823, below, p. 293.)

Committee on the Labouring Poor in Ireland. The Select Committee on the condition of the Labouring Poor in Ireland, with a view to facilitating the application of the Funds of Private Individuals and Associations for their Employment in Useful and Productive Labour was appointed on 20 June 1823. Ricardo was added to the Committee on 23 June. Chairman, Spring Rice. It heard evidence from 18 witnesses between 23 June and 4 July. Reported on 16 July 1823. The appointment Edition: current; Page: [xxvii]of the Committee arose from a petition from Ireland, presented on 18 June 1823, praying the House to consider how far ‘Mr. Owen’s plan for the employment of the poor ... could be applied to the employment of the peasantry of Ireland’. The report, while admitting that Owen’s plan might be suitable for private experiment, regarded it as not a ‘fit subject of legislative assistance’. Ricardo comments on the subject of the enquiry in a letter to Trower, below, IX, 313–14.

IV.: How the Speeches were Reported

Parliamentary reporting in Ricardo’s time was something very different from the official shorthand reporting of the present day. The whole business was a private venture of the newspapers, and their reporters had only recently gained even a bare toleration in the House. One cannot form an estimate of the authenticity of Ricardo’s speeches as they have come down to us without some idea as to how they were recorded.

The pioneer in the reporting of debates was the Morning Chronicle, which was founded in 1769 and conducted by William Woodfall. At a time when the taking of notes by strangers in the House was strictly prohibited, Woodfall was enabled by an extraordinary memory to write up a whole debate after listening to it from the Strangers’ Gallery. When in 1789 James Perry took over the editorship from him, he introduced the system of ‘division of labour’: this consisted in employing a team of reporters, each of whom sat in on the debate for a ‘turn’ of three-quarters of an hour and then, on being relieved in the Gallery by a colleague, left to write up his report at the office.1 From that time onwards, even though the system came to be universally adopted, the Morning Chronicle ‘was distinguished by its superior excellence in reporting the proceedings of Parliament.’2

Edition: current; Page: [xxviii]

Towards the close of the eighteenth century, when ‘the use of notebooks and pencils by “strangers” was still an unholy sight in the eyes of the Speaker’, the reporters established the practice of taking seats in the back row of the Strangers’ Gallery where, ‘sitting remotely in the shadows’, they could take notes ‘without being observed from the Chair’;1 and a few years later the Speaker acknowledged their right to the exclusive occupation of the back row.2 This position, however, ‘not only did not facilitate their hearing what was said by the members when addressing the House, but exposed them to great annoyance from the talking of the strangers on the five or six rows of seats before them.’3 As late as 1819, ‘they were still forbidden to take notes anywhere save on the back row’;4 and in that year one of the reporters of the Morning Chronicle, Peter Finnerty, was brought to the Bar of the House and reprimanded for having persisted in taking notes while sitting in the front row of the Strangers’ Gallery.5

Apart from these handicaps, there was among the reporters themselves a general prejudice against verbatim reporting. This was based on the idea that shorthand writers are incompetent to report a good speech, because ‘they attend to words without entering into the thoughts of the speaker.’6 At the same time it was held that the reporter taking down a speech in long-hand was obliged to ‘clothe the idea in his own phraseology’ and to endeavour to ‘make the style as correct and elegant as possible.’7 As it has been tersely put, he ‘gave eloquence to the stammerer and concentration to the diffuse’.8

This type of reporting, however, required that ‘the reporter must thoroughly understand the subject discussed, and be qualified to follow the reasoning ... of the speaker.’9 Ricardo’s matter did not easily lend itself to writing-up by reporters, and as he says in a letter to Trower, ‘It is a great disadvantage to Edition: current; Page: [xxix]me that the reporters not understanding the subject cannot readily follow me—they often represent me as uttering perfect nonsense.’1

The Parliamentary Debates, printed by, and ‘published under the superintendence of’ T. C. Hansard, was also a private concern, and while it had by this time gained a definite ascendancy, short-lived rivals still appeared from time to time.2 Hansard had no reporters of his own, and his publication was compiled by collation of various newspaper reports or from copies supplied by the speakers or published by them in pamphlet form.3 By advertisements in the press and in his own publication he invited the ‘communication’ of speeches for his work.

Hansard however was far from being a complete record: some speeches and even whole debates were not reported in it at all, even though they had appeared in the newspapers. Omissions were no doubt in many cases caused by the inadequacy of newspaper reports and the difficulty of securing better ones, but in others they were probably due merely to the need to limit the size of the volumes.

Two or three volumes of Hansard were devoted to each session, and these appeared after considerable delay: thus the volume containing the debates of the first three months of 1821 was not advertised as ‘ready for delivery’ until nearly a year later; and it was announced that the volume covering the following period, up to the close of the session on 11 July 1821, would be published in October 1822.4

The editor of the Parliamentary Debates since its foundation in 1803 was John Wright. The method by which he proceeded in his work can be seen from a letter which he wrote to Ricardo to obtain a report of his speech of 11 June 1823:

Edition: current; Page: [xxx]
J. Wright
Wright, J.
August 20. 1823
112 Regent Street
David Ricardo
Ricardo, David



As I am very desirous that a correct report of your Speech on Mr Western’s motion should be preserved in The Parliamentary Debates I beg leave to say that I shall be very glad if you could find leisure to furnish me with such report in the course of ten days. I enclose the Newspaper reports which you will find very scanty— so much so, that I think it would be less trouble to write out the whole, than to attempt to correct what is printed. I shall be glad to be favoured with a line on the subject, and am, Sir,

Your faithful humble Sert.
J. Wright
David Ricardo Esq.

Ricardo complied with this request, as appears from the note attached to the speech in Hansard (see below, p. 309).

The way in which Ricardo on a similar occasion used the newspaper cuttings which were sent to him is graphically shown by the facsimile of the original report, which he prepared for Hansard, of his famous speech of 24 May 1819 on the Resumption of Cash Payments (below, facing p. 332).2

So much care in securing a full record from the speakers was apparently used by Wright only for major speeches, and the quality of the rendering in their case is markedly superior to that of the lesser ones. In other cases he probably contented himself with making a compilation from the newspaper reports.

Thus, from the picture that we have of parliamentary reporting Edition: current; Page: [xxxi]at that time, it seems clear that we cannot read Ricardo’s speeches with the same confidence in their authenticity as we can his writings, or even his evidence.1

There is, however, one speech of which we are now able to read Ricardo’s own report, undoubtedly written within a day after the debate; that is the speech on Mr Western’s Motion of 10 July1822.2 The original transcript, hitherto unpublished, was found in the Mill-Ricardo papers and is given in the present volume instead of Hansard’s version, of which it is four times as extensive. This report, having been written by Ricardo himself so soon after delivering it, has an authority unequalled by any others, even by those of which we know, or can guess from their quality, that they were revised by him, since this revision would normally be carried out months later, owing to the delays in the preparation of Hansard. One can therefore take the report of the speech of 10 July 1822 as a standard by which to judge the quality of the others.

V.: The Speeches in the Present Edition

In the present edition Ricardo’s speeches have been reprinted from The Parliamentary Debates (referred to throughout as Hansard ).3 However, in every case in which Hansard’s report seemed doubtful for one reason or another, it has been collated with the reports in the newspapers; and whenever one of the latter seemed more plausible, this has been given as an alternative in a footnote. Extensive, though not systematic, collation of a general kind with newspaper reports has also been carried out; and in many cases this has made it possible to add in footnotes passages from the newspapers where these are fuller. Moreover, a dozen of Ricardo’s parliamentary speeches, which have been found in the newspapers but are not reproduced in Hansard, have been included, and the fact noted.4

Edition: current; Page: [xxxii]

The titles of the speeches are those given by Hansard to the respective debates. Each of Ricardo’s speeches is introduced by summaries or brief quotations from previous speakers, which indicate the subject of the debate or are referred to by Ricardo. At the end of each speech is given the result of the division, if any, on the question under consideration; and occasionally extracts from subsequent speakers who replied to Ricardo. This and other editorial matter is throughout distinguished by smaller type.

lord brougham’s sketch of ricardo in parliament [From Historical Sketches of Statesmen who flourished in the Time of George III, Second Series, by Henry Lord Brougham, London, Charles Knight, 1839, pp. 188–191]

The Bill which usually goes by Mr. Peel’s name had been passed for restoring the currency a short time before Mr. Ricardo came into Parliament; but the Committee (commonly called the Second Bullion Committee), out of whose Report the measure arose, had fully adopted the principle and had clearly followed the plan laid down by Mr. Ricardo. When he took his place in the House of Commons, after the high reputation which had preceded him, he necessarily appeared to some disadvantage under the weight of the great expectations formed of him. But, as far as these were reasonable, however ample, they were fully answered. His speaking, his conduct, his manner, were all unexceptionable, and all suited to the man, his high station among philosophers, his known opinions on political affairs, his kindly nature, and his genuine modesty. There was something about him, chiefly a want of all affectation as well as pretension in everything he said or did, that won the respect of every party. His matter was ever of high Edition: current; Page: [xxxiii]value. Whether you agreed or differed with him, you were well pleased to have it brought out and made to bear upon the question, if indeed the pursuit of right and truth was your object. His views were often, indeed, abundantly theoretical, sometimes too refined for his audience, occasionally extravagant from his propensity to follow a right principle into all its consequences, without duly taking into account in practice the condition of things to which he was applying it, as if a mechanician were to construct an engine without taking into consideration the resistance of the air in which it was to work, or the strength and the weight and the friction of the parts of which it was to be made. When he propounded, as the best way of extricating us from our financial embarrassments, that the capital of the country should be taxed 700 or 800 millions, and the debt at once paid off, and defended this scheme upon the twofold ground, that what a debtor owes is always to be deducted from his property and regarded as belonging to his creditors, and that the expense of managing the debt and raising the revenue to pay the interest would be a large saving to the nation, he assumed as true two undeniable facts, but he drew a practical inference not more startling at its first statement than inadmissible when closely examined upon the clearest grounds of both expediency and justice. It may even be doubted whether the only feasible portion of the plan, the diminution of interest from time to time effected by threats of repaying the principal, or rather redeeming the annuities (the only thing to which the public creditor is entitled), be not a step too far in this direction both as to justice and policy. In like manner he always greatly undervalued the amount of the depreciation in the currency upon prices generally, estimating it solely by the difference between the Mint price and the Market price of gold; and so confidently did he believe in this speculative estimate, that his practical plan for restoring the currency was grounded upon it. But while such were his errors, and those of a kind to excite very strong feelings in certain large and important classes in the House of Commons, he was uniformly and universally respected for the sterling qualities of his capacity and his character, which were acknowledged by all.

Edition: current; Page: [xxxiv]

His speaking was of an admirable description; clear, simple, correct in diction, copious in argument, pregnant with information, but never thrown away. He reserved the share which he took in debate for questions to which his attention had been particularly directed, with which he was familiar, and to which he attached great importance. Hence, even his extreme opinions upon questions connected with the reform of the constitution in Church and State gave no offence; for he appeared not to court the opportunity of delivering them, but as if compelled by a sense of duty to declare his mind, careless or indisposed otherwise to make a speech. Few men have, accordingly, had more weight in Parliament; certainly none who, finding but a very small body of his fellow-members to agree with his leading opinions, might be said generally to speak against the sense of his audience, ever commanded a more patient or even favourable hearing; and, as this was effected without any of the more ordinary powers of oratory or of entertainment possessed by others, it might be regarded as the triumph of reason, intelligence, and integrity over untoward circumstances and alien natures. The regret felt for his loss was in proportion to the high estimation in which he had been held during the three years that he sat in Parliament; and the country, as well as its representatives, justly sorrowed over a great light extinguished prematurely, which had already proved so useful, and which might have been expected to render so much greater and longer service in illuminating the world.

Edition: current; Page: [none]
David Ricardo 1822 from a bust made at Florence.
Edition: current; Page: [none] Edition: current; Page: [1]



25 March 1819


Mr. Sturges Bourne moved for leave to bring in a bill, which, he declared, was intended to prevent the payment of the wages of labour out of the poor rates; no relief should in future be given to able-bodied labourers in employment, but their children should be provided for and set to work.

Mr. Ricardo thought, that the two great evils for which it was desirable to provide a remedy, were, the tendency towards a redundant population, and the inadequacy of the wages to the support of the labouring classes; and he apprehended, that the measure now proposed would not afford any security against the continuance of these evils. On the contrary, he thought that, if a provision were made for all the children of the poor, it would only increase the evil; for if parents felt assured that an asylum would be provided for their children, in which they would be treated with humanity and tenderness, there would then be no check to that increase of population which was so apt to take place among the labouring classes. With regard to the other evil, the inadequacy of the wages, it ought to be remembered, that if this measure should have the effect of raising them, they would still be no more than the wages of a single man, and would never rise so high as to afford a provision for a man with a family.

[On the second reading see below, p. 6.]

Edition: current; Page: [2]
5 April 1819


Mr. Peel, the chairman of the secret committee, presented their first report, which recommended that cash payments, which had been partially resumed, should be suspended until the final report of the committee had been received and a legislative measure passed thereupon; he moved for leave to bring in a bill to that effect. Mr. Tierney, a member of the committee, opposing the motion, said that the only effect of the bill would be to save a little expense to the Bank whereas ‘any sacrifice ought to be made rather than that good faith should not be preserved.’

Mr. Ricardo began by requesting the indulgence of the House, which he hoped he should experience, especially as he was about to dispute the opinions of the right hon. gentleman1 who had just spoken with so much eloquence. It appeared to him very extraordinary, indeed, that the Bank should be called upon as the right hon. gentleman argued, to issue gold at 3l. 17s. while they were obliged to pay 4l. 1s. for that very gold. Those who obtained the gold upon such terms must, of course, profit by the difference, and they could only derive that profit by acting contrary to law—that was either by clandestinely exporting the gold, or by melting it down. Would parliament consent to allow such a class of persons to obtain profit at the expense of the Bank? Such a class was, indeed, he apprehended, the very last to which parliament would consent to grant any peculiar favour or protection. That the resumption of cash payments by the Bank must be preceded by a reduction of its paper issues, was quite obvious. But then that reduction ought to be gradual, Edition: current; Page: [3]and in order to enable the Bank to resume its cash payments, such a measure as that now proposed appeared to him essentially necessary. He approved of the views of the right hon. gentleman as to the provision of an adequate guard against the repetition of the dangers, hitherto resulting from the improvident conduct of the Bank. He also agreed, that before the Bank could pay in gold, it must take measures to replenish its coffers, and that to replenish its coffers by providing an adequate supply of gold, it must reduce its issue of notes. But, with a view to enable the Bank to resume its payments in cash, he was decidedly of opinion that the proposed measure was essentially necessary, and was sorry that it had not before now been adopted.

Leave was given to bring in the bill, which was then passed.

4 May 1819


Mr. Lyttelton moved a series of resolutions for the abolition of State Lotteries.

Mr. Ricardo supported the motion, and pointed out the evils which arose from the drawings of the lottery so often in the year. He quoted the resolutions of a society to which many of the ministers belonged, deprecating the lottery; and observed, that they were thus condemning, as individuals, the law which they came to support by their votes.1

The House divided: for the motion, 84; against it, 133. Ricardo voted for the motion.

Edition: current; Page: [4]
13 May 1819

SINKING FUND 13 May 1819

Mr. Grenfell moved for a committee on the sinking fund. The present system was for the commissioners for the redemption of the national debt to go four times a week into the city to purchase stock, which in effect ‘they bought with borrowed money—the money borrowed from the loan-contractors.’ ‘This was creating a new debt for no other purpose than to destroy an old one: selling new stock cheap in order to buy old stock dear.’ His object was to convince the House of the expediency of applying the sinking fund to diminish the loan which was to be raised for the service of the year. The saving to the public which might have been effected if this method had been applied from 1793 to 1813 amounted to 20,000,000l. and on the loan of 1815 the saving might have been upwards of 2,000,000l. Amongst those who differed from him in this opinion some were under a bias from self-interest. ‘Loan-contractors were not in his judgment exactly that description of persons by whose advice in these matters a chancellor of the exchequer ought to be governed. In 1814, the right hon. gentleman had stated in his place, that, having conferred with a number of gentlemen contracting for the loan with regard to the propriety of acting on his (Mr. Grenfell’s) suggestion, they all, with one exception only, signified their disapprobation of it, and recommended a loan of 24,000,000l. instead of 12,000,000l. The exception to which he alluded was that of his honourable friend (Mr. Ricardo),1 who, greatly to his credit, observed to the chancellor of the exchequer, that if he considered his own interest merely, he must agree with his brother contractors; but if he were to consult the advantage of the Edition: current; Page: [5]country, he should advise the application of the sinking fund, and a loan of 12,000,000l. only.’

The Chancellor of the Exchequer objected to the motion, on the ground that it would fetter the discretion of government. As to the case of the loan in 1815 ‘it was true that a great profit had been made upon the loan alluded to, but it was contracted for previous to the battle of Waterloo, and the profit was derived from conquest, and the successful termination of hostilities.’ With regard to the supposed saving of 20,000,000l. upon all the loans contracted for during the war, if the system of applying to the sinking fund had been adopted, the sum mentioned did not exceed two per cent of the amount borrowed in that period. ‘Instead of a profit, however, a loss had been sometimes incurred, which would probably have balanced the amount of the saving. The contractors, too, would have objected, and offered less favourable terms.’ ‘One great advantage attending the present system was, that it produced a general steadiness of prices.... Were it not for the regular purchases made by the commissioners, there would be few real buyers, and persons under the necessity of selling would be at the mercy of stock-jobbers.’

Mr. Ricardo said, that he understood the hon. mover to have argued, not that the commissioners, if subscribers for the loans, would have procured for the public the profit which arose from the events of war or peace; but that they would have retained for the public that regular premium which the contractors obtained independently of the events of peace or war—which they were entitled to for undertaking the risk of such extensive undertakings, but which of course, under the present plan, was lost to the public. In that opinion he heartily concurred, as he could not conceive the advantage which could arise from giving the commissioners sums to lay out in the purchase of stock, while sellers were sent by the government to supply them with the stock which they were to buy. The contractors for the loan brought their stock to market just in the same degrees as the commissioners purchased it: they did not dispose of it in the mass, but brought it weekly and daily to market to provide for their instalments. Edition: current; Page: [6]Any gentleman who supposed that if that process did not go on, it would be in the power of the jobbers to make hard terms with the sellers of stock, must have been perfectly ignorant of the stock market [Hear! hear!], for competition was no where carried to such an extent, and no where operated with more benefit to the public. His hon. friend had alluded to the opinion which he (Mr. Ricardo) had given before the chancellor of the exchequer in 1814. He had certainly then given the opinion which he had long entertained. He should have shrunk into the earth before those who had long known his sentiments if he had given any other; but he knew that those gentlemen who gave a contrary opinion, had given it just as conscientiously; for great and sincere differences of judgment on this subject existed in the city. To him it certainly appeared, that if the process of the sinking fund had an effect on the stock market, a similar process must produce an effect on all other markets in the country, and that, for instance, it must be contended that the chancellor of the exchequer could produce an effect on the corn-market, by sending a commissioner to buy a quarter of wheat, while he sent a contractor to sell the same quantity.

The House divided on the motion: Ayes, 39; Noes, 117. Ricardo voted for the motion.

17 May 1819


On this bill [cp. above, p. 1] being brought in for the second reading,

Mr. Ricardo opposed the bill, principally on the ground that it tended to increase the population. If at present there existed a difficulty in supporting the poor, in what situation Edition: current; Page: [7]would the country be placed in twenty years hence, when these children so educated grew up to manhood? The bill was only the plan of Mr. Owen, in a worse shape, and carried to a greater extent.

The bill was then read a second time. On 11 June 1819 it was read a third time and passed.

24 May 1819


The reports of the secret committee on the resumption of cash payments were taken into consideration and Mr. Peel, the chairman of the secret committee, moved a series of resolutions embodying their recommendations. The resolutions were as follows:

1. That it is expedient to continue the Restriction on payments in Cash by the Bank of England, beyond the time to which it is at present limited by law.

2. That it is expedient that a definite period should be fixed for the termination of the Restriction on Cash Payments; and that preparatory measures should be taken, with a view to facilitate and ensure, on the arrival of that period, the payment of the Promissory Notes of the Bank of England in the legal Coin of the Realm.

3. That in order to give to the Bank a greater control over the issues of their Notes than they at present possess, provision ought to be made, for the gradual repayment to the Bank of the sum of Ten Millions; being part of the sum due to the Bank, on account of Advances made by them for the public service, and on account of the purchase of Exchequer Bills under the authority of acts of the Legislature.

4. That it is expedient to provide, by law, that from the 1st February 1820, the Bank shall be liable to deliver, on demand, Gold of standard fineness, having been assayed and stamped at His Majesty’s mint, a quantity of not less than sixty ounces being Edition: current; Page: [8]required in exchange for such an amount of Notes of the Bank as shall be equal to the value of the Gold so required, at the rate of Four pounds one shilling per ounce.

5. That from the 1st October 1820, the Bank shall be liable to deliver, on demand, Gold of standard fineness, assayed and stamped as before mentioned, a quantity of not less than sixty ounces being required in exchange for such an amount of Notes as shall be equal to the value of the Gold so required, at the rate of £.3. 19. 6. per ounce.

6. That from the 1st May 1821, the Bank shall be liable to deliver, on demand, Gold of standard fineness, assayed and stamped as before mentioned, a quantity of not less than sixty ounces being required in exchange for such an amount of Notes as shall be equal in value to the Gold so required, at the rate of £.3. 17. 10½ . per ounce.

7. That the Bank may at any period between the 1st February 1820 and the 1st May 1821 undertake to deliver Gold of standard fineness assayed and stamped as before mentioned, at any rate between the sums of Four pounds one shilling per ounce, and £.3. 17. 10½. per ounce; but that such intermediate rate having been once fixed by the Bank, that rate shall not be subsequently increased.

8. That from the 1st May 1823, the Bank shall pay its Notes, on demand, in the legal Coin of the Realm.

9. That it is expedient to repeal the Laws, prohibiting the melting and the exportation of the Coin of the Realm.

The first three resolutions were agreed to. To the fourth resolution Mr. Ellice proposed an amendment, namely, ‘That the Bank have it in its option to pay, after the 1st of May, 1821, either in legal coin, or in gold, at 3l. 17s. 10½ per oz.’ The amendment was supported by Mr. Tierney and opposed by the Chancellor of the Exchequer.1 Mr. Manning (a Bank director) objected to the fourth and subsequent resolutions because they ‘would have the effect of fettering the Bank so as to cause an inconvenient reduction of the currency.’

Edition: current; Page: [9]

[The transcript of this speech prepared for Hansard by Ricardo partly with cuttings from the Morning Chronicle’s report, is reproduced in the plate facing p. 332 below. In the text Hansard’s capitalization and spelling are retained, but other deviations from the MS are corrected.]

Mr. Ricardo1 said, he was fully persuaded of the truth of the declaration of the hon. director, that the Bank wished to resume cash payments, but he was just as fully persuaded that they did not know how to set about it. When called before the committee, the directors individually admitted that the price of bullion and the rate of exchanges were affected by the amount of their issues; but when collected in their own court they resolved that “they conceive it to be their duty to declare, that they are unable to discover any solid foundation for such a sentiment.”2 And now, in the Remonstrance which they have made to the chancellor of the exchequer, they again admit that the exchanges are affected by their issues, for they condemn the measure recommended by the committee for restoring the exchange to par, on the ground of its being calculated to force them to contract the amount of their circulation, which they represent as fatal to the public interest.3 When they avowed such inconsistent opinions, and after the experience which the House had had of their conduct, it would be the highest indiscretion in parliament not to take out of their hands the preparations for the resumption of cash payments. He did not think this a question only between the Bank and ministers, as it had been Edition: current; Page: [10]argued by his right hon. friend (Mr. Tierney), but rather one between ministers and the Bank on one side, and the country on the other. He was therefore disposed to concur with his right hon. friend in any measure which might be devised to keep the ministers also under control. One principle was clear, and was of the utmost importance in the consideration of this subject,—it was this, that those who had the power of regulating the quantity of the circulating medium of the country, had the power of regulating the rate of the exchanges, and the price of every commodity. This power clearly resided in the hands of the directors of the Bank, and it was a most formidable one. It quite astonished him that Mr. Harman could imagine that it was in the power of an individual to influence the exchanges against the wish of the Bank;1 which was just as reasonable as to suppose that an individual could regulate the price of corn or any other commodity of general consumption. This question was one of immense importance in principle, but in the manner of bringing it about was trivial, and not deserving half an hour’s consideration of the House. The difficulty was only that of raising the currency 3 per cent in value2 [Hear, hear!]. And who could doubt that even in those states in which the currency was entirely metallic, it often suffered a variation equal to this, without inconvenience to the public [Hear!]. In this country we had nothing but paper in circulation, and therefore every variation in the value of our currency was shown by the price of gold, but where metal alone circulated, it could not be doubted that gold might, from various circumstances, Edition: current; Page: [11]become more or less valuable, and thus affect all contracts, though from there being no other standard to measure it by, its variations were less palpable. His particular reason for supporting the measure under consideration was this. By withdrawing paper, so as to restore the note to its bullion value (an alteration, by the bye, only of 3 per cent.), the House would have done all that was required [Hear, hear!]. But if the House adopted the proposition of the hon. gentleman (Mr. Ellice), another variation in the value of the currency would take place, which it was his (Mr. R.’s) wish to guard against. If that amendment were agreed to, an extraordinary demand would take place for gold, for the purpose of coinage which would enhance the value of the currency 3 or 4 per cent in addition to the first enhancement [Hear, hear!].—As to the plan under the consideration of the House, it was that which the Bank directors, if they were wise, should wish for [hear!]. They should wish to fill the circulation with paper, and so long as they had the privilege of giving gold bullion for their notes, there would be no coin in circulation—they would have the monopoly. They had no real interest in the depreciation of the currency; it would be rather their interest to raise it, even to double the value. They were in the situation of creditors, not of debtors; their whole capital being in money or other securities representing money [Hear, hear!]. As to the resolution which bore that the government should repay the Bank a certain sum, he could not agree with it. The House having taken a security that the currency should be of a certain value, they had done enough, and should not farther interfere with the proceedings of the directors, who should answer to their proprietors only for the management of their concerns. The Bank might, if this resolution were agreed to, feel some difficulty in putting forth the amount of currency which was required. For Edition: current; Page: [12]though what the directors thought a check, namely, the rate of interest on money, was no check at all as to the amount of issues, as Adam Smith, Mr. Hume, and others had satisfactorily proved; yet as the Bank directors were governed by certain traditional limits, or something like limits, in discounting to individual merchants, they might have difficulty in keeping up the requisite amount of currency.1 A director, in his evidence before the committee, had said, that the Bank did not confine themselves to this limit where the individual’s credit was undoubted; but it should be recollected that the Bank was a cautious and timid body, and if they had no other means of supplying the requisite amount of circulation but by discounting bills, he feared the public might suffer from a scarcity of currency. He was certainly for leaving them to conduct all such transactions according to their own discretion and pleasure, provided only that such a check was established as should guard against a redundancy. The proposed mode of resuming cash payments appeared to him the easiest that could be imagined. The Bank would be placed under no restraint at first, nor any sudden necessity of reducing its issues. An opportunity would be afforded of effecting the Edition: current; Page: [13]object in the most gradual manner; and even when bullion payments should be made at the Mint price, the inconvenience would be but inconsiderable. Till October 1820, the Bank need make no reduction, and then a slight one [hear!]; and he had no doubt that if they were cautious they might arrive at cash payments without giving out one guinea in gold. The Bank should reduce their issues cautiously; he only feared they would do it too rapidly [hear!]. If he might give them advice, he should recommend to them not to buy bullion, but even though they had but a few millions, if he had the management of their concerns, he should boldly sell. Every sale would improve the exchanges, and till gold fell to 3l. 17s. 6d. there would be no necessity for the Bank to make any purchases. He was only sorry that the Bank was not to be obliged by the resolutions to buy all the bullion offered to them at 3l. 17s. 6d. lest through excessive caution they might starve the circulation. The Mint, it was true, was to remain open to the public, who might coin the bullion which they obtained from the Bank. Mr. Mushett, whose evidence respecting the coinage was worthy of attention, from its accuracy and general ability, had stated, that with a capital of 300,000l. the Mint could supply the public with 12,000,000l. a year.1 Yet a year was a long time to wait for twelve millions, and it might easily happen, that in the interim between the reduction of the Bank issues and the supply afforded from the Mint, the country might seriously feel the deficiency. It was on that account that he should have wished a resolution inserted, to compel the Bank to give its notes for bullion (at 3l. 17s. 6d.) on demand. With the exception of this omission, the plan was, in his opinion, perfectly safe and gentle.— With regard to what had fallen from his right hon. friend Edition: current; Page: [14](Mr. Tierney) respecting the graduated scale of payments not having been submitted to the directors, he referred him to the examination of Mr. Thornton before the Lords’ committee where he would see that that gentleman’s evidence was wholly in favour of the plan.1 He was quite astonished that such an alarm prevailed at a reduction of perhaps one million in four years, and could only ascribe it to the indiscreet language of the Bank2 [Hear, hear!]. The hon. director3 had that night told them not to withdraw confidence from the Bank. The House did not withdraw its confidence from the Bank from any doubt of its wealth, or integrity, but from a conviction of its total ignorance of the principles of political economy [hear, and a laugh]. The Bank had had ample time to reduce their issues, so as to lower the price of gold; yet, in spite of the times repeatedly fixed for the resumption of cash payments, they had never done so. It was not the business of the directors to consider the interest of the public. That was the business of his majesty’s ministers; and when the hon. director told them that the directors had lost so much on the purchase of gold, and so much on the issue of tokens, his question was, why had they done so? Their business was with the interest of the proprietors, for whom they were trustees, not with the interests of the public. The directors were answerable to the proprietors for these misapplications of their funds. He (Mr. R.) had been astonished that the undivided profits of the Bank had been so small, which he should have imagined, must have at least amounted to ten millions;4 but now, by the confession of the hon. gentleman, the matter Edition: current; Page: [15]was explained. The directors had scattered a million here and a million there according to their views of the wants of the ministry or the country, without any regard to the interest of the proprietors [Hear, hear!]. The hon. director had advised them not to cramp the currency, and had referred to their experience of 1797. But that was not a parallel case. It was a season of alarm and panic, when every man had wished to have gold in his house in fear of an invasion. His right hon. friend (Mr. Tierney) had asked, what, under the plan proposed was the holder of 10l. to do, for he could not get bullion at the Bank. According to the amendment, the right hon. gentleman was in no great hurry to give this poor man either bullion or specie. But were they doing nothing by the plan for the holders of notes of 10l.? The holder of a 10l. note would be improved in his condition; for by restoring the currency to its proper value, and by making 1,000l. worth what it purported to be, instead of what it now really was, worth only 970l., his note of 10l. would be proportionally increased in value. Although he could not go to the Bank for gold, he might resort to any goldsmith who would let him have the proportion of gold to which his note was entitled; and the difference to him would be so trifling, as not to be worthy of consideration in the decision of a great question.—It had been said, on the part of the Bank, that they were ready to pay, if repaid the advances which they had made to the government.1 But how came they to make those advances to government, if not assured of repayment at a certain time? The Bank had not been forced to make those advances, but the directors had such an extraordinary disposition to act as ministers [a laugh, and hear, hear!]. It would however, be better if those directors would rather Edition: current; Page: [16]attend to their own interests, and those of their constituents.—A most fearful and destructive depreciation had at one time taken place; but from that we had recovered, and he was happy to reflect that we had so far retraced our steps. We had nearly got home, and he hoped his right hon. friend would lend them his assistance to enable them to reach it in safety. He would venture to state that in a very few weeks all alarm would be forgotten, and at the end of the year, we should all be surprised to reflect that any alarm had ever prevailed at a prospect of a variation of 3 per cent in the value of the circulating medium. His own general opinion was, that an unfavourable state of exchange must always proceed from a redundant currency. If corn were imported and paid for in bullion it was a proof that bullion was the cheapest commodity. Suppose all the Bank-notes now in circulation to be withdrawn, and their place filled by gold coin, would not gold become infinitely cheaper? If our paper had been of any intrinsic value, it would, having become cheap from excess, have been exported also. He thought it right here to pay the tribute of his approbation to the late excellent regulations of the Mint.1 He entirely approved of making gold the standard, and of keeping silver as a token currency. It appeared to him to be a solid improvement in the system of our coinage. Nothing could be clearer than that government had the power, by limiting the quantity, to regulate the value of the silver; it was on that principle that the committee and all other persons recommended the reduction of paper currency. The hon. gentleman (Mr. J. P. Grant) indeed had observed, that the silver coin might be imitated abroad; supposing this to be the fact, the value of the silver coin might be lessened, but that of the gold would not therefore be Edition: current; Page: [17]raised. The silver was not a legal tender above 40s., and gold might always be demanded. It was true that 105l. might be offered in silver instead of 100l. in gold; but this could have no effect in altering the relation between gold and all other commodities. He should be happy to argue this question with the hon. member or with the noble “Old Merchant,”1 [a laugh!] on some occasion when it would be less irrelevant to the subject under consideration.—The hon. member sat down amidst loud and general cheering from all sides of the House.2

Mr. Alderman Heygate then addressed the chair, but the impatience of the House produced a temporary confusion, in the midst of which, after one or two observations, the worthy alderman sat down.

Lord Castlereagh then suggested that the debate be adjourned till the following day and the House rose at two o’clock.

Edition: current; Page: [18]
25 May 1819

25 May 1819

Mr. Pearse (a Bank director) ‘denied the assertion of an hon. gentleman opposite, that they were not competent to the conduct of their own affairs’; and also denied ‘most solemnly’ the assertion which had been made ‘that the Bank Directors had no serious wish to return to cash payments.’

Mr. Ricardo, in explanation, denied his having said that the Bank were insincere in their declarations. He meant no personal hostility to them as individuals, or as a public body; but he was of opinion, that they had taken wrong steps, and that they did not understand the subject of the currency.

On 26 May the resolutions were agreed to; and a bill or bills were ordered to be brought in by Mr. Peel and the Chancellor of the Exchequer.

2 June 1819


On the Chancellor of the Exchequer’s motion for a grant to pay off certain Exchequer Bills, Mr. Grenfell suggested that ‘as government were now on the eve of raising a large sum of money by loan’, the sinking fund should be taken in diminution of the loan. ‘This led him to another observation. A rumour was very prevalent to day, which he conceived was nothing but a calumny on the right hon. gentleman, and should continue so to conceive it, unless he had the right hon. gentleman’s own authority for believing it. It was a rumour, however, which every body had heard, namely, that the right hon. gentleman had communicated to certain loan-contractors, and to them alone, the amount of the loan which it was his intention to negociate. It must be perfectly unnecessary for him to observe, that if this rumour was true, the right hon. gentleman had given to those persons an undue advantage. It was most unquestionably the right hon. gentleman’s duty, when he made such a communication, to make it to the stock exchange, to the public—to make it general.’

The Chancellor of the Exchequer replied that ‘in the conversations which he had held with a number of persons on Edition: current; Page: [19]nature of the financial measures which it might be most expedient to adopt, he had of course spoken on a great many points connected with those measures; but he denied having made any secret or private communication of his intentions, of which any unfair advantage could be taken.’

Mr. Ricardo had heard a statement which set forth, whether correctly or not he could not say, all the particulars of the intended loan, the sum to be borrowed, and the days on which the several payments were to be made. These he understood had been made known to others by the chancellor of the exchequer, but not to him or to any one with whom he was connected.1 The usual course had been for the chancellor of the exchequer to give notice to the parties likely to subscribe to the loan, that on such a day he would expect them, and then when they attended him, to unfold his plan to them. To communicate his intentions to one party alone, was to give that party a great and manifest advantage over all the others. Whether such a communication had been made he did not know; but the rumour was so general, that he could not doubt the fact of some communication from the right hon. gentleman having been made.

The Chancellor of the Exchequer again denied that he had made any other communications except such ‘as he should be very happy to make to the hon. gentleman who had just spoken, and to receive his advice with respect to them.’

Edition: current; Page: [20]
9 June 1819

THE BUDGET 9 June 1819

The Chancellor of the Exchequer introduced the Budget and announced that a loan of 12 millions had been contracted that morning by competition on very advantageous terms and that, besides, 12 millions would be borrowed from the sinking fund for the service of the year; he also proposed that 3 millions should be raised by additional duties on malt, tobacco, tea, etc., and applied to meet the charges of the new loans. Mr. Grenfell, who opened the debate for the opposition, devoted most of his speech to an attack upon the Bank. Mr. Mellish (a Bank director) replied defending the Bank and concluded: ‘The hon. member for Portarlington (Mr. Ricardo), found fault with the Bank directors for not having attended sufficiently to the interests of the proprietors; the hon. member for Marlow (Mr. Grenfell), on the contrary, said, that the Bank had too many bonusses, and that the public ought to share in the profits. How were the directors to act so as to meet the wishes of both gentlemen?’

Mr. Ricardo said, he had already opposed the grant of 3 millions towards a sinking fund, because he did not wish to place such a fund at the mercy of ministers, who would take it whenever they thought that urgent necessity required it. He did not mean to say that it would be better with one set of ministers than another; for he looked upon it that all ministers would be anxious, on cases of what they conceived emergency, to appropriate it to the public use. He thought the whole thing a delusion upon the public, and on that account he would never support a tax to maintain it. He would admit that some means should be resorted to for liquidating the public debt, and in this he agreed with the hon. member for Leicester1 that a great sacrifice should be made; but he could not go with him in thinking, that that ought to be a property tax. That would be attended with the Edition: current; Page: [21]same bad effects as the other plan. He would, however, be satisfied to make a sacrifice; the sacrifice would be a temporary one, and with that view he would be willing to give up as large a share of his property as any other individual.1 [Hear.] By such means ought the evil of the national debt to be met. It was an evil which almost any sacrifice would not be too great to get rid of. It destroyed the equilibrium of prices, occasioned many persons to emigrate to other countries, in order to avoid the burthen of taxation which it entailed, and hung like a mill-stone round the exertion and industry of the country. He therefore never would give a vote in support of any tax which went to continue a sinking fund; for if that fund were to amount to 8 millions, ministers would on any emergency give the same account of it as they did at present. The delusion of it had been seen long ago by all those who were acquainted with the subject; and it would have been but fair and sound policy to have exposed it. On the subject of the loan he had nothing to object. He gave credit to and thanked the chancellor of the exchequer, for his good management within the last two or three days. [a laugh]. It was, he conceived creditable to him to have effected the loan on such good terms, when it was considered that only a few days back the funds were at 65.2 But though he gave credit to the right hon. gentleman for his plan in one respect, it was but fair to his hon. friend (Mr. Grenfell) near him, to say that this was the advice which he Edition: current; Page: [22]had given long ago.1 An hon. Bank director had said that he (Mr. R.) was inconsistent with his hon. friend. He was not bound to agree in every opinion which his hon. friend might hold; but he did not think he was so inconsistent as was said. He would admit, that he had complained of the Bank not having divided their profits. The Bank had made profits no doubt. It was the duty of the directors to do the best for the proprietors; and it was also the duty of government to make as good a bargain for the country as they could. He could not approve of the Bank making presents to government,2 though he could not blame those to whom they were given, for making the most of their contracts with them.3

After further debate,

Mr. Ricardo wished to ask, whether it was to be understood that in the next year, as there would be 11 millions to be raised for the service of the year, and five millions to be paid to the Bank, there would be taken, as in the present year, 12 millions from the sinking fund, leaving the rest to be raised by way of loan?

The Chancellor of the Exchequer declined to pledge himself.

Edition: current; Page: [23]
16 June 1819


Mr. Peel moved for leave to bring in a bill to prohibit the Bank of England from making any advances to government unless distinctly authorised by parliament.

Mr. Ricardo thought the Bank ought not to be in any way shackled in the management of their own affairs. Great inconveniencies, in the diminution of the circulating medium, might result from establishing too strict a limit on this subject.1

The Chancellor of the Exchequer said, ‘it was not his opinion that any diminution of the circulating medium was necessary, nor did he believe that any such would take place.’

Leave was then given. On 25 June the bill was passed.

18 June 1819


The Chancellor of the Exchequer moved that the House should go into a committee on this bill [to raise three millions to be applied to the sinking fund by new taxes on malt, tobacco, tea, etc.; cp. above, p. 20]. The Marquis of Tavistock moved as an amendment, that consideration be postponed six months: it was shameful, he said, that the House of Commons, having relieved their own pockets by repealing the property tax, should now proceed to tax the poor; the only remedy for such practices was a reform of Parliament. The Chancellor of the Exchequer ‘denied that the new taxes would fall exclusively on the lower classes.’ Mr. Grenfell supported the amendment, ‘not because Edition: current; Page: [24]he thought the state of the representation corrupt, but because this was not, in his opinion, the proper moment to resort to a system of taxation.’ After several other members had spoken,

Mr. Ricardo could not agree with the hon. gentleman (Mr. Lamb) that it was desirable to follow the precedent of 1784, at the conclusion of the American war, and to reestablish what he called a sinking fund. It appeared to him that that was the very period to which those who objected to the sinking fund would direct their attention in support of their arguments. What had become of that sinking fund? Had it realized the expectations which had been held out? Were we now less in debt in consequence of its establishment? No—the contrary was the fact; the sinking fund had been converted into facilities, which enabled the minister to contract new debt. It was true we had purchased with it 200 or 300 millions of stock in the market, but had we diminished the debt by those purchases? No, because we had, at the same time, borrowed a still larger sum to enable us to make the purchases. Because, in fact, the moment our expenditure exceeded our income we had a sinking fund in name only; and that part of the taxes which had been paid to the commissioners, and called a sinking fund for the extinction1 of debt, had been absorbed in providing for a new debt. A sinking fund was only useful—was only what it pretended to be—when a surplus of income was strictly applied to the purposes for which it was established—the extinction of debt. No appropriation of money under the name of sinking fund ever had, and, in his opinion, ever would be constantly applied to this purpose; it would always be considered by ministers as a resource of which they might avail themselves when they were under any difficulty, in raising money by new taxes. In this way had they got rid of the last sinking Edition: current; Page: [25]fund, and the same fate would await that which they now seemed solicitous to establish. The language of the noble lord (Castlereagh)1 confirmed him in his opinion of the use which would eventually be made of it; for he had told it to the House; he had told them that, by creating a sinking fund we should show other countries, we would not suffer ourselves to be insulted. If the sinking fund were applied to frighten other nations by being applied to the purposes of war, it could not be applied to the payment of debt, if money was to be raised to provide for the interest of money hereafter to be borrowed for a new war, there was no utility in making the people pay taxes now, to furnish the means of a war hereafter. It would be much better to let the money remain in their pockets, where it would not fail to accumulate, and not to impose new taxes until new necessities required them. He had a jealous distrust of raising money beyond immediate necessity, and placing it in the hands of ministers; not the present ministers only, but any ministers responsible to a House of Commons constituted like ours. He allowed that so long as we had, in time of war, a sum under the name of sinking fund which would exceed the peace expenditure, we had what would be a real sinking fund when the peace came. So long, for instance, as we had 10 millions called a sinking fund in time of war, while we borrowed near 20 millions merely for the temporary purpose of carrying on the war, we might in a restricted sense be said to have a sinking fund of 10 millions; for on the return of peace it would, if so applied, operate to the reduction of debt. But this was not the case in the last war; the amount of the sinking fund, instead of being really applied to the reduction of debt, had been applied to pay the interest of new debt. And, after all, the meaning was only this; that if when peace Edition: current; Page: [26]returned we could reduce our expenditure 10 millions annually below our income, we should be able annually to discharge 10 millions of debt; this surely might be done without the mysterious jargon about a fund which answered no purpose but that of delusion. As to the particular taxes, it was unnecessary for him to state his sentiments, seeing he was an enemy to taxation altogether. He could not, however, agree, that they fell on the labourer, because imposed on the objects he consumed. If, indeed, they were imposed on the luxuries of the labourer, they might in some measure diminish his comforts; but the more the articles taxed approached the nature of necessaries, the more completely would they fall on those who employed labourers. It had been said, that these taxes would fall upon the poor-rates; but that amounted to the same thing; for the poor-rates formed, in reality, a fund destined to support labour, however inconvenient it might be to pay it in that way. He perfectly concurred with the noble lord who moved the amendment, in his expressions as to the state of the representation in that House: he could not help expressing his opinion, that the people were not sufficiently represented in it. This might be some satisfaction to the hon. member for Middlesex (Mr. Mellish), who appeared to be pleased the other evening1 when he discovered a difference of opinion between him and his hon. friend (Mr. Grenfell), as the opinion which his hon. friend was fond of declaring on the subject of parliamentary reform, was diametrically opposite to that which he (Mr. R.) had immediately expressed.

The House having gone into the committee, Mr. Lyttelton objected to the tax on malt, ‘that it was imposed on the only remaining luxury, if indeed it was not a necessary, of the poorer classes of this country. He then, adverting to the argument Edition: current; Page: [27]which had fallen from one of the highest authority on questions of political economy in this kingdom (Mr. Ricardo), namely, that a tax upon the necessaries of life did not fall heaviest on the poor; observed, that although he might be disposed to admit the truth of that principle, yet in this case, as being upon an article, the very last, as it might be said, before those necessaries, the duty did fall heaviest upon that class.’

Mr. Ricardo explained. He said, that he hoped the House and his hon. friend would understand that he was not contending that the taxing of necessaries was not injurious to labourers, but that it was no more injurious to them than any other mode of taxation. In fact, all taxation had a tendency to injure the labouring classes, because it either diminished the fund employed in the maintenance of labour, or checked its accumulation. In the argument which he had used, he had supposed that it was necessary to raise a certain sum by taxes, and then the question was whether by taxing necessaries, the burthen would be particularly borne by the labouring classes. He thought not—he was of opinion that they would ultimately fall on the employers of labour, and would be only prejudicial to the labourers in the same way as most other taxes would be, inasmuch as they would diminish the fund employed in the support of labour.

On 28 June the bill was passed.

[The session closed on 13 July 1819.]

Edition: current; Page: [28]

SESSION 1819–1820

6 December 1819


Parliament was called together in order to consider a series of measures (the Six Acts) for counteracting and suppressing ‘the seditious practices so long prevalent in the manufacturing districts of the country’ (speech of the Prince Regent on the opening of the session, 23 November 1819). Lord Castlereagh introduced the first of these measures, the Seditious Meetings Prevention Bill, on 29 November. It was read a second time on 2 December (when Ricardo voted No, with the minority). On 6 December the bill was again considered.

Mr. Ricardo said, he was anxious very briefly to express his opinion on this subject. He thought that, in the course of this discussion, sufficient attention had not been given to the importance of the right to be curtailed. If the people’s right of meeting and petitioning consisted only in the right of meeting to petition for the removal of grievances, it was not of so much importance, and the curtailment of it was not of such serious interest. But the right was, a right of meeting in such numbers, and showing such a front to ministers as would afford a hope that bad measures would be abandoned, and that public opinion would be respected. It might be compared, in this view, with the right of that House to address the Crown. If the right of that House consisted in passing resolutions only, and if they could not follow up their resolutions by refusing the supplies, and by calling up a spirit of resistance in the country, the Crown could despise their interference. It was the same with the right of the people to petition. If they could not meet in such numbers as to make them be respected, their petitions would have no Edition: current; Page: [29]effect. At the same time, he admitted, that those meetings were attended with very great inconvenience. It could not be denied that circumstances might arise when the government should be fairly administered, and yet distress might arise from causes which the government could not control, and wicked and designing men might produce a great degree of mischief; it did not appear to him that such meetings were the sort of check which ought to exist in a well-administered government; but it was necessary to have some check, because if they left men to govern without any control in the people, the consequence would be despotism. The check which he would give, could be established only by a reform of parliament. Then, instead of petitioning, and from the worst part of the people perhaps, being the check, that House would become the best check which any government could have, and with that check the people would be perfectly satisfied. He had read with surprise the abhorrence of radical reform expressed by several members of that House. He believed there were among the advocates of that measure, designing and wicked men. But he also knew that there was a great number of very honest men who believed universal suffrage and annual parliaments were the only means of protecting the rights of the people, and establishing an adequate check upon government. He had the same object as they professed to have in view; but he thought that suffrage far from universal would effect that object, and form a sufficient check. He therefore thought it would be madness to attempt a reform to that extent, when a less extensive reform would be sufficient.

On 13 December the bill was read a third time and passed; in the division (for, 313; against, 95) Ricardo voted against the bill.

Edition: current; Page: [30]
16 December 1819


Sir W. De Crespigny moved that a select committee be appointed to inquire into the plan of Robert Owen, Esq. for ameliorating the condition of the lower classes. The Chancellor of the Exchequer, opposing the motion, read an extract from Mr. Owen’s speech of 21 Aug. 18172 and declared that, ‘as an official individual, he could not agree to a grant of the public money for the establishment of a plan that had been introduced to the public by a speech, in which all religions were pronounced false, and all systems of government bad.’ Mr. Brougham supported the motion, although he rejected the principle upon which the plan was founded, ‘that of the increase of population being a benefit to the country.’

Mr. Ricardo observed, that he was completely at war with the system of Mr. Owen, which was built upon a theory inconsistent with the principles of political economy, and in his opinion was calculated to produce infinite mischief to the community. Something had fallen from an hon. member on a former night, on the subject of the employment of machinery.3 It could not be denied, on the whole view of the subject, that machinery did not lessen the demand for labour; while, on the other hand, it did not consume the produce of the soil, nor employ any of our manufacturers4. It might also be misapplied by occasioning the production of too much cotton, or too much cloth; but the moment those articles ceased in consequence to pay the manufacturer, he Edition: current; Page: [31]would devote his time and capital to some other purpose.1 Mr. Owen’s plan proceeded upon this—he who was such an enemy to machinery, only proposed machinery of a different kind: he would bring into operation a most active portion of machinery, namely, human arms. He would dispense with ploughs and horses in the increase of the productions of the country, although the expense as to them must be much less when compared with the support of men. He confessed he did not agree in the general principles of the plan under consideration, but he was disposed to accede to the proposition of a committee. Spade husbandry Mr. Owen recommended as more beneficial to production. He was not informed enough on the interests of agriculture to give an opinion, but that was a reason for sending the subject to a committee. For what did the country want at the present moment? A demand for labour. If the facts stated of spade husbandry were true, it was a beneficial course, as affording that demand. And though government or the legislature would not be wisely employed in engaging in any commercial experiment, it would be advantageous that it should, under present circumstances, circulate useful information and correct prejudices. They should separate such considerations from a division of the country into parallelograms, or the establishment of a community of goods, and similar visionary schemes.2 Edition: current; Page: [32]Before he sat down, he trusted the House would excuse his offering a few observations on what he considered the cause of the distresses of the country. He fully concurred in what had fallen from his hon. and learned friend1 on the subject of population. The proportion of the capital to population regulated the amount of wages, and, to augment them, it was important to increase the capital of the country. But when he heard honourable members talk of employing capital in the formation of roads and canals, they appeared to overlook the fact, that the capital thus employed must be withdrawn from some other quarter. The causes of the insufficiency of capital, and the consequent disproportion between wages and population, were to be attributed to many circumstances, for some of which government were not to blame. Supposing a country with a numerous population, large capital, and a limited soil, the profits of that capital will be smaller there, than in a country populous, with lesser portion of capital, and with a great extent of soil. This country was one of large capital, but of increasing population and of an extent of soil necessarily limited; of course profits would be lower in it than in countries which had not the same limitation: still, though the profits were smaller, the capital continued in this kingdom, not only because persons felt a solicitude to keep their property under their own eye, but because the same confidence was not reposed in the security of others: the moment, however, other kingdoms, by their laws and institutions, inspired greater confidence, the capitalist would be induced to remove his property from Great Britain to a situation where his profits would be more considerable: this arose from no fault in the government; but the effect of it was to produce a deficiency of employment and consequent distress. Then came the question, had we Edition: current; Page: [33]taken the proper steps to prevent the profits upon capital from being lower here than in other countries? On the contrary had we not done everything to augment and aggravate the evil? Had we not added to the natural artificial causes for the abduction of capital? We had passed corn laws, that made the price of that necessary of life, grain, higher than in other and neighbouring countries, and thus interfered with the article which was considered the chief regulator of wages. Where grain was dear, wages must be high, and the effect of high wages was necessarily to make the profits on capital low. A second cause arose out of the fetters upon trade, the prohibitions against the import of foreign commodities, when, in fact, better and cheaper than our own. This was done in a spirit of retaliation; but he contended, that whatever line of policy other nations pursued, the interest of this nation was different: wherever we could obtain the articles we wanted at the cheapest rate, there we ought to go for them; and wherever they were cheapest, the manufacture would be the most extensive, and the amount of it1, and invitation to capital, the greatest. Another cause of the existing disposition to send capital out of the country was to be found in the national debt. Instead of paying our expences from year to year, Great Britain had constantly pursued a system of borrowing, and taxes were accumulated not only to pay the simple interest, but sometimes even the compound interest of the debt; and the amount was now so enormous, that it became a matter of calculation, whether it was worth a capitalist’s while to continue in a country where he not only obtained small profits, but where he was subjected to a great additional burthen. Every pecuniary motive impelled him rather to quit than to remain. For a great many of the various causes of the evil, some of the principal of which he Edition: current; Page: [34]had touched upon, there might not exist any immediate remedy. We had, however, a beneficial precedent in the proceedings of the last session. He alluded to the measures taken for a return to payments in specie; and he saw no inconvenience in keeping stedfastly to that system. Parliament had wisely extended the operations of that system over a number of years. They should follow the same course as to the corn laws. After the quantity of capital employed under the faith of legislative enactments in agriculture, it would be a great injustice to proceed to an immediate repeal of those laws. But that House should look to the ultimate good, and give notice, that after a certain number of years, such an injurious system of legislation must terminate. The same observation applied to our prohibitory commercial code. From the variety of interests now in operation under that system, it would not only be necessary to look, but to look stedfastly, to a distant but certain period for its repeal. With respect to the national debt, he felt that he entertained opinions on that point which by many would be considered extravagant. He was one of those who thought that it could be paid off, and that the country was at this moment perfectly competent to pay it off. He did not mean that it should be redeemed at par; the public creditor possessed no such claim—were he paid at the market price, the public faith would be fulfilled. If every man would pay his part of the debt, it could be effected by the sacrifice of so much capital—1 With respect to the objection, that the effect of that sacrifice would be to bring so much land into the market, that purchasers could not be found for such a glut, the answer was, that the stockholder would be eager to employ his money, as Edition: current; Page: [35]he received it, either in the purchase of land, or in loans to the farmer or landowner, by which the latter might be enabled to become the purchaser, particularly when the government was no longer in the market as a borrower. He was persuaded that the difficulty of paying off the national debt was not so great as was generally imagined; and he was also convinced that the country had not yet nearly reached the limits of its prosperity and greatness. It was only by a comparative reference to the state of other countries that the opposite opinion could be entertained, and such opinion would gain ground as long as so many unnatural temptations, by our policy at home, were held out to withdraw capital from the country. He repeated his conviction that Mr. Owen’s plan was in many parts visionary, but yet he would not oppose the appointment of a committee, if it were only for the purpose of seeing whether it was probable that the advantages which that gentleman expected from the use of spade husbandry could be realized.

The House divided: Ayes, 16; Noes, 141. Ricardo voted for the motion.

22 December 1819


Mr. Maberly moved for ‘an account, showing how the sum of five millions voted for the purpose of paying off debt owing to the Bank of England on the 5th July 1819 had been applied.’ The Chancellor of the Exchequer opposed the motion.

Mr. Ricardo said, it appeared to him that the House would act very unwisely by interfering as to the arrangements entered into by government for the repayment of the Edition: current; Page: [36]5,000,000l. of advances to the Bank. At the same time he was at a loss to conceive what danger could arise from giving any information upon the subject. It had been objected, that the production of that information would lead to extensive stock-jobbing. He thought it would have just the contrary effect; for stock-jobbing was always best assisted by secrecy —by the circumstance of some individuals possessing certain information, which the other parties, with whom they transacted their bargains, were ignorant of. Now, supposing the statement required were made known, no jobbing could take place; because every one would then know all that had occurred, as to the repayments. With regard to what had fallen from the chancellor of the exchequer, that the state of the exchanges afforded a means of knowing what capital was going out of the country, he thought very differently. Supposing he wished to invest a sum of 50,000l. in France, or any other country; might he not order his correspondent to invest the produce of the goods he had sent out (50,000l. for instance) in the public funds, or in other goods, or in lands? No alteration could take place in the exchanges, unless there was a bill negociated. The official accounts annually laid before the House, relative to our exports and imports, were such, that it was impossible to draw any correct or practical inference from them. He remembered to have heard it stated, that at the time of the union with Ireland, each of the two countries gave a relative and comparative statement of her exports and imports; when Ireland made out that she had exported the larger quantity of commodities to England, and England appeared to have exported the larger quantity to Ireland. No correct information, therefore, could be derived from such returns. He should vote for the motion of his hon. friend.

The motion was negatived.

Edition: current; Page: [37]
24 December 1819


Mr. Irving presented a petition from the merchants and traders of London for an inquiry into the causes of the commercial distress. Mr. Grenfell and Mr. J. Smith spoke next.

Mr. Ricardo was happy to hear it stated by all the hon. gentlemen who had spoken, that the laws enacted last year1 concerning the currency of the country, ought not to be disturbed. The country was, unquestionably, in a state of great distress, but he differed in opinion from his hon. friend who presented the petition as to the cause of that distress. His hon. friend thought that this country was in a state of forced currency, and that the evils both at home and abroad arose from the regulations which that House had made relative to the currency. That cause, however, he was convinced, was totally inadequate to produce such an effect, and therefore the evil must be traced to other sources. He might here remark, that his hon. friend had brought an unexpected accusation against him, namely, that he had proposed a plan for the payment of the public debt2, but that he had not the merit of originality.3 Now, he did not think that he had ever claimed that merit, for he was aware that many persons before his time had taken a similar view of the subject, and he Edition: current; Page: [38]hoped that whatever might be the merit of the application which he had made of principles known to others, he had stated his opinions with becoming modesty. He conceived that the distress was chiefly to be ascribed to the inadequacy of the capital of the nation to carry on the operations of trade, manufacture, and commerce. But why was the capital more inadequate now than formerly? If the profits on capital were higher, and labour more productive in other countries, it could not be doubted that capital would be transferred to those countries: no proposition in Euclid was clearer than this. Now, he thought they had greatly aggravated this evil by bad legislation, and he had formerly mentioned instances.1 He had referred to the corn-laws as one example; and however unpopular the doctrine might be with some gentlemen, he would state his opinion freely, that he believed the corn-laws to have materially increased the evil. These laws had tended to raise the price of sustenance, and that had raised the price of labour, which of course diminished the profit on capital. But of all this evil, the national debt, and the consequent amount of taxation, was the great cause. Hence the main object of the legislature should be to provide for the payment of that debt, and that provision should commence its operation as soon as possible. For as this debt was chargeable upon all the capital of the country, it was obvious that any capital which went out of the country was exonerated from that charge, while the capital which remained was of course compelled to pay a greater proportion of debt and taxes. To guard against this evil, which was productive at once of individual injustice and national injury, the whole capital of the country ought to be assessed for the discharge of the public debt, so that no more capital should be allowed to go out of the country without paying its fair proportion of Edition: current; Page: [39]that debt. The execution of this plan might be attended with difficulty, but then the importance of the object was worthy of an experiment to overcome every possible difficulty. The whole of the plan through which he proposed the payment of the public debt, might in his view be carried into effect within four or five years. For the discharge of the public debt, he proposed that checks should be issued upon the government to each purchaser, which checks should be kept distinct from the ordinary circulating medium of the country, but should be received by the government in payment of taxes. Thus the debt might be gradually liquidated while the government continued gradually receiving the assessments upon capital to provide for that liquidation. He would not, however, dwell farther upon this chimerical project, as he understood it was considered by every one except himself, but proceed to the consideration of the petition. His hon. friend proposed, as particularly worthy of attention, that a committee of that House should inquire into certain restrictions upon commerce, with a view to their removal. But his hon. friend should reflect, that no immediate effect could be reasonably expected from the labour of such a committee for such a purpose, as the restrictions alluded to, however burthensome, could not be suddenly removed. This removal must, indeed, take place by slow degrees, entwined as they were with the general system of the trade of the country. But still great good might be expected from the investigations of such a committee, who would, he hoped, enter particularly into the consideration of the corn laws. His hon. friend had suggested that a certain modification should take place in the arrangements made towards the removal of the restrictions upon the Bank, namely, that the Bank should not be called upon to pay in bullion until the period arrived for such payment at the lowest rate. Now he, on the contrary, Edition: current; Page: [40]thought that it would be much more for the advantage of the Bank itself, to make the payments in the order already settled; because such payments being made gradually would serve to break the fall, and prepare the Bank for the complete resumption of metallic payments. The only modification, indeed, which he deemed desirable on this subject was, that the Bank should be called upon permanently to pay its notes in bullion, instead of coin; for he could not conceive the policy of incurring the expense of coining gold merely for the purpose of the currency, which could be answered as well, if not more conveniently, by paper. The only object to be provided for in this case was, that the real value of the paper should be equal to its denominative value, according to a settled and universal standard of value, or according to its nominal amount in coin.1 His hon. friend had recommended the establishment of two standards of value, namely, silver and gold; but this was a project, in his opinion, peculiarly objectionable, because, if there were two standards, there would be greater chance of variation, and the establishment of the least variable standard of value was the object to be desired, with a view to maintain the character of our currency.

Mr. Brougham agreed with Ricardo on several points: ‘There was however one point on which he had wished so great an oracle,2 as he must ever consider him on such subjects, had not pronounced the decided opinion he had. He alluded to the possibility, or, if possible, the adviseableness of paying off the national debt. The proposition was not a new one—it had years ago been suggested by Mr. Hutcheson, indeed, he believed Edition: current; Page: [41]every chancellor of the exchequer had a similar proposition made to him every year. It had in more recent times been brought before the public by Dr. Watson, bishop of Landaff.1... The effect of such a measure would be to place the property for five years at the mercy of all the solicitors, conveyancers, and money-hunters, in the country.’

[Parliament was adjourned on 29 Dec. 1819 and, following the death of George III, it was dissolved on 28 Feb. 1820.]

Edition: current; Page: [42]


The new Parliament assembled on 21 April 1820; the King’s speech was delivered on 27 April.

8 May 1820


Mr. Baring presented a petition from the merchants of London, the object of which, he said, ‘was a renewal, under certain limitations, of the freedom of trade by the abolition of all injurious restrictions.’ It was not his intention to recommend any immediate disturbance of the corn laws. But some alterations were possible at once, including the removal of the duty on the importation of wool, of the restrictions on the importation of timber, and of all prohibitions; the throwing open of the trade in the Indian seas and the repeal of the Navigation laws. Mr. Robinson (President of the Board of Trade) said, ‘that the restrictive system of commerce in this country was founded in error, and calculated to defeat the object for which it was adopted’; yet it was ‘impossible all at once to alter our commercial system’. Lord Milton concurred in all the principles of the petition. The restrictive system was one of the causes of the distress; another cause was the change lately effected in the currency. This change was necessary, but hon. members had not fully anticipated the embarrassments it would occasion. ‘He believed even his hon. friend near him (Mr. Ricardo) had formed too low an estimate of the pressure which a change in our currency would create.’

Edition: current; Page: [43]

Mr. Ricardo begged the noble lord to recollect, that at the time when he spoke on the bullion question last session the price of gold was at 4l. 3s. per oz. and that now it was at 3l. 17s. 10½d.; there could not, therefore, be such a pressure arising from this measure as the noble lord had described. At the time when that discussion took place,1 he certainly would rather have been inclined to have altered the standard than to have recurred to the old standard. But while the committee was sitting, a reduction took place in the price of gold, which fell to 4l. 2s. and it then became a question whether we should sacrifice a great principle in establishing a new standard, or incur a small degree of embarrassment and difficulty in recurring to the old. With regard to the petition before the House, he had heard it with great pleasure; and he was particularly pleased with the liberal sentiments delivered by the right hon. gentleman opposite. It was to him a great source of satisfaction that sound as well as liberal principles were put forward by so important a body as the merchants of London; the only thing that astonished him was, that it was only now that these principles were put forward—that they should have taken so much time in their progress, since they were first promulgated by Adam Smith. However desirable the system now suggested, it could not be denied but that some difficulties lay in the way of its completion. The difficulties were of two kinds; the first difficulty resolved itself into a question of revenue. To increase the sources of revenue was doubtless the object of every wise government; and where taxes of a particular kind pressed heavily upon the people, it did not appear to him a very difficult thing to substitute other taxes. Another difficulty, and a greater, was, respecting the vested interests. Many persons vested Edition: current; Page: [44]their capital on the faith of the continuation of the restrictive system, and therefore, however injurious that system might be, nothing could be more unjust than, by the immediate abolition of that system, to occasion the absolute ruin of those who vested large capital on the faith of laws so long established as the restrictive laws. But from this no argument could be surely drawn to continue the system in future times. No argument appeared to him more mischievous— more calculated to promote commotion and rebellion, than this—that if they once did wrong they should never do right, but that they should go on in error and make every mischievous system perpetual. He thought the House ought now to do what was suggested by the bullion committee.1 There were difficulties of a very formidable kind connected with the system embraced by the committee, at least with its immediate execution. And what was done on that occasion? Why, that which ought to be done on the present—to spread the return to cash payments over a great space of time. So now might they return, gradually return, to a better system of commercial regulation, allowing full time to those who had their property invested, to turn it into other channels. After they had done so, they might say to the capitalists, “The present system will continue only so long as you can accommodate yourselves without any sacrifice of your interests, to the new one which we propose.” Some restrictions might thus be removed immediately, without any inconvenience; others might be gradually relaxed, and others might be left till our situation had so greatly improved as to render their removal no inconvenience. He was surprised that the right hon. gentleman2 who had expressed such liberal principles of political economy, and had so freely declared himself against the policy of our commercial restrictions, had Edition: current; Page: [45]yet made a reservation in favour of the corn laws. They were necessary, he said, to protect the agricultural interests; and he (Mr Ricardo) would admit the validity of the argument, provided it could be made to appear that the agriculturists suffered more burthens than other classes of the community. But what were their peculiar burthens? They did not suffer more from the malt-tax, or from the leather tax, or from any other tax with which he was acquainted, than any other class of men. These taxes were common to all, and all felt their pressure alike. But the poor-rates, it was said, operated on them as a peculiar burthen. Well; if the poor-rates were really more oppressive to them than to other classes, and tended to raise the price of grain, he would recommend a countervailing duty on the importation of foreign corn, to the amount of the operation of that cause. He allowed that the poor-rates actually raised the price of corn, because they fell upon the land, and operated as a burthen solely upon agriculturists. But if, while this burthen was felt by them, other classes of the community felt equal burthens, they were put to no disadvantage, and ought to receive no protection. He was fully prepared to admit, that the necessity for supporting the poor constituted the only or the best apology for the corn-laws. Tithes likewise were another burthen to the landed interest, and tended, he would allow, to a certain extent, to raise the price of grain, and for these he would have no objection to allow a countervailing duty. There was this difference between poor-rates and tithes—that while we must support the poor, whatever was the produce, the church could only claim a tenth of what was raised; for, whatever was the deficiency of produce, the clergy must conform to their proportion, and find it sufficient for their support.

Mr. Baring said, ‘that there was one point of importance on which he had the misfortune totally to differ with his hon. friend (Mr. Ricardo); on that point, as on every other, he would differ Edition: current; Page: [46]with him with reluctance and with diffidence.’ Mr. Baring conceived that on an average during the war as compared with the present time the difference in the currency was at least 25 per cent. ‘All the difficulty of the country was in its having a large debt;’ creditors had to be paid a higher value than had been received from them. ‘To add facilities to the circulation he should probably propose, if events did not alter his opinion, in the first place to make perpetual the plan of his hon. friend for payment in metallic bars instead of coin, for which the country was infinitely indebted to his hon. friend, and in the next place to give the Bank the option of paying, either in gold or in silver, not in depreciated or debased coin, but in weight.’

Mr. Ricardo, in explanation, stated that he had never imagined that the currency had never been depreciated more than 4 per cent. He had merely contended, that at the time when the subject was taken up by parliament in the last year, there was only that depreciation; which was too small to warrant an alteration of the ancient standard. He was well aware that during some of the latter years of the war, the depreciation had been as great as 25 per cent.

The petition was ordered to lie on the table. A similar petition being presented from the chamber of commerce of Edinburgh,

Mr. Ricardo said, he would take that opportunity of making an observation as to the two standards of gold and silver. He fully agreed with his hon. friend,1 that a payment in both would facilitate the payment of the public creditor; but then there was a question whether two standards would not be more liable to fluctuation than one invariable standard. If payment were made in one metal, it would be liable to less fluctuation than if made in two, and in two it would be less than if made in three; therefore he considered the payment in one metal as preferable, being liable to less fluctuation.

Mr. Baring replied, that he ‘considered the difference in this respect as more theoretical than it would be found in practice.’

Edition: current; Page: [47]
12 May 1820


Earl Temple presented six petitions from Buckinghamshire for an inquiry into the depression of agriculture.

Mr. Ricardo was not disposed to refuse inquiry to the petitioners, though he thought, under the present state of the country, such a question ought not to be moved but under the soundest discretion. The labouring classes throughout the kingdom were reduced to the greatest distress. That was not the period, therefore, when measures should be taken to increase the price of corn. The agricultural interest had its depression, but still it was to be considered as one class, whose prosperity ought not to be forced at the sacrifice of the general good. There was not a more important question than that of the corn laws. Nothing, in his mind, was better calculated to afford general relief than the lowering of the price of corn. It was the first step to that great remedy, the making labour productive.

25 May 1820

25 May 1820

Lord Milton presented a petition from the agriculturists of Yorkshire praying for protection against foreign competition.

Mr. Ricardo said, that the object of the petitioners seemed to him to be nothing else than to get a monopoly of the English market. The consequence would be, that the price of corn would be raised, and laid generally on all the other classes. The idea which the petitioners had of protecting duties was a most erroneous one, and would, if acted upon, be destructive of all commerce. If they meant that the Edition: current; Page: [48]countervailing duties should be equal in amount to the difference between the price at which corn could be sold here and that at which it was sold in a foreign market, they went upon a most erroneous principle, and one which, he hoped, would never be introduced. Suppose corn sold here at 80s., and that in Poland it could be procured for 40s. or 50s.; if, under such circumstances, it were intended to put on a countervailing duty of 30s., there would be an end of all importation, and of every principle of commerce.1 In that case, the importer would be at a certain loss by the amount of freight, and of course no one would import; the consequence would be, that the price of corn at home would be raised to an exorbitant height. Viewing the question in this light, he hoped that the motion for a committee, whenever it came before the House, would be negatived.

30 May 1820


Mr. Holme Sumner moved that the petitions upon the subject of agricultural distresses be referred to a select committee. He contended that the corn law of 1815 was inadequate and that new measures were required. Mr. Robinson (President of the Board of Trade) declared that he would oppose the motion unless the enquiries of the committee were confined to abuses which might exist in the execution of the law. Mr. Baring also opposed the motion.

Edition: current; Page: [49]

Mr. Ricardo1 said, that there was one sentiment delivered by an hon. gentleman in the early part of the debate, in which he cordially concurred, namely, that in legislative enactments, the interest of one body of men ought not to be consulted at the expense of others, but that each should receive corresponding consideration in proportion to its importance. He (Mr. Ricardo) would wish to act up to this maxim, and, because he consulted the interests of the whole community, he would oppose the corn-laws. In many of the observations which he intended to make he had been anticipated by his hon. friend the member for Taunton.2 The agriculturists had contended that they had a right to be protected in a remunerating price for their produce, but they forget that no remunerating price could be fixed. It was in vain to talk of fixing a remunerating price, which must necessarily change with circumstances.3 If by preventing importation the farmer was compelled, for the national supply, to expend his capital on poor or unprofitable soils, the remunerating price at which he could keep this land in cultivation must be very high, as compared with the price of grain in other countries, where the soil was better, and less labour was required. Open the ports, admit foreign grain, and you drive this land out of cultivation; a less remunerating price would then do for the more productive lands. You might thus have fifty remunerating prices according as your capital was employed on productive or unproductive lands. It became the legislature, Edition: current; Page: [50]however, not to look at the partial losses which would be endured by a few, who could not cultivate their land profitably, at a diminished remunerative price, but to the general interests of the nation; and, connected with this, he would look to the profits of capital. In his opinion a remunerating price might have been so fixed, that 50s. per quarter would have answered the purpose, but at all events he conceived that if the farmers in the country could raise a sufficient supply for the demand, 70s. might be considered as a protecting price.1—He would rather have a great quantity of produce at a low rate than a small quantity at a high. By making food cheap, the people would be enabled to purchase a greater quantity of it, and apply a part of their earnings to the purchase of luxuries. The high price of subsistence diminished the profits of capital in the following manner:— the price of manufactured articles—of a piece of cloth for instance—was made up of the wages of the manufacturer, the charges of management, and the interest of capital. The wages of the labourer were principally made up of what was necessary for subsistence; if grain was high, therefore, the price of labour, which might be before at 50 per cent on the manufactured article, might rise to 60, and being sold to the consumer at the same rate, the 10 per cent (difference) would necessarily be a deduction2 from the profits of stock. If food was high here, and cheap abroad, stock would thus have a tendency to leave the country, and to settle where higher profits could be realized. The right hon. president of the board of trade appeared inconsistent when he denied a committee to inquire into the more important question, and yet agreed to one for discussing such trifling matters as striking Edition: current; Page: [51]the average. This was not what the petitioners wanted; they declared that they could grow as much as the home market required, and they demanded a monopoly of it. He would admit their statement to its full extent. He would even admit that our land was susceptible of a great increase of population, and that we could grow what would be sufficient to support that increase. But then, see what the inference of the petitioners was—they required that importation, therefore, should not be allowed. The answer to the whole of their system was plain. “You can grow those articles, it is true, but then we can get them cheaper from other countries.” They could grow them, but was it expedient that they should under those circumstances? All general principles were against it. They might as well urge that as in France, they could grow beet-root for the purpose of producing sugar, as grow grain sufficient for home consumption merely because it could be done. The right hon. gentleman opposite1 had ridiculed that absurd scheme of Buonaparte in the most pointed language, but all his ridicule applied equally to the growing of corn in this country when we could get it cheaper elsewhere. Another of their arguments was, that as ship-owners and merchants were protected by the navigation laws, and other enactments, so they ought to be protected by prohibitions in return. But he denied that these protections were of any use to the country. The navigation laws were of no use. Nay, he would allow them to take any trade they pleased, and surround it with protections; the measure might be beneficial to the particular trade, but it must be injurious to the rest of the country. There was no principle more clear than this. The argument of the agriculturist was, that the legislature having enabled the ship-owner and cotton manufacturer to injure the community, they should give him Edition: current; Page: [52]a privilege to do the same. Again they talked of the tax on malt, as if the tax on malt was not a general burthen, which fell upon every class of the community. Another of their statements was, that they paid 30 per cent1 on the whole produce of the country. He contended that the land-owner did not pay 30 per cent on the whole produce of the country. The produce of the country was calculated at the value of two hundred millions a year; 30 per cent would be 60,000,000l., and besides that there were the assessed taxes, the customs, and various other sources of revenue, which showed that the calculation of 30 per cent was wrong. They spoke also of the encouragement given to foreign labour, but, he would ask, what article could they import which was not the produce of foreign labour? for which, it was to be observed, that English labour was given in exchange. The error committed in 18162 was that of making the corn law a permanent law. It ought to have been a temporary measure, and to have ceased its operation as soon as the existing leases had expired, and the farmer was enabled to make new terms with his landlord. There were many measures that might be adopted with propriety, even in opposition to general principles, for a time, and under the exigencies of the moment, but parliament should always provide for a return to the good system. They should go back to that system as soon and as well as they could, but at all events they should go back. Nothing was more likely to occasion a convulsion than to persevere in a wrong measure merely because it had Edition: current; Page: [53]once for a temporary purpose been adopted. Adverting to the subject of countervailing duties, of which he had formerly spoken,1 he contended that it was not necessary to constitute a countervailing duty, that it should make up the difference between the price at which a foreigner could sell grain and that at which we could raise it. A countervailing duty, in his opinion, was one which balanced the particular tax laid upon any particular class of the community. Countervailing duties of a different description would entirely destroy all commercial intercourse. He agreed that the interests of the agriculturists, and of the other classes of the community, might be identified, provided we were restrained from intercourse with other nations; but this might not be the case in reference to foreign commerce. It might be the interest of the farmer to confine the manufacturer to the supply which he could afford him at a high price, while the manufacturer might procure the article cheaper from abroad. The price of grain might be raised by two causes—either by a change in the currency, which would affect grain like other articles; or by legislative restrictions, which might alter its relation to other articles. A rise in the price of corn from the latter cause tended to injure all who were not interested in the cultivation of the land, by lowering the profits of stock. It had been said, that the national debt, and the pressure of taxation, were the sources out of which the difficulty had arisen. It was no such thing. If all the taxes and the debt had been got rid of together, the same question would still arise —for while the population of foreign countries was not able to consume the produce of the land, and the population of this country was more than sufficient, there would be a disposition to import.—Some gentlemen seemed to think that taxation made a difference in the state of the question, as to Edition: current; Page: [54]our intercourse with foreign nations. It would no doubt be the case, if we taxed one article more than another, that we should cease to supply foreign countries with that commodity; but, if all articles were taxed alike, commerce in general would not be affected. If, for instance, this country produced corn and cloth, and that the production of each commodity was equally taxed, the amount of taxation would not make any difference in the relative advantage which one species of production had over the other, nor consequently in the choice of the commodity which we might supply to other nations, or be supplied with by them. It would be said, however, that taxation would make all things dearer; he admitted that—but though we might thus for a time cease to sell to other countries, we should not cease to buy of them, till the reduction of the quantity of money we possessed reduced prices also, and brought us to a level with them. It was one of the evils of the national debt, that it stood in the way of a reduction of the taxes in the same ratio as the currency was reduced. If, for instance, a tax was imposed of two shillings per yard on cloth worth twenty-two shillings, the country calculated on paying one-eleventh of the value; but when, in the progress of the alteration of the distribution of money, the cloth was reduced to 20s. a yard, the tax continuing the same, the country paid 1-10th of the value. There was another argument, which was the most important, because the most plausible argument in favour of the Corn law, viz. the plea that by importing corn, we became dependent on foreign countries. On the ground of economy not a word was to be said by any one who had paid attention to the subject, but in the argument that it was desirable that in war this country should not be dependent on another for subsistence, there was a certain degree of plausibility. In answer to this, it was to be said that if we imported corn in time of Edition: current; Page: [55]peace from any one country to a considerable extent, that country must be in the habit of growing corn specially for our consumption. In the event of a war with us, such a country would suffer extreme distress. We knew the effect of an excess, however small, of the supply of corn over the demand in the reduction of the price of this commodity, the consumption of which could not rapidly be increased, and the overplus of which consequently possessed no exchangeable value. All the agricultural distress we complained of would be not one-tenth of what such a country would suffer. But this went on the supposition that all our supply was to be derived from one country, whereas the fact was, that the supply would be derived from a great variety of countries; and was it probable that we should at once be at war with all of them? He therefore thought that this argument was hardly better founded than the other. This would be the happiest country in the world, and its progress in prosperity would be beyond the power of imagination to conceive, if we got rid of two great evils—the national debt and the corn laws. When he spoke of getting rid of the national debt, he did not mean by wiping it away with a sponge, but by honestly discharging it. His ideas on the subject were known1 and he had heard no argument to show that the measure he would recommend was not the best policy. If this evil were removed, the course of trade and the prices of articles would become natural and right; and if corn were exported or imported, as in other countries, without restraint, this country, possessing the greatest skill, the greatest industry, the best machinery, and every other advantage in the highest degree, its prosperity and happiness would be incomparably, and almost inconceivably, great. Other topics he would allude to but for the lateness of the hour. Gentlemen had favoured Edition: current; Page: [56]him more than he had expected. He should oppose the motion because he was persuaded that a committee would be productive of mischief, and not good.

Mr. Brougham, in the course of a speech in support of the motion, said: ‘His hon. friend, the member for Portarlington, had argued as if he had dropped from another planet; as if this were a land of the most perfect liberty of trade—as if there were no taxes—no drawback—no bounties—no searchers—on any other branch of trade but agriculture; as if, in this Utopian world, of his hon. friend’s creation the first measure of restriction ever thought on was that on the importation of corn; as if all classes of the community were alike—as if all trades were on an equal footing; and that, in this new state, we were called upon to decide the abstract question, whether or not there should be a protecting price for corn? But we were not in this condition—we were in a state of society in which we had manufactures of almost every description, protected in every way, even to criminal enactments, to prevent the raw material from going out of the country, in order thereby to assist the native manufacturer.’

The motion was carried by 150 votes to 101, the Government being left in a minority, and the House adjourned. The following day however a motion of the President of the Board of Trade restricting the terms of reference of the committee was carried by 251 votes to 108.1

Edition: current; Page: [57]
2 June 1820


Mr. Curwen presented a petition from the woollen cloth manufacturers of Keswick against continuing the protecting duties upon Irish linen.

Mr. Ricardo observed, that it seemed to be admitted on all sides, that these protecting duties ought to be repealed. They had existed for 20 years, which surely was a period quite long enough to give the Irish manufacturers an opportunity of preparing for their repeal, if any such opportunity were necessary; and he really could see no reason for their further continuance.

8 June 1820

8 June 1820

The Chancellor of the Exchequer moved that the duties on several articles produced in Great Britain and Ireland, imported from one country into the other, should be continued till 1825, and thereafter at reduced rates till 1840, when they would finally cease.

Mr. Ricardo said, he was glad to see even that the time was to come when the country would rouse to those right principles, from which there never should have been any deviation; and hoped, that when the question of bounties with respect to linen, was brought forward, a proposition Edition: current; Page: [58]would be adopted to limit the existence of those bounties also to a certain period, as they were quite as objectionable, upon principle, as the duties referred to in the resolutions before the committee.

Mr. J. Foster observed, that the duties alluded to were protecting duties for England as well as for Ireland.1

Mr. Ricardo considered those duties injurious to Ireland as well as to England, especially in the intercourse between the two countries.

The resolutions were agreed to.2

9 June 1820


The Chancellor of the Exchequer stated the terms of the loan of five millions which had been contracted for on this day: ‘the contractors had taken the loan at nearly 2 per cent above the current price of stock.’3

Mr. Ricardo observed, that the present loan was made on very satisfactory terms. It was impossible, he thought, that it could be obtained at a more favourable rate. He however traced those favourable terms to the recommendation of an hon. friend (Mr. Grenfell) who, some years ago, had advised that the commissioners of the national debt should be allowed to subscribe for the loan to the amount of the balances in their hands.4 This advice was followed on the Edition: current; Page: [59]present occasion; but if the old course had been adopted, and the loan had been for 17,000,000l., the result would have been very different. Another cause which tended to procure terms so favourable was the smallness of the loan. It was within the power of a great number of persons to bid for a loan of 5,000,000l. and therefore the competition for the present loan was much more extensive than usual, and far greater than if it had been for 17,000,000l. In consequence of these circumstances, the right hon. gentleman had certainly obtained such terms as must be highly satisfactory to the country. He conceived that no fairer mode could be devised in forming contracts for the public than by open competition. That system, he hoped, would be generally acted on. An hon. gentleman had, on a former night,1 asked some questions relative to a large amount of exchequer bills, which had been issued by government at par, when they were at a discount in the market. From the explanation of the right hon. gentleman it seemed that they were given in consequence of a contract for a quantity of silver. Now, it was quite evident that the 7s. or 8s. received by government from the persons with whom the contract was made would be reimbursed by a profit in the price of the silver; they would undoubtedly raise the price to the amount which they were likely to lose. He thought, in this instance too, that the system of competition should have been acted on, and that they should have been purchased in that way. He wished for some explanation with respect to the quantity of exchequer bills relative to which information had been demanded a few evenings ago.2 A statement had then been made, which his hon. friend, and other gentlemen, declared they did not understand. It appeared to him to be a very mysterious Edition: current; Page: [60]transaction, and he could not make it out. It seemed that a provision had been made for appropriating the growing amount of the consolidated fund. His hon. friend had noticed this, and had observed that the growing amount might be made productive and useful to the public. In consequence of his representation a bill had been brought in some time ago, to enable the public to make use of its growing amount, by which it was provided, however, that they should not borrow more than 6,000,000l. from it. But it so happened that this growing consolidated fund was not equal to the discharge of the advances that had been made on it in the preceding quarter. He would thus explain himself:—Supposing this was the beginning of the quarter, that the public accounts were made up, and that there was a deficiency of 3,000,000l.; the Bank, in the first instance, made this good; and out of the amount of the consolidated fund in the commencing quarter the Bank was repaid those 3,000,000l. Supposing, over and above this sum of 3,000,000l., an equal sum accrued, the public, under the act, would, he understood, have the advantage of those 3,000,000l., since, by its provisions, a sum of 6,000,000l. might be borrowed for the public service. This was the system; but how, he asked, was it possible that the public could have the advantage of any part of this growing fund, when in fact it was in debt? It was exceedingly difficult for him to comprehend this. In April, 1819, there was a sum of 2,027,000l. so issued for the use of the public; and it was stated that from that period to April 1820, the public had the benefit of that money. But how could they have the use or benefit of it out of a growing consolidated fund, on which there was no surplus whatever, but which, on the contrary, was in debt, and that debt amounting to more than the 6,000,000l. which they were by the act of parliament empowered to borrow? As he could not understand this, he Edition: current; Page: [61]would be obliged to the right hon. gentleman to inform the House whether the public had really derived advantage from this 2,027,000l. from April, 1819, to April, 1820.

The Chancellor of the Exchequer explained.

Mr. Ricardo observed, that on the 5th of July, 1819, there was a deficiency of 8,400,000l. “But,” said the right hon. gentleman, “you have, without interest, 2,600,000l., for which exchequer bills have been deposited.” This he denied; and he would contend that the public had not the advantage of that sum.

Later in the debate, Mr. Alderman Heygate opposed the present loan and the issuing of bills to repay the Bank, because those measures would produce a reduction in the circulating medium, which must be attended with increased distress in the country: ‘such a reduction was at present unnecessary, for the price of gold being the same as the mint price, the Bank note was at par.’

Mr. Ricardo thought it quite unnecessary for the Bank of England to reduce its circulating medium any further than it was at present reduced. The worthy alderman had said, that gold was now at the Mint-price; perhaps he might have said that it was a little under it; for he knew that many persons took gold to the Mint at the Mint-price, in order to have it coined; and this they could not do if gold was not, in fact, a little under that price, because some space of time must elapse before they could receive the benefit of the coinage. But the worthy alderman appeared to labour under a mistake in supposing that a reduction of the circulating medium would be a consequence of this loan, or repaying the Bank. The reduction of bank-notes within the last year did not exceed 2,000,000l.; that reduction of 2,000,000l. was all that was necessary to bring about that state of the currency which all had united with the finance committee in desiring to see Edition: current; Page: [62]obtained. Indeed, if the Bank was desirous to follow their own interest, it was a clear and obvious one: if they were to effect a very great reduction in their paper, which he should most sincerely lament, the consequence would be such a rise in paper, and such a fall in gold, that individuals would carry their gold to the Mint, and endeavour to fill up the circulation with it. As to the alarm felt by his hon. friend1 it was quite groundless, for there could be no fear but that the Bank would keep up a sufficient quantity of notes, as their own advantage depended upon the issue. As to the sinking fund, the argument of himself and his hon. friend2 had been, “Take away all which tends to delude the country—take away so much of that sinking fund as is not in reality an excess of income over expenditure.” Therefore he entirely concurred in the opinions of the worthy alderman, that they should immediately get rid of so much of the fund as, being nominal, was merely a delusion.

13 June 1820


Mr. Grenfell moved for a number of accounts relating to the Bank and said that, the principles which he had so strenuously contended for having been adopted, ‘he trusted the warfare between the Bank of England and himself was over.’ He referred again to the large profits which the Bank had made from the public balances in their hands; they had now been reduced, but a further saving of 100,000l. might be effected on the charge for the management of the public debt by the Bank. Mr. Pearse, a Bank director, defended the Bank.

Mr. Ricardo conceived, that if it were true, as had been stated, that the Bank had made no larger profits in consequence Edition: current; Page: [63]of its connexion with government, and its retaining these balances than any private concern which might have held them would have made, it must have managed its own affairs very badly. The hon. director had mentioned, as one of the great advantages which had accrued to the public from the acts of the Bank, the lending of a sum of money, without interest, to the government. But the thing was differently represented by the court of directors at the time. The Bank was then in this situation:—it had been allowed to increase the amount of its capital, instead of dividing a larger amount of profits among the proprietors—that is, instead of making a larger dividend it had been permitted to add to its capital: and the understanding was, that the loan of 3,000,000l., upon which no interest was to become due, was a boon to the public in return for that permission. At some former periods, the remuneration to the Bank must have been enormous, or it was now very considerably underpaid. But his own opinion upon the charge of management was, that the balances in question were now so small, that it was hardly necessary to have brought the subject before the House.

The papers were ordered to be printed.

19 June 1820

THE BUDGET 19 June 1820

The Chancellor of the Exchequer introduced the budget. In the course of his speech he remarked that, as 12 millions were to be borrowed from the sinking fund, 5 millions would remain to be applied by the commissioners for the purchase of stock; these purchases had the effect of regulating the market during the whole year and of preventing sudden fluctuations from forced sales or from combinations of speculators.

Edition: current; Page: [64]

Mr. Ricardo1 said, he could not clearly understand the alleged benefit which the money-market was to receive from the right hon. gentleman’s arrangement. It was certainly a subject of lamentation that, after five years of peace, we should still find our expenses increasing. According to the right hon. gentleman we had had effectually a sinking fund of but 1,000,000l. during the last year; but if this were correct, and the right hon. gentleman were to follow out the statements contained in the report of the finance committee, he would perceive from the expenditure that there had been an actual deficiency. He would here observe, that he found an item of 1,125,000l. perfectly unexplained. There was no account by which he could trace the manner in which it was proposed to provide for this item of 1,125,000l. The surplus of 1,000,000l., which had been mentioned by the right hon. gentleman, he had already taken into account; but he must contend that this sum of 1,125,000l. still appeared as against the accounts given in by the chancellor of the exchequer, whether he looked at this or at that paper2. This sum of 1,125,000l. ought to appear, therefore, among other outstanding demands. He had a right to presume that the right hon. gentleman was bound to provide for this particular one, Edition: current; Page: [65]among the others. Next year it was anticipated by that right hon. gentleman that we were to have a sinking fund of between three and four millions. During the present year, he said, that he calculated, after deducting 9,000,000l. of unfunded debt to be paid off from 11,000,000l., that there would be a sinking fund of about 2,000,000l. But the right hon. gentleman seemed to forget, that this imaginary improvement of his was made to appear twice in the same statement. He first of all said, that we should have a sinking fund of such and such an amount; but, when he came to speak of the deficiencies upon the consolidated fund, and of the fund out of which they were to be supplied, he must have forgotten, when he was expatiating upon the sinking fund, that he was alluding to that out of which those very deficiencies were to be so supplied. And, throughout all these accounts, he had clearly forgotten that there was, in the quarter ending in January 1819, a deficiency of 8,000,000l. upon exchequer bills. He quite agreed in every word that had fallen from his hon. friend, the member for Penrhyn,1 respecting the alarming deficiency upon the consolidated fund. He quite concurred with him in saying, that that which was the growing produce of the consolidated fund used to be sufficient to pay all the demands upon it for the current quarter; whereas, instead of this, it was now found insufficient to pay even the arrears of the preceding quarter. During the last year, he considered the finance committee to have pursued a very good plan in letting them know what was the real state of the finances of the country.2 The committee had allowed them to see, in that, whether their amount was greater or less than it had been at that time twelve months. Now, he had Edition: current; Page: [66]endeavoured to apply the very same plan to the accounts of this year; and he found it to apply to them in a most remarkable manner. The committee last year estimated the unfunded debt at 53,133,000l. They took the amount of exchequer-bills in circulation, of Irish treasury bills, deficiency bills, &c.; and the result of their estimate was 53,133,000l. By the papers before the House, it appeared, that at the period to which they were made out, the unfunded debt was actually diminished in the sum of 2,000,000l. only, although the right hon. gentleman calculated that diminution at upwards of 10,000,000l. If, however, the papers before them were correct, he must contend, that the amount of actual diminution upon the unfunded debt, between the 5th of January 1819, and the 5th of January 1820, was only 2,000,000l. It was now necessary to see in what ratio the funded debt had increased; and by the returns that had been made to the House, they would find that the sum actually received by loan (which loans last year amounted to 24,000,000l.) was 18,736,000l. Deducting the sinking fund from this, the balance must necessarily be the actual amount to which the funded debt had been increased during the present year; and that increase was to the exact extent to which the unfunded debt had been this year paid off, namely, 2,000,000l.: so that, after all the complicated accounts that had been submitted to the House, the general result was this —that they had decreased the unfunded debt 2,000,000l. and had increased the funded debt 2,000,000l. It had been said that, in point of fact, there was no sinking fund whatever, for that the deficiencies upon the interest of exchequer-bills would amount to a sum about equal to that fund. And indeed it appeared to him, that these deficiencies had increased 1,370,000l. more than they amounted to last year. He had one observation more to make about the funding of Edition: current; Page: [67]7,000,000l. of exchequer bills. The hon. member for Penryhn had paid some compliments to the chancellor of the exchequer, for having upon this occasion funded in the 5 per cents, rather than in any other stock. But, in order to contend that that was a judicious measure, he ought first to have shown that there was a sufficiency of capital to fund in the 5 per cents rather than in the three per cents. If they possessed a very large sinking fund and that sinking fund was likely to be operative, then undoubtedly it was proper to fund in a new stock and create one of 5 per cent in preference to funding in the 3 per cents; and, in that view of the question, he should have been disposed to have approved of the former of these measures. But, seeing that they possessed little or no sinking fund, he was very much disposed to doubt, whether the terms of such a loan would be of that advantageous character which his hon. friend seemed disposed to attribute to them.

21 June 1820


A debate arose on methods of keeping the public accounts.

Mr. Ricardo took the opportunity of objecting to the manner in which the Chancellor of the Exchequer stated the budget. He ought to insert, with reference to the former year, a column of expenditure as well as of receipt. He should say, “I have received so much from the ways and means— so much has been expended—and so much remains to be received on the last year’s budget.” He did not believe that Edition: current; Page: [68]the ways and means stated by the right hon. gent. the other evening would be equal to the payments that were chargeable on them. In his opinion, there would be a deficiency of 2,000,000l.

The Chancellor of the Exchequer observed that in future years more detailed accounts might be produced.

28 June 1820


Mr. Maxwell moved for a select committee to inquire into the means of relieving the distress of the cotton weavers. Amongst the plans to be considered he mentioned: the taxing of ‘a machine called “a power-loom”’ which competed with the simple loom of the individual weaver (‘the capital of the poor man, which consisted in the labour of his two hands, must bear the burden of taxation, since those articles, without which he could not exist, were taxed; while the large capital of the wealthy manufacturer, which he invested in a machine, was suffered to escape any contribution to the revenue’); and the application of public money to provide lands for those who could obtain no employment at their looms. Mr. Robinson opposed the motion.

Mr. Ricardo said, that he conceived the duty of government to be, to give the greatest possible development to industry. This they could do only by removing the obstacles which had been created. He complained therefore of government on very different grounds from the hon. mover, for his complaint was against the restrictions on trade, and other obstacles of that description, which opposed the development of industry. The recommendations of the hon. mover were inconsistent with the contrast between one class and another. If government interfered, they would do mischief and no good. They had already interfered, and done mischief Edition: current; Page: [69]by the poor laws. The principles of the hon. mover would likewise violate the sacredness of property, which constituted the great security of society.

The motion was withdrawn.

3 July 1820


On the order of the day for going into a committee of supply on the expenses of his majesty’s coronation,

Mr. Ricardo thought that if the various articles likely to be consumed at the coronation could be bought cheaper in the foreign than the home market, there could be no objection to their not being home manufacture, seeing that they must be purchased by the produce of our own industry.

[The remainder of the session was mainly taken up by the proceedings against the Queen, which were initiated in the House of Lords on 5 July by the introduction of a bill of pains and penalties and brought to a close on 10 November, when the bill was withdrawn. The session closed on 23 Nov. 1820.]

Edition: current; Page: [70]


The King’s speech on the opening of the session was delivered on 23 Jan. 1821.

2 February 1821


Mr. Grenfell asked the Chancellor of the Exchequer whether he was prepared to give any information as to the refusal of the Bank of Ireland to receive the coin of the realm as deposits. The Chancellor of the Exchequer was unable to give any information.

Mr. Ricardo observed, that paper in Ireland having become at a premium above the price of gold coin, persons had been under the necessity of incurring the expense of conveying gold coin to Ireland, to remedy an evil arising out of the deficiency of circulation from the failures in the south.1 If the Bank of Ireland had filled the void so occasioned, as it was their duty to have done, the evil would have been avoided. He was still of opinion, that the system established with regard to the Bank of England,2 two or three years ago, ought to be perpetuated. If the Bank contemplated paying in gold coin in 1823, as they were now by law required, they must purchase a quantity of gold for that purpose; and to this cause was to be attributed the present disproportion between the price of gold and silver. He hoped, that his right hon. friend would be of opinion, that the system now existing ought to be permanent, and that he would take an early opportunity of bringing forward a measure for that purpose.

[See further p. 98 below.]

Edition: current; Page: [71]
8 February 1821


Mr. Dugdale presented a petition from the merchants and manufacturers of Birmingham for an inquiry into the causes of the national distress. Mr. Baring said that ‘a very considerable part of the distress ... arose from the nature of the currency’; and he suggested ‘the expediency of giving to the Bank the option of paying either in gold or silver, that the value of the two precious metals might be rendered more equal, and the present pound sterling, which was somewhat too high, relaxed. He wished to relax a cord which was at present stretched somewhat too tightly.’ He did not mean however to ‘trench upon the system of the member for Portarlington’.

Mr. Ricardo said, that if the House would indulge him for a few minutes, he should be desirous to make one or two allusions to what had fallen from his hon. friend below.1 The great point to which his hon. friend had addressed himself was the origin of the prevailing distress. By some persons this was ascribed to taxation, by others to restrictions on trade, and by his hon. friend to an alteration in the currency, which he seemed indeed to consider as almost the exclusive cause. With this view his hon. friend had entered into a comparison of the prices of corn at various periods, and he stated the fall to be from about 80 to 60s., inferring that other articles had undergone an equal depression. He seemed to think that with a quarter of corn he could now purchase the same quantity of other commodities which he could have obtained with it when corn was at 80s. and that the reduction of prices was therefore general and equal. Now, this representation he apprehended was erroneous. He could not agree that prices had fallen generally in the same proportion.1 Edition: current; Page: [72]He believed that the fall in corn had been severe beyond measure, whilst there had been no fall with regard to many other articles, or at any rate no fall in the least degree similar. If the prices of bullion were referred to at former periods, it would be seen that the price of corn had altered to the amount of 25 per cent. He was surprised to find his hon. friend making a statement from which, if correct, it must be inferred, that the distresses began at the moment when the last change in the currency took place. Now, if he looked back to the price of bullion in the flourishing year 1818, and compared it with the present price, it would be seen that the difference did not exceed 6 or 7 per cent. To this extent other prices might have since been affected, and he had no doubt that there had been a considerable reduction of prices in other countries. Wine had fallen here, and so had cotton Edition: current; Page: [73]goods; but he believed that fall was not more than equal to that which had occurred in most parts of Europe. In 1816 the price of gold was at 4l. an ounce. In the following year it was 4l. and 6d. In 1818 bullion still did not rise above 4l. 2s. and 4l. 3s., and in 1819, when the plan which he had the honour to recommend was adopted by the House, it was at 4l. 1s. The question, then,1 before the House was, whether it was advisable to return to the old standard, or to take the existing market rate, which was then about 4 per cent above that standard as the measure of value in future. But his hon. friend had argued on this subject as if bullion had been at that time, as it formerly was, at 5l. or 5l. 10s., an ounce. If, instead of being at 4l. 1s. bullion had been much higher, he should not have proposed a recurrence to the mint standard. What he was anxious about, was not to restore the old, but to establish a fixed standard; for, however desirable it might be to a body of merchants or bankers to possess the power of raising or lowering a fourth or fifth the value of the currency, and to make 3l. 17s. 10½d. at one time, equivalent to 5l. at another, it was a power destructive of every engagement, and finally ruinous to every interest. He was not anxious to restore the old standard; but the market price of bullion being then only 4l. 1s., he did not think it necessary to deviate from the ancient standard. What increased his surprise at the view which his hon. friend had taken in tracing all our distress to a variation in the currency was, that when a few years back we had so much greater variations, we had no such distress. With regard to the depression of agriculture, he believed it was a good deal owing to the laws2 which were enacted for the purpose of protecting it. It was certainly desirable that those engaged in the production of corn should have a vent when an excess of supply existed. When two or Edition: current; Page: [74]three good harvests followed in succession, we might, if prices were at all on a level with those on the continent, export it after a fall of three or four shillings a quarter; but at present there must be a destructive fall before it could be sent abroad. The hon. member for Cumberland,1 as well as the hon. member for Staffordshire,2 had talked of the extreme pressure of taxes on agriculture; as if they were found, in that respect, to be peculiarly burdensome. The stockholder was described as being comparatively free from these effects; but it would not be difficult to show, that all taxes fell upon the consumers of those commodities to which they were annexed; and if this were not the case, he did not see what right the landowner had to ask for protection. He could demonstrate, if it were necessary, that taxes always raised the price of that commodity on which they were laid, and therefore fell on the consumer. Was it not impossible that farmers could continue to grow corn for a series of years unless they obtained remunerating prices?— 3 He would now offer a very Edition: current; Page: [75]few remarks on what had been thrown out as to the restoration of two metals as a standard. It gave him pain, however, to hear any allusions made to the subject of not paying the public creditor, and to find that they met with the reception which they did in some quarters. If, indeed, the dividend was to be reduced, he trusted that it would be done openly, and that no stratagem or delusion would be practised. With regard to the plan of his hon. friend, he was sorry that he could not approve of it, recommending, as it did, a different standard from that fixed in 1819; at least, he could not help thinking that the plan amounted to this when he heard his hon. friend say, that the string was too tight, and that it was desirable to empower the Bank to pay either in gold or silver. This appeared to him to be a complete departure from the true and sound principles of currency. No currency could be of the same value perpetually, any more than other articles could always retain the same price. Gold bullion, however, was the commodity which varied the least; and if a contract was made to pay 100l. at a future period, the contract would be most faithfully performed by the payment of that sum in gold. But it might suit the purpose of the debtor to pay it in silver, whilst, by so doing, the creditor would sustain a loss. The two metals seldom maintained the same proportion to each other long. The price of the one might rise, while that of the other fell. So the Bank being now under an obligation to pay 60 ounces of gold, would enable a person who received it, to propose more, or a greater nominal amount of commodities than he would if he paid in silver. The relative Edition: current; Page: [76]value of the two metals had varied since the act of parliament; but what was the cause of that variation? It was this: the Bank being a timid body, seldom clinging to the true principles of circulation, had taken alarm, and had made great and unnecessary purchases of gold, although they found, by experience, that no person applied to them for any. He almost doubted whether a single bar had been demanded from them since the commencement of the new plan.1 If the Bank were enabled, according to his hon. friend’s proposition, to pay in silver instead of gold, they would now realize a profit equal to the difference between 4s. 11½d. and 5s. 2d. As soon as this profit should cease, the two metals would have recovered their relative value, and then it would be difficult to discover the value of his hon. friend’s proposition. He had proved last session that the two metals might vary to the extent of three per cent; but his hon. friend then remarked, that this might be true in theory, but in France, where the experiment had been tried, the difference did not exceed one per mill. Still it was something to find that the possibility of the variation was admitted. He entirely agreed in all that had been said with regard to the retrenchment in our expenditure being the principal, if not the only source of relief. The committee would, he doubted not, without preconceived or particular views, inquire whether the present system of restrictions on trade was advantageous to the country. He should only add, with respect to the rents of land, that no interests could be more distinct than those of the owners and occupiers; yet it did happen that the latter were persuaded to petition that House for regulations which might be beneficial to one class, but most injurious to themselves.2

Edition: current; Page: [77]

Mr. Baring expressed once more his conviction that ‘from the operation of the plan lately adopted by the legislature with regard to the resumption of cash-payments,... the value of the pound sterling, with reference to the price of commodities, had advanced one-third, or at least one-fourth, above that which it bore during the latter years of the war.’ He again urged the policy of allowing a double tender, of silver as well as of gold. As a practical man he could see no purpose in having a single standard: ‘although the establishment of such a standard might be more agreeable to the views of the Royal Society, or other abstract philosophers, who would regulate weights and measures by the vibrations of the pendulum.’

Mr. Ricardo remarked, that the difference between his hon. friend’s opinion and his own was this, that he maintained the advance of the pound sterling with reference to the price of commodities to be only about 4 or 5 per cent, which was equal to the difference between the price of gold at 4l. 1s. and 3l. 17s. 10½d. an ounce, while his hon. friend maintained that advance to be equal to 25 per cent. But how came it, he would ask, that although Russia, Austria, and France had adopted the same system as this country in the issue of paper, there should be such a difference in this country alone as his hon. friend had stated? He, however, differed from the views of his hon. friend, the principle of whose animadversions would in a great measure operate against any metallic currency whatever. With respect to his hon. friend’s recommendation of a double tender, it was obvious, that if that recommendation were adopted, the Bank, although it seldom saw its own interest, would be Edition: current; Page: [78]likely to realise a considerable sum by the purchase of silver at its present reduced price of 4s. 11d. an ounce. But as this purchase would serve to raise silver to the Mint price of 5s. 2d. and comparatively to advance the price of gold, the consequence of which would be to drive gold out of the country, this was, among other reasons, an argument with him for resisting his hon. friend’s doctrine.

The petition was ordered to be printed.

26 February 1821

CORN AVERAGES 26 February 1821

Mr. Robinson (President of the Board of Trade) introduced a resolution for simplifying the methods by which the average prices of corn were ascertained for the purposes of the corn law; he also proposed to include the Isle of Man in the returns in order to prevent frauds. Mr. Curwen said, ‘he was sure that, within a very limited period, the country had lost at least a million by the frauds which had been committed. Large quantities of corn were imported from Denmark into the Isle of Man, and from thence shipped off to England. The greatest injury resulted to the English farmer from the introduction of foreign grain.’

Mr. Ricardo conceived that the effect of the measure would be to raise the importation price. An hon. member1 had spoken of the injury which an accumulation of foreign corn occasioned in the English market. That might be so; but the only remedy for this evil was, for this country to lower the prices of corn nearly to the standard of the prices of the continent. The only way to keep out foreign corn, was by putting high duties upon the importation of it. Now, suppose a year of scarcity had arrived, and that a high duty had been placed on the importation of foreign corn, would any Edition: current; Page: [79]minister at such a time of distress, attempt to enforce that duty—and shut out relief from a starving people? Impossible; and, therefore, the ports would be left open and free, and the immense importation which the hon. gentleman looked upon as so great a misfortune, would take place. Much had been said as to a remedy for the distress of the agriculturist: he was of opinion, that the only remedy for that distress was the total repeal of the corn laws and, sooner or later, a measure of that sort would be adopted.

The resolution was agreed to.

6 March 1821


Mr. Maberly proposed a series of resolutions for the retrenchment of public expenditure and for a reduction of 50 per cent upon all duties on inhabited houses and windows. The motion was opposed by the Chancellor of the Exchequer and by Mr. Huskisson, who contended ‘that we were not at liberty to take off taxes, unless we preserved the Sinking Fund.’

Mr. Ricardo reminded the right hon. gentleman,1 that the proposal of this night was not to reduce the Sinking Fund two millions, but to reduce the taxes to that amount; not by taking from the Sinking Fund, but by increased economy. The object was, to relieve the country from a part of the burdens under which it at present laboured. If, however, the motion had been to reduce the Sinking Fund, it should have met with no opposition from him. He considered it a delusion which was encouraged and made to amount to a certain sum, that ministers might be enabled finally to lay their Edition: current; Page: [80]hands upon it and devote it to purposes of unnecessary expenditure. Though the loan of last year amounted to 24,000,000l. there were 9,000,000l. of exchequer bills and 17,000,000l. of Sinking Fund, so that there was in fact a surplus of 2,000,000l. On the other side, it was asked whether it was intended to diminish the Consolidated Fund, which was the security to the public creditor? Yet ministers had been doing so year after year, until the deficiency amounted to 8,000,000l. Now, however, they were greatly alarmed at such a proposal, when in truth the object of the hon. mover was merely to reduce the expenditure. For the year ending the 5th of January, 1821, the Sinking Fund was estimated at 2,500,000l. He hoped it would turn out so; but his opinion undoubtedly was, that it would be considerably below that amount. It appeared to him that the diminution of the unfunded debt, between 5th January 1820, and 5th January 1821, amounted to very nearly 8,000,000l. while the Sinking Fund for the present year was 17,000,000l. making together 25,000,000l. This was in diminution of the debt; but, on the other hand, what had been added to it? The chancellor of the exchequer took a loan of 17,000,000l. and funded exchequer bills to the amount of 7,000,000l. so that an amount of stock equal to 24,000,000l. was added to the debt. Besides this there was a deficiency of the Consolidated Fund to the amount of 400,000l. Deducting therefore 24,400,000l. debt, incurred from the 25,000,000l. debt reduced, 600,000l. was the only real decrease; and he could call nothing a Sinking Fund, but what operated a reduction of the national debt.

The House divided: For the motion, 83; Against it, 109. Ricardo voted for the motion.

Edition: current; Page: [81]
7 March 1821


Mr. Gooch moved for the appointment of a committee to inquire into the distress of the agricultural interest. He trusted ‘that the gentlemen who usually opposed the agricultural interest—and especially that individual amongst them who was so highly distinguished for his knowledge of political economy (Mr. Ricardo), would permit the committee to see what good they could effect by their deliberations. Trade and agriculture were so interwoven with each other, that they appeared to him as but one interest; and he had always deemed it wicked to consider them as jarring with each other.’ He considered the agricultural interest as the basis of all the others, and therefore he asked the House to give to it ‘that protection which its value to the state demanded.’ Sir E. Knatchbull seconded the motion. Mr. Robinson (President of the Board of Trade) said that although the grounds on which he had objected to a similar motion the year before were applicable to all times, yet as a matter of feeling rather than one of expediency he would now consent to the inquiry. After some further debate,

Mr. Ricardo1 rose to defend his conduct and opinions, which had been repeatedly attacked in the course of the discussion. When he heard that all the interests of the country were equally consulted, he could not help saying, because he felt it, that the interests of landlords were chiefly considered. He had been represented as a mercantile man, having a particular interest which he consulted. He denied that he was Edition: current; Page: [82]interested either as a mercantile man or as a fundholder. He was a landed proprietor, and his interests were bound up with that of the House. He agreed with the Member for Essex,1 that high or low price in corn was nothing in itself. But he maintained the principle of a free trade in corn; not altogether a free trade in practice, but the general right should be allowed to every man, and every class of men, to apply their labour and resources in the most profitable way for themselves, which would be also the most profitable for the country. The effects of a free trade would be to get corn at the most advantageous rate. He wanted a countervailing duty to the home grower, to recompence all the additional charges which he had to pay in taxes above the charges borne by the foreign grower; but the protecting duty should not exceed the difference of those charges.2 The attention of the House had been called to the terrible effects which would be produced upon native agriculture, by allowing a free importation of cheap corn from the Continent. He would endeavour to shew what would be the real effect. The prices of corn would be reduced immediately, and agriculture might be distressed more than at present. But the labour of this country would be immediately applied to the production of other and more profitable commodities, which might be exchanged for cheap foreign corn if the lands were thrown out of cultivation, through too great a reduction of prices to compensate the production of grain at home. He had a Edition: current; Page: [83]great objection to a permanent duty on importations of corn; he still more strongly objected to a graduated duty, to rise in proportion as corn fell, and to fall as corn rose. Suppose the case of a bad crop; the grower would naturally look for the remedy for the loss of quantity in the superior price, from which he would be cut off by the adoption of a graduated protecting price. The Honourable Member for Oxford1 had asked for the solution of what might be called a riddle, uttered by him (Mr. Ricardo), that the immediate opening of the ports to importations of foreign corn, would be so far from disabling the country to pay the present nominal amount of taxes, that the country would be enabled from that very circumstance to pay a larger nominal amount of taxes. The Hon. Member should immediately have a solution. Suppose the country, instead of the present system of agriculture, could find out one which with far more ease of execution and with much less expense, would produce the same or a greater quantity of corn than was at present grown by the existing system, a great deal of labour would be thrown out of employment in agriculture; but let the House keep their eyes on the effects of the capital which would be liberated. Would not this capital be employed in the production of other commodities? and would all the commodities so produced be an addition of capital and gain to the whole country? Hon. Gentlemen asked how there could be any gain to the country when the price of corn would fall to one-half? His answer was, that the new commodities produced would contain a positive value, besides the value which would exist on the corn. In like manner would free importation of corn lead to a release of capital, which would be Edition: current; Page: [84]employed in producing commodities, bringing so much additional gain; for though the commodities as well as the grain would be at a lower rate of prices, they would contain a value sufficient, from their quantity, not only to remunerate their production, but to pay all the charges required by Government. He agreed with an observation of a Noble Person in another place,1 that part of the distress was owing to too much corn being produced, and agriculture must lessen its produce so as to suit the demand. He knew that taxation was an evil; but it could not be truly said that the taxation on agriculture prevented corn from remunerating the expense of its production. If the charges for growing or producing any thing were great, the price demanded for the article would correspond. If his hat or any thing else were taxed, he had, as the consumer, to pay an additional price for it; and where taxation went too far, it would diminish the consumption of the commodity so taxed. In other words, taxation tended to reduce the demand for the taxed commodity, but it did not prevent the remuneration of all the expenses of production for so much of the commodity as was in demand. It was wrong to say that corn could not be produced on account of the taxes on agriculture. The Member for Wareham2 had given a most convincing instance of the truth of this position, by explaining the duty on salt, which he stated to amount to 3,000l. upon the value of every 190l. Three thousand pounds duty were paid on salt, and yet salt yielded a sufficient profit to the producer. He did not mean to say that there was no hardship suffered by the consumer; but this proved that taxation alone did not prevent Edition: current; Page: [85]an adequate remuneration to the corn-grower. It had been said that importation would throw the whole of the lands out of cultivation. But this was assuming that the remunerating price was for every grower the same; whereas, corn was raised in some lands at 40s. and in others at not less than 70s. He had been asked how the cheap corn, when imported, could be paid for? By selling commodities? If that were not practicable, it must be because it would be more advantageous to grow corn than to part with commodities for it. A great deal had been said about the ware-housing system. He had been asked, who would speculate in corn with the prospect of large quantities being let out upon the market at a very diminished price? He would, if he were inclined to speculate, do it in corn. Having the market to himself while corn was under 80s. he would deal, and when it was 79s. without any dread or jealousy of a commodity which was not allowed to enter the market.1 The Member for Cumberland2 had put a question to him categorically. Could we grow corn at the same rate as on the Continent?—No; and for that reason he would have it imported: that was precisely the argument he went upon. The Member for Winchelsea,3 not then in his place, had asked, “Where has the Honourable Member (Mr. Ricardo) been? Has he just descended from some other planet? Does he know that a great deal of capital is engaged in agriculture, which would be then (in case of a free trade) thrown out of Edition: current; Page: [86]that employment?” This was considering the means without reference to the end sought. The end proposed in the employment of all capital was to obtain abundant production. He would say that if he could get corn so much cheaper than it could be grown, he deemed the capital employed in growing corn, to the exclusion of corn more cheaply to be acquired, a nuisance. Better such capital were altogether annihilated. But it would not be annihilated. The greater part of it would be turned into profitable channels. Something had been said about the national debt, and he had been represented as holding the landed property pledged to the payment of the debt. In his opinion not only landed, but funded, and every other kind of property, was pledged to the payment. It was unfair to leave the whole expense of the war on the shoulders of some of their fellow-citizens. After some further arguments to shew the advantages of a free trade, and after expressing his hopes that the country would recover from the unnatural depression under which it laboured, he stated that he had some fears lest the Committee, when appointed, should attempt to raise the protecting prices, from a vague hope of deriving relief there from for the present difficulties of agriculture. He concluded by saying, that he had a great objection to a permanent duty, but he had still greater to a graduated one. He hoped that if any were adopted, it would be the lowest countervailing duty which could be calculated to repay the additional charges of taxation suffered by the home-grower.

The motion was agreed to, and the committee was appointed. Among the members were: Mr. Gooch (Chairman), Lord Castle-reagh, Mr. F. Robinson, Mr. Huskisson, Mr. Brougham, Mr. Wodehouse, Mr. Baring, Sir E. Knatchbull, Mr. H. Sumner, Mr. Western, Mr. S. Wortley, Lord Althorp, Sir H. Parnell, Mr. Sturges Bourne.

Mr. Dickinson moved, that Mr. Ricardo should be added to the committee.

Edition: current; Page: [87]

Mr. Gooch had no objection.

Mr. Ricardo, Mr. Curwen, and Mr. Denis Browne, were added to the committee.1

[The following is Hansard’s report. Cp. above, p. 81, footnote.]

Mr. Ricardo disclaimed any intention of imputing unworthy motives to any of the various parties whose interests were concerned in the question; but he would say, as he had said before, that the interest of the landholders must necessarily be opposed to that of the consumers in the present case. Some hon. gentlemen had been pleased to address him as a mercantile man, as if he had a particular interest to serve. He would answer, that he was not a mercantile man—that he was not a man of funded property, but that he was a landed proprietor, and, as such, had the same interest in the question with many of those who had opposed him. He did not look to the interest of any one party in the state, but to that of the whole country. He agreed in one opinion which had fallen from the hon. member for Essex, that it was not the money price of corn they were discussing, but the labour price; and it was on that very ground that he contended for the policy of a free trade. And what did a free trade mean?—that they should devote the capital which they possessed to the more extensive production of any commodity; corn, for instance. It would result, that the greater the capital which they could so devote, the more of the article would they be able to procure. While he said this, he begged that he might not be understood as advocating an unlimited free trade in corn; for there were circumstances attending that question which rendered it imperative upon the legislature to impose some shackles upon a trade, which, more than any other, being once without restraint, speedily required them. And this led him to consider what had been urged by many gentlemen upon the subject of countervailing duties. If the agriculturists would show that they had any particular taxes to cope with, which other producers had not, then, undoubtedly, they ought to have a countervailing duty to that amount: and not only so, but there ought to be a drawback allowed upon exportation to that amount. The great principle upon which they should go was this—to make the price of their corn approximate, as nearly as possible, to the price it bore in other countries. He was more sanguine, undoubtedly, than many; but he was not such an enthusiast as to suppose that, under present circumstances, they could reach at one step this great and true principle of all Edition: current; Page: [88]corn trade. Much had been said, affirming and denying the direct interest of landholders in monopolizing the market. He would say, without hesitation, that gentlemen of landed property had an interest in getting the monopoly of the market for their own corn. In the mode in which they had gone about it, however, they had not been very dexterous or successful. The hon. member for Cumberland [Mr. Curwen] had said, with great propriety and truth, that for many years past a glut of corn had always come into the country whenever the price had risen above 80s. This fact confirmed the objections which had been raised to protecting duties upon that commodity. Although a duty on the importation of corn would not be so wise a measure as the approach to that system which he had suggested as constituting the true principle of a corn trade; yet he did think that a permanent duty upon importation would be a much wiser measure than that which had been proposed and advocated. Let them rather have a certain moderate duty which should have a tendency to produce a price of corn that should not be very variable. The last desideratum was of the very highest importance, as much of the evil arose from the fluctuation of prices. The system which had been proposed by the hon. member for Bridgenorth [Mr. Whitmore], of duties that should rise as the price of corn fell, and fall as the price of corn rose, he could not consider a very wise one. What would be the situation of the grower, if such a system were put in practice? Supposing he had to contend with the deficiencies of a short crop in one season, he naturally expected to make up for them in the next season. But the adoption of these duties would leave him no such remedy for his misfortunes. The hon. member for Oxford had the other evening appeared surprised at one or two positions which he had ventured to advance. The hon. gentleman had called upon him to solve this riddle, as he called it, namely, “if you open your ports, and import the immense quantities of corn which then will inundate the country, how can it be said the country will be better able to sustain a money taxation? —so far from it, the means she now possesses, now applicable to that purpose, will be withdrawn from her.” But it was not difficult to give the required solution. Suppose the case of a country which was cultivating its own lands, and received no supply from abroad;—a country that had a much better mode and practice of agriculture than others; and which, in consequence of that circumstance, could, with less trouble and expense than they could do, grow all that was necessary for her purpose. It was clear that, under such circumstances, the price of corn would be much lowered there. But, let gentlemen keep their eyes upon the capital that would be thus liberated from the land. Would that be Edition: current; Page: [89]idle? Would that be employed in no way? Would it not be employed for the purchase and obtaining of other commodities? Would not those commodities be of value in the country, and by their value afford to pay that additional taxation which he had alluded to, in the position that had so much startled the hon. member for Oxford? “But,” said that hon. gentleman again, “do you mean to say, that if the price of corn be lessened one half, the country can afford to pay the same money taxation?” He answered confidently, “Yes,” these commodities of which he had spoken would enable her to pay it. An opinion had been given in another place, which he thought had been treated with too much levity. It did appear to him, that that opinion was well founded; for he also was one who thought that the low price of corn, under which we were at present labouring, was occasioned by too great a supply. He did not think it to be the consequence of taxation. Whether that abundance was the effect of too great an importation, or arose from a diminution of the demand, still the depression was in every case, if the price did not repay the producer, to be attributed to no other cause but the too great supply. Taxation, undoubtedly, was a very great evil; no man was more ready to deprecate the present system and extent of the taxation than he was; but how did it operate? Take the commonest article of trade; a hat, for instance. If the hat were taxed, the price of the hat rose of course. Enemy as he was to all taxation, he must say that it was not to taxation only that he attributed the distresses of the farmer; and they who did so, attributed the evil, he thought, to a wrong cause. The hon. member for Ware-ham had said a great deal, to show that those distresses were principally to be imputed to the heavy duties upon salt. Every person who used salt was injured to a certain degree by that tax: no doubt it was a very grievous burthen, but it was certainly not an adequate reason to be assigned for the present distressed state of agriculture. It had been said that such large quantities of corn had been imported, and at so low a rate, that all the poor lands would go out of cultivation. This he took to be a fallacy: and to proceed from hon. members erroneously supposing that all corn was grown at the same remunerating price. But nothing was more clear than that price was as 30s. in some instances, and 40s., 50s., 60s., and 70s. in others. The hon. member for Essex had told the House what small quantities of corn, after all, had been imported within the last ten or twelve years, from foreign countries. Another hon. gentleman, however, was for prohibiting the importation of foreign corn altogether, and asked them how they were to pay for it? Why, as for that matter, they ought not to contract the debt, if they could not pay for it; and if the fact Edition: current; Page: [90]was that they could not pay for foreign corn, that was pretty good security, he should conceive, that they would grow it themselves. Then there was the warehousing system. It had been said, “who will speculate in corn, when he knows what a tremendous quantity of it is hanging over him?” He would for one; for, if he had bought his corn at 79s., and it was now selling for 70s. he would keep it on hand; and take care not to sell it till it had got above 79s. Then if it rose only to 80s., he evidently had the market in his own hands. The hon. member for Cumberland had asked, “Can we grow corn in England on the same terms as the foreign grower.” To this he would answer “No:” and for that very reason he would import it. But, what was the proposed end of all capital, if it was not this—that the possessor should procure a great abundance of produce with it? Now if he could prove that by getting rid of all that capital which is employed in land, he could make more profitable use of it, then he contended, that that was in effect so much capital gained by him. But here again an erroneous idea prevailed. The House was told of the capital which was employed in land, and told in a manner as if it was absolutely and entirely vested in it. Let them just consider, however, the wages of labour, the price of improvements, the charges of manure, and they would find that the total cost of all these items would be a capital saved. The hon. member for Kent [Sir E. Knatchbull] had spoken in a very disparaging manner of thrashing machines. Now, in his opinion, every thing which tended to lessen human labour was an advantage to mankind. Something also had been said on the subject of the national debt. He had no particular individual interest in it, because he derived no revenue from it; but he would say, that the landed interest, the agricultural interest, the trading and every other public interest, were pledged to the public debt. What could be more dishonourable than for a state to carry on the expenses of war by the money advanced upon her good credit by her own subjects, and then to turn round upon those from whom she had borrowed it, and say—“We are insolvent, and we will not pay you.” It was totally unworthy of an enlightened and honourable assembly to entertain a proposition so monstrous. The hon. member for Cumberland appeared to entertain a very strange idea of the nature of countervailing duties. He had said, that the countervailing duties should amount to all the difference between the price for which the foreigner could grow corn, and that for which we could afford to grow it. But the fact was by no means so. The House might remember the large capital employed in France during the continental system of exclusion, in obtaining Edition: current; Page: [91]a species of sugar from beet. Now, the question was, when that exclusion was abolished, and sugars could be imported, what were they to do with the capital employed in the beet process? The hon. member, on his proposition, would have required a countervailing duty to the amount of the difference between the price at which sugar could be so imported, and that at which it could be extracted from beet. Another argument was, that rent and capital would be annihilated if the land was thrown out of cultivation. He did not mean to deny that the House ought to deal tenderly with all the interests concerned; but though opening the ports would throw a good many labourers out of employment in land, it would open other sources of labour. The hon. member for Bridgenorth [Mr. Whitmore] had taken an unfavourable view of the state of the country. For his own part, he had better hopes. He could not help feeling that the difficulties of the country were nearly at an end, and that the present unnatural state of depression must soon cease to be felt. He thought we were now reviving; and nothing could so much contribute to that revival as the relief of the people from taxation by every possible means. He had great apprehension from the appointment of this committee, because he feared that it would look for relief to restrictions upon importation. If restrictions were to be imposed, he would rather have a fixed duty than a graduated one, as being most likely to produce permanent benefit to the country.

19 March 1821


The Chancellor of the Exchequer reminded the House that by the Act of 1819, the Bank of England were entitled, at their option, to issue gold coin on the 1st of May 1822, and were bound to resume cash payments on the 1st of May 1823. He would now propose that this optional power should be brought into practical operation on the 1st of May 1821. Two circumstances justified the anticipation: first, the rapid accumulation of treasure in the Bank, which by restricting the circulation of other countries produced an unfavourable effect on commerce; secondly, the widespread forgery of Bank-notes, which could only be diminished by the progressive substitution of coin for Bank-notes. Mr. Baring moved that the principle of the Act of 1819 be reconsidered. He thought the distress of the country was Edition: current; Page: [92]due to the rise in the value of the currency and the increased burden of debt, which had followed the return to cash payments. ‘He was not himself bold enough to recommend a departure from the standard,’ but he would propose two remedies for the evils of the present system. ‘The first was to render permanent the plan of paying Bank-notes in bullion, or to continue what he hoped he might, without disrespect, call the Ricardo system; for, in his opinion, the permanent establishment of that plan was peculiarly calculated to relieve the tension which was at present felt in the currency of the country.’ As to the danger of forgery, it could not require much ingenuity to invent a Bank-note more difficult to imitate than the present clumsy one; or, instead of the small notes, he would propose a gold token. ‘The second remedy which he had to propose was, the establishment of a double standard, namely, gold and silver.’

Mr. Ricardo1 began by observing, that his hon. friend2 had set out with contending for the propriety of establishing two standards: whereas a great part of his argument had gone to put the gold standard out of the question altogether. He had truly said, that in 1797, permission was given to the Bank of England, by act of parliament, to increase or diminish the amount of its circulation as it might think proper. Now, though he agreed that such a power could not have been lodged in hands less inclined to abuse that permission, he did consider it a power most dangerous to have been entrusted to any men, under any circumstances. It was undoubtedly true that the Bank had had it in its power to have kept the currency at a standard as if it had been composed entirely of gold and silver. He maintained that it had then the full power of doing so. The Bank of England, however, neglected that duty; and, in 1819, when the war had terminated, it became absolutely necessary that the House should adopt the steps it had adopted towards payment in bullion. Edition: current; Page: [93]The question with the House, then, was—“Shall we take the standard of our currency at its present depreciation? or shall we take it as it existed previously to the year 1797?” His noble friend, the member for Salisbury (lord Folkestone), had, with a great deal of good sense and judgment, proposed to fix the standard at the price at which gold then was. On that point he had differed from his noble friend, thinking that gold was not then sufficiently depreciated, had it been more depreciated, he should have preferred that plan to the adoption of a more variable standard. His hon. friend1 who had called him a theorist2, seemed himself to have undergone a great change of sentiment. His own opinion always was, that there should be but one standard, and that that standard should be gold; because silver was liable to undergo such changes, that it might sink in value below gold, and thus occasion the greatest confusion; but his hon. friend had formerly contended, that the adoption of two standards would be attended with advantage.3 Now, however, his hon. friend advanced another idea, which, he confessed, did strike him with astonishment. His hon. friend seemed disposed to admit all the advantages of a fixed currency, and that gold should be adopted as the standard, but also thought, that the Bank should be allowed, at their option, to pay in silver, at Edition: current; Page: [94]5s. 2d. per oz. for ten years to come, still retaining gold as the sole standard, and then adjust the price of silver to the standard of gold. Now, suppose the silver to sink to 4s. or to 3s. 6d., before the ten years had expired, at the end of that term it would be necessary, on the principle of his hon. friend, to raise it to 5s. 2d. thus adjusting it every ten years. This would unquestionably be one of the most variable standards that could possibly be devised. His hon. friend had stated, that representations were sent from all parts of the country complaining of the prevalence of distress. This was unfortunately too true; but it was worthy of remark, that his hon. friend, who was no theorist, had nevertheless a theory respecting the cause of these distresses, by which he imputed them all to the state of the currency. Now, it appeared to him that they might with more truth be referred to a great many other causes. They might arise from an abundant harvest, from the vast importations from Ireland, which had not taken place formerly, and from the late improvements in agriculture, which, he apprehended, would be felt hereafter more severely. These causes his hon. friend entirely over-looked, and laid the whole blame on the alteration which had been made in the currency; while he (Mr. Ricardo) contended that this alteration could not be said to amount to more than 5 per cent. He admitted, that gold might have altered in value; that was an accident against which it was impossible to provide; but, supposing that silver had been adopted as a standard, would it not also have varied? His hon. friend contended, that if silver had been made the standard, it could never have fallen so much in value; but his hon. friend argued all along on the assumption that the whole difference between gold and silver was owing to the rise of gold. This, however, was not fair; for when a difference arose in the relative value of the two metals, he had just as good a right Edition: current; Page: [95]to say that silver had fallen, as his hon. friend had to say that gold had risen. The surest test was the rate of the foreign exchanges; and if his hon. friend looked at what a pound sterling was worth in 1816 in the silver coin of France, and what it was now worth, he would find it difficult to make out a variation of more than 10 per cent. He begged the House to recollect, that in 1817 wheat sold at 109s. and bullion was then at 3l. 18s. 6d. Would his hon. friend say, that that price was owing to the depreciation of the currency? and if not, was he calling on his hon. friend to concede too much, by admitting that the present price of grain might be owing to many other causes? His hon. friend had said, that a great deal of capital had been expended during the war. Now, he doubted whether this was a sound proposition: for, he believed that the savings of individuals during the war, would be found to have more than counteracted the profuse expenditure of the government, and that the capital of the country at the end of the war was greater than it was at the commencement of it. His hon. friend had asked, why we should have a purer standard than the rest of the world?—a question which might be very properly answered by asking, why we should not? If other countries chose to adopt an error, was that any reason why we should follow their example? The attempt to procure the best possible standard had been characterised by his hon. friend as a piece of coxcombry to which he attached no value; but, in a question of finance, if we could get a better system than our neighbours, we were surely justified in adopting it.1 He undoubtedly did wish for a better system, and it was for that reason that he wished to Edition: current; Page: [96]see one metal adopted as a standard of currency, and the system of two metals rejected. With respect to the adoption of a gold token, he thought it would be attended with great danger; if by a gold token was meant a token materially less in value than the gold coin which it represented. The necessary consequence of such a system would be, that the tokens would be imitated in foreign countries, and poured into this country in such quantities as would very speedily produce a depreciation of our currency, equivalent to the difference between the value of the sovereign and that of the token which represented the sovereign. If he could be induced to give his consent to the introduction of a gold token, it must be of such a value as nearly to equal the value of the sovereign. He would permit no more alloy in the token than what would be sufficient to cover the actual expense of coining the bullion into money. Such a plan would afford a sufficient security against the inroads of forgers1, and might be advantageously adopted.—It had been said, that if one metal were adopted for a standard of currency, it would be in the power of speculators to raise or lower the standard, and consequently place the Bank in an awkward predicament; but the power which the Bank had of regulating its issues, would always be sufficient to prevent any inconvenience of that kind. With respect to the suggestion of the right hon. gentleman opposite2 for diminishing the issues of Bank-notes as a security against forgery, he entirely concurred with his hon. friend3 that such a plan would be wholly ineffectual as a remedy against forgery. It was perfectly clear, that whether the issues consisted altogether of Bank-notes, or half in Bank-notes and half in sovereigns, the danger of forgery would be the same. The only effectual Edition: current; Page: [97]remedy against forgery would be, to hasten the period at which the Bank might commence payment in specie. He should be perfectly ready to abandon his own plan, if by so doing that most desirable object could be effected; and he was quite satisfied that the Bank was at this time in such a state of preparation, that in a very few months they might provide the best and only effectual security against the imitation of their notes, by returning to the system of currency which existed in this country previous to 1797. The right hon. gentleman had dwelt upon the tendency of his measure to prevent the accumulation of coin in the Bank; as if the coffers of the Bank were overflowing with coin. Now, the fact was, that the Bank had a great deal of bullion and very little coin. To propose a measure, therefore, for preventing the accumulation of coin in the hands of the Bank, was to provide against a danger, which was not at all likely to occur. With respect to the laws relating to usury, he should be extremely glad to see them repealed; and he thought no time more proper for the repeal of those laws than the present, when the rate of interest had actually sunk below 5 per cent. The rate of interest in the market had been invariably under 5 per cent since 1819. It would be a great advantage to the mercantile interests, that the Bank of England should discount the notes presented to them, not at one invariable rate of interest, but varying according to the alteration of the rate of interest in the market.1

[See further p. 105.]

Edition: current; Page: [98]
28 March 1821


Mr. Grenfell, referring to the alleged refusal of the Bank of Ireland to receive coin of the realm as deposits [see above, p. 70], said that he had now been assured by the principal director of the Bank of Ireland that there was not the slightest foundation for the statement. Mr. Irving thought ‘that, situated as the Bank of Ireland was, they might have regulated the exchanges better by the distribution of their issues in a more suitable manner than they had done’. Mr. Ellis stated ‘that 500,000l. was voted for the service of those who, having property, could not immediately turn it into specie; but so increased was the liberality of the Bank of Ireland on that occasion, that it actually rendered necessary the application of only 100,000l. of that sum.... With respect to the statement that the low rate of exchange arose from the small quantity of circulating medium in Ireland it appeared to him that that could not justly be cited as the true cause, when it was on record that the exports of corn from Ireland were three times greater in the last than in the former year. That was the circumstance to which the low rate of exchange was attributable, and not to any deficiency in the Bank of Ireland issues.’

Mr. Ricardo was very much gratified at what he had heard from the hon. gent. (Mr. Irving)2 this night. The hon. gent. was now of opinion that the circulation of the Bank regulated the state of the exchange, and he (Mr. Ricardo) was very happy that the hon. gent. was at last a convert to that doctrine. Those gentlemen who imagined that a lucrative trade could be carried on by exchanging coin for Bank-notes, were, as it appeared to him, very much mistaken, because it was impossible for Bank notes to be more valuable than the coin of the country. It was impossible for a man, who was Edition: current; Page: [99]called on in the course of trade, to purchase any commodity to carry on his trade more profitably with Bank notes than with the coin of the realm. Therefore there was no sort of inducement, as it appeared to him, for any person to exchange his bullion at the Bank for their notes. The Bank of Ireland was, however, placed under very different circumstances from the Bank of England; and they did seem to him to have acted with a degree of energy, which, if it had been the case of this country, they would have found the Bank of England not ready to have adopted. What was the case of the Bank of Ireland? The stoppage of a number of private banks in the country rendered it absolutely necessary that a very great increase in the circulation, of some sort or another, should be provided. Either the diminution of the circulating medium must be supplied by coin, or a powerful effort must be made by the Bank of Ireland to make up the deficiency by an issue of notes. The Bank of Ireland did make that great effort to the amount, he believed, of 50 per cent; and, from what he had himself heard from the Governor of the Bank of Ireland,1 that issue would have been increased still farther if those securities had been offered on which the Bank of Ireland usually made their advances; but, from the state of Ireland, those securities could not at the moment be found; and the Bank, however willing to increase their issues, had not the power so to do. It was very evident that the Bank of Ireland would not have increased the circulation if they had taken in sovereigns and issued paper. That would have been merely to decrease one circulation, and to increase another. With respect to the management of the debt of Ireland, an hon. gent. had observed that there was a compensation given to the Bank for the care of that debt. Undoubtedly there was a species of remuneration; but when he contrasted that Edition: current; Page: [100]remuneration with what the Bank of England received for the management of our debt, the latter appeared to him to be enormous. At the same time he was one of those who did not think that banks should be called on to serve the public gratis. The word ‘liberality’ had been used, with respect to the conduct of the Bank of Ireland, and, in his opinion, such a phrase was not properly applied, merely because they had issued their Bank notes; because a bank never increased its paper issue without receiving some advantage from it. He fully concurred in the opinion of those who held that the circulation of the Bank of Ireland was, at the time the distress occurred, very deficient; and he looked upon the exchange to have been affected, not by the great increase of the exportation of corn, but as arising from the issue of the Bank of Ireland not being so high, in notes or money, as it ought to have been.

29 March 1821

PUBLIC ACCOUNTS1 29 March 1821

Mr. Ricardo begged to know from the Secretary of the Treasury whether the annual accounts which were produced respecting the public expenditure, by order of the house, might not be printed in a more perspicuous and simple form. The hon. gent. particularly referred to one branch of the accounts; but he spoke so low, that we could not hear to which he referred.

Mr. Lushington expressed his readiness to adopt any suggestion for the purpose of having the accounts more clearly understood.

Edition: current; Page: [101]
5 April 1821


Mr. Curwen moved for leave to bring in a bill for the repeal of the tax upon horses employed in agriculture.

Mr. Ricardo said, he should certainly give his support to the motion. He should do so on the same principle on which he had voted for repealing the last duty on malt1, not because it was in itself a bad tax, or pressed with peculiar hardship on the landed interest, but with a view of compelling the observance of strict economy in the administration of government. It was his belief that the whole amount of the malt tax might be saved by measures of economy; and as he looked upon the sinking fund to be utterly useless—to be at this moment unproductive of one single good effect—he was quite disposed to abrogate every tax so long as any portion of that fund remained in existence.2 The hon. mover had stated, that foreign monarchs were embarking in the corn trade, that they were becoming merchants, and that the king of Sweden was importing oats into this country. Now if this were the fact, he for one should rather rejoice at it, because he should expect to make much better bargains with kings and Edition: current; Page: [102]princes than with their subjects. The hon. gentleman, however, need not be under any alarm; for if, as he represented, these trading potentates would not take back our hardware and pottery in exchange, and would receive nothing but bullion, there was a sufficient security for our continuing to grow our own corn.

Mr. Baring ‘expressed his regret at hearing this question argued with reference to the conflicting interests of different classes of the community. It gave him some surprise to find his hon. friend treating a great national subject [the sinking fund] in a way which, practically considered, he must pronounce extraordinary and almost absurd.’

The motion was withdrawn.

5 April 1821

TIMBER DUTIES1 5 April 1821

Mr. Wallace, the Vice-President of the Board of Trade, moved a resolution for reducing the duty on timber from the Baltic and increasing that on timber from the British colonies of North America, thus diminishing the protection of the latter. Sir H. Parnell moved an amendment to equalize all duties at the end of five years. Mr. Sykes, opposing the amendment, pointed out that ‘the American timber trade was carried on by British shipping, but three-fourths of the Norway timber trade was carried on by foreign ships’. Mr. Baring remarked that ‘the general principle of political economy which ought to regulate the conduct of a great country ... would lead us to purchase an article wherever it could be had of the best quality and at the Edition: current; Page: [103]cheapest price’. But in this particular case ‘some sacrifice of the several interests of the public to those of the ship-owners was necessary’.

Mr. Ricardo1 said, he was anxious to deliver his opinion on the present proposition, as it involved a principle of infinitely greater importance than the question immediately under consideration. They had been told that they ought to go to the best, and cheapest market, and also that the timber of Norway and Russia was better and cheaper than that of America; and yet they were recommended as a practical measure, to take the worst timber at the dearest rate! His hon. friend (Mr. Bennet), in a speech full of the soundest argument, and as yet totally unanswered by the gentlemen opposite, had shown, in the most convincing manner, that by buying our timber from the northern powers of Europe, we should save 400,000l. annually on the purchase of that article, and consequently that we were yearly incurring a debt to that amount, in order to put this money into the pockets of the ship-owners. If a bill were introduced for the specific and avowed purpose of granting a sum to that amount to the ship-owners, he would much rather agree to it than to the resolutions now before the committee, for in that case the capital thus given to them might be more usefully employed. At present it was a total sacrifice of 400,000l. a year, as much so as if the ships engaged in the coasting trade should be obliged to sail round the island in order to give employment to a greater number. He was of opinion that, according to the true principles of commerce, it ought to form no part of the consumer’s consideration to enter into the distribution by the seller, of the money or labour which he (the consumer) exchanged for any commodity which he wanted. All the consumer had to consider was, where he could get the article he Edition: current; Page: [104]wanted cheapest; whether the payments were to be made in money or in manufactures was matter quite of minor importance. In this, as in all other branches of commercial policy, it was useless to urge partial views in behalf of one set of men or another. That House ought not to look to the right or the left, but consider merely how the people of England, as a body, could best employ their capital and labour. Wrong notions of commercial policy had too long prevailed; and now that the country had begun to recognize sounder principles, the sooner they acted upon them the better. There were exceptions to be made in cases of very old established arrangements; but this American trade was not one of them; was of new date, and mainly sprung out of a quarrel between England and the Baltic powers1: it was then said that the latter would withhold their timber, and that the colonial trade must necessarily be encouraged in Canada. What once occurred, might again happen it was said. Well, then, his reply was—if ever it should happen, it would be time enough to pay the high price: at present let more economical arrangements be attempted. It was strange that inconsistency always marked the progress of monopolists. One set of men now called out for this colonial trade in behalf of the shipping interest, and the very same set of men, if they were spoken to about the West India Dock system, would call it partial and oppressive. So, respecting the Irish linen monopoly, it was said, why not be allowed to go to Germany, where the same manufacture might be had cheaper? He certainly concurred in the hon. baronet’s view of this question.

Sir Henry Parnell’s amendment was lost by 15 votes to 54. Ricardo voted for the amendment.

[See further p. 110 below.]

Edition: current; Page: [105]
9 April 1821


On this debate [cp. above, p. 91] being resumed Mr. Baring moved as an amendment that a select committee be appointed to reconsider the whole subject: ‘the more he considered this question, the more he felt it to be ... “the” one in which were involved all the distresses experienced by the country and their remedy.’ Mr. Attwood, seconding, said that the value of money since 1819 had risen 20 or 30 per cent., and not 3 per cent. as predicted by Mr. Ricardo. The Chancellor of the Exchequer opposed the amendment.

Mr. Ricardo said, he would not have troubled the House if he had not been so pointedly alluded to in the course of the debate. He was not answerable, he said, for the effect which the present measure might have upon particular classes; but he contended that if the advice which he had given long ago had been adopted—if the Bank, instead of buying, had sold gold, as he recommended1—the effect would have been very different from what it was at present. It was impossible, on any system of metallic circulation, to guard against the alterations to which the metals themselves were liable; yet all the complaints they had heard that night referred to the changes in the value of the metals. When the measure of 1819 had been adopted, they had known that the alteration that it would make between gold and paper would be 4 per cent: yet with that knowledge, they had, in all the difficulties with which they were surrounded, recommended the measure. The hon. member for Taunton2 had entered into a speculation on the subject, as if a gold standard had been an innovation of 1819. But that standard had been adopted some time between 1796 and 1798. Up to that period, gold and silver had been the standard. The chancellor of the exchequer had laboured Edition: current; Page: [106]under a mistake when he had said that silver had been a legal tender only to the amount of 25l. It was true that that had been the utmost amount in the degraded currency of the country; but a man might have gone to the Mint with his silver, and 100,000l. might be paid in silver of standard value. This, however, had never been any man’s interest. But gold had been carried to the Mint, and gold had, in fact become the standard. The change in the relative value of the metals had taken place in the period he had mentioned between 1796 and 1798; and large quantities of silver had been carried to the Mint, in order to profit by the state of the law, and the relative value of silver and gold. If government had not interfered, a guinea would not have been found in the country, and silver would have been the standard. The government, aware that there would be one silver currency of degraded value, and another of standard value, had by an act of parliament, he believed, shut the Mint against silver; and he asked whether gold had not then become the standard? If the Bank had not bought gold, contrary to his opinion and recommendation, gold would not have risen. But it was only an assumption that gold had risen. When the relative value was changed, what criterion could they find, to show, whether the one rose, or the other fell? His hon. friend (Mr. Baring), who had been examined before the committee1 with the attention which his high authority demanded, had strenuously recommended a gold standard as less variable than a silver standard. Yet he now stated, from his experience in France, that silver varied very little. His hon. friend’s theories thus changed very often; his own were unchanged, though he had been represented as moving with the vibrations of a pendulum, and entertaining views of placing the currency in a degree of perfection not suited to Edition: current; Page: [107]our situation.1 His hon. friend had himself the same views of the perfection of the currency; and he regretted that his hon. friend had not continued to entertain those opinions. His hon. friend had spoken of the danger of keeping men’s minds in a state of uncertainty; yet he constantly came down to the House with new speculations. The evil of uncertainty and alarm could only be got rid of by parliament being determined to adhere to the measure they had adopted. Such speculations coming from so great an authority as his hon. friend, were calculated to do much mischief. It had been stated, that we could not get labourers to consent to a fall of wages, and that they ran away with the capital of their employers. By altering the value of money, it was very true that they altered the distribution of property. By increasing the value of the currency, the stockholder received greater value, and another paid more. With rents it was the same: the landlord received more value, and the farmer paid more. Thus the distribution of property was always altered by the alteration of the currency. It was quite possible that this alteration might occasion a glut of certain commodities in the market. For instance, a clothier might bring to market a certain quantity of superfine cloth when prices were at a certain rate; if the clothiers2 should come to receive more money than before, and their labourers3 to pay more, it was not likely that the labourers should require so much superfine cloth as those whose property was diminished by the change in the currency had required: the consequence would be a glut of cloth in the market. By altering the distribution of property thus, an alteration would be made in the demand for some commodities; there would be a deficiency of supply to the Edition: current; Page: [108]new taste which came to the market, with the increase of property: and there would be too much for the taste whose resources had fallen. The hon. member for Callington (Mr. Attwood) had ascribed the variations of prices in all commodities to the currency. He begged the hon. member to look at the variations in the prices of corn during the last century, and connect them if he could with the currency. Corn had risen or fallen forty or fifty per cent when no alteration had taken place in the currency. The low price of corn was to be ascribed to the very large importation from Ireland, to the productive harvest, to the very great abundance of corn that was in the country. The demand was limited, because no man could eat more than a certain quantity of bread. If there was more than the usual and ordinary quantity in the market, the price must of necessity fall. We had no outlet for corn, because our prices were higher than in any other country. If the variations in prices were owing to the money standard, which he denied, all countries must have been affected by similar variations, and he wondered that his hon. friend1 had not told them his experience in that respect in France, America, Russia, Spain, and other countries. But if the variations were owing to what he (Mr. Ricardo) had stated, it was not fair to impute them to the act of 1819. The chancellor of the exchequer had said gold had not risen before the peace of Amiens. This was not quite correct. It had begun to rise in 1799; in 1800 it had been 4l. 5s.

Mr. Baring’s amendment was negatived.

[See for the third reading below, p. 110.]

Edition: current; Page: [109]
12 April 1821

USURY LAWS 12 April 1821

Mr. Serjeant Onslow moved for leave to bring in a bill to repeal the Usury Laws. In the course of the discussion Mr. R. Gordon ‘deprecated the theory which this proposition had in view, cautioning the House to beware of theories from the sad experience of the measure for the resumption of cash payments. This, however, was the age of theories, and nothing was heard of but a recourse to first principles.’ Mr. Calcraft, opposing the motion, said that none of the advantages expected from the repeal of the assize of bread had been realised: the present measure would upset mortgages and persuade lenders that they ought to have obtained better terms.

Mr. Ricardo thought the House and the public were very much indebted to the learned gentleman, for the measure which he had proposed; and expressed his astonishment at the apprehensions of members, that its adoption would operate to the prejudice of the landed gentry, by raising the rate of interest; for the fact was, that the lenders of money would not have more power to raise the rate of interest than the borrowers1 would have to keep it down; and the competition between both would serve to bring it to a reasonable standard. As to the allusion of his hon. friend to the assize of bread, that case had no analogy to the present question, because the maximum upon bread was merely meant to keep the price of that article in due relation to the price of corn. An hon. friend had taken occasion, in referring to the resumption of cash payments, to reprobate what he called that theory. But his hon. friend should consider that the restriction upon cash payments was a departure from the old and established theory of the country, to the sound currency and wholesome practice of which it was now proposed to return. His hon. friend had deprecated change in such a strain, as would really Edition: current; Page: [110]form an argument against any improvement. He had had great experience in the money market, and could state the usury laws to have always been felt as a dead weight on those wishing to raise money. With respect to those concerned in the money market itself, the laws had always been inoperative; and during the war indirect means had been found of obtaining seven, eight, ten and fifteen per cent interest. The laws therefore occasioned inconvenience, but did no good.

Leave was given to bring in the bill. In the course of the session the bill was postponed several times and finally abandoned.

13 April 1821


On this bill [cp. p. 105] being brought in for the third reading,

Mr. Ricardo said, he should not have blamed the Bank if they had only increased their issues to an amount sufficient to replace the gold coin that had been removed from the country; but they had extended their issues far beyond what was necessary for that purpose, and to this increase of circulation he ascribed all the depreciation which had followed.

The bill was read a third time and passed.

16 April 1821


[See above, p. 102.] Mr. J. P. Grant moved as an amendment that the drawback allowed on Russian timber be repealed. Mr. Wallace opposed the amendment because the effect of such a measure would be to give Norway the monopoly of the trade.

Edition: current; Page: [111]

Mr. Ricardo1 was much surprised at the course of argument adopted upon this question. Norway was said to be benefitted by the new arrangement, merely because she had before suffered a still greater injustice than it was now proposed to inflict upon her. The proposition made by his learned friend went only to place Russia and Norway, as respected the importation of their timber and deals, on the same footing; yet this had been described by the right hon. gentleman, as giving a monopoly to Norway; and it had been contended that such a regulation would cause a proportionate rise in the price of Norwegian timber. Now, a slight degree of attention must convince every one, that the higher the price of Norwegian timber rose, the more able must Russia be to compete effectually with Norway. It was contended, that the interest of the producer ought to be looked to, as well as that of the consumer, in legislative principles. But the fact was, that in attending to the interest of the consumer, protection was at the same time extended to all other classes. The true way of encouraging production was to discover and open facilities to consumption. An hon. gentleman2 had observed, that timber of a superior quality might be had by those who chose to pay a higher price, and that there was therefore no compulsion on the purchaser. But it was a little too much to raise the price of the best article by means of import duties, and then tell the consumer that he was not obliged to buy the cheap and inferior one. The practical effect of these duties was to raise as much compulsion as could be introduced into commercial affairs.

The amendment was negatived.

Edition: current; Page: [112]
18 April 1821


On 17 April Mr. Lambton moved for a committee of the whole House, ‘to consider the state of the representation of the people in Parliament.’ He said that he had prepared a bill extending the franchise to all householders and certain classes of leaseholders, and limiting the duration of parliaments to three years. The debate was continued on the following day.

Mr. Ricardo observed, that the subject of reform was the most important question which could come before that House. He was anxious, therefore, to declare his opinion with reference to it. He agreed with the hon. member for Durham,1 that it was quite necessary the House of Commons should truly represent the people. It was not necessary for him to have the proof of the recent votes of the House to be convinced that the people at present were not represented. From the manner in which that House was constituted, he was quite certain before of that fact. He would, therefore, embrace any plan which was likely to give the country an efficient representation, and should consequently support the measure now proposed. There was only one thing respecting it which he regretted; and here he was sure that what he was about to declare would be very unpopular in the House: he regretted that his hon. friend did not propose the introduction of voting by ballot, which he thought would be a greater security for the full and fair representation of the people than any extension of the elective franchise. The people would then vote for the man whom they should consider as best calculated to support their interest, without any fear of the overwhelming influence of their superiors. It might be said, that if this were to take place, the effect would be, that in time the people would get rid of the Lords. He Edition: current; Page: [113]denied that this would be the effect. The people would never, when left to their own free and unbiassed choice, be anxious to get rid of that which they considered the instrument of their good government; and unless gentlemen were prepared to assert that the Lords were an instrument of bad government, which he believed nobody would assert, they could not entertain any rational fear that the people would be anxious to get rid of them.1

The House divided on the motion: Ayes, 43; Noes, 55. Ricardo voted for the motion.

8 May 1821


Mr. Scarlett moved for leave to bring in three measures to amend the Poor Laws: ‘the first was, the establishing the [poor rates] assessments for the last year as a maximum; the second, the preventing parochial relief where the parties merely grounded their claim upon being unable to obtain work; and the third, the abandonment of the power enabling justices to order the removal of paupers.’

Mr. Ricardo expressed his surprise that any apprehension should be entertained of the tendency of his hon. and learned friend’s bill to create embarrassment in the law of settlement, as the great object of that bill was, to remove all difficulty and litigation with respect to that law. It had been observed that labour, instead of being paid in wages by employers, had been paid out of the Poor-rates. If so, why then should not the amount of such payment be deducted in fairness from those rates? This was one of the objects of his hon. and learned friend’s bill; because that bill proposed to have the Edition: current; Page: [114]labourer paid in just wages by his employer, instead of having him transferred to the Poor-rates. The effect, indeed, of his hon. and learned friend’s measure would be, to regulate the price of labour by the demand, and that was the end peculiarly desired. With respect to the pressure of the taxes and the national debt upon the poor, that pressure could not be disputed, especially as it took away from the rich the means of employing the poor: but he had no doubt, if the supply of labour were reduced below the demand, which was the purpose of his hon. and learned friend’s measure, that the public debt and taxes would bear exclusively upon the rich, and the poor would be most materially benefitted.

Leave was given. Later in the Session the bill was withdrawn.

31 May 1821


During the debate Mr. Lockhart complained that ministers, wishing to gloss over agricultural distress, had purposely delayed the report of the Agricultural Committee.

Mr. Ricardo thought it right to say, in justice to his Majesty’s ministers, and to the agricultural committee, that the charges made against them were not well-founded. (Hear, hear.) No unnecessary delay had taken place in the formation of the report of that committee. (Hear.) The delay had arisen entirely from the peculiar nature of the subject, and could not be attributed to any want of diligence on the part of the members of the committee. (Hear, hear.) He expected and believed that the report would be made before the prorogation of parliament.2 (Hear.)

Edition: current; Page: [115]
1 June 1821

THE BUDGET 1 June 1821

The Chancellor of the Exchequer brought forward the Budget.

Mr. Ricardo said, that the chancellor of the exchequer always gave a most flattering account of the state of the country. Last session he had declared that the funds which would be applicable to the expenditure of the present year would be much greater than what he had now stated them to be. He had stated that the addition to the sinking fund would have been 1,700,000l. instead of 950,000l. had it not been for the additional interest on exchequer bills. Now, he wished to know whether the interest of those exchequer bills had not been provided for in the preceding session? He thought a sum was voted for that purpose, because he took occasion, on the last budget, to remind the right hon. gentleman that he had made no provision whatever for the interest on the exchequer debt; and he stated in answer, that provision had already been made out of former votes. If that were the case, he must place this payment against certain debts which should be liquidated in the present year, and not against that which fairly belonged to the budget of former years. From the papers which were in the hands of members, it appeared that the account might be correctly stated thus:— By the annual accounts, the amount of the unfunded debt appeared to be 17,292,544l. There were funded, during the last year, 7,000,000l. exchequer bills, which, added to the former amount gave a total of 24,292,544l. There was a deficiency arising on the consolidated fund, which the right hon. gentleman had entirely left out of view. That deficiency amounted to 517,232l. during the present year, and this being Edition: current; Page: [116]added to the enormous deficiency which existed before, might be stated, in fact, at 8,990,000l. And here he could not help remarking, that these accounts, from the way in which they were made up, did not give the committee that correct view of the state of the finances which it was desirable that it should be furnished with. If he wished to consult them for information, he could find no part from which he could clearly discover what the annual deficiency upon the consolidated fund really was. A paper having been moved for some time since, he was enabled to ascertain that on the year ending the 5th Jan. 1821, that deficiency was 8,850,327l. and in the year ending 5th Jan. 1820, 8,321,000l. The difference between the sums was 429,327l. Now, this being the case, what was the reason that in the annual printed accounts which were delivered to the House, the amount of the deficiency upon the consolidated fund for the very same period1, was stated at 517,232l. instead of 429,327l.? making a difference between those accounts and the return which he spoke of, of 87,905l. He did not mention this difference upon account of the magnitude of the sum, but for the purpose of showing how little reliance could be placed on these public accounts, under their present shape. But, to return to the matter of those accounts. It seemed that, during the last year, we had contracted loans to the amount of 24,292,544l. to which must be added, for the deficiency upon the consolidated fund, 517,232l., making together 24,809,776l. Against this amount they must put that part of the debt which had been paid off. It must be shown how much money had been devoted to that purpose; and then, whatever balance appeared, by so much had our debt increased or decreased. We had a sinking fund last year of 17,510,000l. Edition: current; Page: [117]The amount of treasury bills paid off was 2,000,000l. The difference between the amount of exchequer bills upon the 5th January, 1820, and the 5th January, 1821, was 5,934,928l. So that we had devoted, in truth, to the payment of the national debt, whether funded or unfunded, during the current year, the sum of 25,444,928l., and reckoning, as he did, the amount of the debt contracted to be during the same period, 24,809,776l., the difference would be 635,152l. The actual amount, therefore, of difference, between the debt on the 5th Jan. 1820, and the debt on the 5th Jan. 1821, did appear to be no more than 635,152l., although the right hon. gentleman by some other species of calculation, made it amount to 950,000l. The House was told by the right hon. gentleman, that there would be a sinking fund next year, of 4,000,000l. Now, assuming the revenue for the current year to be as stated by the right hon. gentleman, and supposing that there should be such a sinking fund, it was to be remembered that the right hon. gentleman had included in his calculation a sum of 500,000l. which he said he was to receive from France, and which was applicable towards the payment of the national debt during the present year. But if this 500,000l. was so applicable during the present year, it would not be in the next, or any future year. He (Mr. Ricardo) wished to know what funds could be made of general and permanent application in this way; and therefore it was of little avail to bring forward such a sum as this in such a statement. He took it that the sinking fund would really amount to 2,809,000l.; and the sinking fund on exchequer bills, to 290,000l., making the sinking fund 3,099,000l. instead of 4,000,000l.1 He confessed he was one of those who Edition: current; Page: [118]thought a sinking fund very useless. He did not mean to say that he was not favourable to such a fund in the abstract. Upon the principle of the thing there could be hardly any doubt; but, after the experience which they had had, he did not expect to see that principle acted upon. He did not expect that it would ever be made applicable to the reduction of the national debt. The hon. gentleman then briefly recapitulated the history of this fund from the time of sir Robert Walpole. When Mr. Pitt came into power, he was desirous of establishing a sinking fund upon the safest and most permanent principles, so as to secure it from all inter-meddling of ministers. What had become of this sinking fund, and where were all these boasted securities? First of all, the present chancellor of the exchequer came down to the House boasting (as if he were going to confer a great obligation on the country and the fund-holder) of his intention to take about 7,000,000l. of the annual income of this sinking fund; and he then talked of the greatness of the treasure with which we should be incumbered. That right hon. gentleman’s alarms ever seemed to arise, not from any prospect of our poverty but from the great increase of our wealth; and accordingly he was always telling the House of the various mischiefs that resulted from excess of capital. Had that right hon. gentleman considered the true principles of capital, he would have seen that there never could be much danger of its excess. Upon the subject of this sinking fund,1 he would take the liberty of calling the attention of the House to a pamphlet which had been written under the Edition: current; Page: [119]auspices of a right hon. gentleman opposite he believed. [The hon. gentleman here read an extract from a pamphlet.] This was the system of which it had been gravely observed that no departure from the original measure, and no violation of the act of 1792, had taken place in the subsequent appropriation of the fund. Now, the principle of Mr. Pitt’s system was professedly this—that thereafter, every war should carry in itself the seeds of its own destruction. In every word of the reasoning of this pamphlet upon this question, he (Mr. R.) did most cordially agree; and hence he inferred, that such appropriation as had been made of the sinking fund, was a violation of the public faith. It was the violation of that fund which had entailed upon us a large increase of debt; and they who expected to see it preserved inviolate hereafter, did, in his opinion, deceive themselves. The right hon. gentleman had ventured to apply, in payment of the interest of a new debt, almost all the sinking fund that remained to us. Almost all, did he say! The right hon. gentleman had, in effect, applied the whole of it. He had lately increased the taxes by 3,000,000l., a sum which was more than the sinking fund actually amounted to. He (Mr. R.), therefore, was rather disposed now to say, “Let us have no sinking fund; let the money remain in the pockets of the people. When the ministers want supplies, whether for carrying on a war, or for any other purpose, let them come down to the House and ask for them, without having any such fund to resort to.” Ministers were accustomed to tell the House that they must have a sinking fund to meet exigencies, to second the efforts of our armies and generals, and to inspire the enemy with a salutary respect for us. But the legal and the original intention Edition: current; Page: [120]of the sinking fund was, to pay off the national debt; in proof of which he might refer the House to a well known speech of Mr. Pitt’s. [Here Mr. Ricardo read a passage from it.]1 After this declaration of Mr. Pitt, and after all which they had seen in late years, could they place any confidence in ministers as to their being likely to act upon such a principle? Under all circumstances, whenever a motion should be made for the repeal of any tax that was within the actual amount of the sinking fund, he, for one, would support such repeal. He knew it would be objected that the revenue would sometimes fall short in particular branches, which would make it difficult to supply the deficiency. If so, let government impose new taxes to raise the full sums necessary for the state; but he would never consent to this sort of misapplication of a fund created for the specific purpose of liquidating the debt of the country. But this sum had been appropriated and fresh taxes imposed likewise. The people consented to fresh taxes on that occasion, in the hope that they should the more speedily experience some relief; and but for this reasonable expectation, parliament too would never have been induced Edition: current; Page: [121]to impose them. Unfortunately, the people of England were at this moment much more in debt than they would have been if there had been no sinking fund in existence. He should offer but a word or two relative to saving banks. He highly approved of them; but a plan had been suggested by a gentleman in the country, to which he thought the House would do well to pay some attention. The name of this gentleman, he believed, was Woodrow,1 and his plan was one by which a life-annuity income might be obtained in these banks. The plan was, that persons at an early age might be willing to make a trifling sacrifice, which, by the operation of compound interest, would in the course, say of thirty or forty years, increase to a considerable sum. At the birth of a child, a father might be disposed to put by a small sum of money, for the purpose of procuring to the child an annuity hereafter: a plan of this kind would be productive of great benefits.2

Edition: current; Page: [122]
1 June 1821


On this bill, which was brought in by Mr. Richard Martin,

Mr. Ricardo said, that when so many barbarities prevailed in fishing and hunting, and other species of amusement, it was idle to legislate without including all possible cases.1

[The session closed on 11 July 1821.]

Edition: current; Page: [123]


5 February 1822


The King’s speech was delivered this day. On the motion for the address, Mr. Hume moved an amendment recommending a reduction of expenditure, on the grounds that the excessive taxation was ‘a principal cause’ of the agricultural distress.

Mr. Ricardo, though he agreed with everything that had fallen from his hon. friend, the member for Aberdeen,1 in favour of economy and retrenchment, could not vote in favour of his amendment, as he differed widely from his hon. friend as to the causes of the existing agricultural distress. His hon. friend stated, that the cause of that distress was excessive taxation; but the real cause, it could not be denied, was the low price of agricultural produce. That taxation should be the cause of low prices was so absurd and so inconsistent with every principle of political economy, that he could not assent for a moment to the doctrine. Agreeing, however, as he did, with his hon. friend, as to the necessity of economy and retrenchment, and as to the impropriety of making loans to the occupiers of lands, he was sure they would be frequently found, in the course of the session, pursuing together that necessary object, a reduction of expenditure and taxation.

The amendment was negatived.

Edition: current; Page: [124]
11 February 1822


Mr. Brougham moved ‘That it is the bounden duty of this House, well-considering the pressure of the public burthens upon all, but especially the agricultural classes, to obtain for the suffering people of these realms such a reduction of the taxes as may be suited to the change in the value of money, and may afford an immediate relief to the distresses of the country.’ The Marquis of Londonderry1 opposed the motion.

Mr. Ricardo denied that taxation was the cause of the present agricultural distress. A country might, he said, be totally without taxes, and yet in the exact situation that England was at present. It was consistent enough in those who thought that the restoration of the currency had made a change of 50 or 56 per cent. in the value of money, and had consequently increased the actual value of the taxes in that proportion, though their nominal amount still remained the same, to say that taxation was the chief cause of the distressed state of agriculture; but it was impossible for those who held that the restoration in the currency had not created any thing like so great a change, to accede to such a statement. From the line of argument which his hon. and learned friend had pursued in one part of his speech, he was afraid that his hon. and learned friend was going to prove, that the very taxation which he wished to reduce was a source of benefit to the nation. His hon. and learned friend had stated, that the manufacturers of leather, on account of the tax on it, largely increased its price to the consumer, and derived so much benefit thereby as to be ready to represent it to parliament Edition: current; Page: [125]as a very useful and beneficial tax. Surely, by a parity of analogy, the agricultural interest, burdened as it was by taxation, might petition parliament against a reduction of it, since it was as much in their power as in that of the leather-manufacturer, to make it useful in enhancing the price of their commodity to the consumer. His hon. and learned friend had, however, drawn a very nice distinction—so nice indeed, that, for his own part, he was not gifted with ability to discern it—between the circumstances in which the leather-manufacturer and those in which the agriculturist was placed. He had said, that, in the case of the manufacturer, the taxation was paid by the consumer; but that in the case of the agriculturist, it was paid by the seller, and could not be charged to the consumer.1 He could wish his hon. and learned friend had stated to the House his reasons for such an assertion. If he were to be called upon to declare what he conceived the cause of the present depressed state of agriculture, he should say, that the cause of it was the abundance of produce now in hand, arising from the late abundant harvest, the quantity of land recently brought into cultivation, the importation of corn from Ireland, and various other causes, which it was not material for him at that time to mention. Indeed, the House would deceive both itself and the country, if it should come to a resolution that taxation was the cause of the distresses of the agricultural interest. He perfectly concurred in the opinion of his hon. and learned friend, that the present state of things could not last long: that was an unnatural state of things, in which the farmer could not obtain a remunerative price for his produce, and the landlord could not obtain an adequate rent from his tenant. His hon. and learned friend had stated, that unless something were done to relieve the farmer, much of the land Edition: current; Page: [126]would be thrown out of tillage. He said so too; and it was to that very circumstance that he looked forward as a remedy. His hon. and learned friend, among the other observations which he had made, had made some upon a set of individuals whom he stated to be anxious to transfer the whole landed property of the country into the hands of the public creditor. For his own part, he could not help observing, that he knew of no persons who entertained such wishes; neither could he imagine any cause which could, under such a measure,1 be necessary. He himself thought that the landholder might be enabled to receive an adequate rent, without any breach of faith being committed towards the stock-holders. With regard to the stock-holders, it might be supposed, from the language which had been used that evening, that it had been proposed to transfer to them the property of the land-holders, and to leave the land-holders entirely without resources. Now, such a proposition never had been, and never could be, seriously propounded. But though he said that, he was prepared to assert, that it would be most advisable, both for the land-holder and stock-holder, that the former should surrender to the latter a part of his property, in liquidation of the debt that had been contracted. Indeed, as the stockholder received, in the shape of interest, taxes from the landholder, it might be said that a part of the land did at this moment absolutely belong to him. [Cries of “Hear” from both sides of the House.] He would suppose, that during the war the ministers had come into the House, and, after stating the necessity of the case, had called upon the country gentlemen to give up a certain portion of their property in a direct manner to the exigencies of the state. Must they not, in that case, have absolutely parted with a portion of it? And if at Edition: current; Page: [127]that time others advanced for them that capital which they had not in an immediately tangible shape, was it not right that the capital so advanced should now be repaid to them? He was not demanding for the stock-holder more than he was entitled to receive; he was merely demanding that, in a compact such as he had described, the terms should be fairly and honourably fulfilled towards him. If the alteration in the value of the currency had given to the stock-holder more than he was entitled to, which he (Mr. R.) did not believe, let it be shown and let the deduction be made openly and without disguise. These were all the observations which he should obtrude at present upon the House. On a future occasion, he should explain the reasons why he thought that the alteration produced in the value of money by the restoration of the currency, had been greatly over-stated; and then he should endeavour to show, that if proper measures had been taken at the time of passing Mr. Peel’s bill, the resumption of cash payments would have produced no greater effect on the price of corn and other agricultural produce, than a fall of five per cent; whatever greater fall might have taken place, would have been attributable to other causes.

Mr. Brougham replied that he had been misrepresented. What he had said was, that the large capitalists interested in the leather trade derived a benefit from the tax on leather because it prevented men with small capitals from competing with them.

The previous question being put the House divided: for Mr. Brougham’s motion, 108; against it, 212. Ricardo voted with the minority for the motion.1

Edition: current; Page: [128]
18 February 1822

SAVING BANKS 18 February 1822

Mr. Ricardo presented a petition from Mr. John Woodrow1 who, he observed, had taken a great deal of pains in examining into the best mode of relieving the poor, and who was of opinion that the principle on which the Saving banks were at present conducted was not the most beneficial that could be devised. He conceived it would be much better, if those who vested their money in these banks were paid by Edition: current; Page: [129]way of annuity, but at a less rate of interest than was now given. Their money might be allowed to accumulate, and thus a comfortable provision would be insured to them, when they arrived at an advanced age.1 He (Mr. R.) thought the plan deserved the attention of the legislature.

18 February 1822


On 15 February the Marquis of Londonderry announced the policy of the Government on the ‘Agricultural distress and the financial measures for its relief;’ he then gave notice that he would move for the revival of the agricultural committee and that the Chancellor of the Exchequer would bring forward a measure for enabling the Bank to issue 4,000,000l. on 3 per cent. Exchequer Bills in loans to different parishes on the security of the poor rates, to be used for the relief of the agriculturists. Accordingly, on 18 February, the Marquis of Londonderry moved that the report of the committee on the agricultural distress, presented in 1821, be referred to a select committee. Mr. J. Benett, Mr. Stuart Wortley and several other members having spoken on the motion,

Mr. Ricardo2 began by observing, that the hon. member3 had stated, that the operation of the sinking fund in the purchase of stock, would have the effect of reducing the interest of money, thus benefiting mortgagers and other borrowers, and in that way relieving the landed interest. But Edition: current; Page: [130]he begged to say, that the interest of money depended upon other causes. The rate of interest depended upon the profit that could be made upon the employment of capital; and that again depended upon the wages of labour, which were regulated, in a great measure, by the price of food. While a sinking fund was fairly applied, it might and would raise the price of stock; but it by no means followed, because the price of stock rose, that, therefore, the rate of interest would generally fall. He would not be understood to be adverse to the principle of the sinking fund, if he could be assured that it would be really applied to the liquidation of the public debt: but he found from experience, that, while the people were called upon to pay a large proportion of taxes for the maintenance of this fund, in the hope that it would be applied to the discharge of their debt, they experienced nothing but disappointment, through the manner in which that fund had been appropriated by the ministers. The existence of this fund would serve only to encourage ministers to engage in new wars, by facilitating the contraction of new loans. Such, indeed, had been the destination of every sinking fund which the country had known, from the plan of Walpole to those of the ministers who followed him. Mr. Pitt, notwithstanding the experience he had derived of the fate of all sinking funds, established by his predecessors in office, had been unable to secure his own. What a variety of expedients had been resorted to in order to keep up that system, and to secure the application of it to the purpose for which it was professedly designed at the outset. But they had all been ineffectual against the attacks of the present chancellor of the exchequer; a sinking fund which ought to be now above 20,000,000l. was so reduced that with the addition of 3,000,000l. of new taxes it only amounted to 5,000,000l.; and he had no doubt, whatever, that within a few Edition: current; Page: [131]years this grant would be found quite as inefficient as any that had preceded it. The hon. member for Wiltshire,1 had pronounced great praise upon the speech of his hon. and learned friend (Mr. Brougham); which was the more extraordinary, as the hon. member differed from all the main positions laid down by his hon. and learned friend; for, in opposition to the views of the hon. member, his hon. and learned friend had maintained, that it was impossible to raise the price of agricultural produce: that the producer could not transfer the taxes imposed upon him to the consumer, in the same manner as manufacturers could; while the hon. member for Wiltshire had maintained, that taxation did tend to increase the price of raw produce, his doubt only being as to the time that would be requisite for such purpose. His hon. and learned friend had observed, that if a man embarked any large proportion of capital in manufactures, he might, by the use of improved machinery, and other means, contrive, not only to overcome any discouraging prospect which might appear at the outset to damp his speculations, but even to advance his profits beyond any thing upon which he could originally calculate. But the agriculturist, upon investing his capital, had no other remedy for any discouraging prospect, excepting time alone, while he was oppressed with certain taxes; for he would never make the consumer pay them. The hon. member for Wiltshire’s observation, as to the time required to transfer taxes on raw produce to the consumer, was not applicable to the matter under discussion, because no new taxes had been laid on agricultural produce. If his observation had been applied to any taxes now for the first time proposed to be adopted, it would no doubt be entitled to attention. But it was to be recollected, that the taxes to which the hon. member had alluded, were, it might Edition: current; Page: [132]almost be said, interwoven with our general system of taxation, having existed for several years; yet that which had so long existed, was now by many persons set down as the cause of the low price of agricultural produce; and hence it was argued, that taxation was the cause of the public distress. But to the agriculturists he would say, that the only effectual remedy for their case was, to regulate their supply by the public demand: and, if they did not take special care of that, all other efforts must be unavailing. He had been represented by the hon. member for Wiltshire as to having said, that the land was mortgaged for the whole of the public debt. But he declared that he should have been quite ashamed to have made any such observation, as he only meant to say that which was his opinion, namely, that the land-owners were, as well as the other classes of the people, responsible to the fund-holders for the payment of their share of the debt [hear, hear!.] From the responsibility the fund-holder himself was not wholly exempted: towards the payment of his own debt he must himself be a large contributor. He did say, that it was for those who contended that the fund-holder received more than his fair share, to show the House how this had happened; and that if such were really the case, a proportionate abatement ought to be conceded. His hon. and learned friend (Mr. Brougham) in his last speech had remarked, that to raise the price of corn was impossible; and that, therefore, the remedy for the present depression must be by reducing taxes: but that, if this reduced taxation should not have the effect of placing the gentlemen of landed property in affluence—[cries of “No.”]

Mr. Brougham observed, that the case he put on a former evening was that of the distress of the landed interest becoming intolerable.

Mr. Ricardo said, he might in some degree have misunderstood Edition: current; Page: [133]his hon. and learned friend, but he would offer a word or two on the subject of this distress. It was not very long ago since they were all in a state of the greatest alarm, on account of the distressed manufacturers. It was conceived that our manufacturers were declining and the most gloomy apprehensions were indulged on their behalf. But he then took the liberty of intimating his opinion, that those distresses were not permanent; and, happily, his predictions had been fulfilled. He was disposed to hope equally well of the agricultural interests; but not while such a system of corn laws as the present existed. He thought it was most desirable to fix some system by which the prices of corn might be rendered less variable, and by which a proper and adequate compensation might be secured to the grower. One of the measures of relief proposed was, an advance of four millions by the Bank at three per cent interest. This was an hazardous experiment, unless the Bank had issued four millions more1 than was necessary for the circulation of the country. The House would do him the favour to recollect, that, in the session of 1819, he expressed an opinion on the Bank question, for which he received a reproof at the time from an hon. director, that the Bank should not then buy gold, but rather sell it.2 His fears, he would confess, were now the other way. Vast quantities of gold had been obtained by them to supply the circulation of this country; and he now begged the directors to consider whether they had more than was sufficient for that purpose; for if they had not, he was quite sure that the measure which they were about to adopt could not be expedient, for four millions could not be absorbed in our circulation. It was quite impossible that four Edition: current; Page: [134]millions could be added to the circulation, without affording a great inducement to export the gold. If the Bank had no greater quantity of gold than sufficed to carry on the circulation of the country, no measure could be more injudicious than this, as it respected them. If, on the other hand, having large quantities of gold in their possession, they issued four millions of additional currency, the effect would be, to promote the exportation of gold, to lower its value all over the world, and to turn the foreign exchanges against us. He gave the directors of the Bank full credit for their good intentions; he believed that men of higher honour or integrity could not exist; but he thought they had not a sufficient degree of talent for the management of so vast a machine as that with which they were intrusted. Once more he would intreat them to consider the matter well, in all its probable consequences, before they increased the present currency, by so large a sum as four millions. And here he would beg the House also to reflect what might have been the effect of the bill brought in by the right hon. gentleman (Mr. Peel), had it been fully acted on. He (Mr. Ricardo) had ventured to say, that its effect upon prices would be about five per cent. To that opinion he still adhered; and he thought he could demonstrate the fact. The state of our money system at that time was this:—gold was five per cent higher in value than paper; that was, a man having an ounce of bullion could per chase the same quantity of any commodity as another man could do with 4l. 2s. in Bank notes. The question was, how to make these two denominations of money coincide in value? It was quite clear, that if nothing was done to alter the value of gold, it was only necessary to raise the value of paper to the same level, and that then the sum of 3l. 17s. 10½d. in paper would purchase as much as the ounce of gold. After the right hon. gentleman’s bill was brought in and had Edition: current; Page: [135]passed, he (Mr. Ricardo) regretted that it was not carried into effect in the method at first proposed; he referred to the intended payments in bars of1 gold bullion. If that plan had been acted upon, the Bank would have been competent to have answered all demands upon it with the gold then in their possession, how small soever that sum might have been. As they therefore, in that case, would not have affected the general value of gold in Europe, by making large purchases in other countries, the change could not possibly be greater than the difference between gold and paper, at the time of the passing of the bill. The bill of the right hon. member (Mr. Peel), he did not conceive to be materially different from the plan proposed by himself, for it established an intermediate system of payments in bullion, and did not make the payments in cash imperative till the 1st May, 1823. He could not imagine the reasons which had induced the Bank to commence cash payments at so early a period. He had always blamed them for being too hasty in their preparations; for if they had contented themselves with bullion payments, and the country had seen the advantage of that system, it might have been continued—as undoubtedly it would have been wise to continue it—and payments in cash might have been deferred some years longer. If the affairs of the Bank had been conducted with skill, the directors, instead of forcing so great an importation of gold, should have kept the exchange as nearly as possible at par. He repeated then, that the consequence of the law, if skilfully acted upon, was only to cause a rise of 5 per cent. But the Bank had acted very differently, and had imported a great quantity of gold; as much perhaps as twenty millions. This, of course, had created a change in the price of commodities, in addition to the apparent difference between paper and gold. Edition: current; Page: [136]The buying up of this quantity of gold must have affected a change in the value of it (as compared with other commodities) throughout Europe. What the amount of this change was, it was impossible to say—it was mere matter of conjecture. But when they took the quantity of gold in circulation in Europe into the calculation, and all the paper also, for that too must be reckoned, he did not conceive that it could be great, and he should imagine that 5 per cent would be an ample allowance for the effect. [Hear, hear!].—With respect to the 4 millions of Exchequer bills, and the mode of their application which the noble lord had made a part of his plan, he was really astonished to find the right hon. member for Chichester (Mr. Huskisson), in a speech which contained many sound observations,1 supporting a system for lending the public money on the security of corn and poor-rates. Such a system was decidedly contrary to every established principle of political economy and common sense.—As to the effect and operation of taxes, he wished to make one or two observations. There were two descriptions of persons, producers and consumers, likely to complain to that House of the pressure of taxation. Against the producers he was prepared to say, he would shut the doors of that House. He would tell them they had the remedy in their own hands; that they must regulate their own price, by making the supply square with the demand. But to the consumers on whom the taxes really pressed, he would say, the doors of the House should be always thrown open. When they said that their income was unequal to their expenditure, and that taxes prevented them from procuring the comforts and enjoyments to which they were accustomed, he would say, that their prayers were entitled to the utmost attention, and that Edition: current; Page: [137]the taxes should as far as possible, be removed. Now, he would ask gentlemen, to whom they supposed the repeal of the malt tax would be a benefit—to the farmer who produced it, or to the general consumer? He should say to the consumer. And so on of the salt, the soap, and other taxes, which affected articles of general consumption. That would be his reason for calling for the repeal of these taxes; but not at all from the impression that those taxes were duplicated or triplicated by dealers or sellers. His hon. and learned friend1 seemed to think, that if a commodity changed hands two or three times, each dealer would charge 10 per cent on the amount of the tax; so that, after various changes, it might be increased to an almost indefinite amount to the consumer; but, if these two or three changes took place in the course of one year, 10 per cent, supposing that was the ordinary rate of profit per annum, would satisfy all the persons through whose hands it passed. He had been represented, very erroneously, to have stated that reduction of taxes was not a benefit. But the contrary was the fact. He always thought that taxes were injurious, but they affected all classes of consumers, and the repeal of any one of them would not be particularly serviceable to the agricultural class. His hon. and learned friend observed, that if the quantity of capital were increased, it was an axiom in political economy, that profits would be diminished. Far from that being the fact, he denied the position altogether. If the capital of the country were doubled and the price of provisions lowered, he would have no doubt that the rate of profits would not be reduced. But with the continually increasing population of England, they could not have low prices of corn, if they did not import foreign corn. He would not at this moment propose an Edition: current; Page: [138]importation free of all restraints, but he would agree to a protecting duty (the amount he was hardly capable of fixing), gradually declining till the duty was equal to the peculiar burthens to which the farmer was liable. The hon. member after a recapitulation of his remarks, and characterising in strong terms of reprobation the impolicy of the system of lending the public money upon the security of corn or poor’s-rate, concluded with observing, in reference to what had fallen from the hon. member for Wiltshire as to the increased amount of taxation which the landowners and farmers had now to pay in consequence of the depreciation of the currency, that the fundholders were subjected to the same advance upon the taxes, although that class of proprietors had not derived any additional advantage from the war or its consequences, as Mr. Mushett had most satisfactorily demonstrated.1—[The hon. member sat down amidst loud and general cheering.]

A committee was appointed, consisting mostly of the same members as the committee of 1821 [see above, p. 86–7] including Ricardo: among the new members were W. W. Whitmore and Sir J. Newport.

22 February 1822

WAYS AND MEANS2 22 February 1822

Col. Davies called the attention of the House to certain discrepancies between the finance accounts for the year and the statement of income and expenditure of the country up to 5 Jan.1821. Mr. Hume moved that ‘the Chancellor of the Exchequer should be requested to reconcile the two accounts’.

Edition: current; Page: [139]

Mr. Ricardo thought it necessary that some explanation should be given; and he begged leave to call the attention of the Chancellor of the Exchequer to a question which he (Mr. Ricardo) had put to him last year, when he had brought forward his Budget.1 The sum which had actually been devoted to the repayment of Exchequer Bills up to January 15, 1821, had been only 950,000l., while the Chancellor of the Exchequer had said it would be 1,700,000l., it appearing that 700,000l. had been expended in the payment of interest on Exchequer Bills. Next year the Chancellor of the Exchequer had promised that the surplus would be 4,000,000l. But when it came to be ascertained, it had turned out to be only 2,600,000l. How was the Right Honourable Gentleman to reconcile these differences. The interest on Exchequer Bills had amounted to 1,380,000l. and this, with some other matters not well explained, made a total of 1,700,000l. If the accounts were to be kept in this way, it was impossible that the Members of that House could come to any knowledge of the real state of the country. They had been told of large surpluses, which, from year to year, were to be available to purposes of economy, but when they came to count those sums, they found that the greater part had vanished. If they were told that 1,700,000l. would be available in one year, and instead of that had only 950,000l.; if they were told that in the subsequent year there would be four millions, and it had turned out that there were only two millions, what security was there that next year they might not have only two millions instead of the five millions, of which the Right Honourable Gentleman had boasted? The whole of the boasted surplus might thus, it was evident, be absorbed in a quarter of which the House had no knowledge. It had been said that the expences were to be but 18,210,000l. but Edition: current; Page: [140]upon casting up the four items of which they were composed, the amount proved to be eighteen millions five hundred and fifty thousand pounds. If the expenditure of the year was to exceed the estimate by half a million; if they were to be told of a surplus of four millions, and then in place of that to have a surplus only of 2,600,000l. Then what security had they that there would be a surplus of five millions next year? He thought that the matter stood in much need of explanation.

25 February 1822

NAVY FIVE PER CENTS 25 February 1822

The Chancellor of the Exchequer introduced a measure for the commutation of every 100l. of Navy five per cents into 105l. of a new four per cent stock. The time allowed for holders resident in Great Britain to signify their dissent was limited to the 16th of March; for those who lived out of Great Britain and in Europe, the 1st of June; and for those who lived out of Europe, twelve months from the present time.

Mr. Ricardo thought the plan very desirable, and the terms proposed by ministers extremely fair. With regard to the time allowed for option, he thought it amply sufficient. But, suppose persons were to purchase stock in the name of others residing abroad, with a fraudulent intention, would they be entitled to the extended term, or would they be obliged to give their answer by the 16th of March?

The Chancellor of the Exchequer said, the case supposed by the hon. member would be precluded by some resolutions which would be subsequently read at the table.

Mr. Ricardo said, it would very much facilitate the plan, if such holders of five per cents as assented, could know at Edition: current; Page: [141]what time the transfer to the four per cents was to take place. The question of the dividends might at first sight offer some difficulty, but this difficulty was more apparent than real, because the very same dividend which was given to a person holding 100l. in the five per cents might be given to a person holding 105l. in the four per cents. If this stock were quickly transferred, the natural consequence would be, to raise the price of it in the market; and as persons would be induced to speculate in it from the advantage of a small but quick profit, the operation from this circumstance would be much facilitated. The right hon. gentleman would do well if he explained the mode in which the money was to be paid off to persons who dissented. It was evident that persons having an option, and who were in doubt whether they might or might not have made a bad bargain, would not decide till the latest moment. He should like to know then, if many thousand letters came in on the 16th of March, how these applications were to be disposed of.

The resolutions were agreed to.

5 March 1822


Mr. Scarlett, in presenting a petition from Peterborough, said that a superabundance of produce could not of itself have caused the agricultural distress. ‘Supposing the farmer were to pay all the demands made upon him—for instance, his rent, tithes, and taxes—not in money, but in kind—would it not be clear that, in such a case, an abundance of produce would be of considerable advantage to him? How, then, could it be maintained, that abundance of produce, under the existing state of things, was the chief cause of the evils by which the agriculturist was now oppressed?’

Edition: current; Page: [142]

Mr. Ricardo said, it was true, that, if the produce of the land was divided into certain1 proportions, every party would be benefitted by an abundant crop; but his learned friend having come to that conclusion, left his argument there, instead of extending it a little farther. Now, he would ask his learned friend whether, if the quantity of commodity were excessively abundant, that was to say, the double, treble, or quadruple of an ordinary crop, it would not be a cause of poverty to the agriculturist? He maintained that it would be so; for the farmer, after having satisfied the consumption of himself and family, would find, upon going to exchange the surplus of his commodity for other commodities2, such a competition in the market as would compel him to dispose of it upon very low terms; and thus abundance of produce would be to him a cause of distress. It was true that, from the alteration of the currency, the evil had been aggravated; for it was clear that it rendered it necessary to sell a greater quantity of corn to answer the demands of the government and the landlord. But he now contended, as he had at all former times contended, that, up to a certain point, for instance, 10 per cent, great loss had been derived from the change in our currency; but that the rest of the distress was to be attributed to the increased quantity of produce.

Edition: current; Page: [143]
8 March 1822


Mr. Maberley’s motion for an account of the interest paid to the Bank of Ireland having given rise to some discussion on the comparative charges made by the Banks of Ireland, and of England, Mr. Pearse (a Bank director) rebutted ‘the insinuations thrown out against the Bank of England’ and said: ‘The hon. member for Portarlington had, upon a former occasion, asserted, that the directors had scarcely ability enough to perform the duties with which they were intrusted:1 but he (Mr. P.) preferred the opinions of the proprietors of Bank-stock, who elected them annually, to all the theories of modern philosophers on the subject.’

Mr. Ricardo said, that whenever the conduct of the Bank was brought before the notice of the House, he should think it his duty to speak of it as he thought and felt. With regard to the directors, he was willing, at all times, to give them full credit for honesty of intention; but he could not help thinking, that they had at different times involved the country in considerable difficulties. He persisted in saying, that the Bank restriction act which was passed in 1797, might have been unattended with detriment to the country, had the directors known how to manage their own concerns. But, not knowing how to manage them upon true principles, they had issued a quantity of paper so large as to depreciate its own value; and to recover from that depreciation, the country had found it necessary to undergo a painful process, which had been the cause of a great part of the present distress. Ever since the year 1819, the Bank had committed a great error in its eagerness to provide gold. That error they confessed themselves, when they offered to lend government 4,000,000l. Such an offer he took to be a specific confession Edition: current; Page: [144]of error, inasmuch as it was a declaration that they had amassed more gold than was necessary, and by so doing had aggravated the evils under which the country suffered. As to the plan of the Bank lending 4,000,000l. to the government, he viewed it with some degree of fear, because the directors had convinced him by their conduct that they did not know what they were about. If they thought they could issue either 4,000,000l. of gold coin, or even of paper, without withdrawing the gold coin from circulation, they were mightily mistaken.1 He was quite sure that the currency could not absorb it, and therefore it must go abroad.

13 March 1822


Mr. Marryat presented a petition from the House of Assembly of Lower Canada complaining of the distress caused by the restrictions imposed on their trade by the British legislature.

Mr. Ricardo thought the House bound to attend to the complaints of the petitioners. The Canadians suffered serious hardships which ought to be removed; they complained, 1st. That we did not take timber from them on the same terms as we did before. 2nd, that we refused to admit their corn. And 3dly, that they were subjected to the inconvenience of purchasing all articles in our markets. As to the first, we had a right to go to any market we pleased for our timber; but, on that very principle, the second cause of grievance ought to be done away, and their corn ought to have access to our markets. With respect to the forcing the Edition: current; Page: [145]colonies to purchase in our markets, when they might be more conveniently supplied elsewhere, it was an inconvenience to which they ought not to be exposed. He would always oppose that principle, not only as applied to Canada, but to every other colony.

14 March 1822


Mr. Maberly, in moving for a select committee on the public accounts, observed that the various public accounts, when compared with one another, were full of errors; for instance, the balance-sheet account presented by the Marquis of Londonderry on 15 February last, differed from the finance accounts of 1821, and the Chancellor of the Exchequer’s account differed from both. Mr. Lushington, in the course of his reply, said that ‘the balance-sheet form was adopted at the suggestion of an hon. member (Mr. Ricardo), and was deemed to be the most compendious way of stating the accounts.’

Mr. Ricardo said, that the public accounts ought to be so stated, that every member, upon referring to them, might be able to make a balance-sheet from them, and see at once what was the actual revenue, and what the expenditure of the country.

The motion was withdrawn. On 18 April on the motion of the Chancellor of the Exchequer a select committee was appointed ‘to investigate the manner in which the public accounts are at present kept, and to suggest such improvements in the system as might appear necessary.’ Ricardo was appointed a member of the committee.

Edition: current; Page: [146]
20 March 1822


Mr. Curwen moved for a committee to take into consideration the propriety of augmenting the duty on imported tallow and of repealing the duty on candles. Mr. Robinson (President of the Board of Trade) opposed the motion; ‘he could not agree to a proposal which could only benefit agriculture by throwing a burthen on the whole body of consumers, or by impeding the trade of the country.’ Besides, ‘the just complaint of foreigners, was, that the trade of this country was so restricted, that all their ingenuity was required to get an article into this country on profitable terms; and now that one article was found on which they could get a profit, the state was to step in and take it in the shape of a tax. If this was to be our rule of commercial policy, we might as well shut up shop at once.’

Mr. Ricardo said, he had heard with great pleasure the principles avowed by the president of the board of trade, and hoped the right hon. gentleman would hereafter act upon them; for if they had hitherto been followed up, the right hon. gentleman could never have proposed the duties upon cheese and butter [Hear!!.] The hon. mover was a great friend to agriculture, and was ready to go a great way in support of it. The length to which he had gone that night was really surprising, for he had told them exactly the quantity of tallow produced in this country, the quantity produced abroad, and the effect which the tax operating on this quantity would have upon the price, which he told them was precisely 5l. 10s., the rest of the proposed tax being to be paid by the foreign producer. How the hon. gentleman got at this result was surprising. He believed the fact would turn out to be very different; that the producers in all foreign countries furnished their articles on the average, at the price at which they could afford them; and that a tax now imposed, Edition: current; Page: [147]would on the average of future years, be added to the price. He could not consent to tax the whole community for the benefit of one class. As he anticipated that his hon. friend’s motion would meet with the fate it deserved, he should not detain the House longer, but to observe on a remark of the hon. member for Hull.1 The hon. member for Hull had said, that he was a friend to a surplus revenue beyond expenditure, but that he was an enemy to a sinking fund. Now to what purpose was a surplus revenue applicable but as a sinking fund? The hon. member had said, that he found from the experience of history, that a sinking fund was always seized by the ministers. He (Mr. R.) agreed with him, and it was on this account that he objected to the proposal to maintain a surplus revenue. In principle nothing could be better than a sinking fund. He was so great a friend to the principle, that he was ready to consent that the country should make a great effort to get out of debt; but then he would be sure that the means taken would effect the object. He would not trust any ministers, no matter who they were, with a surplus revenue, and he should therefore, join in any vote for a remission of taxes that might be proposed, so long as a surplus revenue remained. The taxes on candles and on salt had been proposed for reduction, but though that on salt was undoubtedly very burthensome, it did not appear to him to be that which most demanded reduction. The taxes on law proceedings seemed to him the most abominable that existed in the country, by subjecting the poor man, and the man of middling fortune, who applied for justice, to the most ruinous expence [hear!]. Every gentleman had his favourite plan for repealing a particular tax, and this tax upon justice, was that which he should most desire to see reduced.

The motion was negatived.

Edition: current; Page: [148]
2 April 1822


Mr. Stuart Wortley moved to refer to a select committee the petition of Mr. H. Burgess for remuneration for the expenses which he had incurred in the preparations for an extra post,1 which had been encouraged by government and eventually prevented by decisions of parliament. The Chancellor of the Exchequer supported the motion.

Mr. Ricardo said, the ground on which the chancellor of the exchequer had put the case would have induced him to vote against the motion if he had known nothing else of it. The right hon. gentleman had called on them to accede to the motion as a matter of compassion or indulgence. Now, they were not entitled to vote away the public money from their own sentiments of compassion. If the Treasury had given Mr. Burgess encouragement to incur expence, they should take on themselves the responsibility of remunerating him.

The motion was negatived.

3 April 1822


On 1 April Mr. Gooch brought up the report of the select committee on the distressed state of agriculture: it was then agreed that the report should be taken into consideration at the end of the month [see below, p. 155].

On 3 April, however, Mr. J. Benett presented a petition from the distressed agriculturists of Wiltshire, and this was made an occasion to anticipate the debate upon the report. Mr. Western expressed his dissent from the conclusions of the select committee and said that ‘an immense proportion of the present difficulties Edition: current; Page: [149]arose from the alteration in the currency’. ‘During the depreciation we had contracted an enormous debt, which was now to be paid by the industrious classes in a currency of increased value. This had made such a havoc in the property of the country, as was never made by revolution or civil war. It was true, during the depreciation of money, the rents of estates had been doubled, but incumbrances had doubled and taxes had quadrupled, so that the situation of landlord had not been a whit better. But what was the state of the landlord now? His income was again reduced to one half, and all their fixed payments remained.’

Mr. Ricardo said, that no one could be more aware of the great difficulties which had been occasioned by alterations in the currency than himself. He had given the subject the greatest attention in his power, and had laboured hard to show the necessity of a fixed and unvariable standard of value. At the same time, he could not agree with the hon. member for Essex,1 as to the operation of the changes in the currency upon agriculture. Let them suppose the utmost extent of the operation of2 the changes in currency on the pressure of taxes. They must deduct from the whole amount of taxation, the amount of those taxes which were employed in expenditure, as they had been diminished in proportion as the value of money had been augmented.3 Supposing, then, 40,000,000l. to remain, on which the operation of the currency on taxation was to be calculated. What proportion could possibly be paid by the tenantry of this amount? Suppose one fourth. He did not include the landlords in this calculation, but only the tenantry. Suppose one-fourth paid by the tenantry, their proportion would be 10,000,000l. Suppose, according to the extravagant calculation Edition: current; Page: [150]of the hon. gentleman, that 25 per cent was the real amount of the alteration operated by recurring to a metallic standard of value. Then 2,500,000l. was the whole extent of its operation on the tenantry. Was it possible that the distress which was now felt could be owing to 2,500,000l.? Such a sum was totally inadequate to such an effect. Let them look again at the landlords. The alteration could affect them only as it took more from them in the shape of taxation. No person was more ready than he was to admit, that it occasioned an increase of burthen in this shape as in every other; but he must be allowed to ask, whether, if the tenant paid the rent demanded, the landlord must not be benefited by receiving the same rent which he had exacted in the depreciated currency? He admitted that landlords did not receive the same rent, but had made an allowance equal to the depreciation. But, if he received the rest of the rent, whence arose the distress? He had given up 25 per cent, and received 75 per cent, equal to 100. How, then, was he injured? But the landlords did not receive 75 per cent. They told them that they could not receive any rent—that the distress was so great, that the surplus could not pay any thing but the taxes. He asked, then, whether the depreciation could possibly have occasioned this? He did not believe that the changes in the currency since 1819, had been more than 10 per cent. But did he say that the landed interest suffered only to the extent of 10 per cent? No such thing. The greatness of the distress he was most sensible of, and the causes which had been assigned he thought amply sufficient to account for it— namely, the abundance of several successive harvests, the importation of corn from Ireland, and other similar causes. It was utterly impossible that this country could be reduced to that situation that the surplus produce of agriculture should be only sufficient to pay the taxes, without affording any rent Edition: current; Page: [151]to the landlord, or any profit to the cultivator. This was a situation to which the country could not possibly come.— He wished here to say a few words of the report which the agricultural committee had made. The former report1 contained some most admirable propositions. If he might divide it into two parts, he would say, the first half was as excellent a report as had ever emanated from any committee of that House, and was well worthy of being placed beside the bullion report and the report on the resumption of cash payments by the Bank. It contained most sound and excellent observations on the corn trade, and on the corn-laws. It most justly pointed out two great evils arising from the corn-laws, which affected the present distress. The first was, when there was a scarcity, and corn rose to 80s., then the ports were opened, and we were deluged with foreign corn, whatever might be the price in the countries from which it came. The ports were open for any quantity. This was a great evil, and operated at the very time when the short harvest ought to be compensated by high prices. The second evil was felt when in a season of plenty we habitually produced corn at an expense very considerably above other countries. If there were successively good harvests, the farmer could obtain no relief from exportation, and was thus ruined by the abundance of produce. What was the inference from this, but that they should take measures, to enable our farmers, in seasons of abundance, when they could not obtain prices to compensate the expense of culture, to get relief by exporting to other countries, and for this purpose a duty on importation of foreign grain should be imposed, equal to the peculiar taxes which fell on the farmer, such as tythes and a part of the poor-rate; and a drawback of the same amount should be Edition: current; Page: [152]allowed on exportation. If such a regulation were adopted, after a small fall of prices, the farmer would then export to other countries, and relieve the glut of the corn market at home. Another part of the report was totally incorrect. It spoke of countervailing duties, not, as all countervailing duties ought to be, as imposts upon the importer in order to subject him to all the burthens of the home-grower of corn, so that the taxes might fall equally on grower and importer, but as duties which should be equal to the additional expense of growing corn in this country over other countries. Countervailing duties on this principle, would thus be sometimes 20s., and sometimes 30s. There appeared to him to be no principle more clear, than that there could not be a fixed remunerating price in any country. Before there was a dense state of population in a country, they would cultivate the very best lands, and they could then compete with any country, and export their surplus produce. There would then be no occasion for countervailing duties. But when population became more dense, poorer lands would be cultivated, and an increase of charges would arise from the greater expenses of cultivation. As population went on, the cultivation would go on to still poorer lands, and the price would continue to rise. If, then, the rule should be, for a countervailing duty, the difference of charge in the growth, no limit could be affixed to the amount. He could not conceive any system of duties more destructive to the best interests of the country.—He would now advert to the present report. He had gone into the committee under a deep impression of the great distress which the agricultural interest suffered, with a most unfeigned desire to find some means of relief, not upon the general and absolutely true principles of legislation, but with every inclination to give every facility to measures of immediate effect in alleviating distress. All he required was, Edition: current; Page: [153]that there should be something in the report, pledging them, when the distress should have gone by, and the farmers should be rescued from their suffering—for he was the advocate of the farmer, and not those who pretended to be the exclusive friend of agriculture—all he had required was, that the report should promise a return to proper principles when the present dangers should have been removed. But, although the report recognized the evil which produced low prices, and the apprehension of still lower prices, it did not hold up the slightest purpose of ever returning to sound principles. It expressed hopes of better principles being adopted, and the House would be astonished to hear what those principles were. It was to have recourse to the countervailing duties which he had explained. If on this plan they attempted to give a monopoly to grapes reared in hot-houses, countervailing duties might be imposed on wine, to make it as dear as the produce of the hot-houses. In the same way with sugar. In this way all branches of foreign commerce would be lost to this nation, and to every nation which adopted countervailing duties. The only true policy was to allow us to go to the country where the article required was most easily and abundantly produced. He was ashamed to occupy the time of the House so long [Cheers]; he would not go into detail, but he felt called upon to throw out a few observations. The hon. member for Essex had alluded to the West Indian cultivators. If he wanted an argument, he would take that very case, and he asked how the currency could be supposed to have affected them? Was it not notorious that their distress was entirely caused by over production? Were not the measures adopted for their relief calculated to give them a market for their produce which they had not before? In the same manner, the agriculturist of this country must be relieved by increased demand, or Edition: current; Page: [154]diminished supply. He had not said that taxes contributed not to the distress. On that point he had been misunderstood. They who were exposed to exclusive taxes ought to receive protection from those taxes. But on this subject he would give his opinions in greater detail on a future occasion.

Mr. H.G. Bennet ‘rose to protest against the doctrine, that taxes had nothing to do with the distresses of the agricultural interest’. The Marquis of Londonderry in reply said, ‘that hon. gentleman might take a lesson from his friend near him, the member for Portarlington, who had shown how small a portion of that distress now complained of had been thrown on the suffering individuals by taxation.... The distress was caused by the operation of the seasons, and the state of the markets; and therefore could not be cured by the remission of taxation, even though that were pushed to the length of national bankruptcy.... Though abundance was desirable, yet carried beyond a certain point, it occasioned evils like those now felt. He was not prepared to go into this view of the question, and to show how they suffered by abundance: but if the hon. member for Portarlington turned his intelligent mind to it, he could make the House understand this part of the subject.’

Mr. Ricardo corrected the error which appeared to have prevailed in the mind of his hon. friend, the member for Salisbury,1 that he (Mr. R.) was an advocate for taxation. On the contrary, he had voted for every reduction of taxes that had been proposed in the course of the session, because he was anxious for the repeal of taxes, feeling that every tax must prove a burthen upon the public.

Edition: current; Page: [155]
29 April 1822


The Marquis of Londonderry in pursuance of the report from the committee on the agricultural distress (which had been presented on 1 April 1822) moved a series of resolutions on agriculture and at the same time announced various financial measures which the government would shortly bring forward. He repeated the opinion which he had formerly expressed that the remission of taxes could only be a palliative, but not an effectual remedy for the agricultural distress; an opinion which had received sanction and confirmation ‘in the able work1 which has recently been published by the hon. member for Portarlington (Mr. Ricardo), than whom it is impossible for the House on such questions to have higher authority’. Lord Londonderry’s resolutions provided that, once the ports had been opened to the importation of corn on the price reaching the limit fixed by the existing law (80s. per quarter for wheat2), that limit should thereafter be lowered to 70s.; the importation however instead of being free of duty as it was under the existing law would be subject to a duty of 12s. per quarter for wheat when the price was between 70s. and 80s., of 5s. when the price was between 80s. and 85s., and of 1s. when above 85s. An exception was made for foreign corn already in the warehouses. It was also proposed to advance up to 1,000,000l. on the security of British corn when the price of wheat was under 60s. Mr. Western spoke next.

Mr. Ricardo said, that, having a proposition which he wished to submit to the House, he offered himself thus early to the committee. He was desirous of laying his proposition before the House, as the noble lord had laid his, in order that the House might have an opportunity of judging of their several merits. The hon. member for Essex3 had said, that the Edition: current; Page: [156]noble lord’s plan1 would have the effect of extending the paper currency. He cared not whether it would or would not; for he knew full surely that they had at present as extended a currency as the state of the country required. The present plan—however it might be disguised—was an attack upon the sinking fund.2 The sinking fund was in principle relinquished. He cared not whether the ultimate accumulation was to be 7,000,000l. or 9,000,000l.; the present plan was a breach of public faith, so far as the application of the sinking fund could be a breach of faith. There was, in fact, no longer any sinking fund. He solemnly protested against prolonging the charter of the Bank. They had repeatedly called on the chancellor of the exchequer not to enter into any engagement with the Bank for a renewal of their charter. Yet it was now said, that there would be an extension for 10 years, for an object for which it was totally insufficient.3 It would be a great improvement that the public should be allowed to enter into partnery concerns for supplying their own money transactions, instead of having them intrusted for 10 years longer to the Bank. He had hoped never to have heard of their charter being renewed. The benefit of the paper currency ought to belong to the public. No advantage could ever be derived from the Bank lending money to the public.—With respect to what the noble lord had said of their plans differing very little, he thought there was the most essential difference between them. He (Mr. R.) proposed that a duty of 20s. per quarter should be imposed on the importation of wheat when the price rose to 70s. The noble Edition: current; Page: [157]lord supposed that he (Mr. R.) had adopted this of choice; but instead of that, he considered it as forced upon him, and he consented reluctantly to this duty, on account of the distress which now existed, and only on that account. There was another very important difference. He proposed that this duty should be imposed when wheat rose to 70s., because agriculture was at present so extremely depressed. But the noble lord proposed 80s., 85s., 70s., and brought nearer all of them to the importing price, while he (Mr. R.) differed upon that point, and by imposing a duty of 20s. when the price was lower at home, afforded a greater relief to the farmer. He thought the farmers the most distressed class in the country, and the most cruelly used. When the prices rose in consequence of a short harvest, and when the farmers ought to have compensation, they diminished their profits, and let corn in from all parts of the world.1 This great evil the noble lord did not propose to remedy. If the price rose to 85s., it was only required to pay a duty of 1s., and the poor farmer might be inundated with foreign corn. But another difference between him and the noble lord was this—he (Mr. R.) contended, that there could be no security to the farmer while the price of corn was kept higher in this country than in foreign countries. This had been ably shown in the last year’s agricultural report. Did the noble lord propose to relieve the agriculturists from this evil, or to afford any mitigation of it? No. Therefore they would be fully as ill off as now.2 According to his (Mr. R.’s) plan they would be Edition: current; Page: [158]sure that the prices here could not be much higher than they were abroad. He would read the propositions, which he hoped the noble lord would be prevailed on to admit with his own; if not, he hoped the House would decide respecting it. They were as follow:

1. “That it is expedient to provide that the foreign corn now under bond in the United Kingdom may be taken out for home consumption, whenever the average price of wheat, ascertained in the usual mode, shall exceed 65s. a quarter, upon the payment of the following duties:—Wheat 15s. a quarter; rye, peas, and beans, 9s. 6d. a quarter; barley, bear, or bigg, 7s. 6d. a quarter; oats, 5s. a quarter.

Edition: current; Page: [159]

2. “That whenever the average price of wheat, ascertained in the usual mode, shall exceed 70s. a quarter, the trade in corn shall henceforth be permanently free, but subject to the following duties upon importation:—Of wheat, 20s. a quarter; rye, peas, and beans, 13s. 3d. a quarter; barley, bear, or bigg, 10s. a quarter; oats, 6s. 8d. a quarter.

3. “That at the expiration of one year from the time at which the above duties on corn imported shall be in operation, they be reduced as follows:—On wheat, 1s. a quarter; rye, peas, and beans, 8d. a quarter; barley, bear, or bigg, 6d. a quarter; oats 4d. a quarter.

4. “That a like reduction of duties be made in every subsequent year, until the duty on the importation of wheat be 10s. a quarter; rye, peas, and beans, 6s. 7d. a quarter; barley, bear, or bigg, 5s. a quarter; oats, 3s. 4d. a quarter, at which rates they shall henceforth be fixed.

5. “That a drawback or bounty be allowed on the exportation of corn to foreign countries, On wheat, 7s. a quarter; rye, peas, and beans, 4s. 6d. a quarter; barley, bear, and bigg, 3s. 6d. a quarter; oats 2s. 4d. a quarter; and that such drawback or bounty in like manner as the importation duty be fixed.”

Mr. Huskisson moved a series of resolutions to the effect that three months after the price of wheat exceeded 70s. per quarter, or so much sooner as it exceeded 80s., the ports should be permanently open to the importation of foreign corn, subject to the same duties as proposed by the Marquis of Londonderry.

[See further p. 162.]

Edition: current; Page: [160]
1 May 1822


The Chancellor of the Exchequer moved a series of resolutions recommending a plan for spreading the burden of pensions, which arose principally from the war, equally over a period of 45 years; it was proposed to offer a fixed annuity of 2,800,000l. for that period to contractors who would undertake to pay the pensions. The pensions amounted at present to 5,000,000l. annually and they would probably be reduced to 300,000l. after 45 years, by ‘the natural decrement of human life’. ‘The transaction’, he said, ‘would stand completely clear of the sinking fund.’

Mr. Ricardo was astonished how ministers could come down with grave faces, and propose such a measure, after all the anxiety they had expressed on the subject of the sinking fund. This plan was nothing more nor less than an invasion of that fund. The chancellor of the exchequer had said, that these annuities were a part of the debt of the country. This he (Mr. R.) admitted. But, supposing the object of ministers was, to relieve the country from taxation to the amount of 2,200,000l., and they took that sum from the sinking fund, he would ask them to compare the situation in which the country would be placed at the end of 45 years, with that in which it would stand at the expiration of the same period by adopting the plan now proposed. In both cases the object would be to raise 2,200,000l. per annum; but, at the end of 45 years, acting on the plan now introduced, would not the country be more in debt, than it would be if the sum were taken immediately out of the sinking fund? Now, if this proposition were true—and it could not be controverted— was it not, he demanded, an invasion of the sinking fund? He, however, had no objection to it on that account: but it was the greatest inconsistency in the right hon. gentleman to say that the sinking fund was to be held sacred, while he Edition: current; Page: [161]came to the House with a proposition that would leave the country more in debt 45 years hence than if 2,200,000l. were taken from it at once. He agreed with his hon. friend (Mr. Gurney), that the debt which was the object of this proposition carried a sinking fund along with it. Year by year, as lives dropped off, it was decreasing; and what was the object of the sinking fund but to place all public debt in the situation of this particular debt? Thus, if 30,000,000l. were owing in one year, to reduce it to 29,500,000l. in the next; then to 29,000,000l., then to 28,500,000l.; and so on progressively, until at last the whole was liquidated. A less beneficial effect would be produced by prolonging the debt beyond the term to which it would extend, but for this plan, which he could not help considering an entire fallacy.

The resolutions were agreed to.

3 May 1822

3 May 1822

On the report stage, Mr. Hume moved as an amendment that the contract be made with the Commissioners for the Redemption of the National Debt.

Mr. Ricardo said, that the proposition of the hon. member for Montrose was the same as that of ministers, only he wished the contract to be made on the most advantageous terms. Whatever bonus the private contractor obtained, would be a clear loss to the country. There could be no doubt that, if the sum required were now taken from the sinking fund, at the end of 45 years the country would be in a better situation than if the money were borrowed of individuals. He was an enemy to all complicated schemes, and was for avoiding a crooked path when there was a straight one before him leading to the same end. The obvious course was to take the sum from the sinking fund.

The House divided: for the amendment, 56; against it, 135. Ricardo voted for the amendment.

[See further p. 191.]

Edition: current; Page: [162]
7 May 1822


The Report [see p. 155] was further considered. Mr. Attwood opposed all the resolutions that had been moved [see pp. 155 and 158–9 above] because, under the pretence of relieving agriculture, their real object was to pave the way for the introduction of foreign grain. The true causes of the agricultural distress were the alterations in the value of currency and the enormous burden of taxation. But it was surprising to find that ‘in the present day, when that new school, or new science as it was called, of political economy, was supposed so greatly to flourish, and was certainly so widely extended,’ doubts should exist as to what the effect of taxation was. ‘The hon. member for Portarlington—(and if he referred so repeatedly to the opinion of that hon. gentleman, it was because he was the only individual of equal authority, who had given any consistent exposition at all of the causes of agricultural distress, and he thought that the agricultural interest was on that account indebted to the hon. gentleman, at least, for his intentions, although he (Mr. Attwood) did not agree with him, in scarcely any one of the opinions he entertained; and was convinced that those opinions had produced extensive mischief and were calculated to occasion still more);— that hon. member had taken a survey of the condition of agriculture, and he found it suffering under great embarrassments; he had found that corn could not be produced in this country, at the present time, for the same monied cost at which it had been formerly produced here; and at which it could now be produced in the countries around them; and what was the explanation that he gave of the causes of this change? He told them that to feed an augmenting population, they had been driven to the cultivation of inferior soils; that those soils could be alone cultivated by the application of additional labour; that they yielded a smaller surplus produce; that none but a higher monied price could be a remunerative price for corn so grown; that this was the main source of the difficulties of agriculture, and that the relief from those difficulties was to be found in abandoning the cultivation of those poorer soils. But as this was the main ground on which the whole system of the hon. member rested, he would beg to state his opinions in his own words, as they were found in a pamphlet recently printed by him on that subject. [Mr. Attwood then read from a pamphlet of Mr. Ricardo]—“The words remunerative Edition: current; Page: [163]price, are meant to denote the price at which corn can be raised, paying all charges.—It follows, from this definition, that in proportion as a country is driven to the cultivation of poorer lands for the support of an increasing population, the price of corn to be remunerative must rise. It appears, then, that in the progress of society, when no importation takes place we are obliged constantly to have recourse to worse soils to feed an augmenting population, and with every step of our progress the price of corn must rise.”1 This was the hon. gentleman’s theory, by which, as applied to this country, he explained the cause of the rise of corn since 1793, and why it was, that corn could not now be grown in this country at a low price. Now he (Mr. Attwood) was convinced, that there was no foundation, in fact, for the assertions here maintained, and on which this system was founded. He believed, that the fact thus assumed was directly the reverse of that which did in reality exist; that, so far from the average quality of land becoming poorer as population and wealth advanced, it became richer; and he had no doubt, but the average quality of the land under cultivation in this country, at the period of its highest prices, and of the greatest prosperity of agriculture, at the period prior to the close of the late war—that the average quality of land was then more fertile; that it produced more corn on an average by the acre, and with less positive labour; that it yielded a greater surplus produce, than at any former period. It was not true, that the cultivation of any country, proceeded in the manner, and according to the calculation here assumed. It was not the best land, which was first cultivated; nor the worst land which was last cultivated. This was determined in a great measure by other circumstances; by the rights of proprietorship, by locality, by enterprize, by the peculiarities of feudal tenure, its remains still existing; by roads, canals, the erection of towns, of manufactories; all those and other obstacles of a similar nature interfered with the calculations of the hon. member; and bad land when it was once brought into cultivation, and subjected to the operations of agriculture; by draining, by watering, by the application of various substances, frequently became the best land, and was afterwards cultivated at the least expense.’ Mr. Attwood illustrated his contention by reference to various periods of history and continued: ‘Adam Smith, the greatest of authorities on the subject of political economy, would tell them, that the operation of excessive taxation on agriculture, was precisely similar to that which the member for Portarlington traced to an imaginary poverty of the land. The effect of taxation on agriculture, as explained by Dr. Smith, Edition: current; Page: [164]might be stated in these words; that it was an effect similar to that which would be produced,—by an increased barrenness of the soil; by an increased inclemency of the sky.’ Mr. Attwood then proceeded to show that the burden of taxation was increased to the same extent as the value of the currency had been raised. But this was not to be estimated from the price of gold. ‘The hon. member for Portarlington, who had chiefly insisted on that mode of calculation, had never hitherto been induced to explain, why gold, taken as a commodity, in the market, by the ounce, was to be considered as a better criterion than any other commodity.’ He (Mr. A.) contended that ‘it was undoubtedly a worse.... The most proper commodities to determine the extent of that change, were those in which agriculture was principally interested, corn and cattle.’ The prices of corn and cattle, as compared with the average of the last five years of the war, had fallen one half; ‘the pressure of taxation upon agriculture, therefore, had been doubled.’

Mr. Ricardo said, he rose, impressed with great admiration for the speech which the House had just heard. He thought the hon. gentleman had shown a very considerable degree of talent, much research, and great knowledge of the subject upon which he had spoken. [Hear.] Notwithstanding these circumstances, he could not help thinking, that the hon. gentleman had committed a great many errors. The hon. gentleman had spoken of him (Mr. Ricardo) as if he had always been a favourer of a paper circulation [cries of “No, no”]—as if, in fact, he had not been one of the first to point out the evils of a currency, in the estimation of which the House could have no guide, and which was at all times liable to be increased or diminished, as it might suit the convenience or the pleasure of the Bank. The hon. gentleman appeared to have founded the whole of his speech upon a passage in a pamphlet that he (Mr. Ricardo) had written, respecting what were called “remunerating prices.” To the test of the doctrine and reasoning of that pamphlet, he should be very willing to trust the whole of the argument in this case. It could make no difference to the farmer how he obtained those remunerating Edition: current; Page: [165]prices, provided he got them; although it was very true (as had been asserted by the hon. gentleman), that in order to obtain such prices, he must be content to be paid in money or value of very different descriptions. But the important fact was, that it was impossible a man could long go on, producing any one particular commodity, unless he could obtain for it a remunerating price.—The hon. gentleman had spoken as if he (Mr. Ricardo) were alone responsible for the alteration which had lately taken place in the value of money. He would, however, beg the House to recollect the state in which the currency stood in the year 1819. At the time of the passing of the bill of 1819, the difference between the paper currency and gold was only 5 per cent. What he had then suggested was, that measures should be taken which, while they restored the value of the paper currency to an equality with gold, and thus put an end to the depreciation, would make any purchases of gold unnecessary. Under those measures, as there would have been no additional demand for gold, there could have been no increase in the value of that metal. But as that suggestion was not followed, but another which rendered the purchase of gold necessary, and which (as it had been carried into effect by the Bank) had made a considerable change in the value of gold, how was he (Mr. R.) responsible for the effects of it? If the change in the value of money had been 20 or even 50 per cent he should not have been responsible for it. Undoubtedly, as the hon. member contended, the burthen of money taxation was increased, in proportion to the increase in the value of money: the only difference was as to the amount of that increase. He (Mr. Ricardo) contended, that it was at the utmost about 10 per cent, and nothing like what had been contended by the hon. gentleman. The hon. member had said that he (Mr. Ricardo) measured depreciation solely by the Edition: current; Page: [166]price of gold; and the same observation had been made in various parts of the House, and repeated elsewhere1 under an entire misconception of the meaning of the word depreciation. Depreciation meant a lowering of the value of the currency, as compared with the standard by which it was professedly regulated. When he used the word, he used it in this obvious and proper sense. The standard itself might be altered, as compared with other things; and it might so happen that a currency might be depreciated, when it had actually risen, as compared with commodities, because the standard might have risen in value in a still greater proportion. When he said, that the currency was relieved from depreciation to such and such an extent, did he say that the currency had not altered in value? The question of the value of the currency was quite a different thing from the question of depreciation; and if the hon. member could prove that gold had changed in value 40 or 50 per cent, he (Mr. R.) would allow that there was a proportionate increase of value in the currency. The hon. member asked why gold was a better standard than corn or any other commodity? He (Mr. R.) answered, that gold had always been the standard of the country; and if we had not passed the fatal law of 1797, we should have continued to this moment with a metallic standard. But, would it have been said on that account, that gold had not altered in value? If, while we had continued a metallic currency, any other country which had had a paper currency had been returning to a metallic standard, the hon. gentleman might have come down, as he did now, and said, that on account of the purchase of gold that had been made, the value of that metal had been enhanced and that the pressure of money taxes had been proportionately increased. But, did the hon. member mean seriously to contend, that Edition: current; Page: [167]corn was less variable in value than gold [Hear, hear!]? Let him propose, then, that the Bank directors should pay their Bank-notes at a certain rate in quarters of corn instead of sovereigns; for that was the bearing of his assertion [Hear!]. The hon. gentleman talked of the impossibility of the cultivators of the soil having recourse to land of inferior quality, but the hon. gentleman did not correctly state the argument. It was not that cultivators were always driven by the increase of population to lands of inferior quality, but that from the additional demand for grain, they might be driven to employ on land previously cultivated a second portion of capital, which did1 produce as much as the first. On a still farther demand a third portion might be employed, which did not produce so much as the second: it was manifestly by the return on the last portion of capital applied, that the cost of production was determined. It was impossible, therefore, that the country should go on increasing its demand for grain without the cost of producing it being increased and causing an increased price. If the hon. member saw in the present state of things only the consequence of the change in the value of money, he gave no reason for the amount of the distress. Let them suppose his (Mr. Ricardo’s) own case. He was possessed of a considerable quantity of land, the whole of which was unburthened by a single debt. Now, according to the hon. member, he and the tenants on that land would have only been injured to the amount of the increase which the change in the value of money had made in the burthen of taxation. But they were, in point of fact, injured much more. The hon. gentleman was mistaken as to the fact, when he said there was little variation in the price of grain in the last century. In the first 62 years of the last century the average price of the quarter of wheat had been Edition: current; Page: [168]32s.; but, in the years from 1784 to 1792 it had been 45s.—a very considerable increase on the value of corn. But, he would not rest on any scattered facts what was so evident in principle, as that the extension of cultivation must extend the cost of production of corn. The hon. member had said, that the effect of taxation laid on the land was the same as if the farmer had to support an additional man from whose labours he reaped no benefit. That he (Mr. R.) acknowledged was the effect of all taxation [Hear!]. The hon. member had seemed to think that he would deny this. On the contrary, no one could assert the mischievousness of taxation more strongly than he would. He would never consent that one sixpence should be taken out of the pockets of the people that could be avoided. But he was not, therefore, so blind as to say that taxation was the cause of all the present distress [Hear, hear!]. It was truly said, that the effect of taxation on the landholder was the same as if he had to maintain an additional man: but was not this also the case of the merchant and the manufacturer? [Hear!] If taxation, then, were the sole cause of distress, the distress would press on all alike. The theory of the hon. member was, therefore, totally insufficient to account for what they now witnessed. The hon. gentleman had asked, whether the price of corn would not be doubled if the currency were paper, and taxation were doubled? If tithes were doubled, poor-rates doubled and all taxes affecting especially the growth of corn were doubled, the effect would certainly be to increase the price of corn to that amount; but the country might be taxed generally without producing that alteration. The hon. gentleman had said that he (Mr. Ricardo) advised the abandonment of the land. Now he did not advise the abandonment of it while it was profitable; but he did undoubtedly advise farmers not to grow a commodity that would not yield them a remunerating price. Edition: current; Page: [169]He would give similar advice to the clothier and to the ship-owner, if their circumstances were similar. He would not now enter into a discussion of the particular propositions about to be brought before the committee. He was content to have answered, however inadequately, the very able speech of the hon. gentleman, and he sat down with declaring that he did not entertain the slightest doubt of the validity of the principles he had maintained.

The House having resolved itself into a committee, the Marquis of Londonderry said that personally he should feel no alarm if the resolutions of either Mr. Huskisson or Mr. Ricardo were adopted; the former had shown a disposition to modify his general principles and ‘the hon. member for Portarlington, too, had acted with as much accommodation as could be expected from a person who held so high the principles to which he gave his authority.’ But the great mass of the committee thought that the ports should not be opened when wheat was under 80s., and they ought not to legislate against the sentiments of the country; he would propose that the ports should open at 65s. with a duty of 15s. and a fluctuating duty of 5s. per quarter of wheat [cp. his previous proposal p. 155]. Sir T. Lethbridge proposed a duty of 40s. per quarter on wheat; he trusted the House would not be led away by ‘the abominable theories of political economists.’ Sir F. Burdett attacked the government for having brought forward a measure against their own conviction, and withdrawn it when they saw that it was not well received. He thought that there ought to be no duties at all. ‘He could not agree with the hon. member who spoke last in his denunciation of the principles of political economy; nor could he comprehend what the hon. member meant by political economy, when he so abused it, unless he thought that it meant low prices.’ The fall of prices was not due to the superabundance of produce or to importation, but to the diminution in the quantity of currency occasioned by the Act of 1819, ‘the most fraudulent transaction that ever disgraced any country.’ His argument was this: ‘A decrease in the quantity of an article might raise its price beyond the proportion of that decrease. But the currency had been diminished to a great extent. During the war the bank circulation rose to about 30,000,000l., and the circulation of country paper amounted, on calculation, to 40,000,000l. more, making together 70,000,000l. Taking the circulation of the country to be about a tenth part of Edition: current; Page: [170]its income, then a diminution of one per cent in the value [? quantity] of the circulating medium would depress prices 10 per cent.’

Mr. Ricardo, being of opinion that the sufferings of the agriculturists were in a great degree owing to the corn laws, considered the present a fit opportunity for saying a few words upon that subject. Even if he were fully to agree with gentlemen who ascribed the present distresses to the change in the value of the currency and the weight of taxation, still he thought those gentlemen must admit that the corn laws, considered abstractedly without any reference to those two questions, were calculated to produce great evils. One of the principal of these evils was, the unnaturally high price of corn in this country over all other countries. The hon. baronet1 had admitted, that superabundance would occasion a great fall in the value of corn as well as all other articles. And here he must observe, that there appeared to be a little inconsistency in the arguments of the hon. baronet. In one part of his speech the hon. baronet admitted that a super-abundant production of corn would occasion mischief to the extent in which it was at present experienced. [Sir F. Burdett dissented.] The hon. baronet now said he did not admit this; but he certainly understood him to do so, and to apply the argument to the change in the value of the currency; for he said that those who contended, that the increase of an article beyond a certain limit, would occasion a fall in price greater in proportion than the increase which had taken place, must admit that an alteration in the value2 of the currency will produce a change in the value3 of commodities, greater in proportion than the alteration in the value4 of money. Although he (Mr. R.) was of opinion, that a superabundant Edition: current; Page: [171]supply of an article produced a sinking in the value of the article greater than in proportion to the additional quantity, yet he did not apply this argument to money. He would put a case to the House, to show how a superabundant supply of an article would produce a sinking of its aggregate value much greater than in proportion to the surplus supply. He would suppose, that in a particular country a very rare commodity was introduced for the first time—superfine cloth for instance. If 10,000 yards of this cloth were imported under such circumstances, many persons would be desirous of purchasing it, and the price consequently would be enormously high. Supposing this quantity of cloth to be doubled, he was of opinion that the aggregate value of the 20,000 yards would be much more considerable than the aggregate value of the 10,000 yards, for the article would still be scarce, and therefore in great demand. If the quantity of cloth were to be again doubled, the effect would still be the same; for although each particular yard of the 40,000 would fall in price, the value of the whole would be greater than that of the 20,000. But, if he went on in this way increasing the quantity of the cloth, until it came within the reach of the purchase of every class in the country, from that time any addition to its quantity would diminish the aggregate value. This argument he applied to corn. Corn was an article which was necessarily limited in its consumption: and if you went on increasing it in quantity, its aggregate value would be diminished beyond that of a smaller quantity. He made an exception of this argument in favour of money. If there were only 100,000l. in this country, it would answer all the purposes of a more extended circulation; but if the quantity were increased, the value of commodities would alter only in proportion to the increase, because there was no necessary limitation of the quantity of money. The argument of the Edition: current; Page: [172]hon. baronet, to which he had before alluded, was therefore inapplicable. With respect to the subject more particularly before the House; namely, the evils of the present corn laws, he was of opinion that the farmer would suffer an injury from having too abundant crops. But to look at the other side of the question. Suppose the farmer should have scarce seasons, and that his corn should rise; just at the moment when he would be about to reap the benefit of this circumstance, the ports would be opened, and corn would pour in in unlimited quantities. These evils had been pointed out in the most able manner in the agricultural report, and in the resolutions of his right hon. friend (Mr. Huskisson), to some of which he should be sorry if the House did not agree. In his opinion, not the resolutions of the noble marquis, nor even those of his right hon. friend, and still less those of hon. members on his own side of the House, were at all adequate to remove the evils complained of. How was the evil of an habitually higher price in this country than in foreign countries to be remedied? By making the growing price in this country on a level with that of other nations. If his propositions should be agreed to, for imposing a duty of 10s. upon imported corn, and granting a bounty of 7s. upon exported corn, he thought it impossible that the price of wheat in this country could ever be materially higher than that of foreign nations. If abundant harvests should occur here, the farmer would have his remedy in exportation. In fixing the duty of 10s. upon imported corn, he had been guided by what he thought the circumstances of the case required. He did not intend that the House should adopt the duty of 10s. all at once. In the present distressed state of the agriculturists in this country, and taking into consideration the abundant supply of grain on the other side of the water, he was willing to give the farmer protection up to 70s., and then open the Edition: current; Page: [173]ports for importation, commencing with a duty of 20s. In his own opinion, this duty of 20s. would amount to a total exclusion of foreign corn, but he selected it, because, under the existing laws, all importation was prohibited, and therefore he was not making the situation of the consumer worse than at present, at the same time that he was securing a gradual approach to what he considered right principles. He would state the grounds upon which he calculated the duty of 10s. He found it stated in the evidence given before both Houses, that the whole of the charges which the farmer had to pay, which were principally tithes and poor-rates, amounted to about 10s. per quarter. The hon. member for Wiltshire1 said last night, that he desired no more than to have a duty placed upon the importation of corn, calculated on the taxes which fell on the landed interest. He did not understand the calculations of that hon. member, but he called upon him to refute his if he could. If the hon. member admitted their correctness, he should expect the support of his vote. He recommended the imposition of the duty upon imported corn, for the reasons he had before stated, namely, the protection of the farmer in the event of a bad harvest. He contended that he was vindicating the cause of the farmers more effectually than many gentlemen who called themselves their friends.—It was necessary for him to make a few observations upon that part of his plan which provided for the introduction of foreign corn, now in bond, into the home market, subject to a duty of 15s. whenever the price of wheat should reach 65s. The hon. member for Oxford2 had said, that this measure would be destructive of the agricultural interest, and that it would reduce the price of corn to 47s. But the farmer had the remedy in his own hands. When the price of wheat should arrive at 64s., if he apprehended the Edition: current; Page: [174]influx of foreign grain, he would be in possession of the market, and might dispose of his corn to advantage. He had selected 65s. in order to secure the farmer from being placed in competition with the holders of foreign corn in bond and in foreign countries at the same time; he would first have to cope with the former, and if the price should afterwards rise to 70s. he would then compete with the latter. It might be right to observe, that a duty of 10s. would be fully adequate to protect the farmer even when the ports were opened. According to the evidence before the committee, there appeared to be little danger of the country being over-whelmed by importations. The noble marquis had stated, that the expense of bringing corn from abroad to this country amounted to 10s. per quarter. But Mr. Solly, in his evidence, calculated that the expense of growing of corn in the interior of Germany, together with all the charges consequent upon its carriage to this country, would amount to 2l. 16s. The duty of 10s. upon importation would increase this sum to 3l. 6s. Now, the member for Cumberland1 was of opinion, that 65s. was a fair protecting price; and if so, why did he and other members object to the duty of 10s., which would secure them against importation until the price of wheat should be at least 65s.? He could not understand upon what principle the agriculturist could object to his propositions. He was willing to give them not only a remunerating price of 70s., but a duty of 20s., and yet they thought that was not adequate protection. He would take this opportunity of informing the House, that Mr. Solly, to whose evidence he had referred, understanding that the noble marquis had asserted, that the last harvest in Silicia had been so very abundant that it was not considered worth while to reap it, had instructed him (Mr. R.) to state, that so far from having had an abundant Edition: current; Page: [175]harvest, the inhabitants were reduced to the necessity of buying seed-wheat. The noble marquis’s propositions did not appear calculated to remove the existing evils, but rather to confirm them. They would tend to encourage the agriculturist in speculating upon high prices, and would thus produce the same round of evils. He also objected, though in a less degree, to the propositions of his right hon. friend.1 His right hon. friend proposed a duty of 15s. on imported corn without any drawback upon exportation, the consequence of which would be, to make the price of corn in this country habitually 15s. higher than in foreign countries. Nobody had more clearly shown the evil of such a circumstance than his right hon. friend, and therefore he was exposed to the charge of inconsistency for having proposed a measure calculated to produce it. The drawback which he (Mr. R.) proposed, would operate in favour of the farmer when he would stand most in need of assistance. He declined entering upon the question of the currency, but he could not avoid making one observation on that subject. Some gentlemen seemed to think that the contraction of two or three millions of the currency had never before the present time taken place. In the report of the committee of 1797, it was stated, that in 1782—at which time the Bank paper in circulation did not amount to more than 8,000,000l. or 9,000,000l. in addition to coin—an actual reduction of 3,000,000l. of the amount of the money in circulation took place.

The debate was resumed on 8 May when Mr. J. Benett proposed a duty of 24s. on foreign wheat. Mr. Lockhart said, ‘he conceived the proposition of the hon. member for Portarlington was altogether unsound. It would have the effect of throwing much of the poor land out of cultivation; a measure so destructive to those interested in it, that had he not known the amiable Edition: current; Page: [176]disposition of that hon. member, he should be disposed to question his motives.’ Mr. Western said that it would be in vain to seek any remedy until they had repealed the Act of 1819. ‘He could not too often repeat that the higher the money price of corn the lower would be the labour price in real effect. By raising the money price of corn, they would practically lighten the weight of taxation, and reduce the real price upon the labourer.’ He would not refuse permission to import foreign grain, if the state of the country required its introduction; but it was most important not to be dependent upon other powers for any considerable share of the supply. Mr. Bankes said that a free trade ‘might be right, but it was not the system under which the country had acquired its wealth and power. That system was one of restriction, upon all articles of home produce, and upon none more than corn. They might be much wiser than their ancestors; but he was not disposed to consider them such fools as modern philosophy would make them out to have been.’ He thought ‘the country was more manufacturing than was good for it already’ and deprecated ‘the liberal doctrines of the day’. He concluded by reminding the House of the fable of the bundle of sticks; ‘if they became disunited, and suffered the political economists to pull one out of the bundle, they would all be broken. Let them look to agriculture as the chief stick, and protect it as far as lay in their power. But above all, let them continue to follow in the course by which their ancestors had made a small country become a great one’. Mr. Brougham had no objection to the principle of Mr. Ricardo’s resolutions, but he thought his permanent duty of 10s. too small. That duty was calculated on the ground that the farmer was peculiarly burdened to that amount by the tithes and poor-rates; but this was not all, because ‘the agriculturists, more than any other class, were affected by the taxes imposed on those commodities which were consumed by the labouring classes, because more labour was used in producing the same amount of produce in value by the farmer, than by the manufacturer, or any other individual.’

9 May 1822

9 May 1822

The debate being resumed, Lord Althorp moved as an amendment to Mr. Ricardo’s resolutions that a fixed duty of 20s. per quarter be imposed on the importation of wheat (instead of 20s., decreasing in ten years to 10s.) and a bounty of 18s. per quarter be allowed on exportation (instead of 7s.).

Edition: current; Page: [177]

Mr. Ricardo was surprised at his noble friend’s proposing such an amendment. He could not see upon what principle his noble friend could justify raising the bounty on exportation to 18s. a quarter. For his own part, he did not think that any bounty would often be called into operation. Whenever it should, 7s. would be quite enough. His noble friend, the learned member for Winchelsea,1 and the hon. member for Corfe-castle,2 both agreed in one objection against his resolutions—that he had not made sufficient allowances for the effect of indirect taxation on the agricultural interest, which, according to their statement, was more affected by it than any other interest. Their statement to a certain extent, might be true; still he thought they had exaggerated. The principle upon which he had made his calculations was, that the price of every commodity was constituted by the wages of labour, and the profits3 of stock. Now, the noble lord’s argument was, that in manufactured commodities the price was constituted of only a small portion of wages, and a large portion of the profits of the stock; whilst, in agricultural commodities, the case was exactly the reverse. If the noble lord could substantiate such a proposition, he would agree that he was entitled to the allowance he demanded.4 All that he doubted was, whether the fact were so. He doubted whether the proportion of labour was greater in agriculture than in manufactures. The right way of coming to a sound determination upon that point was, by considering in what the dead capital of both consisted. If he could show that the dead capital in Edition: current; Page: [178]agriculture bore the same proportion to its whole capital, that the dead capital in manufactures did to its whole capital, then he thought that his noble friend’s proposition would no longer be valid. His learned friend, the member for Winchelsea, had said, that almost all the produce of the land was made up of labour. His learned friend, however, seemed to have forgotten that there was a great deal of capital in buildings, in horses, in seed in the ground, besides in labour. It was true that the manufacturer had a great proportion of his capital in his machinery; but, even though that were taken into consideration, he must still say, that the proportion of his noble friend was not made out so clearly as it ought to be; and that he was therefore only entitled to a small allowance. Now, in allowing a duty of 10s., he thought that he had made an ample allowance; and he had made that allowance, too, on the principle, that all the poor-rates as well as all the tithes fell exclusively upon the agricultural interest. He now stated, however, that the agricultural interest was not entitled to the full allowance of all the poor-rates, inasmuch as a part of them was paid by the manufacturers, although much the greater part, he would allow, was paid by the agricultural classes. He was persuaded that if he had kept to that principle, the allowance to the agricultural interest would not have been more than 7s. Now, he had allowed them a duty of 10s., and therefore, in the 3s. that there was over, he had made ample compensation for any errors that he might unintentionally have committed. He would now say one word to the hon. member for Corfe-castle (Mr. Bankes), regarding the lecture which he had read him (Mr. R.) upon political economy. The hon. member had talked much of the wisdom of our ancestors. He willingly allowed that there was much wisdom in our ancestors: but at the same time he must ever contend, that the present generation had all their wisdom and Edition: current; Page: [179]a little more into the bargain. [Hear, hear.] If the argument of the hon. member were to be considered as valid, there was an end at once to all hopes of future improvement. The present generation had invented steam-engines and gas-lights, and had made several other useful and beneficial discoveries, and he trusted that they would never be stopped in their progress to knowledge by being told of the wisdom of their ancestors, or be convinced that they were in the most flourishing condition possible because the system of their ancestors was called most wise and excellent. Undoubtedly this country was a great country, and had of late years increased its capital to a great extent. But in arguing upon that point, the hon. member for Corfe-castle might as well have employed this argument as the one which he had used; he might as well have said, “We have increased in wealth, whilst we have been contracting a great national debt; therefore, the national debt is a great blessing, and it would be a bad thing to get rid of it.” [Hear, and a laugh.] That argument was quite as valid as the argument which the hon. member had actually used.—The hon. member then proceeded to state, that one argument urged against a free importation of corn, which appeared to him not to deserve the slightest attention, was this—that England ought not only to be a self-supplying, but also an exporting country. Now he wished to press one point upon their consideration, and that was—that it was the great interest of a country which grew a commodity for the use of another, to keep the market open for the sale of it. Now, if we were to raise a large supply for the purpose of sending our raw produce to a foreign country, in what a situation should we be placed if the market were to be shut against it? What a glut would then be forced into the home market! He would contend, that the ruin which such an event would produce, would be so great that no minister, Edition: current; Page: [180]nor sovereign, would be able to remedy it. The hon. member for Corfe-castle had also lamented that we were becoming too much of a manufacturing country. The hon. gentleman might, perhaps, think that a manufacturing country could not be so happy as an agricultural country. But he might as well complain of a man’s growing old as of such a change in our national condition. Nations grew old as well as individuals; and in proportion as they grew old, populous, and wealthy, must they become manufacturers. If things were allowed to take their own course, we should undoubtedly become a great manufacturing country, but we should remain a great agricultural country also. Indeed, it was impossible that England should be other than an agricultural country: she might become so populous as to be obliged to import part of her food; but instead of lamenting over that circumstance, he should think it a proof of prosperity and a subject of congratulation. There would always be a limit to our greatness, while we were growing our own supply of food: but we should always be increasing in wealth and power, whilst we obtained part of it from foreign countries, and devoted our own manufactures to the payment of it. The hon. member for Corfe-castle had asked, whether our farmers were to be transformed into manufacturers, and our ploughmen into mechanics? From that question, any stranger who had walked into the House might have supposed that a proposition had been actually made to throw open our ports, and to change all at once our entire course of policy. But had any proposition of that nature been even hinted at? The hon. member for Oxford (Mr. Lockhart) had done him the honour of stating, that he believed that he (Mr. R) would not willingly inflict misery upon his country; but had added that he believed his resolutions would have such a tendency. But when he proposed a monopoly for the Edition: current; Page: [181]agriculturist up to 70s. (and the hon. member for Wiltshire1 admitted that 67s. was a remunerative growing price), and a duty of 20s. on the first opening of the ports, and a gradual reduction of it to a fixed and permanent duty of 10s., could it be fairly said that he was proposing a scheme to turn the capital of the country from agriculture to manufactures? It had been well observed by an hon. member, that it was totally impossible that the direction of our capital could be changed in that manner. The security against it was to be found in the necessity of our growing our own corn—a necessity which would always prevent us from becoming too much of a manufacturing country. The fact was, that his resolutions, if adopted, would gradually employ a small portion more of the capital of the country in manufactures, of which the result would be beneficial to all classes of the community, as it was only by the sale of our manufactures that we were enabled to purchase corn.—He had never heard any answer attempted to his argument respecting the miserable situation into which the farmer would be plunged under a system of protecting duties. The high prices of corn exposed the farmer to great and peculiar risks. Now, none of the representatives of the agricultural interest in that House had ever ventured to assert that the farmer was not liable to the risks which he had pointed out as likely to arise from the variation of prices: none of them had attempted to show that his view of the danger was absurd and chimerical; and, as they had not done so, he was greatly confirmed in that view which he had originally taken. The hon. member for Wiltshire had stated, that we could obtain a large supply of foreign corn at 25s. per quarter. Now, he held in his hand a letter from Mr. Solly,2 in which that gentleman declared, that in all Edition: current; Page: [182]the evidence which he had given before the committee, he had not spoken of the then accidental price, but of the remunerating price, on the continent; and his learned friend (Mr. Brougham) had justly observed, that it was the remunerating price on the continent that regulated the price here. Now, he believed that his learned friend had understated that remunerating price. His learned friend had stated it at 45s.; he believed it to be 10s. more; for his learned friend had made no allowance for the profits of those who brought it here, which, in the opinion of Mr. Solly, were at least 6s. a quarter. The chief reason, however, for his mentioning the letter of Mr. Solly was, that Mr. Solly had said that Memel (from which one of the witnesses before the committee had derived his information) was not a port from which any great quantity of corn was shipped—not above 20,000 quarters a year, and that of inferior quality. Now, he wished to ask the House, if not more than 20,000 quarters were shipped from Memel, and those too of an inferior quality, whether such a fact would justify them in passing such a legislative measure as his hon. friend had proposed? The assertion, therefore, that foreign corn could be obtained at 25s. per quarter, was unworthy of attention for a single moment.—The only farther observation which he had to make was, with regard to what had fallen from the noble marquis.1 The noble marquis had said, that the measures which he had recommended to the House had been carried in the committee, almost without a dissentient voice. Now, he (Mr. R.) had stated his opinions in the committee, and for the sake of his own character and consistency, he would take the liberty of restating them to the House. He had gone into that committee with the opinion that the agricultural classes were in a state of great and overwhelming distress—that any Edition: current; Page: [183]relief which could be held out to them, ought to be held out —and that he would give them such relief; but on condition, that he should, in his turn, receive a pledge that some better measures of legislation should be instantly resorted to. He had been disposed to give the agriculturists every thing they required. They had a prohibition at present; and they could not have more. Indeed, he had been ready to adopt any proposition that the committee might originate, so long as the committee expressed a willingness to propose some more salutary measures of legislation to the consideration of parliament. The committee had held out to him a hope that they would do what he advised; they told him that they would insert something in their report which would satisfy him upon that point; and, in consequence of that declaration, he had given a conditional assent to the measures they had proposed. When he saw the report, and found that it contained no such clause as he had anticipated, the conditional assent that he had given to their propositions was immediately dissolved; and he refused to concur in the report of the committee, because it contained nothing of the nature which he had hoped it would contain. The hon. member for Hertford1 had said, that the evidence of those persons who imported corn was to be taken with some allowance, because their views of interest, however honest the individuals might be in intention, were likely to bias them. He did not mean to quarrel with that observation; for in most cases he allowed it to be well founded. He wished, however, to be permitted to apply it to those who had to decide in that House upon this most important subject. Let him remind them, that they had a great interest in it; let him caution them not to be led away—not to be improperly biassed—by any views of their own personal advantage. Let him implore them to recollect Edition: current; Page: [184]that they were legislating for the happiness of millions, and that there was no evil so intolerable as the high price of human food. [Hear!] He was astonished to hear the hon. member for Essex1 declare, that it was matter of indifference to him whether prices were high or not; and that he wanted to have corn for little labour and for low prices. He went along with the hon. member in that sentiment; but then he was astonished to find, that the hon. member, when they came to a measure that was calculated to give them low real prices, flew off in an opposite direction, and declared that we ought to grow our own corn, and that it was only upon particular occasions that we should suffer it to be imported. Such a declaration, if acted upon would render it impossible to obtain low prices in a country increasing in population like our own: indeed, the only way of getting low real prices, with which he was acquainted, was, to divert part of the capital of the country in such a way as to increase its manufactures.

After further debate. Mr. Western said that in the present state of the currency he would refuse to legislate on the question of corn. ‘Were not the prices of corn on the continent, for the last twenty-five years, estimated in our paper currency, and, therefore, liable to all its fluctuations?... Would it not, then, be unwise to look at those prices as the foundation of any prospective regulation?’

Mr. Ricardo denied that the price of corn on the continent was liable to the fluctuations of our currency.

The committee then divided on Lord Althorp’s amendment, to fix a permanent duty of 18s. on wheat: For the amendment, 24. Against it, 201.

A second division took place on Mr. Ricardo’s propositions for a duty of 20s. per quarter of wheat, when the price shall rise above 70s., to lower 1s. a year for ten years, and for 10s. being the permanent duty, and 7s. the bounty afterwards: Ayes, 25. Noes, 218.

Edition: current; Page: [185]
  • list of the minority

  • Athorp, lord
  • Birch, Jos.
  • Brougham, H.
  • Barnard, lord
  • Beaumont, T. W.
  • Becher, W. W.
  • Carter, J.
  • Davies, col.
  • Denison, W. J.
  • Evans, W.
  • Haldimand, W.
  • Hume, J.
  • Lamb, hon. G.
  • Lamb, hon. W.
  • Langston, J. H.
  • Marjoribanks, S.
  • Maberly, J.
  • Newport, sir J.
  • Philips, G.
  • Rumbold, C. E.
  • Robinson, sir G.
  • Smith, G.
  • Scarlett, J.
  • Thompson, W.
  • Whitmore, W. W. Teller
  • Ricardo, D.

The committee then divided on the Marquis of Londonderry’s resolutions: Ayes, 218; Noes, 36.1

13 May 1822

13 May 1822

When the report of the committee on the Marquis of London-derry’s resolutions was brought up, Mr. Western referred to ‘the hasty and peremptory contradiction he had received on a former night on the subject of prices from the hon. member for Portarlington.’ Mr. Philips hoped ‘that his hon. friend (Mr. Ricardo) would bring forward his resolutions year after year; convinced that time would prove the correctness of his positions. The more his hon. friend was known, the more he would be respected, and the more universally recognized, by all who had sense or candour, as one of the most original and wisest writers, and one of the soundest thinkers on the subject of political economy.’

Mr. Ricardo, in explanation of the allusion which had been made to his statement of the average prices of foreign corn, by the hon. member for Essex, begged the House would bear in mind, that there were two authorities on that subject that were quoted from, who differed much in their items. The calculations of Mr. Solly were made in conformance Edition: current; Page: [186]with the variations of our paper currency, and were, therefore, always higher than those of Mr. Grade, who made his calculations upon a fixed exchange. He had built his argument on the latter, and it would be found that whilst he was quoting from one paper, the hon. gentleman was quoting from another, and thus the misunderstanding arose. He therefore hoped he should be acquitted of any intention to mislead.

Mr. Attwood controverted in detail Mr. Ricardo on this point, and launched into another attack upon Peel’s Act of 1819. Mr. Peel replied to Mr. Attwood’s attempt to ‘overwhelm him with his sarcasm’ that ‘as he was to share that sarcasm with his hon. friend, the member for Portarlington (if he might be permitted, on account of the respect which he felt for that hon. gentleman’s great talents and high character, to use a term which he certainly had no right to use from long intimacy with him), he would only observe, that he was willing to share it, so long as he shared it in such company.’

Mr. Ricardo then submitted his resolutions for the sake of having them recorded on the Journals. Mr. Ricardo’s resolutions were negatived; the resolutions of the Marquis of Londonderry were then agreed to.

[See further, on the corn bill, below, p. 195.]

16 May 1822

ABSENTEES 16 May 1822

Sir T. Lethbridge presented a petition from 600 respectable inhabitants of Somerset, praying for a tax on absentees who had taken up their residence in foreign parts. He said that it was calculated that in Paris alone there resided 10,000 families of English, Irish and Scots; they were spending large sums and by transferring the money to France they gained an advantage of 25 per cent.

Mr. Ricardo wished to set the hon. baronet right, as to the state of the exchange, which was now, he could assure Edition: current; Page: [187]him, very nearly at par; and it was impossible it could be far otherwise, because with a metallic circulation in this country and in France, the exchange could never vary more than from ½ to ¾ per cent. As to the petition, he should be sorry to see its prayer granted; because a tax on the property or income of absentees, would hold out a direct encouragement to them to take away their capital, as well as their persons. Now, we had at any rate their capital, which was useful, though not so useful as if they also stayed at home. What most surprised him was, that the hon. baronet should bring such a petition forward, at the very time that he was proposing in the agricultural committee a resolution which might make all the articles of life, and provisions in particular, attainable at the dearest rate.1 The hon. baronet was for high duties; the imposition of which would be the readiest means of compelling people of small fortunes to quit the kingdom. Of all the evils complained of, he (Mr. R.) was still disposed to think the corn laws the worst. He conceived that were the corn laws once got rid of, and our general policy in these subjects thoroughly revised, this would be the cheapest country in the world; and that, instead of our complaining that capital was withdrawn from us, we should find that capital would come hither from all corners of the civilized world. Indeed, such a result must be certain, if we could once reduce the national debt—a reduction, which, although by many considered to be impracticable, he considered by no means to be so. That great debt might be reduced by a fair contribution of all sorts of property—he meant, that, by the united contribution of the mercantile, the landed, and he would add, the funded interest, the national debt might be certainly got rid of. If this were done, and if the government would pursue a right course of policy as to the corn Edition: current; Page: [188]laws, England would be the cheapest country in which a man could live; and it would rise to a state of prosperity, in regard to population and riches, of which, perhaps, the imaginations of hon. gentlemen could at present form no idea. [Hear, hear.]

17 May 1822


This bill had been introduced by the President of the Board of Trade in order to remove some of the restrictions on the trade of the West Indian and North American colonies: it allowed American ships to trade with certain ports, and it allowed British ships to export from the colonies direct to foreign countries, instead of through the United Kingdom. The debate however turned on the sugar duties, which favoured the West Indies against the East Indies. On the second reading Mr. Ellice spoke in support of the bill and referred to the injustice to which the West Indian planters and settlers had been subjected by the alteration in the currency.

Mr. Ricardo rose, in the first instance, to make one observation on the subject of the currency. Though the facts were not known to him, he could not help suspecting the correctness of his hon. friend, respecting the payments in the West Indies. That persons in the West Indies who, in 1815 paid a debt of 100l. with 155l. of their currency, should now have to pay 227l., while that currency was not itself altered in value, seemed to him incredible. He would go on, however, to another subject. If he had wanted an argument in favour of a free trade, he should not have gone farther than the speech of his hon. friend. He had painted the system exactly as it was. He had told them that the ship-owners were burthened with peculiar charges; that to compensate themselves for these charges, the ship-owners were allowed Edition: current; Page: [189]to saddle unnecessary expenses on the West Indians; that the West Indians were not allowed to refine their sugar, but were obliged to send it over with a quantity of mud, in order to employ and encourage our shipping; that they, in their turn, had a monopoly given them of the supply of the home market, where the consumer got his sugar burthened by the cost of all these charges. The system throughout was of the same nature. Vexatious and unnecessary burthens were cast upon one class, and that class was allowed to relieve itself by preying upon some other. An hon. member1 had put a very proper question; when he was told that the people of England were taxed for the sake of the West Indians, the hon. member had asked, who got this million and a half, when the West Indians could barely keep their estates in cultivation? No one got it. That was what he (Mr. R.) complained of. The people of England paid grievously for their sugar, without a corresponding benefit to any persons. The sum which they paid was swallowed up in the fruitless waste of human labour. The hon. member for London2 had said, that they should pay the same price for their sugar, whether they taxed it or not. Now it was not possible this could be the case. The hon. member might as well have said, that if they did not lay a tax on tea, the Chinese would raise the price of it equal to the present price burthened with the tax. The general principle that regulated price where free competition operated was, that a commodity would be sold as cheap as the producers could afford. Unless, therefore, our admission of the East India sugars could add to the cost of producing them, there could be no increase of price. The case of the West Indies was precisely similar to that of the corn laws. As in the latter case we were protecting our poor soil from the competition of the rich soil of other countries, so were Edition: current; Page: [190]we to protect the poor soil of the West Indies from the competition of the rich soil of the East Indies. The mischief in such cases was, that there was much human labour thrown away without any equivalent. He fully agreed, that there would be the greatest possible injustice in sacrificing the vested interests of the West Indies; but it would be cheaper to purchase our sugar from the East Indies, and to pay a tax directly to the West Indies for the liberty of doing so. We should be gainers by the bargain; because there would be no waste of human labour. As he thought a monopoly was a disadvantage on either side, he saw no reason for opposing the present bill, which approached, to a certain degree, to free trade. We could not too soon return to the sound principle; and if we once arrived at it the House would no longer be tormented with these discussions, and with constant solicitations to sacrifice the public good to particular interests.

20 May 1822


Early in the Session Mr. Wallace (Vice-President of the Board of Trade) had introduced the Navigation Act Amendment Bill, which removed many of the restrictive provisions of the Navigation Laws. On the report stage,

Mr. Ricardo considered it a happy omen that so many gentlemen were now of opinion that our system admitted of improvement. The only complaint he had against the bill was, that it did not go far enough.

[See further, below, p. 197.]

Edition: current; Page: [191]
24 May 1822


No contractors having come forward for the pensions plan approved by Parliament [see above, p. 160] the Chancellor of the Exchequer introduced a modified form of that plan. He proposed that the fixed annuity should be paid to trustees accountable to Parliament; that the trustees should undertake to pay the pensions; and that they should be empowered in each year to sell as much of the annuity (or otherwise borrow from the public) as was necessary to make up the deficiency. He announced that the sums released would be used for reducing the duties on salt (from 15s. to 2s. per bushel) and on leather, and for repealing the Irish window tax and the tonnage duty on ships. Mr. Hume moved as an amendment to the financial measures that the sums required be taken from the Commissioners of the National Debt instead of being raised by loan or annuities [cp. above p. 161].

Mr. Ricardo said, he was most ready to commend the conduct of ministers where he found it prudent and proper; and in the proposed remission of taxes he thought they had acted judiciously in listening to the general prayer of the people. But, when he offered this commendation, he must decline concurring in any terms of excessive gratitude. He confessed, that he owed no gratitude to ministers for giving the people what was, in fact, their own money. If, indeed, the ministers had framed any plan for giving the people any portion of money which did not really belong to them, then would be the time to offer them fervent gratitude. But he thought that ministers, in coming down with all that earnestness to announce the remission of taxes, had not dealt quite fairly with the House. It looked as if they wished to induce the House to assent to those parts of their proposition which were bad, under the cover of those parts which were good. Now, he thought it was the duty of that House to separate the bad from the good, and by its vote to get rid of the Edition: current; Page: [192]former altogether. Under that view, he should support the amendment. He regretted much that any portion of the salt tax was continued, he did not wish that any nucleus should remain, because they well knew with what vigour, under the management of the exchequer, it would spread. [Hear, hear.] As to the present plan for meeting the dead expenditure, it was nothing more or less than an annual loan, in the contracting for which either a profit or a loss, as in all other loans, must follow. To the public, then, at last they must go for that loan; and as there was no ascertained stock in which it was to be funded, it would be of course less marketable, and consequently a greater profit must be held out to the contractor. Why then not keep that advantage to the country? There was another fallacy: for as the period of 45 years approached to a termination, what was to prevent the chancellor of the exchequer of the day, from converting these annuities into a perpetuity? He did expect the vote of the hon. member for London.1 That hon. member had qualified his support to the former plan, by hoping that the chancellor of the exchequer would take advantage of the present high price of the funds, in making his bargain for the public. Now, by the proposed scheme, the sale of the annuities was to be annual, and of course the purchases. Being thus made from year to year, such sales and purchases must be subjected to the contingency of war, and the depreciation of the price of stocks. Besides, if the market failed the right hon. gentleman, he must issue Exchequer bills, and add to the unfunded debt. If war subsequently occurred, he would then have to fund at a greater expense.

Mr. Hume’s amendment was lost on a division and the resolutions were agreed to.

[See further p. 193 below.]

Edition: current; Page: [193]
31 May 1822

BANK CHARTER 31 May 1822

Mr. Grenfell presented a petition against the proposed renewal of the Bank of England charter [cp. p. 156, n. 3, above] and remarked on the ‘immense profits’ made by the Bank during the last twenty years and ‘their tyrannous conduct towards government and towards the public’.

Mr. Ricardo did not complain of the Bank directors for making the concern as profitable as possible; but he complained of ministers for having made such improvident bargains with the Bank, as to enable that establishment to make those enormous profits. He should oppose to the utmost the renewal of the Bank charter, because he was satisfied that every farthing made by the Bank ought to belong to the public. Even if a paper currency were wanted, ministers could accomplish the object more advantageously for the public without, than with the assistance of the Bank of England.1

3 June 1822


On the report stage of the revised measure, Mr. Hume having again moved his amendment [cp. above, p. 191], Mr. Grenfell said that should the amendment be rejected he would propose a clause empowering the Commissioners for the National Debt to purchase the proposed annuities. The Chancellor of the Exchequer acquiesced in this suggestion.

Edition: current; Page: [194]

Mr. Ricardo said, that the plan was neither more nor less than sending one set of commissioners into the market to sell stock, and another set into the market to buy stock; and even the chancellor of the exchequer now understood that fact so fully, that he was about to support a clause which would enable these two sets of commissioners to deal with one another. And here he would remind the House of an expression used by the right hon. gentleman on first bringing forth his plan. The right hon. gentleman then assured the House, that he was not so young in office, as to make a proposal to parliament unless he had good ground to believe that he could make a bargain upon the terms which he stated. And what had the right hon. gentleman done since? Why, he had been forced to tell the House, that there had been an error in his calculations—that he had never supposed that he could make a bargain with any body for 2,800,000l., but that the bargain would cost considerably more. Then look at the present situation of the country. The chancellor of the exchequer said, that the sinking fund was 5,000,000l. Yes; but he had for a long time maintained the delusion of its amounting to 16,000,000l. Now, as he had tardily acknowledged that the 16,000,000l. was a delusion, and that the real fund was only 5,000,000l., so he might hereafter acknowledge that the 5,000,000l. was a delusion, and that the fund was in reality only 3,000,000l. The plan of the hon. member for Aberdeen,1 was simple and easy to be effected; then why not adopt it, in place of such a complicated operation as that proposed by the chancellor of the exchequer?

Mr. Hume’s amendment was negatived. Mr. Curwen then moved as an amendment that the whole duty on salt be repealed. The Chancellor of the Exchequer opposed it and said that if the salt tax were repealed, either some new tax must be imposed or ‘the integrity of the sinking fund must be invaded [A laugh!].’

Edition: current; Page: [195]

Mr. Ricardo said, it was asserted by ministers that the annuity scheme was no infringement on the principle of the sinking fund. If so, instead of forty-five let the period of that scheme be extended to fifty or sixty years, and that would afford a sufficient sum to enable parliament to remit the whole of the salt duty.

Mr. Curwen’s amendment was negatived and the original motion agreed to. The bill was then passed.

[See further below, p. 281.]

3 June 1822


The new corn bill based on Lord Londonderry’s resolutions [cp. above, p. 155], having been brought in, Mr. Canning proposed the addition of a clause to allow the taking of foreign corn out of the warehouse for being ground into flour for exportation. Sir T. Lethbridge opposed the clause as likely to promote the introduction into the home market of foreign corn in the shape of flour.

Mr. Ricardo agreed, that if the clause could not be introduced with a full security against the flour coming into the home market it ought not to be admitted; but, if that security could be found, it would be most unjust to deprive the holders of foreign corn of it. He thought the bill of the noble lord would be a great improvement on the present law. The hon. member for Cumberland1 founded all his arguments on the value of corn in pounds sterling; but he (Mr. R.) did not regard the pound sterling. He was anxious that the people should have an abundant supply of corn and an increase of their comforts, and he thought a greater freedom in the trade calculated to produce those effects. He Edition: current; Page: [196]differed entirely from the hon. member, as to the ill effects which it would have upon the demand for labour.

The clause was agreed to.

On the question that 70s. be the permanent price at which wheat shall be imported, Mr. Whitmore moved to substitute 64s.; Mr. Wodehouse moved to substitute 75s.

Mr. Ricardo1 expressed his surprise at the proposition of the hon. member for Norfolk;2 since the most active supporters of the agricultural interest had declared that 67s. would afford adequate protection to the farmer. He thought the proposition of the hon. member for Bridgenorth3 deserving the support of the House. High protecting prices would only benefit the landlord at the expense of the rest of the community, not excepting even the farmer.

The original clause was agreed to.

Edition: current; Page: [197]
10 June 1822

10 June 1822

On the report stage, Lord Londonderry said that as there was so strong an opinion against the clause for grinding foreign wheat, he would oppose it.

Mr. Ricardo said, that unless the agriculturists could show that injury would arise to them from the adoption of the clause, parliament should not hesitate to give to the foreign importer the proposed relief.

The house divided on the clause: Ayes, 21; Noes, 116. Ricardo voted for the clause. The bill was then passed.

4 June 1822


Mr. Wallace moved the third reading of this bill [cp. above, p. 190].

Mr. Ricardo said the Right Honourable Gentleman opposite (Mr. Canning) had adverted to the improving state of the silk trade with Bengal, in consequence of the protecting duties afforded to it. If a partial impulse were given to the trade from such a cause, he (Mr. R.) should consider it rather a subject of regret than of satisfaction. It was curious to hear the contradictory statements which were advanced in that House; for it was at once contended that it was necessary to protect Agriculture, because the Manufacturers were protected, and that to take off protecting duties from the Manufacturers, was a measure highly detrimental to the Agricultural interest. It was impossible that both these propositions could be true. Edition: current; Page: [198]He should vote for the present Bill, and he gave his sincere thanks to the Right Honourable Gentleman opposite for the pains he had taken during its progress.

The Bill was read a third time and passed.

12 June 1822


On 11 June Mr. Western moved that a committee be appointed to consider the effect which the resumption of cash payments had had in producing the present agricultural distress. He concluded his speech by recommending a revision of the standard and the adoption of ‘a system which should give to the products of industry of every description the same relative money price, which they commanded during the suspension of cash-payments, and secure a fair and reciprocal remuneration for the general industry of the country.’ Mr. Huskisson moved as an amendment a resolution which had been adopted by parliament in 1696: ‘That this House will not alter the standard of gold or silver, in fineness, weight or denomination.’

The debate was adjourned to the following day when, after other speakers, Mr. Leycester said he would support the motion for a committee, although he must protest against any attack upon Mr. Peel’s bill, which he regarded as ‘a measure founded in wisdom.’ Mr. Haldimand noticed that many charges had been brought against the Bank, and said that ‘all of them appeared to him unfounded, save one;’ which was, ‘that the Bank of England, looking forward to the resumption of cash payments, had accumulated a large quantity of gold in its coffers, and by so doing had, as the hon. member for Portarlington observed, appreciated the currency.’ On the circulation of Bank paper he remarked, ‘that so long as the Bank was ready to pay its notes in gold, the House had no reason to complain whether there were five millions more or less of their notes in circulation.’

Mr. Ricardo1 said, that he agreed in a great deal of what Edition: current; Page: [199]had fallen from his hon. friend1 who spoke last, and particularly in his view of the effect of the preparations made by the Bank for the resumption of payments in specie; it was undeniable, that the manner in which the Bank had gone on purchasing gold to provide for a metallic currency, had materially affected the public interests. It was impossible to ascertain what was the amount of the effect of that mistake on the part of the Bank, or to what precise extent their bullion purchases affected the value of gold; but, whatever the extent was, so far exactly had the value of the currency been increased, and the prices of commodities been lowered. His hon. friend had said, that whilst the Bank was obliged to pay its notes in gold, the public had no interest in interfering with the Bank respecting the amount of the paper circulation, for if it were too low, the deficiency would be supplied by the importation of gold, and if it were too high, it would be reduced by the exchange of paper for gold. In this opinion he did not entirely concur, because there might be an interval during which the country might sustain great inconvenience from an undue reduction of the Bank circulation. Let him put a case to elucidate his views on this subject. Suppose the Bank were to reduce the amount of their issues to five millions, what would be the consequence? The foreign exchanges would be turned in our favour, and large quantities of bullion would be imported. This bullion would be ultimately coined into money, and would replace the paper-money which had previously been withdrawn; but, before it was so coined, while all these operations were going on, the currency would be at a very low level, the prices of commodities Edition: current; Page: [200]would fall, and great distress would be suffered.— Something of this kind had, in fact, happened. The Bank entirely mismanaged their concerns in the way in which they had prepared for the resumption of cash payments; nothing was more productive of mischief than their large purchases of gold, at the time to which he alluded. They ought to have borne in mind that, until the year 1823, the bill of his right hon. friend (Mr. Peel), did not make it imperative on the Bank to pay in specie.—Until the arrival of that period, the Bank were only called upon to pay in bullion, and in 1819, when the bill passed, their coffers contained a supply amply sufficient to meet all demands, preparatory to the final operation of the right hon. gentleman’s bill. That bill he had always considered as an experiment, to try whether a bank could not be carried on with advantage to the general interests of the country, upon the principle of not being called upon to pay their notes in coin, but in bullion; and he had not the least doubt that, if the Bank had gone on wisely in their preliminary arrangements—if, in fact, they had done nothing but watch the exchanges and the price of gold, and had regulated their issues accordingly, the years 1819, 1820, 1821 and 1822 would have passed off so well with the working of the bullion part of the plan, that parliament would have continued it for a number of years beyond the time originally stipulated for its operation. Such, he was convinced, would have been the course, had the Bank refrained from making those unnecessary purchases of gold which had led to so many unpleasant consequences. But it was said by his hon. friend (Mr. Haldimand), that the Bank had since 1819 kept up their circulation to the same level as before 1819, and that, therefore, they had not caused the favourable exchange, and the influx of gold. He denied this—he denied that their issues were now as large as in Edition: current; Page: [201]1819; but allowing, for the sake of argument, that they were so, he should still make it matter of charge against the Bank, that they had not increased their issues, so as to operate on the foreign exchanges, and prevent the large importations of gold. With reference to the conduct of the Bank on that occasion, it had been said on a former evening, by an hon. Bank director, (Mr. Manning), in the way of justification, that they were not left masters of their own proceedings— that the numerous executions for forgery throughout the country, had made the public clamorous for a metallic circulation so as in a measure to compel the Bank to precipitate the substitution of coin for their one and two pound notes; but the Bank lost the benefit of this argument, by the opposition which they made throughout the discussions of the committee and the House in 1819, against every description of metallic payments.—He believed, indeed, that after they had accumulated gold in large quantities, they thought it expedient to substitute it in the form of coin for the one and two pound notes, and also for the reason which they had given; but this consideration did not lead them to limit their issues and to purchase the large quantities of gold; and it was of the effect of such limitation and of those purchases which he complained, and against this charge they had made no defence, nor could they make any. After their remonstrances to the committee, and to the chancellor of the exchequer, on the subject of the ill consequences of restricting their issues, why did they promote the evil which they deprecated—why make those purchases for amply filled coffers—why take a step so inevitably leading to mischief? He could ascribe it to one cause only, namely, that they were ignorant of the principles of currency, and did not know how, at such an important moment, to manage the difficult machine, which was intrusted to them. He was surprised, after what had Edition: current; Page: [202]been said by the hon. member for Shaftesbury (Mr. Leycester), of the character of Mr. Peel’s bill, that he should have come to the conclusion of voting for the appointment of a committee. If the past measures, so far as parliament had acted in this bill, were right, for what purpose was the committee? The declared object of the motion was to alter the standard, and he could not see, how, after the hon. gentleman’s argument in favour of adhering to the present standard, he could vote for a motion tending to such an alteration. It had been said by his hon. friend the member for Newton (Mr. H. Gurney), that they had begun at the wrong end— that they should in the first instance, have called on the private bankers to pay their notes in specie, and afterwards on the Bank of England to pursue the same course. Such a proposition, he thought, would have been absurd. The Bank of England had the power, by regulating its issues, of depreciating or increasing the value of the Bank note just as they pleased—a power which the country banks had not. The Bank of England could depreciate, as was the case in 1812 and 1813, their one pound note to the value of 14s., or they could increase it to the value of two sovereigns by an opposite course, provided the Mint, by coining, did not counteract their operations. It was impossible, therefore, and if even possible, it would be most unjust, to require private banks to call in their notes and to pay in specie, leaving at the same time this great Leviathan, the Bank, to continue its paper issues at will, and not subject to the same metallic convertibility.

In touching upon this subject, he must say that his opinion had been much misunderstood, both within and without the walls of parliament; and if it were not too great a trespass upon the indulgence of House, he should wish to take this opportunity of explaining himself. In doing so he could not Edition: current; Page: [203]do better than refer to an observation which had fallen from the hon. alderman (Heygate) in the course of the debate. He had said, that if gold were the index of the depreciation of the currency, then his (Mr. Ricardo’s) argument founded upon it might be good, and that the sacrifice of 3 or 4 per cent in establishing the ancient standard was small in the estimate of the advantages attending it: but he (the hon. alderman) did not concur in the opinion, that gold was the index of the depreciation of the currency. Now, the whole difficulty in reference to this part of his opinions was, as to the meaning of the word “depreciation:” it was quite evident that the hon. alderman and himself attached a different sense to that word. Suppose the only currency in the country was a metallic one, and that, by clipping, it had lost 10 per cent of its weight; suppose, for instance, that the sovereign only retained 9-10ths of the metal which by law it should contain, and that, in consequence, gold bullion, in such a medium, should rise above its mint price, would not the money of the country be depreciated? He was quite sure the hon. alderman would admit the truth of this inference. It was quite possible however, that, notwithstanding this depreciation, some of those general causes which operate on the value of gold bullion, such as war, or the mines from which gold is annually supplied becoming less productive, that gold might be so enhanced in value, as to make the clipped sovereign comparatively of greater value in the market than it was before the reduction in its weight. Would it not then be true that we should possess a depreciated currency, although it should be increased in value? The great mistake committed on this subject was in confounding the words “depreciation” and “diminution in value.” With reference to the currency, he had said, and he now repeated it, that the price of gold was the index of the depreciation of the currency, not the index Edition: current; Page: [204]of the value of the currency, and it was in this that he had been misunderstood. If, for instance, the standard of the currency remained at the same fixed value, and the coin were depreciated by clipping, or the paper money by the increase of its quantity, five per cent, a fall to that amount and no more, would take place in the price of commodities, as affected by the value of money. If the metal gold (the standard) continued of the same precise value, and it was required to restore the currency thus depreciated five per cent, to par, it would be necessary only to raise its value five per cent, and no greater than that proportionate fall could take place in the price of commodities. In these cases he had supposed gold always to remain at the same fixed value; but had he ever said that there were not many causes which might operate on the value of gold as well as on the value of all other commodities? No, he had not, but just the contrary. No country that used the precious metals as a standard, were exempted from variations in the prices of commodities, occasioned by a variation in the value of their standard. To such variations we had been subject before 1797, and must be subject to again, now that we have reverted to a metallic standard. In the plan which he had proposed, there was nothing which could cause a demand for gold, and therefore he had been justified in anticipating a variation in the price of commodities, from adopting it, of only five per cent, the then difference between the value of gold and of paper. If, indeed, it had been necessary to purchase gold in order to revert to a metallic standard, then he would allow that a greater difference than 5 per cent would take place in prices, but this was wholly unnecessary; because we had adopted a gold standard, were we therefore to be exempted from those variations in the prices of commodities which arose from the cheapness of their production at one period compared with Edition: current; Page: [205]another? Was the discovery of new improvements in machinery, or a superabundant harvest, or any of those general causes which operate to reduce price, to have no effect? Were the injudicious purchases of the Bank to have no effect on the value of gold? Did he deny that in the present state of the world, the occurrences in South America, might have impeded the regular supply of the precious metals to Europe, have enhanced their value and affected the prices of commodities all over the world.

It had been imputed to him that he entertained the extravagant idea, that if a metallic standard was adopted, from that moment commodities were never to vary more than 5 per cent. A proposition so absurd he had never maintained—his opinion on that subject had never changed, and, if not intruding too much on the time of the House, he would quote a passage from a pamphlet he had published in 1816, on the subject of his plan of bullion payments, to show the House what that opinion had then been:—

“When a standard is used, we are subject only to such a variation in the value of money as the standard itself is subject to; but against such variation there is no possible remedy; and late events have proved that, during periods of war, when gold and silver are used for the payment of large armies, distant from home, those variations are much more considerable than has been generally allowed. This admission only proves that gold and silver are not so good a standard as they have been hitherto supposed; that they are themselves subject to greater variations than it is desirable a standard should be subject to. They are, however, the best with which we are acquainted. If any other commodity less variable could be found, it might very properly be adopted as the future standard of our money, provided it had all the other qualities which fitted it for that purpose; but while these Edition: current; Page: [206]metals are the standard, the currency should conform in value to them, and, whenever it does not, and the market price of bullion is above the Mint price, the currency is depreciated.”1

Such were the arguments he had always used, and he still adhered to them. He hoped the House would pardon this personal reference to his own opinion: he was very averse from intruding on their patience; but he was as it were put upon his trial—his plan had not been adopted, and yet to it was referred the consequences which were distinct from it; and he was held responsible for the plan that had been adopted, which was not his, but was essentially different from it. Such was the singularity of his situation, and if the House would indulge him by permitting one more reference to his opinions expressed in that House in the year 1819, he should have done with that part of the argument which was strictly personal. What he had said in his speech, during the former discussion of Mr. Peel’s bill (and he quoted it now from the usual channel of information—the Reports), was this, “If the House adopted the proposition of the hon. gentleman (Mr. Ellice),* another variation in the value of the currency would take place, which it was his wish to guard against. If that amendment were agreed to, an extraordinary demand would take place for gold, for the purpose of coinage, which would enhance the value of the currency three or four per cent in addition to the first enhancement.”2 “Till October, 1820, the Bank need make no reduction, and then a slight one; and he had no doubt that, if they were cautious, Edition: current; Page: [207]they might arrive at cash payments without giving out one guinea in gold. The Bank should reduce their issues cautiously, he only feared they would do it too rapidly. If he might give them advice, he should recommend to them not to buy bullion, but even though they had but a few millions, he would boldly sell.”1 Such were his expressions in 1819. Had his recommendations been adopted? No. Why, then, was he to be held chargeable for results over and above the effect of raising the currency from the actual state of depreciation at which it stood at the time?

Having explained these personal allusions, he should now say a little upon the general question, which had not, in his opinion, been very fairly argued. A constant reference had been made to the extreme point of the depreciation in the currency, which they knew occurred in the year 1813; and Mr. Peel’s bill had been argued upon as if it had been passed in that year, and had caused all the variation which it was acknowledged had taken place in the currency from that period to the present time. This was a most unfair way of arguing the question, for to Mr. Peel’s bill could only be imputed the alteration which had taken place in the currency between 1819 and the present period. What was the state of the currency in 1819? It was left entirely under the management and control of a company of merchants—individuals, he was most ready to admit, of the best character, and actuated by the best intentions; but who, nevertheless—and he had declared plainly his apprehensions at the time—did not acknowledge the true principles of the currency, and who, in fact, in his opinion, did not know any thing about it. This company of merchants were, then, invested with the management of the great and important concern on which the welfare of the country, and the stability of its best interests, Edition: current; Page: [208]materially depended. They were the men who had the power of making their one pound note worth 14s. or 17s. or 18s. or 19s., as it had successively been, under their guidance, between the years 1813 and 1819. In the latter year, and for four years previous to it, the system had so operated as to bring the currency within something like 5 per cent of its par value. The time was then favourable for fixing a standard which was likely to save the country from the vacillation of such a system as that which had previously so much affected it. The time had then arrived (in 1819) for fixing a standard, and the only consideration was as to the selection of the particular standard which ought to be adopted. They had two courses of proceeding open to them on that occasion; one was either to regulate the standard by the price of gold at the moment, or to recur to the ancient standard of the country. If, in the year 1819, the value of the currency had stood at 14s. for the pound note, which was the case in the year 1813, he should have thought that upon a balance of all the advantages and disadvantages of the case, it would have been as well to fix the currency at the then value, according to which most of the existing contracts had been made; but when the currency was within 5 per cent of its par value, the only consideration was, whether they should fix the standard at 4l. 2s., the then price of gold, or recur at once to the old standard. Under all the circumstances, he thought they had made the best selection in recurring to the old standard. The real evil was committed in 1797, and the opportunity of mitigating its consequences was lost by the conduct subsequently pursued by the Bank; for even after the first suspension, they might, by proceeding upon right principles in managing their issues, by keeping the value of the currency at or near par, have prevented the depreciation which followed. It might be asked how they Edition: current; Page: [209]could have done so? His reply was, that quantity regulated the value of every thing. This was true of corn, of currency, and of every other commodity, and more, perhaps, of currency, than of any thing else. Whoever, then, possessed the power of regulating the quantity of money, could always govern its value, and make the pound note, as he had said before, worth fourteen shillings or two sovereigns, unless the mint, by opening to coin for the public, counteracted the operation of the Bank issues. By pursuing a wise and prudent course, the Bank might have so regulated its affairs, as to have prevented the currency from sustaining any depreciation from 1797 downwards; they might, in fact, have governed the market-price of bullion, and the foreign exchanges; but, unfortunately, they had not taken the steps necessary for that purpose.

With respect to the bill of 1819, he must say, that he never regretted the share which he had taken in that measure.— [Hear, hear.] Remarks had frequently been made upon an opinion which he (Mr. Ricardo) had given of the effect which had been produced on the value of gold, and therefore on the value of money, by the purchases made by the Bank, which he had computed at five per cent, making the whole rise in the value of money ten per cent. He confessed that he had very little ground for forming any correct opinion on this subject. By comparing money with its standard, we had certain means of judging of its depreciation, but he knew of none by which we were able to ascertain with certainty alterations in real or absolute value. His opinion of the standard itself having been raised five per cent in value, by the purchases of the Bank, was principally founded on the effect which he should expect to follow, from a demand from the general stock of the world of from fifteen to twenty millions worth of coined money. If, as he believed, there Edition: current; Page: [210]was in the world twenty times as much gold and silver as England had lately required to establish her standard on its ancient footing, he should say that the effect of that measure could not have exceeded five per cent. The hon. member, who had brought forward this motion had disputed the propriety of the standard recognized by Mr. Peel’s bill, and contended, that the value of corn would have formed a better and more fixed standard. His reason in support of such an opinion was, that the average price of corn, taken for a series of ten years, or for longer periods, furnished a standard less liable to variation than the standard of gold. He did not perfectly comprehend that part of the hon. member’s argument. Either he meant that the country ought to have a fixed metallic standard, regulated by the price of corn each year, as deduced from the average of the ten previous years, or else by an average for ten years, determinable at the expiration of every ten years. Now, in any way in which the average could be taken, according to either plan, there would be a sudden and considerable variation in the value of the currency. To-day, for example, the standard might be fixed with reference to the price of corn, when its average price was 80s. per quarter, and to-morrow, if that were the period for correcting the standard of money by such a regulation, it might be necessary to alter it to 85s. or 90s., thus causing a sudden variation in all money payments from one day to another. [Mr. Western here signified his dissent.] He was extremely sorry to have mistaken the hon. member, and he would not press this part of his argument. He must, however, say, that to take the average price of corn, as the best measure of value, was a most mistaken principle. The hon. member had, indeed, quoted in support of such a measure of value, the concurring authorities of Locke and Adam Smith, who had asserted that the average price of corn, during a period Edition: current; Page: [211]of ten years, was a less variable standard than gold; and in support of the opinion, the prices taken according to such an average were quoted. But the great fallacy in the argument was this—that, to prove that gold was more variable than corn, they were obliged to commence by supposing gold invariable. Unless the medium in which the price of corn is estimated could be asserted to be invariable in its value, how could the corn be said not to have varied in relative value? If they must admit the medium to be variable—and who would deny it?—then what became of the argument? So far from believing corn to be a better measure of value than gold, he believed it to be a much worse one, and more dependent upon a variety of fluctuating causes for its intrinsic value. What was the real fact? In populous countries, they were compelled to grow corn on a worse quality of land than they were obliged to do when there was not the same demand for subsistence. In such countries then, the price must rise to remunerate the grower, or else the commodity must be procured from abroad by the indirect application of a larger capital. There were many causes operating on the value of corn, and therefore making it a variable standard.—Improvements in husbandry; discoveries of the efficacy of new manure; the very improvement of a threshing-machine, had a tendency to lower the price. Again, the different expense of production, according to the capital necessary for cultivation, and the amount of population to be supplied with food, had a tendency to augment the price. So that there were always two causes operating and contending with each other, the one to cheapen and the other to increase the price of the commodity; how, then, could it be said to furnish the least variable standard?—[Hear, hear.] It was a part of Adam Smith’s argument that corn was a steadier criterion, because it generally took the same quantity Edition: current; Page: [212]to furnish one man’s sustenance. That might be; but still the cost of production did not the less vary, and, that must regulate the price. Its power of sustaining life was one thing: its value was another. He fully agreed with the hon. member for Essex,1 that there were various causes operating, also, on the value of gold, some of which were of a permanent, and others of a temporary nature. The more or less productiveness of the mines were among the permanent causes; the demands for currency, or for plate, in consequence of increased wealth and population, were temporary causes, though probably of some considerable duration. A demand for hats or for cloth would elevate the value of those commodities, but as soon as the requisite quantity of capital was employed in producing the increased quantity required, their value would fall to the former level. The same was true of gold: an increased demand would raise its value, and would ultimately lead to an increased supply, when it would fall to its original level, if the cost of production had not also been increased. No principle was more true than that the cost of production was the regulator of value, and that demand only produced temporary effects. The hon. member (Mr. Western) had entered into elaborate statements of the amount of taxation at different periods, estimated in quarters of wheat, and from this statement he inferred an enormous fall in the value of money. Now, if these calculations, and the mode of applying them, were of any value, they must apply at all times as well as at the present. Let the hon. member, then, extend his calculations a little over former times, and see how his reasonings applied. If reference were made to three particular years which he should name, the hon. gentleman’s calculation would look a little differently to what it did at present. The price of wheat was, in 1796, 72s. Edition: current; Page: [213]per quarter; in 1798 (only two years afterwards) it fell to 50s.; in 1801 it rose as high as 118s.—[Hear!]. This was the enormous fluctuation of only three years. Here, then, the House had the experience of so short a period as three years, and of the variations of price in that time. The hon. gentleman, in his argument, had assumed, that the price of wheat was to be permanent as it now stood. He (Mr Ricardo) thought it was by no means likely to be permanent; he anticipated that it would rise; and, indeed, if the present was not a remunerating price, it was impossible that it should not rise; for in no case would production go on, for any considerable length of time, without remunerating prices. The alteration in the price of the quarter of wheat, then, in three years, was as the difference between 50s. and 118s. But, in 1803, the price fell again to 56s. In 1810 it attained 106s. and in 1814 was reduced to 73s. The variations, in short, were infinite and constant—[Hear!]. Then, with regard to the price of flour, he had ascertained, that in the year 1801, in the month of July, the Victualling office at Deptford paid 124s. for the sack of flour. In December of the same year they paid only 72s. In December, 1802, they paid for the same commodity and quantity, 52s.; in December, 1804, 89s.; and in subsequent years the price per sack was successively from 99s. to 50s., in short, as uncertain as possible. All these details tended to show that the price of corn was perpetually fluctuating and varying; and it would only be wonderful if such were not the case. The hon. gentleman had said, that he hoped no member of that House would, with a contrary conviction on his mind, refuse, from motives of mistaken pride or prejudice, to acknowledge any former error into which he might have fallen in the consideration of these subjects. He (Mr. R.) could assure the hon. gentleman, that so far as he himself might be supposed to be concerned, he Edition: current; Page: [214]would not allow any foolish pride of the sort to operate with him. The hon. gentleman had remarked, at some length, on the evidence which had been furnished to that House by Mr. Tooke, with respect to the effect of an abundance of commodities lowering prices. Those prices were said to have fallen considerably more than ten per cent; but Mr. Tooke expressly said, that of the commodities he mentioned, there was not one, for the depreciated value of which, when it exceeded ten per cent, he could not well account.1 The quantity of all articles of consumption which had been brought into our markets, during the time of which that gentleman spoke, exceeded the quantity furnished in any former period; and there were some of the imported articles, the prices of which had continued to fall ever since, as sugars and cotton. But surely this could not be matter of surprise, when the House looked at the augmented quantity. The hon. gentleman had dwelt much on the injury which he conceived the country had sustained in consequence of loans that had been contracted for, at periods when the prices of the public funds were low, and which were now to be redeemed when the prices were high; and to make the disadvantages still more apparent, the calculation of the hon. gentleman was made in quarters of wheat at the corn prices of those times. The hon. gentleman said, “in order to pay that stock at the present value of money, I require such an additional number of quarters of corn.” Any body who heard the hon. gentleman’s speech would naturally have supposed that the rise in the price of the funds was necessarily connected with the increased value of the currency. But this could not be so; if the value of the currency had any thing to do with it, the contrary effect would take place. But the alteration in the Edition: current; Page: [215]value of the currency had nothing to do with this question; if the dividends were paid in a more valuable medium, so was the price of stock estimated in the same valuable medium; and if the dividend were paid in the less valuable medium, so also was the price estimated in the like medium. During the American war, the three per cent consols were as low as 53; and afterwards they rose to 97. At that time there had been no tampering with the currency. What, therefore, could the value of the currency have to do with the price of the funds? If a man wanted money upon mortgage now he could raise it at four per cent; whereas, during the continuance of the late war, he not only gave seven or eight per cent, but was obliged to procure the money, after all, in a round-about manner. The whole of the argument might be reduced to the statement of a single fact, which was this—they who invested sums of money in the funds at this day would get a low interest in return; those who had invested during the war had obtained a large interest.—With respect to an argument which had been advanced by the hon. member for Shrews-bury (Mr. Bennet) he could not concur in it. It was contended by his hon. friend, that the whole loss on the recoinage of money in king William’s reign, when it was restored from a depreciated to a sound state, was about two millions and a half; and he estimated the inconvenience and loss to individuals at that sum. But his hon. friend forgot that contracts in all countries existed in a much larger proportion than money, and consequently the loss must have been much greater than his hon. friend had estimated. The contracts might, in fact, be twenty or fifty times the amount of money, and therefore the interests of particular parties would have been affected accordingly. It was quite clear, that any alteration effected in the value of currency must of necessity, now as well as at all other times, affect one party or the other to Edition: current; Page: [216]such contracts; but this was an effect perfectly natural and inevitable.

To recur to the question before the House, he must say, that the motion of the hon. member for Essex was calculated to awaken and renew the agitation, which he had hoped would, ere this, have subsided. It was calculated to do much mischief—[Hear!]. If there were any chance of the hon. gentleman’s motion obtaining the support of the House, its success must be attended with the effect which, on the preceding evening, his right hon. friend (Mr. Huskisson) had ably pointed out. Every person would be eager to get rid of money which was to be rendered liable to an excessive and immediate depreciation. Every one would be anxious to withdraw it, as it were, from a currency of which he must anticipate the fate; he would be directly embarking it in gold, ships, goods, property of any kind that he might deem more likely to retain a steady value than money itself. He (Mr. R.) believed that the measure of 1819 was chiefly pernicious to the country, on account of the unfounded alarms which it created in some men’s minds, and the vague fears that other people felt lest something should occur, the nature of which they could not themselves define. That alarm was now got over; those fears were subsiding; and he conceived, that as the depreciation in the value of our currency, which a few years ago was experienced, could not possibly return upon us in future, if we persevered in the measures we had taken, it would be the most unwise thing in the world to interfere with an act, the disturbance of which would unsettle the great principle we had established. He did flatter himself, that after the suffering which the country had undergone, in consequence of the Bank Suspension bill, a measure of a similar character would never again be resorted to. His hon. friend (Mr. Bennet) had stated, that the depreciation in the Edition: current; Page: [217]value of the currency was in 1813 about 42 per cent. He thought his hon. friend had much overstated the amount of the depreciation. The highest price to which gold had ever risen, and that only for a short time, was 5l. 10s. per ounce. Even then the Bank-note was depreciated only 29 per cent, because 5l. 10s. in Bank-notes could purchase the same quantity of goods as the gold in 3l. 17s. 10½d. of coin. If, then, 5l. 10s. in Bank-notes was worth 3l. 17s. 10½d. in gold, 100l. was worth 71l., and one pound about fourteen shillings, which is a depreciation of 29 per cent, and not 42 per cent, as stated by his hon. friend. Another way of stating this proposition might make it appear that money had risen 42 per cent; for if 14s. of the money of 1813 were now worth 20s., 100l. was now worth 142l.; but as he had already observed, nothing was more difficult than to ascertain the variations in the value of money—to do so with any accuracy, we should have an invariable measure of value; but such a measure we never had, nor ever could have. In the present case, gold might have fallen in value, at the same time that paper-money had been rising; and therefore, when they met, and were at par with each other, the rise in paper-money might not have been equal to the whole of the former difference. To speak with precision, therefore, of the value of money at any particular period, was what no man could do; but when we spoke of depreciation, there was always a standard by which that might be estimated. Another argument of his hon. friend1 greatly surprised him: he objected to the amendment of his right hon. friend (Mr. Huskisson), because it did not give him sufficient security that the standard would not be at some future time altered. He appeared to fear that recourse might, on some supposed emergency, again be had to the measure of 1797. In short, his hon. friend was for adhering Edition: current; Page: [218]to the standard fixed by Mr. Peel’s bill; and yet, in the same breath, added, as it appeared to him (Mr. R.) most inconsistently, that he would vote for the motion of the hon. member for Essex, which professedly went to alter that standard.

After several other speeches, the House, at three in the morning, divided: for Mr. Western’s motion, 30; against it, 194. Mr. Huskisson’s amendment was then agreed to.

17 June 1822


Mr. Littleton presented a petition ‘from the miners, iron-makers, and coal-masters of Dudley, praying that the House would enjoin a more strict observance of the law, which directs that labourers should be paid only in money, and not in provisions or other commodities.’

Mr. Ricardo thought it impossible to renew so obnoxious an act. Mr. Owen prided himself upon having introduced the provision system. He had opened a shop at New Lanark, in which he sold the best commodities to his workmen cheaper than they could be obtained elsewhere; and he was persuaded that the practice was a beneficial one.

20 June 1822


Sir N. Colthurst moved ‘that an additional duty of 10s. per cwt. be imposed on foreign butter imported into this country.’ Mr. Robinson opposed the motion.

Mr. Ricardo said, the Irish gentlemen complained of want of protection, but what their rule of protection was he could not imagine. In this instance they had a protecting Edition: current; Page: [219]duty of 25s. per cwt.; but he supposed they would not be satisfied unless they had a complete monopoly of the trade. In his opinion, the proposition ought to have been the other way. Parliament ought to be called on to get rid of this protecting duty by degrees1, by which means the trade would be rendered really beneficial to the country. The House was assailed on all sides for protecting duties. One day they were assailed by the butter trade, then by the dealers in tallow, then the West India planters complained, and the shipping interest also demanded legislative interference. But what did Adam Smith, that great and celebrated writer, say on this subject? His words were—“Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident, that it would be absurd to attempt to prove it. But in the mercantile system, the interest of the consumer is almost constantly sacrificed to that of the producer; as if production and not consumption were the end of all industry and commerce.”2 No man could doubt the truth of this proposition. With respect to the application now made to the House, it was founded on a petition from the city of Dublin, which falsely stated, that the trade in butter had fallen off considerably. So far from that being the fact, it was, with the exception of one or two years, one of the greatest years of exportation that had ever occurred.

The motion was negatived.

Edition: current; Page: [220]
21 June 1822


Mr. Wallace moved that the consideration of this bill [see below, p. 275] be postponed till next session.

Mr. Ricardo expressed his regret, that the right hon. gentleman had been induced to postpone this measure. He hoped he would take into his serious consideration the state of the silk trade, which was now labouring under peculiar disadvantages, and which might compete successfully with foreign countries, if the present high duties, which gave so much encouragement to contraband traffic, were reduced. The Spitalfields act was another grievance to which this trade was exposed, which he hoped government would see the necessity of repealing.1

1 July 1822

THE BUDGET 1 July 1822

The Chancellor of the Exchequer having brought forward the Budget,

Mr. Ricardo said, that the chancellor of the exchequer had held out great hopes of what was to be expected from the sinking fund, and had stated, that a mere accident only had prevented all those hopes from being realized this year, but that next year we should receive its full and effective benefits. He (Mr. R.) feared, however, that we should go on as we had done, and that some accident or other would continue to prevent us from enjoying those benefits which the chancellor Edition: current; Page: [221]of the exchequer had so flatteringly held out. If the committee took the account in the way in which the chancellor of the exchequer wished them to view it, there would appear a surplus of 5,000,000l. this year, and, that in 1824 there would be a surplus of 6,000,000l. The right hon. member had, however, come at last to that point from which he (Mr. R.) wished to start, namely, that without a surplus of revenue over expenditure there could be no real or effective sinking fund. Now let the committee observe the manner in which the chancellor of the exchequer had made out the existence of such a surplus in the present year. He said that we had a surplus of 4,961,000l. But, how stood the fact? Taking the total exchequer deficiency at 14,144,000l. and deducting it from 15,481,000l., the sum to meet it, there would remain only 1,400,000l. as a real and effective sinking fund this year. “Oh!” said the chancellor of the exchequer, “We have by accident to pay the Bank 530,000l. this year, but next year we shall have no such incumbrance, and therefore our surplus will be complete.” He wished to know by what process of calculation the chancellor of the exchequer could make out his 5,000,000l. this year? The revenue of the country was 53,087,000l., the expenditure was 51,119,000l. making a surplus of 1,968,000l.; this appeared to be the entire surplus of the year; but “No,” said the chancellor of the exchequer, “we have 700,000l. saved by the alteration of the five per cents.; we have also to make allowance for 2,600,000l. received.” How this could be brought in under the head of surplus revenue he could not perceive. A sum of five millions might be easily made out; but would the committee call it a surplus of revenue? Then, again, the right hon. gentleman stated, that in 1824 there would be a surplus of 6,000,000l. But how was it to be obtained? It was to be obtained by taking credit for 4,875,000l. which was to be received from Edition: current; Page: [222]the trustees of half-pay and pensions. Now he would ask, whether there were no payments to be made on the other side of the account? The chancellor of the exchequer must know, that money so obtained could not be looked upon in the light of receipts at all. The receipts in 1824 were calculated at 52,400,000l. and the expenditure at 50,600,000l. so that the real surplus on the 5th Jan. 1824, would be 1,800,000l. He agreed, with his hon. friend (Mr. Ellice) respecting the im-policy of diminishing our funded, while we increased our unfunded debt. He should recommend a diametrically opposite course of proceeding. Adverting to what had been said relative to the Bank having reduced its rate of interest,1 he expressed his satisfaction at having heard the chancellor of the exchequer say, that the usury laws were unfair.2 There was no period at which an alteration in those absurd laws could be so properly and effectively introduced as the present, when they were, in fact, a dead letter, the market price of the loan of money being lower than the legal price. But he could not believe, that the reduction of interest made by the Bank had any general effect upon the value of money in the market, or upon the price of land, or of any commodity. If the Bank had doubled its circulation, it still would have no permanent effect upon the value of money. If such a thing had taken place, the general level of interest would be restored in less than six months. The country only required, and could only bear, a certain circulation; and when that amount of circulation was afloat, the rate of interest would find its wholesome and natural level. Undoubtedly he was very glad to hear that the Bank had at length begun to discount at 4 per cent.; and Edition: current; Page: [223]he thought they should have done so long before. Had they persisted in demanding 5 per cent, they would have been without a single note to cash.1

10 July 1822


Mr. Western, pursuant to notice, introduced his resolutions on the state of the currency; but, several members being absent, he proposed to move the first seventeen now, without debate, and to bring forward the last one on a future day.

Mr. Ricardo said, he could not agree to any of the resolutions in their present form; several of them contained mistakes in fact, and all of them were pervaded by an erroneous principle.2

Mr. Huskisson strongly objected to the postponement of the discussion. Mr. Western then proceeded with his motion.

Edition: current; Page: [224]

[The text of Western’s Resolutions given below is taken from Ricardo’s copy of the original parliamentary paper, which was annotated by him apparently for use while speaking, and which is preserved among his papers; Ricardo’s underlinings and the marginal comments written on this copy are also reproduced.1]


1st. true 2d. —not true 3d:

Descriptive of the distressed state of the Agricultural part of the country;—the effects of the altered state of the Currency on the general amount of Taxation; and the relative situation of the Public Creditor and the Public, under such altered state of the Currency.

True, but by what caused. What suffering would there have been had there been no taxes.

1.—THAT the Select Committee appointed last Session to inquire into the petitions complaining of the distressed state of the Agriculture of the United Kingdom, reported, That it was with deep regret they had to commence their Report by stating, that in their judgment the complaints of the petitioners were founded in fact, and that at the price of corn, at that time, the returns to the occupiers of arable farms, after allowing for the interest of their investments, were by no means adequate to the charges and outgoings; and that a considerable portion thereof must have, therefore, been paid out of their capitals:— That the price of grain having experienced a still further depression, viz. from 55s. 6d. per quarter of wheat to 45s.; and all other grain and all other articles having undergone a similar or greater decline, the insufficiency of the receipts of the farmers to cover their charges must be proportionably increased, which is further confirmed by the numerous petitions on the table of the House, representing in the strongest terms their aggravated and excessive distress; and that in consequence thereof, the labourers in many Edition: current; Page: [225]districts are destitute of employment and the consequent means to purchase food, and have broken out into acts of violence and aggression, and for which the lives of some have been forfeited under sanction of the law.

Is it possible justly to ascribe the distress in Ireland to any thing connected with the currency.

2.—That it appears by the papers relating to the state of Ireland, laid before this House by His Majesty’s command, that serious disturbances had broken out in that country, of which the demand and collection of rents had been, on the part of the insurgents, the alleged causes; and subsequent information has been received, that the labourers in agriculture, from a partial failure in the crop of potatoes, together with a total want of employment, and consequent means to purchase other food, are in the most calamitous and deplorable situation; and that many have died from the want of nourishment, whilst the price of provisions still continues so low, as not to afford to the occupiers of land the means of defraying the various charges to which they are subject.

No such words in the Report. not true

3.—That in the same Report of the Select Committee of last Session, it is stated, “that the measures “taken for the restoration of the currency have con“tributed to lower the price of grain and other com“modities generally, and consequently to cause a “severe pressure upon the industry of the country, and “not only to have occasioned a proportion of the fall “of prices here, but to have produced a similar, “though not equal, effect in other countries; and, in a “degree, to have deranged the markets of every part “of the civilized world.”—That in proportion as all commodities, whether the produce of the soil, manufactures or commerce, have experienced a depression of their money value; so must the proprietors have suffered a direct injury; and whatever may be the degree, it is impossible that the commercial and manufacturing classes of the community can long continue to prosper, whilst the cultivators of the soil are rapidly sinking into ruin and decay, and the labourers suffering in consequence of the want of their usual employment.

Edition: current; Page: [226]
Not before 1800 An important admission.1 4. 6. 8—10 p.c. 4. 11. 2. or 15 p.c. depreciation. 13° bushels 1797 to 1816 8 bushels ⅞ bushel

4.—That soon after the passing of the Act of 1797, by which the Bank of England was restricted from paying its notes in specie, the antient metallic standard of value having been thus departed from, the currency of the country, composed of bank notes, became depreciated, which depreciation was evinced, and may be estimated by the amount of bank paper money above 3l. 17s. 10 d. necessary to purchase anounce of gold; and which fluctuating from that sum to 5l. 11s. was, on the average of eighteen years to 1816, 4l. 10s. 10d. thence to 1819, 4l. 1s. and the last 10 years of the war, 4l. 16s. 1d. That this depreciation may be further and more accurately estimated by the price of commodities, particularly of wheat, at different periods, by which it will also appear, that the value of gold was reduced by the issue of paper, which became its nearly exclusive substitute; that the price of wheat, according to the Eton College tables, upon the average of 150 years prior to the commencement of the late war, whether calculated in periods of 10 or 50 years, had not exceeded 46s. per quarter, and an ounce of gold would consequently, during all that time, exchange for 13 bushels and a half; that from 1797 to 1816, the average price of wheat fluctuated from 50s. to 125s. per quarter, the average of the last eight years of the war being 101s. 9 d. and the average of the whole period 81s. 10d. and an ounce of gold would therefore only exchange for 8 bushels seven eighths; that the price of grain thus became, in its nominal or money value, nearly double its amount at any former period; the rent of land and commodities acquired a similar additional value, and consequently all possessors of fixed incomes sustained an injury to the extent of such alteration.

Wheat 10 years ending 1735—1.15.2 1745—1.12.1 1755—1.13.2 1795—2.14.3 Rental annihilated Paying off debt.

5.—That the average price of wheat between the years 1797 and 1819 having been, therefore, in that currency about 80s. per quarter, existing leases were formed according thereto; that the average price since 1819 has been 55s. 6d. and last year and this, about 50s.; that, upon the supposition of rent being Edition: current; Page: [227]estimated at one fourth, or two eighths of the gross produce, it is evident, at the price of 50s. being a reduction of three eighths, that so much of the money value of the gross produce is annihilated, as constitutes the present entire rental of the kingdom, and likewise so much of the receipts of the occupier as amount to one eighth; that the tenant is, therefore, liable to utter ruin if held to his engagement, or the landlord to the loss of his income, subject, at the same time, to the payment of all charges and settlements increased in their amount in the ratio of the increased nominal or money price of grain and other commodities; and in case of mortgage to the extent of half the value, at that period, a reduction of rent in proportion to the fall in the money price of produce, places the mortgagee in full possession of the estate.

—doubled. —That war increased taxes, very true, but what is the inference were they increased to the injury of a particular class

6.—That, from the year 1797 to 1816, the country was, with short intervals, engaged in a war of unprecedented expense; the taxes were quadrupled, as well as county and parochial assessments, and a heavy public debt created: That this period was at the same time distinguished by extraordinary efforts of national industry, applied to its agriculture, manufactures and commerce, by a facility and extension of credit in all those branches, giving more immediate activity to capital, and a consequent extent and complication of money engagements beyond all former precedent: That the national debt, which on the 5th of January 1793, was 227,989,148l. at an annual charge of 8,911,050l. progressively increased to the amount of 795,312,767l. of capital of various denominations, on the 5th of January 1822, at an annual charge, inclusive of terminable and life annuities, of 30,015,785l.; and the total of taxes, which on the 5th of January 1793, amounted to 17,656,418l. 11s. 3d. progressively increased, till in the year 1815, it amounted to 78,431,489l.: That, subsequent to the war, it has been reduced; and the total on the 5th of January 1822, was 60,671,025l.

Why calculate this in money at any other rate than£3. 17. 10½ £4. 10. 10.1

7.—That this taxation has acquired an additional weight by the Act of 1819, and the measures preparatory thereto, the degree of which can in part be Edition: current; Page: [228]ascertained by a comparison of the price of gold, but more justly by the money price of commodities, by which the real value of all payments must be determined: That the equivalent in gold to 60,671,025l. was, in the former period, 13,358,934 ozs.; and, in the present, 15,657,246 ozs.; or in current money of the former period, 71,109,992l.; and that taxation is therefore further and unjustly increased, as paid in gold, 2,298,312 ozs. or 10,438,067l. in money.

8. That the average price of wheat of the former period having been 81s. 10d. per quarter, the equivalent of the taxes in wheat was 14,228,155 quarters; and the price, since 1819, having been on an average 55s. 6d. the equivalent at that price is 21,863,720 quarters; or, in money, 89,459,050l. and the increase of taxation paid in wheat is consequently 7,035,565 quarters, equal to 28,787,233l.

9. That it appears from various evidence, given in successive Committees appointed to consider the petitions of the agriculturists, that the wages of labour of an able husbandman, did, during the former period, amount to 15 or 16s. per week; and that, at 15s. the labour of 5,000,000 of persons for 15 weeks, was then equivalent to the discharge of the present taxes: That the price of labour being now reduced to about 9s. per week, the labour of 27 weeks of the same number of persons is now necessary; and which, at 15s. per week, amounts to 101,150,000l.; and that taxation paid in labour is consequently increased to the amount of 40,468,175l.

10. That it appears by a comparison of the official and declared value of exports of British commodities, that in the year 1814, the declared value of the exports was 47,859,388l. and the official value 36,120,733l. being 32 per cent. of the declared above the official value; and that in 1821, the quantity in official value amounted to 40,194,893l. and the declared value to 35,826,083l. being 11 per cent of the official above the declared, making a total decline in Edition: current; Page: [229]value of 43½ per cent, and the general price currents exhibit a similar decline: That the total amount of taxation in commodities, is therefore equivalent to 87,003,397l. of the former period, and the increased taxation paid in commodities to 26,331,572l.

Report allows the depreciation + read this

11.—That the further reduction of wheat from 55s. 6d. to 45s. and other agricultural produce, together with any further decline in the money wages of labour, and price of commodities, additionally increases the burden of taxation, as well as all other charges, both public and private, upon the property and industry of the country to an extent proportionate to such further reduction;—and that as wheat never exceeded, upon the average, the present rate in the old money standard, it must be expected that it will on an average there remain, unless enhanced by scarcity; and that the price of commodities, and wages of labour will continue at the money value they now bear, or be further reduced.

What effects? why those which have been enumerated.

12.—That such effects could not by possibility have been in the contemplation of the legislature, still less of the people of England, at the time of the passing the Act of 1819:—That its destructive consequences are now visible—that individuals held to their contract, either have been or must be ruined; an unexampled revolution of property follow, and the burthens of taxation become absolutely intolerable.

154 millions paid for Sinking fund.

13.—That by the Parliamentary Paper, No. 145, of the present Session, columns 1 and 2, it appears, that from the 5th of January 1798, to the 5th of January 1816, the sum of 459,630,826l. of money, including bills funded, was paid into the Treasury on account of loans, for which an annual charge for interest and annuities was created of 23,860,020l. which sum converted into a three per cent capital, is equal to 795,334,000l.

Outrageous Undue gain! Why undue? When land rose was that an undue gain?

14.—That the average price of gold having been during that period 90s. 10d. the equivalent in gold to the money so lent and capital created, was 101,203,117 ozs.; and the 3 per cent stock being now at 80, the said capital is equal to 140,095,550 ozs. of gold, at the Edition: current; Page: [230]before-mentioned average price of 90s. 10d. and that at the present price of gold of 77s. 6d. to 163,407,306 ozs.: the difference, being 23,311,836 ozs. constitutes an undue gain to the public creditor, at the expense of the public, equal in money to 110,974,694l.


15.—That the average price of wheat having been during the above period 81s. 10d. the equivalent in wheat to the money so lent was 112,333,400 quarters; and the price of 3 per cent stock being now 80, and wheat at the same average, the equivalent would now be 155,533,185 quarters; but at 55s. 6d. the average price since 1819, it is equal to 229,285,478 quarters, or in money, 938,159,330l. being an increased gain of 73,782,215 quarters by the alteration of the currency, or in money 301,892,228l.

Annual charge not 23 but 13 mill. Is this true? Yes, on the supposition that the loans were made in the same medium.

16.—That the annual charge of 23,860,020l. created in the period above stated, was equal to 5,253,502 ozs. and is equal to 6,127,174 ozs. being an increase of 874,192 ozs. or 3,403,886l.: That the above annual charge in wheat was equal to 5,831,370 quarters; is, at the average since 1819, equal to 8,600,000 quarters, or in money 35,196,666l. being an increased gain of 2,799,000 quarters, or in money of 11,328,311l. and that by comparison with commodities and labour, in the proportion of difference of their money value in those two periods, an equally undue advantage to the public creditor is proved to have been given at the charge of the public.

Here is an admission. ¼ of a century 1809. £4.—.8.

17.—That all public creditors prior to 1798, and others subsequent, have suffered in proportion to the depreciation that followed their respective loans; that they are therefore entitled, in strict justice, to be paid in money, of value equal to that of those periods, and be indemnified for the diminished value of their income during the interval: That many of those creditors having probably in such a length of time, sold their stock and purchased property, have since undergone another and more fatal injury, by the restoration of the old currency, and consequent diminution of the value of their property so bought; —on the other hand, those who lent their money Edition: current; Page: [231]when the currency was depreciated below the average of the whole period, gained a further undue advantage than is shown by the foregoing statements; and the depreciation was at its greatest extent during the latter years of the war, when the largest proportion of money was lent, and capital created; in addition to which the public have, upon very advantageous terms to the stockholder, redeemed a larger capital debt than existed prior to 1797.

18. That under all these circumstances, it is evidently and indispensably necessary to take into immediate consideration the destructive effects that have arisen out of the alterations made in the currency, by the Acts of 1797 and 1819, as well respecting the enormous public burthens created and so augmented by the Act of 1815, as the revolution of property in the vast and complicated intercourse of individuals throughout this country occasioned thereby; in order that, by a final arrangement of the currency, as equitable to all parties as circumstances will admit, or by a reduction of taxation equal to the advance occasioned by the Act of 1819, together with the establishment of some principle for the adjustment of private contracts, justice may, as far as possible, be administered to all, and the country saved from a revolution of property, and also from a pressure of taxation beyond the ability of the people to sustain.

[The speech is printed below for the first time from the original transcript in Ricardo’s handwriting, which has been found in the Mill-Ricardo papers. It is four times as long as the corresponding report in Hansard. It must have been written on 11 July, since early on the following day Ricardo left on his Continental Tour.1 The transcript is unfinished and the conclusion, as indicated below, is here taken from Hansard.]

The first Resolution having been put,

Mr. Ricardo said that if he failed to expose all the errors and fallacies in the Resolution which the honble. gent had Edition: current; Page: [232]submitted to the attention of the House it would be from his inability to give clearness to his thoughts and not because they did not contain errors and fallacies, for he had seldom seen so many contained in so small a compass. The honble. gent. appeared to think if he could shew that prices had undergone a considerable variation during the last 8 years that such alteration must necessarily be imputable to the act of 1819 for restoring the ancient standard of our money. He appeared to think that there was not, nor could be, any other cause for the variation of prices and that it was sufficient to shew that there had been a considerable fall in the prices of various commodities to justify him in proposing a revision of the standard of our currency with the express view of raising such prices. Even according to the Honble. le gentleman’s principles he was bound not only to shew that prices had fallen but that they had fallen in consequence of the measures which had been pursued to give us the benefits of a fixed standard. He had forgotten that at all times we had been liable to fluctuations of prices when we had not meddled with our standard, and what proof did the honble. gent offer that the present fall of prices might not be imputable to some of those general causes which operate on the value of commodities. Because the fund holder received the value of 13½ bushels of corn now for every sum of £3. 17. 10½ in which his dividend was paid, and had only received 7½ bushels for the same sum formerly was it to be inferred that the currency had varied in that proportion? If the argument were good for this country it was valid also for every other, but what would the honle gent. say if it were now proposed in the legislature of France to alter the standard of the currency because a given number of francs received by the public creditor would now purchase 50 or 100 pct. more of wheat than it would purchase in former years. He Mr. Ricardo Edition: current; Page: [233]would follow the honble. gentleman thro’ all his resolutions and he would with the indulgence of the House advert to them in their order. With respect to the distressed state of those connected with the agriculture of the country and which was stated in the first resolution there was no difference of opinion; unhappily it was too well established that such distress existed, but what they differed about was the cause of such distress—the honble. gentleman imputed the whole of it to the alteration in the value of the currency, whereas he and those who agreed with him without denying this as one cause of the distress mainly attributed it to the abundance of the quantity of produce. Corn might fall from various causes, from abundance, from improvements in agriculture which would lower the cost of production, from a deficient supply of the precious metals from the mines,—these were causes which might operate generally in all countries but they never had yet been made the foundation of a proposal for altering the standard of a currency. It must be remembered that the altering the standard of the currency could not affect the agriculturists as a class if they had no taxes to pay. The alteration might be beneficial or injurious to tenants during the continuance of their leases, contracted when money was of a different value, but in the same proportion would it be injurious or beneficial to the landlord with whom such agreements were made, and therefore the whole together would be as rich and no richer than before. This would be the case if we were an untaxed people but that not being the case the raising of the value of money was injurious to this class in proportion as the increased value augmented the taxation of the country. This effect however was general and not partial, and would operate on all classes alike. In his character of a payer of taxes it would operate on the stockholder equally as on all other classes. If then great as our Edition: current; Page: [234]taxation was we deducted the increased amount paid by the Stockholder, the increased amount paid by Merchants, Manufacturers and the possessors of all other property he left it to the house to determine whether the increased amount of taxation which fell upon the agriculture of the country in consequence of any probable alteration in the value of money was adequate to account for the very general distress of that class—to him it appeared impossible that such great effects could follow from such an inadequate cause, but the whole was explained on the supposition of a too abundant quantity of agricultural produce.

The second resolution of the Honble. gentleman referred to the distress in Ireland and he actually ascribed the famine which prevailed in that country to the alteration in the value of the currency. Could the honble. gent. seriously argue that the failure in the potatoe crop which he himself did not deny, to an altered value of currency? But says the honb.le. gentn. the people are dying for want of food in Ireland, and the farmers are said to be suffering from superabundance. In these two propositions the honble. gentn. thinks there is a manifest contradiction, but he Mr. R. could not agree with him in thinking so. Where was the contradiction in supposing it possible that in a country where wages were regulated mainly by the price of potatoes the people should be suffering the greatest distress if the potatoe crop failed and their wages were inadequate to purchase the dearer commodity corn? From whence was the money to come to enable them to purchase the grain however abundant it might [be]1 if its price still far exceeded that of potatoes. He Mr. Ricardo should not think it absurd or contradictory to maintain that in such a country as England where the food of the people was corn, there might be an abundance of that grain and such low Edition: current; Page: [235]prices as not to afford a remuneration to the grower, and yet that the people might be in distress and not able for want of employment to buy it, but in Ireland the case was much stronger, and in that country there could be no doubt there might be a glut of corn, and a starving people. So much for the second resolution.

The third resolution of the Honble. gentn. was founded on something which he said appeared in the report of the Agricultural committee, and he had marked it by inverted commas, which naturally led those who read it to conclude that the passage was an extract from the Report. A few words in the passage to which he was referring were written in Italics in order as it appeared to give them greater force; after speaking of the effects of the altered value of currency on the price of grain and other commodities the words in italics were these, “and consequently to cause a severe pressure upon the industry of the country”. He Mr. Ricardo was sure the honblb. gent would not knowingly make any misstatement and therefore he concluded it was the mistake of some one who had assisted him in drawing up these resolutions. It appeared that there were no words in the Report which answered to the quotation in this resolution—to much of it the spirit of the Report was at variance and in no part could he find any words which could justify even the inference of the words emphatically written in Italics. Mr. Ricardo here read a passage from the Agricultural Report. But he Mr. R had another observation to make on this resolution[;] it said “That in proportion as all commodities, whether the produce of the soil, manufactures or commerce, have experienced a depression of their money value, so must the proprietors have suffered a direct injury.” In this proposition he could not agree. It is not in proportion to the fall in the money value of commodities that the parties Edition: current; Page: [236]alluded to would be injured, but in proportion as the taxation which they may be called upon to pay shall be really increased by the rise in the value of money. Nothing can in itself be a matter of greater indifference to a producer of commodities than their money prices provided every thing alters at the same time and in the same proportion, and therefore the inference which the honble. gentn. draws and which he would have this house also draw is wholly without foundation.

I now come to the 4th. Resolution which is an important one, because in it the honble. gent admits that gold is the standard of this country and that the depreciation of paper money is to be estimated “by the amount of such paper money above £3. 17. 10½ necessary to purchase an ounce of gold” a doctrine which I have always maintained but which is now very often in this house and out of it called in question. In this Resolution it is asserted that “soon after the passing of the act of 1797 by which the Bank of England was restricted from paying its notes in specie, the currency of the country became depreciated”. It is only essential to examine into the correctness of this statement because the honble. gentleman in his speech founds an important argument upon it. He was fully aware that to his proposal for altering the standard on account of the benefit which the fundholder of a recent date derived from the increase in the value of money it would be objected to him that the fundholder of 1797 had been a loser in consequence of having received his dividend in a depreciated medium for several years and if compensation was to be made to one party who was the payer of taxes so also should it be made to the old stockholder who had suffered so great an injury. How does the honble. gentn. answer this objection? by denying the justice of his claim? no he admits it but he represents it as so old that it has become Edition: current; Page: [237]antiquated—a strange answer this and I should think that if his claim be a just one the circumstance of its being of 25 years standing does not weaken it. It can never be too late to do justice, but the fact is not as this resolution represents it, the paper money of the country did not become depreciated immediately after the act of 1797—it only began to be depreciated in 1800 and the average depreciation from 1797 to 1809 did not exceed 2½ pct., as measured by the average price of gold £4. —. 8. If then there was any weight in this argument of time, I think I shew that in this case length of time cannot be pleaded and if justice is to be done to one party injured so must it also be to another. On the whole I am prepared to shew that the account between the payers of taxes and the Stockholder is pretty nearly balanced, and that in reality the country is now no more loaded with taxes than it would have been if we had never departed from our metallic standard, but had uniformly adhered to the system which we so regularly followed up to1797. But of this I shall have occasion to speak hereafter. I shall consider the real question to be this—Is the agricultural interest in a worse situation than it would have been if neither of the 2 acts that of 1797 and that of 1819 had never been passed. Did he not in fact gain as much by the effects of the first of these acts as he has lost by the subsequent one? To the solution of this question I shall pay attention before I sit down. In this 4th. Resolution I see it asserted that the price of gold on an average of 18 years was £4. 10. 10. I believe this to be incorrect and that the average was about £4. 5. or £4. 6.—After having admitted that the price of gold was the measure of the depreciation, the honble. gent, in this resolution, recurs to the price of corn as measuring the depreciation. The honb.l gent in his speech said that he hoped he should not be answered by any attempt to shew Edition: current; Page: [238]that he might have been a little inaccurate in his statements of the price of corn, as he knew there would be a difference in the result whether the price was estimated from the Eton tables or otherwise; he, Mr. R, could assure the honbl. gent that he had taken no pains to discover such inaccuracies because he considered the price of corn as having nothing to do with this question. Corn was not now nor never had been the standard of the money of this or any other country. If it were a better standard than that which we possessed it might be a good reason for adopting it in future but hitherto it had not been the standard but gold had and therefore we were bound to measure our payments by gold and by nothing else. As he Mr. R had already observed if the argument from the number of qrs. of corn paid the public creditor now as compared to former years were valid here, it was also valid in France, and therefore tho’ France had uniformly maintained a metallic standard she might now justly alter the standard and pay the public creditor with a smaller number of ounces of silver because they were now equivalent to a greater number of bushels of wheat. Surely the House would not listen to such an argument, nor give countenance to so dangerous a principle. If the agriculturist thought wheat the proper standard, why might not another man think sugar such, or indigo, or cloth. Why might he not say I formerly paid the public creditor with so many pounds of sugar or yards of cloth and now I am obliged to give a greater number. What security have we that these various commodities may not vary in different directions some of them rising others falling. In such case by what rule should we determine to adopt one in preference to the other? But is the honble. gentleman prepared to go through with the standard which he himself proposes? I believe that the stockholder might safely close with the proposal if such were made Edition: current; Page: [239]to him. The average price of wheat for 30 years ending in 1755 was £1. 13. 4, but since 1755 the public creditor has not received within 50 pct. of the quantity of wheat to which he would have been entitled if wheat had been the standard. If the Honble. gentleman[’s] argument be a good one why should not the fundholder have made up to him the value of the amount of corn of which he has been defrauded since 1755 together with compound interest on the same. If corn is to be the measure now so ought it always to have been since the contraction of the public debt and if the honble. gentleman is not willing to admit this he should shew why he would have corn the standard when it is against the Stockholder and in favor of the agriculturists, and why he rejects the same measure when it is in favor of the Stockholder and disadvantageous to the landed interest.

Mr. Ricardo said that the 5th. Resolution also contained a fallacy because it supposed that from the circumstance of the fall in the price of corn and other produce being equal to that amount which formerly constituted rent, that therefore there could not by possibility be any rent at the present moment. This would indeed be true if all the charges of production as well as taxes were to remain at the same money value as before. But could this be the case? Was it possible to believe that with so immense a fall in the value of corn, the cost of production should not be reduced? Would not labour fall with the fall of raw produce? Would not seed and many other expences be also reduced? In fact the price of corn as affected by the currency was of no importance whatever to the agriculturist excepting as he was burthened with fixed money taxes, because all the charges on production would be in proportion to the variations in price from such a cause. This resolution speaks also of the increased charges on the land in consequence of mortgages and other debts being to Edition: current; Page: [240]be paid in money of an increased value. This was undoubtedly true but had not the landholder derived a benefit from this source when money was depreciating and if justice was to be done to all parties would he not have as much to pay on this account as he would have to receive. The kept his eye steadily fixed on the injury which the landed interest had recently sustained,—he wholly forgot the advantage which they had derived from the fluctuating value of money at no very remote period. The 6 th. Resolution of the Hon. gent. Mr. Western told us that during the war the debt had most enormously increased. No one could deny this fact: The war had been a most expensive one, but it left undecided whether that debt had been increased injuriously or unjustly to one particular class: That was the only point in dispute between the honle. gent and himself.

In the 7th. resolution the honbl. gent only asserts what is true that an increased debt must be paid with an additional number of ounces of gold, but in order to ascertain what amount of money such an additional quantity of ounces of gold is equivalent to, why should they not be estimated at the present value of gold, why should the honble. gentleman calculate it at the value of gold of a former period? He Mr. Ricardo must again observe that in proportion as the value of gold had been increased by the act of 1819, he acknowledged taxation had also been increased, but the question here again offered itself on which he should have to observe presently, had it been increased so as on the whole to impose an undue weight on the landed interest? On the 8th. Resolution he Mr. Ricardo should say little, because the honble. gentleman had laid no foundation whatever for his favorite standard of wheat, but if he had, he Mr. Ricardo was at a loss to know on what principle the additional quantity of wheat which the tax payers had to contribute should be estimated Edition: current; Page: [241]in the money price of a former period and not in the money price of the present time. Neither should he Mr. Ricardo make any remark on the 9th. Resolution because as wheat formed a material part of the value on which the wages of labour were expended it was to be expected that labour would vary with the price of wheat. In making labour the standard therefore the honbl. gent. had in fact repeated his former argument respecting a wheat standard. It was not a distinct commodity, affording an additional proof of the alteration in the value of money, but was most particularly governed by the price of wheat almost necessarily rising and falling with it.

In the 11th. Resolution the honble. gentleman assumes that wheat though not a remunerating price is to remain at its present price, but on what ground he has not indeed stated to the house. He Mr. Ricardo was wholly at variance with the honble. gent. on this point, he could not conceive it possible that corn would remain at its present depressed price if it were true as stated by the honb.l. gent. that if it did it could neither afford rent to the landlord nor profit to the farmer. He Mr. Ricardo was fully assured that on such conditions corn could not permanently be grown, and therefore the honble. gentleman’s premises were unfounded or his conclusion must be an erroneous one.

In the 12th. Resolution the House was told that in 1819 when it passed the act for the resumption of cash payments it could not foresee the effects which the former resolutions had enumerated. It would indeed have been strange if it could have foreseen effects which had previously occurred. These resolutions speak of the depreciation as being at its height in 1814. Much of the sufferings of the agriculturist had taken place before 1819 and could not have been the consequence of the act of that year. The question for the Edition: current; Page: [242]House to consider was the effect of the act of 1819. All the former variations in the currency the evils of which no one was more willing to admit than himself had taken place under a system which this act went to put an end to, and it was for putting an end to such a system that it had his warm approbation.—

He Mr. Ricardo had now to animadvert on the 13th. resolution which contained only the trifling error of 154 millions. He was ready to forfeit all the little credit which he might have with the house if he did not prove his assertion. —The honble. gentleman in this resolution has stated that from the 5th. of Jany. 1798 to the 5th. Jany. 1816 the sum of 459 millions of money had been paid into the treasury on account of loans, for which a capital of £795,334,0003 pct. stock was created,—that in payment of this sum a value equal to 101,203,000 ounces of gold was received and to pay the same capital in 3 pct. stock valued at 80 at the present moment 163,407,306 ounces of gold would be necessary: the difference being 23,311,836 ounces, which the honble. gent. goes on to say constitutes an undue gain to the public creditor at the expence of the public equal in money to 110,974,694£. The annual charge created by the debt contracted from 1798 to 1816 the honl. gent states at 23 millions. In the first place 459 millions were not raised from the public between 1798 and 1816 but 154 millions less than that amount. It is true that the loan contractors or stockholders paid the public 459 millions in a depreciated money during that period, but they received in payment of debt in that same money, during the same time, 154 millions, consequently only 305 millions was received, and an additional debt to that amount only was contracted. It was now acknowledged on all sides that the sinking fund was only a nominal one if it did not arise from a surplus of revenue above expenditure. Suppose that the Edition: current; Page: [243]Chancellor of the Exchequer of those days had acknowledged the delusion of the sinking fund, and had listened to the advice often given by his honl. friend Mr. Grenfell of making the sinking fund commissioners subscribe to the loans of the year how much would the contractors have then paid into the treasury? 305 millions and not 459 as stated by the honbl. gent. But the increased charge on the debt between the two periods is 23 millions says the honbl. gent. but what is the fact? it is only 13 millions. But in addition to these errors, and to swell the loss to the public, the honl. gentn. calls that an undue gain to the stockholder which arises from the difference between the price at which he contracted for the various loans during the war, and the present price of 80 to which the 3 pct. have risen after several years of peace. It is something new to hear this called an undue gain made by the stockholder. If the honbl. gentn. had bought an estate for £100,000 which he could now sell for £130,000 would he call the £30,000 an undue gain? If he had purchased French stock at 58 which has now risen to 90 would he call that an unjust gain? and [what]1 would he think of a French legislator who should seriously propose to diminish the payment to the stockholder on account of such rise? If such a plea was listened to there was an end of all security and good faith, and no man could safely for a moment enter into a contract if government were to consider the profit if he made any an unjust gain.

He Mr. Ricardo would only mention the 14 and 15 resolutions to shew the extravagant conclusions to which the honbl. gentleman had come. He had really submitted to the house a proposition that the stockholder had gained by the alteration in the value of the currency £301,892,000 between 1798 and 1816. The honbl. gentleman first states that the Edition: current; Page: [244]whole amount of money paid for loans during the above period was £459,630,000 which I have proved was in fact only 305,000,000 and yet on this sum he states him to have gained £301,000,000

[Ricardo’s own transcript breaks off here. The conclusion of his speech is reported in Hansard as follows.]

The hon. gentleman seemed to insinuate, that certain individuals were in the habit of making public attacks upon the landlords of this country. The charge could not be brought against him. It was true, he looked upon rents in the same light as he did every other article in the market, liable to fluctuations, and to be regulated according to the demand for the produce of the soil. He had never said that the country would be ruined by a superabundant supply;1 on the contrary, that the country would greatly benefit by that supply; the greater the supply the greater the comfort. Great supply induced low prices; low prices injured the grower, but gave an advantage to the country. It was not, however, that kind of advantage which he should wish it to possess. On the contrary, he would always wish to see the grower receive a fair remunerating price; because he was convinced, that all classes in the country would go on better and more prosperously when the farmer received a fair remunerating price. But a remunerating price had nothing to do with the state of the currency. If corn were down so low even as 20s. and the price of labour and all other outgoings were regulated by that price, the grower could go on paying his rent as well perhaps as when he received 80s. and when his outgoings were in proportion Edition: current; Page: [245]to that price.—With respect to the advantage that one class had gained over the other by the bill of 1819, he would say, that it certainly was impossible to tamper with the currency of a country, without producing such effects. The payers of taxes had lost at one period and gained at another, in consequence of the fluctuations of the currency; but it was quite remarkable to see how nearly at par stood the loss and gain. In his opinion, the great mischief sprung out of the original error, he meant the bill of 1797.—That was the great error— the measure of 1819 was the remedy. The House acknowledged the mischief of the measure of 1797, and they were bound to support the bill of 1819, which was only intended to remedy the original error. If the House at a fatal moment interfered with that bill, what would be the consequence— what would be the state of London the next day? What wild speculation—what ruin would follow! So strong were the evils that would follow such a step, that he anticipated from that House its decided negative to the motion of the hon. member.

After several other speeches, of some of which, ‘from the lateness of the hour, no report has been preserved’ (Hansard ), the resolutions were negatived; and at four in the morning the House adjourned.

[The session closed on 6 Aug. 1822.]

Edition: current; Page: [246]


The King’s speech on the opening of the session was delivered on 4 Feb. 1823.

12 February 1823


Mr. Wallace (the retiring Vice-President of the Board of Trade) moved for the revival of the committee on foreign trade of the previous session.

Mr. Ricardo rose for the purpose of paying his tribute of respect to the merits of the right hon. gentleman, who had so lately filled the office of vice-president of the Board of Trade. He would say this; that, much as the right hon. gentleman’s plans had benefitted the commerce of the country, they would have benefitted it still more, had all of them been fully carried into effect. They had met, however, with too many obstacles from interests that were hostile to his improvements; and, though he regretted the circumstance much, he must still observe, that those interests ought to be tenderly dealt with. He thought it would be wiser to make a compensation to any parties who might be injured by the alteration, than to persist in a system which was proved to be detrimental to the commercial interests of the nation at large. He had heard with the greatest pleasure, the very liberal speech which the right hon. gentleman had made that evening; nor was it with less satisfaction that he had heard his flattering account of the export trade of the country. It had been said, that the exports were greater now than they had been during the most flourishing year of the war. It ought likewise to be stated, that during the war our great foreign exports went to meet our great foreign expenditure; whereas Edition: current; Page: [247]at present we received valuable returns for every thing we exported. In looking at the general state of the country, it was satisfactory to find that, amid the gloom and distress in which the agricultural interests were involved, its foreign commerce was in a flourishing condition. He was sure that it must be the wish of all who heard him, that it might long go on, prospering and to prosper. His only reason for rising was to bear his testimony to the extraordinary merits of the right hon. gentleman.

18 February 1823

BANK BALANCES 18 February 1823

Mr. Grenfell, in moving for a return of the balances of public money in the hands of the Bank of England, observed that the services rendered by the Bank to the public were overpaid. The new Chancellor of the Exchequer (Mr. Robinson) declined entering at present into the subject. Mr. Baring said that the advantage of holding the public balances ‘had been estimated and paid for by the Bank on the renewal of their charter.’

Mr. Ricardo said, it was true the Bank had made a compensation for the grant of the charter; but it was not sufficiently great for the advantages they had so long possessed. If, during his continuance in office, the Bank of England should apply for a renewal of the charter, he hoped the chancellor of the exchequer would be particularly careful that they did not overreach him. Before any such bargain should be made, it would be the duty of the right hon. gentleman to consult the House as to the terms of it. If it should be open to public competition, much more would be given for it than had ever yet been offered. From the advantages which the Bank had derived, it was impossible not to see, that the terms had been very much in their favour.

Edition: current; Page: [248]
21 February 1823


The new Chancellor of the Exchequer (Mr. Robinson), anticipating the Budget, made an exposition of the financial situation of the country; he expected a surplus of more than 7,200,000l. and proposed to reduce or repeal several of the assessed taxes. Mr. Maberly intimated his intention to propose a plan for hastening the operation of Pitt’s land tax redemption act [on this plan, see p. 259 below].

Mr. Ricardo said, he remembered, that at the termination of the last session, he had frequently to repel the attacks which were made upon the science of political economy. He had been delighted, however, to hear the plain, sound, practical, and excellent speech, which had been delivered by the right hon. gentleman opposite; and he thought that the science of political economy had never before had so able an expositor as it had now found in that House. He thought that there never yet had been in that House a minister filling the situation which was held by the right hon. gentleman, who had in that capacity delivered sentiments so candid, so wise, and so excellent. In all the statements which he had made, it was impossible not to follow him with the greatest ease and safety; for it was in all these quite clear, that each of them was, in fact, as the right hon. gentleman had put it. But, there was this one difference—an important one, certainly—between him and the right hon. gentleman. The right hon. gentleman had stated the surplus of our income over our expenditure at 7,000,000l. Now he (Mr. Ricardo) had contended last year, and did still contend, that the transaction respecting the commutation of the pension charge, was only a transfer from one hand to the other.1 This evening the right hon. Edition: current; Page: [249]gentleman had introduced into his surplus of 7,000,000l. a sum of 2,000,000l. to be received; he would like to know from whom? Could the right hon. gentleman himself tell? On the one side of the account he had put an amount of 2,800,000l. to be paid for pensions and half-pay; and on the other side, he had stated, that he was to receive 4,800,000l. from the trustees, whoever they might be, who were to pay such pensions and half-pay; and of these two items, the balance was 2,000,000l. to be repaid, of course, to these trustees or commissioners themselves. Undoubtedly, therefore, from this assumed surplus of 7,000,000l. of actual income over expenditure, there must be deducted these 2,000,000l., which the sinking fund itself was to supply. If this view of the subject was correct, the right hon. gentleman when he should have carried his plan into effect, of giving the proposed relief to the country, would actually leave them with a clear sinking fund, not of 5,000,000l., but of 3,000,000l. This was the only difference in point of statement between him and the right hon. gentleman. But he could go along with the right hon. gentleman in every principle that he had applied to the sinking fund; as applicable to the diminution of our debt in time of peace. But, this was always in the supposition, that we did actually possess such a sinking fund, and that it could be so applied to pay off our debt. So convinced was he of the necessity, the indispensable necessity of getting rid of this tremendous debt, that he had before ventured to suggest the expediency of a general contribution from the capital of the country for that purpose. He would contribute any proportion of his own property, for the attainment of this great end, if others would do the same. If this proposition should be thought extravagant, or if it should be supposed that the contribution he should suggest was excessive, why not ask for a smaller contribution of Edition: current; Page: [250]capital for the same object? As to the other parts of the right hon. gentleman’s speech, he considered that taxes raised in order to pay off debt, ought to be looked upon in a very different light, from those that were raised for the immediate services of the state. The one, we might be considered as paying to ourselves; the other was for ever lost to us. As to the plan proposed by the hon. gentleman who spoke last, he had few or no remarks to offer upon it. His scheme for the reduction of the debt, by paying off the land tax, was, as far as he (Mr. R.) understood it, quite practicable. It did exist, indeed, to some extent, at the present moment; but the hon. gentleman’s plan would, perhaps, increase its facilities. The hon. gentleman, however, in his plan for the reduction of taxes, went much too far; for he seemed to consider, that the clear surplus, which they had to dispose of, after allowing for the 2,200,000l. which the right hon. gentleman proposed to remit in taxes, would give a sinking fund of 5,000,000l. Now, he said, that the hon. gentleman went too far, on this ground—that we could not have such a sinking fund applicable to such a purpose. And here he would beg leave to call the attention of the House to a pamphlet which had been lately published under the auspices of ministers themselves.1 [Hear, hear! from the Treasury Bench.]2 Well, he did not know how that might be; but this he knew, that it contained arguments which were constantly in the mouths of ministers. In this pamphlet the sinking fund was made applicable to two Edition: current; Page: [251]or three different objects: and first of all, it was efficient for paying off debt. If so, it was clearly efficient for no other object. If a man applied the surplus of his income to the payment of debts, he surely could not apply it to any other purpose. But the pamphlet proceeded to say, that the fund was efficient for carrying on war in case of an emergency, if allowed, in the mean time, to accumulate at compound interest. This was as if the real object of the fund was, in the event of any aggressions by an enemy, to enable us to fight that enemy, in case of a war. But if so, why did not ministers confess it? Let them at once openly avow their object. But he thought that the more constitutional course would be, in case we should be required to repel the aggressions of an enemy, for the ministers of the crown to come down to the House and acquaint it with the necessity of providing for the expenses of a war that was about to be undertaken, rather than to retain the sinking fund at its present establishment, with the view of making it available on such an emergency. He did think that there was something mysterious in this doctrine of making that which was supposed to be applicable to paying off our debts applicable to the expense of a war.

26 February 1823


Mr. Denison, in presenting a petition from the freeholders of Surrey, referred to the mischief produced by tampering with the currency in 1797 and 1819, and expressed the opinion that ‘some amicable adjustment was necessary throughout the country.’

Mr. Ricardo would not have risen upon this occasion, if the hon. gentleman had not declared, that he wished some amicable arrangement could be made by which that part of the country which was now profiting on account of the loss Edition: current; Page: [252]of the others, might be made to bear its share in the burdens.

He complained that the words which had been used at that and at other public meetings, had been vague as to the advantage of the public creditor. For his part, he was at a loss to see what advantage the fundholder had gained. The argument appeared to him to be made use of rather upon the principle, that by giving your adversary’s argument a bad name, you give your own a good one. Upon such grounds it was contended that the stockholder had met with nothing but gain; but those who had attended to the question, were of a different opinion. If only that which the fundholder was gaining now upon the sums which he had lent after the depreciation, was to be taken into the account, then there would no doubt be a balance in his favour; but, this view of the question would be most unfair. It would be stating the profit on the one side, without the corresponding loss on the other. If both of these were to be taken into the account, it would be found that the stockholder had had nothing more than was just; and that if the interest which he had been paid in depreciated currency, upon capital which when lent had not been depreciated, were to be set against the interest which he was receiving in undepreciated currency now, upon capital which when lent had been depreciated, then, not only would the loss in the one case compensate all that had been hitherto paid in the other, but would actually be equal to a perpetual annuity to that annual amount, which he was at present receiving. Mr. Mushett, of his majesty’s mint, than whom nobody was better able to understand the subject himself, or to afford clear views of it to others, had, in a very luminous publication, demonstrated that this was the fact.1 A parade was made in the speeches at public meetings, of the 800,000,000l. of debt which had been lent in depreciated currency, and the vast amount of the difference of interest Edition: current; Page: [253]upon it; but it was well known, that about 400,000,000l. of this debt was borrowed before the Bank Restriction bill had operated any depreciation whatever; and another hundred millions had been lent to the government before any considerable depreciation had taken place. Hence there had been 500,000,000l. lent to the public in capital which was not depreciated. Interest in the depreciated currency had been paid upon this for twenty years; and the loss arising therefrom, according to the calculation of Mr. Mushett, was, allowing simple interest, about 27,000,000l.; or, allowing compound interest, and that was the fair allowance, about 12 or 13 millions more. It would appear, that the whole loss which the stockholder had sustained, in consequence of having been paid in a depreciated currency the interest on the sums borrowed, previous to and immediately following 1797, was about forty millions.—Having thus stated the disadvantages to the old public creditor, he should next state what was the calculation of the same authority, as to the advantages since the depreciation had ceased, by the alteration of the currency. That he calculated at two millions per annum. Compare that with the previous loss of forty millions, and by converting that amount into perpetual annuity, we should have the sum of two millions a year. So that the profit and loss would be found to balance each other. Taking, therefore, the respective interests of the stockholder and the payer of taxes, it would be seen, that no injury had occurred to either. Whether his opinion was right or wrong, as to the depreciation that existed at the period of the alteration of the currency, still, on the calculations of Mr. Mushett, it was evident, that to the public creditor, the profits at the one time, though greater, would be balanced by the corresponding losses at the other. He stood not there to defend the alterations that had taken place in the currency. No man had taken greater pains than himself, either within or without that House, to show the Edition: current; Page: [254]absolute necessity of a fixed standard. His hon. friend expressed his regret, that what was called an amicable adjustment had not taken place in 1819, at the restoration of the standard. Why, then, had he not proposed it? It was suggested at that period by a noble lord (Folkestone), in place of reverting to the old standard, to alter it to 4l. 1s. being the amount of the variation between the paper and the price of gold at that time. But, supposing that suggestion to have been adopted, was it to be argued, that a loss of 3 or 4 per cent could have produced all those distresses to agriculture, which the most extravagant opposers of the alteration of the currency attributed to that measure? Their opinions, even as to the amount of the depreciation, were irreconcileable: some stated it at 20 per cent, others contended it was 100; while the most extravagant went the length of asserting, that it amounted to 300 per cent. Suppose, however, that in place of reverting to the ancient standard, it had been increased 100 per cent, did they think no evils would have followed? Would the result, after doubling the amount of all the taxes, have left what now existed—an increasing revenue and a thriving trade? It was not his intention to renew the discussion on that hackneyed topic, Mr. Peel’s bill; but, as such a variety of contradictory opinions had been given on its effects, he would state what was the opinion of a bank director on its efficacy, as it operated on the proceedings of the Bank. Mr. Turner, who had been in the direction for two years, decidedly said, that as to the operations of the Bank, Mr. Peel’s bill remained a dead letter.1 It had neither accelerated nor retarded payments in specie; except by the payment of ten millions of exchequer bills to the Bank, which enabled it to expend that Edition: current; Page: [255]amount in the purchase of bullion. Taking into consideration the rule by which the bank directors generally admitted they regulated their issues, namely, the application for discounts, and coupling with that the low rate of the interest of money, the circulation would have been the same, and consequently the distress of agriculture as great, even if that bill had never passed.

Lord Folkestone replied, and, ‘with respect to the suggestion he had made, in 1819, of increasing the standard to 4l. 1s., he confessed that now, after mature consideration, he was convinced that that amount of increase would be wholly inadequate to the state of things. That principle was limited to the variation which existed between paper and gold at the particular period. His hon. friend himself then argued on the assumption, that the amount of that variance did not exceed 5 per cent. And here he must be allowed to say, that his hon. friend had not been perfectly consistent with himself; for he had since admitted, that the variance was as great as 10 per cent. He (lord F.) maintained, however, that the depreciation was infinitely greater.’

Mr. Ricardo admitted, that the noble lord was correct, in stating that he (Mr. R.) had on one occasion computed the depreciation at 5 per cent, and that he now found it to be 10 per cent; still, he was not in error. His first computation referred to a payment in bullion; and it would have been correct if the Bank had acted precisely in the spirit of that bill: but, instead of doing so, they had got together a large quantity of gold, which they coined into sovereigns, and then they came down to the House to procure an act, enabling them to get rid of those sovereigns. If the measure of which he approved had been acted on, the depreciation would have been but 5 per cent; because it would have been measured by the price of gold.

Lord Folkestone said, ‘he had supposed the hon. member to have been arguing with reference to Mr. Peel’s bill; but now he discovered, that his argument rested on a measure which existed only in his own imagination.’

Edition: current; Page: [256]
26 February 1823


Mr. Whitmore moved for leave to bring in a bill for lowering the price, at which the importation of foreign corn was permitted, by 2s. a year, until it was reduced to 60s. Mr. Huskisson (the new President of the Board of Trade) opposed the motion.

Mr. Ricardo said, that the right hon. gentleman, in all the arguments which he had brought forward for postponing the consideration of the corn laws, had in reality given a reason for proceeding at once to amend them. What was the danger which his hon. friend, who brought forward the present motion, apprehended? It was the danger of those very high prices, to the recurrence of which the right hon. gentleman looked forward, as the conjuncture when the corn laws might be amended. He apprehended the danger of capital being again drawn, by the temptation of high prices, to the land (and the right hon. gentleman agreed that the danger existed)—that there would again be a succession of low prices, and another loss of capital. This evil it was the object of the present proposition to prevent; yet the right hon. gentleman would wait till the evil came upon them, before he would provide the remedy. As to the motion of his hon. friend, he would not oppose it; because he should be glad of any approach to a free trade in corn. But he thought his hon. friend did not go far enough; he had left the mischief of a fixed price. Both his hon. friend and the right hon. gentleman had laid down the true principles of a corn law; namely, that a protecting duty should be imposed on foreign corn, equal to the peculiar burthens borne by the grower of corn in this country. But, when this was done, a fixed price should be done away altogether. In fact his hon. friend had Edition: current; Page: [257]seemed a little uncertain as to his fixed price. He had taken it at 60s.; but he had stated, that if foreign corn could be imported at 55s., he should have reduced it to that. He thought he had committed a great error in taking any fixed price at all. A duty should be imposed on corn imported, equal to the peculiar burthens borne by the grower of corn; and, in his opinion, a drawback or bounty to nearly the same amount should be allowed on corn exported. Then, and then only, would corn be kept at a price nearly equal in this, to what it was in other countries. If there was an abundant harvest, it would find a vent by means of the bounty; and, on the other hand, if there was a deficient supply, under the influence of the duty, corn would be introduced as it was wanted, and not in the enormous quantities poured in under the existing law, when the price rose to a certain height. The right hon. gentleman had objected to the proposition, because of the agitation it would create out of doors. But his hon. friend’s proposition did not interfere with the present law, until the price of corn was as high as 80s. In this, also, he differed from his hon. friend; because, before corn was so high, that encouragement might be given to extensive cultivation, which it was his object to avert. He (Mr. R.) should recommend, that the law for the amendment of the corn laws should come into operation long before corn had reached 80s.; and he should then recommend a system of duties and bounties, at first[,] in deference to those prejudices of which he thought they were too tender, higher than the amount of the peculiar burthens of the agriculturists; and gradually diminishing to an equality with the computed amount of those burthens. He could not in any way agree with his hon. friend, the member for Cumberland,1 nor with the hon. member for Wiltshire,2 who had entered into some strange calculations, Edition: current; Page: [258]to show that the agriculturist paid taxes to the amount of 67 per cent. But, on what did the hon. member reckon this per centage? Not on the expense of growing corn, but on the rent. This was a most unwarranted mode of calculation. They had it in evidence before the agricultural committee, that there was some land in England which did not pay above 2s. an acre rent; yet, no doubt, as the cultivation of that land was heavy, there were in truth taxes on the producer which did not affect the landlord, and taxes on the landlord which did not affect the producer. If a tax was imposed directly on the production of corn, the grower would remunerate himself, not by a deduction from the landlord’s rent, but by getting more from the consumer. And as to general taxes, they pressed alike on all classes; on the labourer who worked at the loom, as well as on the labourer who worked at the plough. He hoped his hon. friend would not withdraw his motion. The greatest good would be done by bringing the question before the House. His hon. friend’s speech abounded in excellent principles, which could not fail of producing an effect upon gentlemen in that House, and removing the delusion which prevailed out of doors. He therefore urged his hon. friend to take the sense of the House on this most important question. The object of the approach to a free trade, which he recommended, was to keep prices steady and low. He did not mean such low prices as would not remunerate the grower; for when the manufacturer ate his bread at all cheaper than the price at which the farmer could be remunerated, the greatest injury was done to the general interests of the country.

The House divided on the motion: Ayes, 25; Noes, 78. Ricardo voted for the motion.

Edition: current; Page: [259]
28 February 1823


Mr. Maberly, pursuant to notice [cp. above p. 248], moved for the removal of the exorbitant conditions which, by the Act of 1798, were attached to the redemption and purchase of the land tax; it was reasonable to expect that, once those obstacles were removed, the remaining balance of the tax to the amount of about 1,250,000l. would be redeemed, thus cancelling a sum of about 40,000,000l. of the three per cents. This would be a substitute for the sinking fund, which could then be applied to relieve the people of seven millions of taxes. The Chancellor of the Exchequer opposed the motion.

Mr. Ricardo thought that the plan which had been proposed by the hon. mover, could by no means be considered as a desirable substitute for the sinking fund. At the same time, it might possess those merits which should induce the House to adopt it. In the manner in which his hon. friend had proposed that plan, he certainly could not acquiesce; for he thought it would fail to accomplish the object which he conceived to be so desirable. It was, indeed, most desirable, that we should diminish the amount of our debt; and to effect that diminution, he did believe it might be available; but, in such case, it must be adopted in a different way from that in which the hon. gentleman had stated it. Its object was to purchase up a certain quantity of the land tax, by the transfer of a certain quantity of stock; and then it went on to propose, that other parties might purchase the tax, in case the proprietor of the land should not choose to do so. If this had been the extent of the plan—if it had gone simply to cancel an amount of stock—if it had left the purchaser no other right but that which a mortgagee possessed in his claim upon the land—if it had allowed the parties to claim of Edition: current; Page: [260]the landlord, without any intervention of the government or its officers, then he would say, that it was certainly calculated to accomplish the great object of diminishing the debt. But if, under this plan, there was to be a receiver-general to receive the amount of the proprietor, and to pay it into the Bank—if there was to be this sort of management and collection created—it would only be substituting one debt for another; and though there might thus be 42,000,000l. and upwards, of stock, cancelled, yet he should consider, that they were only creating a new stock in its place, and transferrable in the same manner. An objection had been raised by the chancellor of the exchequer, that did not seem to possess all the weight which that right hon. gentleman attached to it. He had said,—“Would it not be a great hardship to give to a stranger the right of demanding this tax of a land proprietor?” Why, what would be the hardship? The landed proprietor, it was clear, must pay at all events; and was the receiver of the taxes so merciful a gentleman, that the House was to suppose he would exercise his official functions with much more kindness and humanity than the proprietor of the land tax would manifest? He (Mr. R.) very much regretted, that the land tax was not of that description, that it might be extended further; for if those taxes which were applicable to the reduction of the national debt could be so extended, it was quite clear that they might push that most desirable object still nearer to its accomplishment. So far he concurred with his hon. friend, and no further. He could by no means agree with him, that if the land proprietor should wish to purchase, he should have the right; but if he should decline that, then a stranger might purchase; and, failing both, that it should be sold by public auction. How such a purpose was to be accomplished by public auction, he really could not see. Certainly, the result of this plan could not, by any Edition: current; Page: [261]means, be called a sinking fund. It was totally unconnected with such a fund. But the right hon. gentleman might say, if he pleased, “Your plan is a very good one, and I will adopt it, in addition to my sinking fund.” If the plan was a good one, as he (Mr. R.) undoubtedly considered it, upon the whole, to be, he thought it might be quite desirable on its own peculiar grounds; but not as a substitute for the sinking fund. With respect to the sinking fund, he had already very frequently said, that he should be willing to vote for a reduction of taxes to the amount of that sinking fund; but he could not consent to vote any larger reduction than was equivalent to its absolute amount. It was now universally agreed, that the definition of such a fund was the surplus of our income over our expenditure. That surplus, which the right hon. gentleman estimated at 7,000,000l., he (Mr. R.), and the country in general he believed, took to be, in fact, no more than 5,000,000l. How had the right hon. gentleman got the item of 2,000,000l. which he made a part of that surplus? Was it to be obtained in any other way, than by taking it from the sinking fund itself, or borrowing it in the market? If it was borrowed in the market, it was only increasing, by so much, the debt. If it was taken from the sinking fund, it was by so much a diminution of the assumed surplus. Therefore, he (Mr. R.) could not vote for remitting taxes to the amount of 7,000,000l. He thought, indeed, that if due economy and retrenchment were observed in every department of our expenditure, it might be very possible to remit even 7,000,000l., and thus add 2,000,000l. to the proposition of the chancellor of the exchequer. But he greatly feared the fact would not be so; and he must see another account brought in by the government, before he could consent to the remission of the additional 2,000,000l. Under the false notion with which ministers seemed to be impressed about Edition: current; Page: [262]their surplus of 7,000,000l., it was much to be apprehended, that they would not prove a whit more economical than usual, were the House even to vote the remission of other 2,000,000l. They would say, “You only take away our surplus, and therefore there is no necessity for further economy.” He hoped the House would pardon him, if he was tedious, but he desired once more to explain what he meant by an efficient sinking fund. An efficient sinking fund, in the opinion of many gentlemen who sat near him, could not exist at the same period that we were increasing our debt. In that position he did not coincide. He thought, for instance, that when Mr. Pitt first established a sinking fund, and although, during a considerable portion of his subsequent life, the country was engaged in foreign wars, by the enormous expenses of which the debt was increased in a far greater proportion than the sinking fund paid it off; yet that, in effect, we then always had a sinking fund. Of every loan that was borrowed to meet those vast expenses, Mr. Pitt provided for the interest, and reserved a fund of one per cent for the extinction. Undoubtedly, an incredible weight was added to the debt by the protracted war that ensued; but, what would have been the situation of the country, had she sooner effected a peace? All those loans which had been borrowed in war time, would have been provided for, and there would have been left an efficient sinking fund. Had this system been adhered to during the whole progress of the war, he (Mr. R.) would have been the last man to raise his voice against the sinking fund. But, what was the fact? In 1813, the late chancellor of the exchequer1 came down to the House, took 8,000,000l. per annum away from the sinking fund, and in the same breath told them, that they were Edition: current; Page: [263]paying their debt, that the finances would be placed in the most flourishing condition; and in a short time after the peace, he told them, that they would be in possession of a greater treasure than any other nation of the earth could boast. It was at the very moment that he took away from the sinking fund 8,000,000l., that the late chancellor of the exchequer had made all those splendid promises. But, unfortunately, this was not his only attack on that fund; nay, it was a trifling one, compared to those which he subsequently made upon it. The late chancellor of the exchequer, instead of providing for the annual interest of his loans, suffered compound interest to accrue upon them. Though there was placed, in the hands of commissioners, who most conscientiously and perfectly discharged their duties, a fund of 15,000,000l., he said, “I have, by my expenditure, left you in a situation in which you have a deficiency of 15,000,000l. in your finances.” Why, where, then, was the sinking fund? Would the chancellor of the exchequer have dared to come to that House, year after year, and have calmly spoken of a deficiency of between 12,000,000l. and 15,000,000l., if he had not known all the while, that there was, in reserve, a fund of 15,000,000l. which he reckoned upon parliament’s permitting him to apply to other purposes than those which it was originally intended to effect? Now he (Mr. R.) contended, that the sinking fund of this day would have the same fate as its predecessors. If it remained, it might go on well enough for a few years; but, should the right hon. gentleman opposite continue in power, he, or if not, then some future chancellor of the exchequer, after coming down to the House, and telling them how thriving a condition this sinking fund was in, would some day inform parliament, that a deficiency of some sort or other was discovered, or that some emergency had arisen, which rendered it necessary to appropriate the Edition: current; Page: [264]whole. The language of his majesty’s ministers confirmed these anticipations in a great measure. If, however, they properly considered the matter, they ought to look upon this fund as already appropriated. It was a fund to pay off debt; and surely it was never to be considered as applicable to the expenses of a war; for if it was to pay debt, it could meet no other object. Let the House suppose the case of a private individual: suppose he had an income of 1,000l. a-year, and that he found it necessary to borrow 10,000l., for which he agreed to give up to his creditor 500l. per annum. Let them suppose his steward to say to him, “If you will live on 400l. a year, and give up another 100l., out of your income of 500l., that will enable you, in a certain number of years, to get completely rid of your debt.” The party listened to this good advice, lived on 400l. a-year, and gave up annually 600l. to his steward, in order to pay his creditor. The first year, let it be assumed, that the steward paid the creditor 100l. Then the debt would be 9,900l.; and therefore the income due to the creditor would be only 495l. But the party continuing to pay to his steward 600l. per annum, in the next year the steward paid over 105l.; and so from year to year the debt was diminished, 600l. being still received by the steward. At the end of a certain number of years, the result was this:— That out of a yearly reserve of 600l., half the debt was paid off: only 250l. was due to the creditor, and 350l. remained in the hands of the steward; his master continuing to live on 400l. per annum. At this period, some object offering to the steward, which he thought might be beneficial to the gentleman, or to himself, he borrowed 7,000l., and devoted the whole 350l. in his hands, to pay the interest on that sum. What, then, became of this gentleman’s sinking fund? Originally he was in debt only 10,000l.; now, he found himself indebted, altogether, 12,000l.; so that instead of possessing Edition: current; Page: [265]a sinking fund, as he had hoped, he was positively so much more in debt. He considered that the whole mystery of our sinking fund was, in truth, just the same. He did believe, in his conscience, that the amount of the national debt would not have been near so large as it now was, if the sinking fund had been honourably adhered to. He did believe, that such a disastrous result would not have been the case, if Mr. Pitt had continued minister. No: he would have provided—as any other honest or efficient minister would have done—for debts as he contracted them. In time of war even we should have possessed a sinking fund. But, as he despaired of ever seeing such a system followed by any minister in that House —as he despaired of seeing a sinking fund strictly and inviolably sustained—he would give his hearty support to his hon. friend’s motion, if he would make his proposed remission of taxes 5,000,000l., instead of 7,000,000l. The latter amount seemed rather beyond the mark, and therefore he could not vote for it. With respect to the memorable plan of last year,1 he hoped the right hon. gentleman was not one of those who could support such an inexplicable mystery. He hoped that the right hon. gentleman would repel the charge of having contributed to such a delusion. If the right hon. gentleman really wished to repeal 2,000,000l. of taxes, let him say to the House that the ministers of the crown, wishing to do so, proposed to take them out of the sinking fund. The roundabout statements, and the machinery of acts of parliament, which in recent sessions had been resorted to, were unbecoming the station of the right hon. gentleman, and unworthy of the government of a great and powerful nation.

Mr. Baring ‘could not help adverting to what he considered a contradiction in the speech of his hon. friend. His hon. friend said, he was not opposed to the principle of Mr. Pitt’s sinking Edition: current; Page: [266]fund; but he objected to the preservation of any surplus at all, because he was sure that somebody would take it away: he was afraid that some minister or other would take it away; and, therefore, he was resolved to take it away himself. This reminded him of the Frenchman in some play, who, upon being appealed to by a lady for his advice, as to the best mode of resisting the advances of her admirer, replied, that the best way of resisting temptation was to yield to it at once.’ ‘He should like to know from the hon. member for Portarlington, how, in a case of emergency, the country could effectively act without a surplus revenue? What would be the situation of the country, when deprived of credit?’ Mr. Baring next adverted to the plan for an ‘adjustment of property’ which the hon. member for Portarlington had suggested; ‘he must assert, that however specious in theory, or valid in abstract calculation,’ it was ‘totally inapplicable to any practical object.’

The motion was negatived.

6 March 1823


On 3 March the Chancellor of the Exchequer moved a series of resolutions recommending the repeal of the old sinking fund acts and the establishment of a new sinking fund of 5,000,000l.

On 6 March, on the report of the committee upon the bill to give effect to these resolutions, Mr. Monck observed that the operation of the sinking fund, though it reduced the capital of the debt, raised the price of stocks, and therefore increased ‘the real amount of the debt.’ ‘The more that was paid, the more we had to pay.’ It would be better to apply the surplus revenue to the reduction of taxes. ‘In this way, the Americans at the close of the war, having an expenditure of four millions of dollars beyond their revenue, raised small loans, till, in the last year, their revenue had increased so as to enable them to reduce their debt.’

Mr. Ricardo said, it was true that the government of America had borrowed 4,000,000 dollars, and that, by bringing capital from other countries, it had, in fact, improved its resources. It was also true, that the effect of the sinking fund Edition: current; Page: [267]was at present to raise prices against ourselves. But this was true of every sinking fund. The question was, had not the sinking fund reduced the annual charge? It certainly would do so if correctly applied. A real sinking fund, if properly appropriated, was a great good. To a fictitious sinking fund he had many objections. But there was a great difference between the two. A real sinking fund applied to pay off the debt, would raise the price of stocks, and enable us to borrow on better terms. Many members had no hopes that a real sinking fund would be preserved. They, therefore, objected to grant a sum for a purpose, the beneficial effects of which they were never likely to see. His hon. friend, the member for Taunton,1 had facetiously observed, that because he (Mr. R.) thought ministers were going to rob the sinking fund, he would willingly take it away himself.2 It was, he thought, good policy, when his purse was in danger, rather to spend the money himself than allow it to be taken from him. He did not, he confessed, think the national purse safe in the hands of ministers. It was too great a temptation to entrust them with. What he wanted was a real sinking fund, and therefore he supported the present as far as it was real. But there was every reason to believe it would become fictitious; for every sinking fund had, in its origin, been real, but had all been turned into fictitious funds. As to the Annuity bill of last year,3 he hoped the whole of it would be repealed, and the amount be transferred to the sinking fund. It had been estimated that 2,000,000l. of those annuities would die off annually. Let this sum be applied to the purposes of the sinking fund. The hon. member for Taunton had, on a former evening,4 been severe on him, giving him credit for the ability of his calculations, but denying that he looked Edition: current; Page: [268]sufficiently at their political and moral consequences. Now, he claimed the merit of extent in the scope of his views beyond the hon. member. He felt deep alarm at the heavy amount of the debt, and at the want of proper means to lighten it. His hon. friend, with his enlarged views, wished for a sinking fund, not to pay off the debt, but to furnish ministers with the means of going to war, in cases of extremity. But, if this fund were to be so appropriated, how was the debt to be paid off? He would tell his hon. friend, if no means were taken to pay it off, that he was sleeping on a volcano. He thought a national debt of 800 millions a very serious evil; and he thought so from the heart-burnings which were occasioned by the taxes levied to pay it, which in one year affected one interest, and the next year another interest. Taxation pressed on every interest; and did he not propose to benefit mankind when he said we ought to endeavour to get rid of the debt? By doing this, should we not get rid of the expense of collecting taxes? Should we not get rid of the immorality of smuggling, and of the excise laws? By getting rid of smuggling, should we not benefit trade? For all the profit of the smuggler was a tax on the whole community. Neither would it be a trifling benefit, in a constitutional point of view, that it would deprive ministers of a great deal of patronage. It would also confer great benefits on our commerce, by putting it in a natural state. At present, from the duties and restrictions of customs and excise, it was in a most unnatural state. Was this legislating for men, or for stocks and stones? He had before stated, that he thought a great effort should be made to get rid of the debt; and he had mentioned a plan which he thought should be adopted. The hon. and learned member for Winchelsea1 had opposed his plan; and had said, that it would throw the Edition: current; Page: [269]whole land of the country into the hands of pettifogging attorneys; but of this there was no danger. Parliament might interfere, and give secure titles to the land which was disposed of, without the interference of pettifogging attorneys. Let it not be said, that he was not aware of the difficult situation in which the country stood. Nothing else could have induced him to recommend the measure. He could be quite easy in recommending the measure of a sinking fund, if they had a different kind of parliament—one that moved in more direct sympathy with the people. He confessed his fear of the present parliament, and its disposition to ministerial compliance. His hon. friend1 asked, in case of applying the sinking fund, what they were to do should a new war break out? If that was the real view, they should not call it a sinking fund. They might call it a fund for ministers to divert to particular purposes, but not a sinking fund. But, suppose a new war to break out, no such thing as a sinking fund ever having been heard of—was his hon. friend ready to vote a fund prospectively to be at the disposal of ministers, in that event? Let him say yes, and they would understand each other.2

Edition: current; Page: [270]

Mr. Baring said, ‘that, with every respect which he might have for his hon. friend’s talents and the ingenuity which marked the speech which he had just made, he must be allowed to say he had never listened to one which led to such—(not to say absurd— that term would savour of want of courtesy), but so singular a conclusion. To begin with the plan of paying off a part of the debt, by a new disposition of the property of the country, he must be allowed to say, that it was the plan of a man who might calculate well and read deeply, but who had not studied mankind. It was ingenious in theory, and obvious enough; but not very sound for practice. He did not pretend to any thing like the reach of intellect possessed by his hon. friend, but he thought his hon. friend sometimes over-reached himself, and lost sight of man, and of all practical conclusions.’

11 March 1823

11 March 1823

On the report stage, Mr. Grenfell said that ‘many plans had been devised to pay off, by one great effort, the national debt, and the crotchet of his hon. friend (Mr. Ricardo) for accomplishing that great object by a general contribution from all the property of the country, was the wildest of them all.’ Sir H. Parnell expounded his plan for applying the sinking fund so as to replace the perpetual annuities by long annuities determinable in a fixed number of years.1

Mr. Ricardo highly approved of his hon. friend’s plan, which, by taking the sinking fund out of the hands of ministers, would do away his great objection to it; namely, its liability to be perverted from the purpose for which it was originally intended. His hon. friend’s proposition of converting what were at present permanent into determinable annuities, appeared to him to be deserving the serious attention of the House; and he must say, that he did not think his hon. friend did justice to his own plan, in stating, that it would liquidate the existing debt in 45 years; for the calculation Edition: current; Page: [271]on which he had proceeded was made when the 3 per cents were only at 80. The House might easily conceive how beneficially public credit would be affected, if a real sinking fund were thus continually operating over the whole extent of the debt. From the adoption of such a plan, ministers, in the event of any occurrence requiring an increased expenditure, would not, as heretofore, be enabled to despoil a fund, which ought to be sacredly appropriated to another purpose; but must come down to parliament, and otherwise provide for the public exigencies. While he was on his legs, he would say a few words on what an hon. friend had been pleased to call his “crotchet” for reducing the national debt by a general contribution of capital. His (Mr. R.’s) proposition would merely carry further the principle of the income tax. His hon. friend was quite deceived, if he supposed that he ever contemplated the possibility of effecting the object he had described at once. On the contrary, the operation might be extended by numerous instalments over a period of two, three, six or twelve months. And when the immense benefits which would result from its adoption were considered, he could not think it so Utopian a scheme as his hon. friend seemed to imagine it to be.

14 March 1823

14 March 1823

On the second reading (13 March) the Chancellor of the Exchequer said that ‘there was only a surplus of 3,000,000l.’, but if the plan of spreading the war pensions over 45 years was carried out, there would remain a clear surplus of 5,000,000l. ‘That appeared to him a real bonaâ fide surplus, applicable to the reduction of the debt. It was that surplus which, by the bill, it was proposed so to apply. In so doing there was no increase whatever made of the unfunded debt. Nor was there any mystery—any of what was familiarly called hocus pocus.’

Edition: current; Page: [272]

On the third reading (14 March) Mr. H. G. Bennet moved as an amendment that it be postponed six months. Mr. Baring intimated that if Mr. Bennet’s motion was negatived, he would move that the sinking fund be limited to three millions. With respect to the plan of Sir H. Parnell ‘he thought it would not have been a bad one, if it had been applied to the reduction of the 5 per cents last year; but it could not be applied to the 3 per cents without the consent of the holders of stock; which could not be well calculated upon, because there would be a difficulty of selling the new stock in the market.’

Mr. Ricardo said, that he felt great delight at the admissions which had at length been made, as to the real amount of the sinking fund now in the exchequer. That pleasure, however, was somewhat qualified, by finding that the House was now called upon to augment this real sum of three millions to the sum of five millions. The chancellor of the exchequer, a few evenings ago, had said, that he did not think there was any hocus pocus in his plan. The House, after that declaration, could scarcely expect to be called on to vote that there was at present a surplus of five millions. An act of parliament could not create a surplus where it was not. As to the objection which had been made against the plan of the hon. baronet, that it might not be agreed to by the holders of the 3 per cents, it had much weight. The plan of the hon. baronet did not presume any such consent. He only proposed, that a trial should be made whether or not the public would consent to it. He proposed to convert a certain sum, say 50,000,000l. from 3 per cents to 4 per cents. Why should not ministers try the experiment? The public opinion would thereby be ascertained. They did not want grounds for estimating the probable event of that plan. There were then long annuities in the market, of which 37 years remained unexpired. Taking them at 4 per cent at 19 years purchase, they would be worth 75 or 76. If ministers, therefore, could go to market to sell the 4 per cent annuities at 37 years for 76, they Edition: current; Page: [273]might buy 100l. three per cents at less than 76. It was said, that we had reduced 24 million of debt since 1816. Any one would imagine, in the way this was put, that the reduction was the effect of the sinking fund. It was no such thing. The reduction was occasioned by changing one kind of stock into another. We thus lessened the capital, but we did not diminish the charge; except to a very trifling amount. He would prefer being without any sinking fund, to one upon the plan now proposed; and he was sure, that if we were, public credit would not suffer. He would therefore support the amendment,1 and if that were negatived, then he would support the proposition of his hon. friend (Mr. Baring.)

The House divided on Mr. Bennet’s amendment: Ayes, 59; Noes, 109. The House again divided on Mr. Baring’s amendment: Ayes, 72; Noes, 100. The bill was then passed.

13 March 1823


Mr. Huskisson moved for leave to bring in a bill enacting that every merchant vessel should have a number of apprentices in proportion to her tonnage.

Mr. Ricardo wished to know whether the sailors were friendly to the measure. He had no doubt that their employers were so; because they would be enabled to lower the rate of wages by increasing the number of apprentices. He thought the navy would not receive that benefit from it, which Edition: current; Page: [274]seemed to be anticipated. Our sailors would seek employment in the merchant service of other countries, if the rate of wages was unduly lowered in their own. Should that be the case, where would gentlemen find that nursery for the navy, of which they now talked so largely?

[See further, p. 276.]

18 March 1823


In the course of the debate Colonel Davies referring to the meeting recently held in support of Spain1 said that it was ‘a cruel mockery’ to inform them that they wished them success; and then to talk of neutrality.

Mr. Ricardo protested against the inference, with respect to those who had attended the dinner given to the Spanish minister. He felt a deep sympathy with the Spanish people; but he was very far from intending, by his attendance at that meeting, to pledge himself to engage the nation in war. He had no hesitation in declaring his opinion, that it would be wise in this country to keep out of the war. At any rate, the House ought to hear what ministers had to say, before it came to a decision on the subject. Right or wrong, it was not fair to condemn them unheard.

Edition: current; Page: [275]
21 March 1823

COAL DUTIES1 21 March 1823

A petition was presented from owners of Collieries at Forest Dean, complaining of the operation of the Coastwise Duty on Coal, and praying for relief.

Mr. Ricardo said, that this was one of the many cases in which industry was cramped by a restrictive system of taxation. He understood that Forest Dean was as well able as any place in its vicinity to supply coals, were it not that it was fettered with duties, with a view to give a preference to more favoured places. They were daily receiving petitions upon this subject, and he was glad to find that His Majesty’s Ministers at length acknowledged the evils of the system. He hoped they would turn their attention, not only to this, but the many other inconveniences which arose out of the restrictive system, as the country was entitled to enjoy every benefit which could be derived from its capital and industry.

21 March 1823


Mr. Wallace introduced a measure to permit foreign manufactures and produce to be deposited in British warehouses and taken out for exportation without payment of duty [cp. above, p. 220].

Mr. Ricardo was of opinion, that the bill was founded on a sound and judicious principle, and one which ought to prevail throughout our commercial code. The country was Edition: current; Page: [276]greatly indebted to the right hon. gentleman for his efforts to liberalize the system of trade. It was impossible to make a law which would not interfere with the interests of some classes; but the one before the House, while it was calculated to advance the public welfare, interfered as little as possible with particular interests.

On 2 April the bill was passed.

24 March 1823


The report of this bill [cp. above, p. 273] being brought up,

Mr. Ricardo said, he objected altogether to the principle of the bill. He thought it was a maxim, that no person ought to be controlled in his own arrangements, unless such control was rendered necessary by paramount political circumstances. Now, no such necessity could be shown in support of this bill. In his opinion, it would not be more unjust to enact a law, that every surgeon should take a certain number of apprentices, to encourage the progress of surgical science, than it would be to pass this bill, rendering it imperative on the masters of merchant vessels to take a given number of apprentices, in order to encourage the increase of efficient seamen. He denied that this bill would cause an addition of one seaman to the number now in the service. So long as there was employment for seamen, there would be encouragement enough for them; and when there was not, those who were now here, would resort to foreign countries for employ. The only effect of the bill would be, to reduce the wages of seamen; and that alone would render it objectionable. Edition: current; Page: [277]He would move, to leave out from the word “repealed,” to the end of the bill, his object being, to remove the compulsory condition for taking a certain number of apprentices from the bill.

The House divided: for Ricardo’s amendment, 6; against it, 85.

  • List of the Minority

  • Bennet, hon. H. G.
  • Grenfell, Pascoe
  • Smith, Robert
  • Sykes, D.
  • Whitmore, W. W.
  • Wyvill, M.
  • Tellers
  • Ricardo, D.
  • Hume, J.

[See further, p. 282.]

26 March 1823


Mr. Hume presented a petition from Mary Ann Carlile, shopwoman of her brother Richard Carlile; she had been prosecuted by the Society for the Suppression of Vice for selling a copy of An Appendix to the Theological Works of Thomas Paine and had been sentenced for blasphemous libel to a year’s imprisonment and a fine of 500l. or to be imprisoned till that fine was paid. The year of her imprisonment had expired, but she was kept in gaol from her inability to pay the fine.

Mr. Ricardo trusted that the House would excuse him if he ventured to say a few words upon this petition. The hon. and learned gentleman who had just sat down,1 appeared to conceive, that Mary Ann Carlile would have been entitled to some lenity, had she expressed contrition for her past offences, or had she stated any change to have taken place in her religious sentiments. Now, they were bound in common justice, to consider that the petitioner was expressing her own sentiments in the libel of which she had been found guilty. Edition: current; Page: [278]The demand, therefore, of the attorney-general was, that she must acknowledge that to be right, which she conscientiously believed to be wrong, before she could entitle herself to any lenity; or, in other words, that she must commit an act of the most shameless duplicity, in order to become a proper object for the mercy of the crown. While upon that subject, he must be permitted to find fault with a rule that prevailed in the courts of justice. A witness, before he was examined, was asked whether he believed in a future state: if he replied that he did not, his oath could not be taken. Supposing that an individual did not believe in a future state, and by replying that he did not, showed that he was an honest man, he was put aside as an incompetent witness; whereas, if he belied his belief, and did not act the part of an honest man, he was considered as a witness worthy of credit. He contended, that the hon. member for Devonshire1 had by no means answered the case which his hon. friend had made out. His hon. friend had stated, that these prosecutions had aggravated the very evil which they were instituted to check. The hon. baronet asserted, that the fact was not so—and how did he prove it? Why, he read a passage which proved that the sale continued in spite of his prosecutions, and thus confirmed the very argument which he had intended to refute. Besides, it appeared to him, that the hon. baronet, in reading the opinions of which he complained so loudly, had not taken a wise course, to keep them from the knowledge of the public. He fully agreed with his hon. friend that the prosecutions of the Society for the Suppression of Vice had done much mischief. Blasphemy was an offence which it was quite impossible to define. Nobody, in committing it, was aware of what he was offending against. It was one thing in this Edition: current; Page: [279]country, and another thing in France; indeed, that which was blasphemy here, was not blasphemy there, and vice versâ. Indeed, as the law was now laid down, the mere disputing the truths of Christianity was an offence; and, therefore, the moment it was shown that the individual had sold a work reflecting upon them, that moment he stood convicted. If he said that he believed in what he wrote or sold, and attempted to state the grounds on which he rested his belief, he was told immediately he was aggravating his original offence by repeating it; and being thus precluded from making a defence, and bound as it were hand and foot, was delivered over to the vengeance of the prosecutor. The attorney-general found great fault with his hon. friend for saying, that the jury would never have returned a verdict of guilty against Mary Ann Carlile if they could have anticipated the punishment that awaited her; and had argued, that the doctrines which such a sentence inculcated was most dangerous to the interests of public morality and justice. Now he (Mr. Ricardo) fully agreed in all that his hon. friend had said upon that subject; and so far from the doctrine of his hon. friend being new or unheard of, it was a doctrine that was perpetually influencing the conduct of juries. Juries were constantly taking into their consideration the consequences that were likely to follow from their verdicts. If not, why were they so often finding individuals guilty of stealing property under the value of 40s. when every man was convinced that the property was worth much more? Why, but because they knew that, if they did not return such a verdict, a punishment would be inflicted incompatible with the spirit of the times? In forgeries, too, would any man deny, that the punishment which followed on conviction did not often come within the contemplation of the jury? [Hear hear!] He should therefore dismiss the observations of the attorney-general, Edition: current; Page: [280]without any further remark. He must now inform the House, that after a long and attentive consideration of the question, he had made up his mind that prosecutions ought never to be instituted for religious opinions. All religious opinions, however absurd and extravagant, might be conscientiously believed by some individuals. Why, then, was one man to set up his ideas on the subject as the criterion from which no other was to be allowed to differ with impunity? Why was one man to be considered infallible, and all his fellow men as frail and erring creatures? Such a doctrine ought not to be tolerated: it savoured too much of the Inquisition to be received as genuine in a free country like England. A fair and free discussion ought to be allowed on all religious topics. If the arguments advanced upon them were incorrect and blasphemous, surely they might be put down by sound argument and good reasoning, without the intervention of force and punishment. He was convinced that if it had not been for the indiscreet conduct of certain societies in prosecuting Mr. Carlile and his connexions, that family would never have acquired the notoriety by which it was at present distinguished.1

Edition: current; Page: [281]
10 April 1823


Mr. Hume moved for returns of the numbers of persons confined as Crown debtors and for contempt of Court.

Mr. Ricardo objected to the imposition of a fine by a judge, afterwards to be remitted by a secretary of state. A judge might as well pass but one sentence—say death—for all crimes, and leave the government to inflict the quantity of chastisement it thought fit. The judge who tried the case was the fit person to decide what penalty the offender should endure1.

12 February 1823


On 24 March 1823 the Chancellor of the Exchequer introduced a bill to amend the act of the previous session [see above, p. 191] so as to allow the trustees to sell their annuity for a term of years and not merely from year to year, the Bank of England having now agreed to receive part of the fixed annuity and to pay the pensions for five and a quarter years.

On the third reading of this bill, on 18 April, Sir J. Newport contended, ‘that this bargain with the Bank was a direct violation of the statute of William and Mary which prevented the Bank from becoming a dealer and jobber in public securities.’

Mr. Ricardo did not blame the Bank directors for making as advantageous a bargain as possible for their constituents. It was, however, an extremely improvident one for the Edition: current; Page: [282]country. He thought that there was also a constitutional objection to the contract, founded on the nature of the charter of the Bank, and the manner in which the capital was made available to the public. It seemed to him highly impolitic, that the Bank should be allowed to make speculations in the funds. At all events, ministers ought to have delayed the conclusion of the bargain, until they had laid the papers regarding the late negotiations upon the table: had they so waited, the bargain might have been more favourable to the public. He wished to know whether the Bank was to be allowed to charge for the management of this transaction, as well as for the management of the public debt.

Mr. Huskisson answered, ‘that the Bank was to be allowed nothing beyond the terms of the contract which were before the House. He contended, that the bargain was advantageous for the public, and that the Bank were permitted to deal in public securities.’

The bill was then passed.

18 April 1823


On this bill [cp. above, p. 276] being brought in for the third reading,

Mr. Ricardo opposed the measure, as imposing injurious restrictions on a particular trade, and interfering with the private rights of the individuals connected with that trade. The right hon. gentleman opposite was bound to show, that there were some circumstances in this particular trade which ought to take it out of the general rule. He had, however, not only failed to do this, but he had failed to prove that the measure would afford any protection to private seamen. He Edition: current; Page: [283]should therefore move as an amendment, “That the bill be read a third time that day six months.”

Mr. Huskisson said, ‘the measure had given universal satisfaction to the ship-owners, and he believed there was scarcely a man in the House, except the hon. member (Mr. Ricardo) who was not satisfied of its utility.’

Mr. Ricardo withdrew his amendment; and the bill was read a third time and passed.

24 April 1823


Lord John Russell moved ‘that the present state of the representation of the people in parliament requires the most serious consideration of this House.’

Mr. Ricardo said, that the arguments of the hon. gentleman who had just sat down1 had been too often repeated, and too often refuted, to have any weight with him on the present occasion. He would not admit that conclusions hostile to the cause of reform could be drawn from the practices of past ages; because he denied that the present generation ought to be bound down by all that had been done by their ancestors. He thought the present generation possessed not only as much wisdom as any of those which had preceded it, but a great deal more. The simple question for them to determine was, whether they would not purify the House, when it was notorious that it could not be considered, in the fair sense of the words, to represent the people? He perfectly agreed with all that his noble friend who made the present motion had said, with reference to the state and condition of the House. He concurred with him in Edition: current; Page: [284]every one of his representations; but he did not think the remedy he had prescribed was the most adviseable for the purposes they both wished to accomplish. The question of reform was naturally divided into three considerations. First, the extension of the suffrage; secondly, the mode of election; and thirdly, the duration of parliaments. As to extension of the suffrage, important as he felt that topic to be, and convinced as he was that it ought to be extended much beyond its present limits, still the other two points appeared to him to be of deeper interest. In the arrangement of the suffrages, the whole of the people might be represented, and yet the House might be composed of persons whose elections had been procured by improper means. It was for this reason that he was compelled to dissent from his noble friend’s proposal for transferring a portion of the representatives from close boroughs to extensive counties. He thought the whole system of election which prevailed at present was illegal. Of what use was it that the power of choosing its representatives should be given to the people, unless the free exercise of that right were also secured to them? He contended, that so long as the influence of the aristocracy possessed, as it did now, the means of biassing the votes of the people, this House could not be a fair representation of that people. Let it not be supposed, that he wished to deprive the aristocracy of that just influence which it derived from its wealth and respectability; but he thought that it became most pernicious, when it was exercised for the purpose of influencing elections. Of its practical evil, every person’s own knowledge would furnish many and ample proofs. How could it be expected, that a man whose means of procuring a livelihood depended mainly upon the patronage and support of those who were in a more elevated rank—how could it be expected, for instance, Edition: current; Page: [285]that the inferior class of tradesmen—should withstand the threats and terrors which might be put into execution, to prevent them from voting according to their conscience? To look for this would be to call upon small freeholders for a degree of severe virtue which had no corresponding example in the higher ranks of society. There was but one method of obviating these difficulties; which was by altering the mode of election, and adopting the ballot instead of open votes. If this were done, they would have a house of commons which would fairly represent the people.—The other point which he wished to mention to the House was the necessity of more frequent election. And this he thought was indisputable; because it was the ready means of ensuring the attention of the House uniformly to the interests of the people.—There was another point in which he must dissent from the opinion of his noble friend. His noble friend had argued that in the event of any parliamentary reform, the House ought to take into their consideration what were called the vested rights of individuals in boroughs. Now, this really appeared to him to be a most extraordinary proposition. Could those pretended rights be considered in the light of property? Could any thing be more contrary to justice than to propose any compensation for such assumed property? Had not the people a right to be well governed? And was it to be maintained, that, because a certain set of persons had, for corrupt purposes, enjoyed the privilege for many years of preventing the people from being well governed, they should, therefore, be compensated for the loss of a privilege so unjustifiable.—The right honourable secretary (Mr. Canning) had, upon a former occasion,1 Edition: current; Page: [286]stated, that if the House of Commons should fairly represent the people, it would become too powerful for the safety of the Crown and the House of Lords. This argument, he (Mr R.) contended, did not belong to the question; for it was impossible that a House of Commons fairly constituted should not consult their own interests. If, therefore, such a House should propose to dismiss the Crown and the House of Lords, it would be because they were unnecessary to the good government of the country. The right hon. gentleman must, therefore, abandon this argument, or confess, that a virtuous House of Commons would be driven to dismiss the Crown and the House of Lords.—It had also been contended, that if the general principle of his noble friend’s motion were acceded to, a hundred different plans of reform would start up, and that it would be impossible to secure any thing like unanimity on the subject. That was not his opinion. He, for one, was for no alteration in the constitution of the House of Commons, unless that alteration should render it fully and fairly a representation of the people; and he was convinced that that was the object which all the friends of parliamentary reform had in view. The only difference between his noble friend and himself was, that he did not think the plan proposed by his noble friend would accomplish that object. He believed that if that plan were adopted, the House would continue to be what it now was—the representative of the aristocracy of the country, and of the aristocracy only. County elections were, in his opinion, conducted on no better principles than borough elections; and he repeated his conviction, that unless the system of ballot were resorted to, it would be in vain to attempt any reform at all of parliament.—The right hon. secretary opposite1 had argued, when the question was last under consideration, Edition: current; Page: [287]that the House of Commons, as at present constituted, operated as a check upon the Crown, and a balance of the power of the other House of Parliament. That he denied. To make such a proposition good, it must be first shown that the House of Commons fairly represented the people; otherwise, it was a farce and a mockery to say, that it operated as a check upon the Crown and a balance of the power of the other House of Parliament. His opinion was, that at present the government of this country was a compromise between the aristocracy and the Crown. Instead of the House of Commons, as at present constituted, being a check upon the people, it was itself frequently checked by public opinion. But, was that a convenient operation? Was it convenient that county and other public meetings should perpetually be called, for the purpose of affording a check to the proceedings of the House of Commons? Would it not be much better that the House should really represent the people—that it should be the organ of public opinion?— The right hon. gentleman, on the occasion to which he had already alluded, had triumphantly asked, to what period of our history the reformers would refer as affording the best view of the state of the House of Commons? For himself, he would answer, to none. He believed the people never had been better represented. But, were we never to have a good House of Commons, because we never had had a good one? The people at large now possessed so much more information than they ever before possessed, that they were entitled to be better represented in parliament than they had ever before been.—The right hon. gentleman opposite had allowed, that the proposition might be a beneficial one, but that it was not the constitution under which we were born. The same argument might be used to perpetuate every abuse and every evil. It might be said with respect to Ireland, Edition: current; Page: [288]was the present state of things to be continued in Ireland, because it was the constitution under which the Irish were born? To hear the right hon. gentleman, it would be supposed that the friends of reform were proposing the establishment of a republic. But that was a gratuitous assumption: it was his conclusion, not theirs. The demands of the people might be easily satisfied. They asked only for that which was perfectly reasonable—that they might have a voice in the public councils, and the power of restraining the expenditure of their own money.—He by no means denied the assertion of the right hon. gentleman, that the aggregate of the House of Commons contained as much intellectual ability and moral integrity as ever existed in any similar assembly in the whole world. But then it must be recollected, that all men, in all situations, acted under the influence of motives. He was persuaded that the conduct of the very same gentlemen by whom he was then surrounded, if they were really chosen by the people, and were frequently returned to the people that their merits might be re-considered, would be extremely different from that which it was at present. Mr. Pitt, when he was the friend of parliamentary reform, had said, that it was impossible for an honest man to be minister of this country with such a House of Commons. He was also of that opinion. He did not say, that the ministers did not mean to act honestly; but they were obliged to consult men, and to pursue measures, opposed to the interests of the people. However they might be inclined, they could not do otherwise; feeling that, owing to the peculiar constitution of the House, they would be turned out in a week if they should venture to act honestly. That the people were competent to the task of electing their representatives, the experience of this and of every other country conclusively showed. The enlightened Montesquieu had said, “Could we Edition: current; Page: [289]doubt the natural capacity of the people to discern real merit, it would only be necessary to cast our eyes upon the continued series of surprising elections which were made by the Athenians and the Romans, which undoubtedly no one could attribute to hazard. It is well known that although at Rome the people possessed the right of electing the plebeians to public offices, they never chose to exercise that power; and that although at Athens, by the law of Aristides, they were allowed to select the magistrates from every rank of the state, yet the common people, says Xenophon, never petitioned for such employment as could possibly interfere with their safety or their glory.”1 These instances might serve to show, that instead of selecting demagogues and disturbers of the public peace, as was unjustly apprehended, the people, if left to the unrestricted exercise of their choice, would act wisely and prudently.

Mr. Martin, of Galway, opposing the motion said: ‘His honourable friend and countryman, the member for Portarlington—(Loud laughter and cries of “No”); he begged pardon, he was sorry he had called the honourable gentleman his countryman, for he was informed he had never set foot in Ireland. That honourable gentleman had talked gravely against the influence of the aristocracy, yet, notwithstanding, he did not believe he could himself mention one of his own constituents, although they did not amount to more than twelve in all; and it was equally certain, that the honourable gentleman was either returned by that very aristocracy, whose influence he so loudly deprecated, or by an interest quite equivalent, and not less cogent.’2

The House divided on the motion: Ayes, 169; Noes, 280. Ricardo was one of the tellers for the minority.

Edition: current; Page: [290]
7 May 1823


Mr. Ricardo, in presenting a Petition from the Merchants and Manufacturers of the Burgh of Arbroath against the present regulation, which imposes a stamp, and inflicts a tax upon the manufacture of that article, stated, that in the opinion of the Petitioners, an opinion in which he concurred, this stamping afforded no security whatever as to the quality of the cloth, but had, in fact, rather an opposite tendency, being thus a severe and vexatious burthen upon the manufacturer, without the least advantage to the consumer or the revenue. As such, it ought no longer to be allowed to fetter the trade. He felt great pleasure in stating that the Board of Trade had taken the same view of the subject, and that the President of that Board was to bring in a Bill for the regulation of it, which he (Mr. Ricardo) hoped would meet with no opposition.

Mr. Ricardo then presented a Petition from the Spinners of Linen Yarn in the neighbourhood of Arbroath, praying that they might be relieved from that vexatious part of the Linen Laws which subjects their hanks to seizure, even though it be the full weight stipulated, if one of the hanks either want a few threads, or have a few threads too many; casualties which, in the making up of yarn spun by machinery, cannot possibly be always avoided.

Edition: current; Page: [291]
7 May 1823

TALLOW1 7 May 1823

Mr. Curwen presented a Petition from the Butchers praying for the imposition of a duty on foreign tallow.

Mr. Ricardo was not exactly aware of the nature of the measure which the Hon. Gentleman had in contemplation; but if it was to be similar to that of last year,2 he had no hesitation in saying, that the remedy would have no other effect than the imposing of a heavy burthen upon the people of this country without any advantage to the revenue; and therefore he hoped that the House would deal with it as before.

Sir T. Lethbridge complained that British farmers could not compete with the prices of tallow imported from Russia.

Mr. Ricardo characterised this as one of the measures which aimed at putting money into the hands of the landed interest by taking it out of the pockets of the rest of the people. The landed interest had already too many regulations in their favour. For instance, the commercial interest had to pay five per cent. upon all property transferred upon the death of the owner; and this was not required of the landed interest.

Edition: current; Page: [292]
9 May 1823


Mr. T. Wilson presented a petition from the silk-manufacturers of London against the Spitalfields Acts (which empowered the magistrates to fix the wages of the journeymen silk-manufacturers).

Mr. Ricardo could not help expressing his astonishment that, in the year 1823, those acts should be existing and in force. They were not merely an interference with the freedom of trade, but they cramped the freedom of labour itself. Such was their operation, that a man who was disposed to embark in the trade could not employ his capital in it in London; and, as it might be inconvenient, in many instances to carry that capital out of London, the trade was necessarily cramped and fettered.

Mr. Huskisson ‘fully agreed in the propriety of repealing the acts’ and intimated that he would bring in a bill to that effect.

[See further, p. 295.]

12 May 1823


Mr. J. Smith presented a petition from the merchants and bankers of London, praying for an alteration in the existing law of lien upon goods sent on foreign ventures. Mr. Baring said, that ‘the great inconvenience felt from the present system was, that money could not be raised by the hypothecation of goods, Edition: current; Page: [293]because it was not known to whom they belonged.... If moneywere remitted, the possession passed from the hands of the principal to the agent, and no lien was created; the same freedom was sought to be established for the circulation of merchandise.’

Mr. Ricardo1 said, he would put the case in this way: suppose an individual employed him as an agent, to dispose of goods, and that he was dishonestly inclined, and defrauded his principal; in that case, who ought to be the loser, the man who said, “I will not pay a single penny without the goods are delivered to me;” or the man who did not make any inquiry, but lent his money upon mere representations? It was not desirable that either party should lose; but one must suffer, and the sufferer ought to be the individual who did not use proper caution.

On 15 May a select committee was appointed to enquire into the question: Ricardo was a member of the committee.

Edition: current; Page: [294]
12 May 1823


Sir T. Lethbridge presented a petition from the butchers of Leadenhall-market, complaining of the glut of Russian tallow in the market, and praying for a further import duty on that article. He said, ‘that the duty on Russian tallow would fall on the Russian merchant, and not on the English consumer.’

Mr. Ricardo observed, that the principle advocated by the hon. baronet might be applied to every foreign commodity. As the hon. baronet had discovered so easy a way of reducing the national debt, by throwing the burthen of taxation entirely on foreigners, he ought to become chancellor of the exchequer without delay; for he was afraid they had never yet found a chancellor of the exchequer who could impose taxes without inflicting serious burthens on the people.

12 May 1823


Mr. Denison, in presenting a petition from the table beer and ale brewers of London, suggested that the tax should be removed from beer and placed on malt. ‘This would place the poor man and the rich on an equality. At present, the poor man, who could not brew his beer, paid a tax from which the rich man was exempt.’

Mr. Ricardo could see no reason why the tax should not be imposed on the malt. If that were done, individuals would be at liberty to brew what quality of beer they pleased. The hardship was very great on the poor man, who Edition: current; Page: [295]was obliged to purchase his beer at a high rate from the public brewer; whereas all those who possessed facilities for brewing were exempted from the burden.

[See further, p. 301.]

21 May 1823


The Lord Mayor1 presented a petition from his constituents, the working silk-weavers of Sudbury, against the repeal of the Spitalfields Acts.

Mr. Ricardo thought that this petition, coming from a district which was free, and praying that a restriction might be continued upon another district, was a most powerful argument in favour of the very measure which it opposed.2

Mr. F. Buxton presented a similar petition from the journeymen silk-weavers of London; ‘it stated, that the journeymen weavers had derived great benefit from the effects of the existing laws, of which he thought they were competent judges.’ Mr. Hume vindicated the principles upon which the proposed measure was founded and said, the petitioners ‘did not understand the operation of those principles to their own advantage or dis-advantage. They thought, for instance, that the existing law had been beneficial to them, when it had, in fact, been, for the last forty or fifty years, diverting the trade to Sudbury and other places.’ Mr. F. Buxton ‘admitted, that the petitioners did not pretend to understand political economy—a science, the principles of which appeared to change every two or three years.’ Mr. Ellice agreed that all restrictions on trade had probably Edition: current; Page: [296]better be removed. ‘They were, however, proceeding to remove a law which, as the workmen conceived, afforded them protection, while they allowed the Combination act, and the act against the emigration of artisans, to remain in existence, which statutes, as every one knew, operated severely against certain of the working classes.’

Mr. Ricardo said, in answer to what had fallen from an hon. gentleman, that if they waited until they could, at one stroke, destroy all restrictions on trade they would never effect any useful alteration. The hon. member for Weymouth1 had observed, that the petitioners knew nothing about political economy, the principles of which seemed to change every two or three years. Now, the principles of true political economy never changed; and those who did not understand that science had better say nothing about it, but endeavour to give good reasons, if they could find any, for supporting the existing act. He most assuredly would not utter a word that could be injurious to the manufacturing classes: all his sympathies were in their favour: he considered them as a most valuable part of the population, and what he said was intended for their benefit. But, why should this particular trade come under the cognizance of the magistrate more than any other? Why should he interfere with this particular branch of the trade when many other branches of it were not under his control? The law only applied to the weavers. With respect to all other parties connected with the trade the magistrate had no jurisdiction whatever. Why should he have the power to fix the price of labour, more than the price of bread, meat, or beer? Delay was asked for. Now, he saw no use or advantage in delaying the measure. The hon. member for Norwich2 called on the House to delay the bill until next session. But, what reason had he given for the postponement? No one whatever. He merely said, “I Edition: current; Page: [297]think the existing measure is a very bad one for the workmen, but there is an extraordinary prejudice in its favour amongst the weavers, and therefore I would delay the measure until that prejudice is removed.” Why, at the end of the next session they would be in exactly the same state as at present; the prejudice would be found to exist as strongly as before. He therefore hoped that his right hon. friend would proceed with the measure, and refuse any application for delay.

[See further, p. 306.]

22 May 1823


Mr. W. Whitmore moved that a select committee be appointed with a view to equalising the duties on sugar (at present an extra duty of 10s. to 15s. was payable on sugar from the East, above that which was payable on sugar from the West Indies). Mr. C. Ellis, opposing the motion, said that ‘the protection extended to the West-India colonists had been conceded as a compensation for restrictions to which the East-India interest was not subject. If it were not a formal charter, it was an absolute compact with the consideration of value received, and not less valid than positive law.’ Mr. Robertson contended that the consumer was benefitted by the present state of things; owing to the incapacity of the East Indies under their wretched system of slavery, and the destruction caused by the white ants, ‘it would be impossible ever to make the growth of sugar in the East Indies sufficiently productive.’

Mr. Ricardo congratulated the House upon the comfortable information contained in the speech of the hon. member who had spoken last, and who had shown, that, what with the white ants and other difficulties, it would be impossible for the East-India planters ever to compete with those of the West-India colonies. The inference from which was, that Edition: current; Page: [298]there was nothing to fear from allowing them the advantage required. On this occasion he would take the liberty of quoting a speech of the hon. member for Sandwich (Mr. Marryat) in 1809, which was marked throughout by its strict adherence to the true principles of political economy. In that speech, the hon. member had contended for the policy of admitting the conquered colonies to an equal participation in the trade with the other colonies of England. The question at that time was, whether the colony of Martinique should be allowed to send its sugars to the British market on the same terms as the other colonies, and the hon. member had then clearly shown, by a train of the soundest reasoning, that the price of sugar on the continent regulating the price in this country, it could be no disadvantage to us that the sugar of Martinique should be sent here.1 Here the hon. member read the passage of the speech to which he had alluded. He then went on to contend, that the same argument (substituting the East Indies for Martinique) would apply to the question before the House. The sugars of the East Indies would not exclude those of the West. He would maintain, that there ought to be no restrictions on the imports of any of our colonies—that it would be an injury, as well to the colonies as to the mother country, and that therefore we ought to get rid of them altogether. It should also be recollected, that if the proposed measure gave advantages to the East-India trade which it did not possess before, there were disadvantages under which that trade still laboured, which went to counterbalance them. An hon. member had talked of our compact with the West Indies. He would say, in reply, that if any compact existed, by which the industry, either of the colonies or of the mother country, was rendered less productive, Edition: current; Page: [299]the sooner it was got rid of the better. The argument of the hon. member for Dumfries (Mr. K. Douglas) was quite inconclusive, in supposing that we should lose a great portion of the revenue derived from our West-India produce. He did not think the proposed measure would have any such effect, or that we should have the produce of either the West or East Indies at half their present price. He wished that could be proved; because it would render the proposition still more desirable. But he thought it was absurd to maintain, that because our West-India planters had a large capital embarked in the trade, we were therefore bound to take sugars from them at double the price which we could get them for elsewhere. Such an effect would not, however, be the result of the proposed alteration. East or West-India sugars would not be much lowered by it; but we should have this advantage from it, which would be most desirable—it would prevent sugars from rising above their value. Some gentlemen were alarmed at the idea of exporting bullion to India. For himself, he did not object to it; for bullion could not be acquired without the employment of our industry, and if a duty was levied in one case as well as in the other, it was clear that we should not lose any part of our revenue. With respect to the employment of our ships and sailors, it was natural to conclude, that as the East Indies were further off than the West, the proposed alteration would employ more rather than fewer. As to the duty on East India sugar, it was, by their own confession, of recent date, not having been introduced until 1814. What then, became of the ground of long possession? With respect to the effect the measure recommended would produce on the negro population, he did not see any grounds for supposing that it would be injurious. In the first place, he did not believe that we should import East-India sugar to any very considerable Edition: current; Page: [300]amount. But even were the competition to interfere with the sale of the produce of the West Indies, the condition of the slaves, if not improved, would not be injured by the change; inasmuch as the capital now employed in the production of sugar, would, under such circumstances, be converted to the growth of a more beneficial, because a more remunerating commodity. In the speech of the hon. member for Sandwich, to which he before alluded, there was a most extraordinary observation. It the more surprised him, as it was irreconcileable with the sound views entertained by the hon. member. In the speech, however, it was stated, that the price of any commodity did not depend on the cost of cultivation, but on the relation of the supply to the demand. Now, nothing was more unsound. In all cases, the cost of cultivation was sure to regulate the price which any commodity must bear in the markets of the world. As, therefore, the cost of production was acknowledged to be less in the East Indies in the production of sugar, the price of that article in the markets of the world must in the long run be regulated by that cost. There was another observation which was worthy of remark. The hon. members acknowledged, that the greatest advantage would attend a free trade; but, said they, “it is not a free trade, but a participation in the monopoly that the East-India advocates demand.” Granted. He would accede to their object; though at the same time, he was prepared to go to a much greater extent. He was ready to allow a free trade on sugar from all parts of the world where that commodity was grown. He would allow a competition not alone of East-India sugar, but of the sugars of South America, Cuba, Brazils, and China. And so would the hon. member for Sandwich, provided he was allowed to import the sugars of the West Indies with the lower rate of duties. It was, however, of those duties which prohibited all Edition: current; Page: [301]competition, that he (Mr. R.) complained; and, with the hope of modifying the evil, he would give his support to the motion.

Mr. Marryat said, ‘it was extremely amusing to hear hon. members, proprietors of East-India stock, declaiming in that House on the advantages of a free trade, at the very moment that they themselves were interested in one of the most outrageous monopolies that ever existed in any country in the world.’

Mr. Ricardo, in explanation, observed, that he had never possessed a shilling more than 1000l. East-India stock, and never given a vote in favour of monopoly in his life.

Mr. Huskisson ‘agreed with the hon. member for Portarlington that, considering the question abstractly, and without reference to the state of things which had grown out of the colonial policy of this country for the last century—the only point worthy of notice was, where, as consumers, could we get our sugars at the cheapest rate? But, he denied that the question ought to be so abstractly considered’, and opposed the motion.

The House divided on Mr. Whitmore’s motion: Ayes, 34. Noes, 161. Ricardo voted for the motion.

28 May 1823


Mr. Maberly moved ‘That a select committee be appointed to inquire into the present mode of taxing malt and beer separately, and whether it would not be expedient to collect the same amount on malt alone’ [cp. above, p. 294]. The Chancellor of the Exchequer opposed the motion.

Mr. Ricardo thought, that his hon. friend, the mover, had shown the tax on beer to be unequal, and that one class was exempted from it, while another was obliged to pay. He had shown, also, that the diminution in the expense of collecting this tax would assist the revenue. The hon. member regretted that this had been made a question between the agricultural and other classes; but, even if it were true that the tax had an Edition: current; Page: [302]unequal operation, in this respect also the sooner it was equalized the better. If the duty paid ought to attach on all persons consuming beer, it ought to attach equally. The motion should have his hearty support, because it went to accomplish that object.

The House divided: Ayes, 27. Noes, 119. Ricardo voted for the motion.

30 May 1823


Mr. Attwood presented a petition from the manual weavers of Stockport, complaining of the extremely low rate of wages: ‘they complained also of certain improvements in machinery, the effect of which had been to reduce the quantity of employment of those who wove by hand, and which threatened to leave a large population without any means whatever of support.’ Mr. Philips contended ‘that no means were so effectual for the benefit of the manufacturing class, as the introduction of machinery; and if parliament were foolish enough to comply with the prayer of those who wished to discourage machinery, they would inflict the greatest possible injury on the public, and especially on the petitioners themselves.’ Mr. H. G. Bennet said, ‘a very useful publication on the subject of machinery, written by Mr. Cobbett, had been extensively circulated throughout the manufacturing counties, and would, he hoped, effect a change of opinion no less extensive.’1

Edition: current; Page: [303]

Mr. Ricardo said, that much information might, undoubtedly, be derived from Mr. Cobbett’s publication, because that writer explained the use of machinery in such a way as to render the subject perfectly clear. He was not, however, altogether satisfied with the reasoning contained in that pamphlet; because it was evident, that the extensive use of machinery, by throwing a large portion of labour into the market, while, on the other hand, there might not be a corresponding increase of demand for it, must, in some degree, operate prejudicially to the working classes. But still he would not tolerate any law to prevent the use of machinery. The question was,—if they gave up a system which enabled them to undersell in the foreign market, would other nations refrain from pursuing it? Certainly not. They were therefore bound, for their own interest, to continue it. Gentlemen ought, however, to inculcate this truth on the minds of the working classes—that the value of labour, like the value of other things, depended on the relative proportion of supply and demand. If the supply of labour were greater than could be employed, then the people must be miserable. But the people had the remedy in their own hands. A little forethought, a little prudence (which probably they would exert, if they were not made such machines of by the poorlaws), a little of that caution which the better educated felt it necessary to use, would enable them to improve their situation.

Mr. Philips instanced the fact, that the wages of the artisan were more liberal where machinery was used than where it was not used, as a proof that its introduction was not hurtful to the weaver.

Mr. Ricardo said, his proposition was, not that the use of machinery was prejudicial to persons employed in one particular manufacture, but to the working classes generally. It was the means of throwing additional labour into the market, and thus the demand for labour, generally, was diminished.

Edition: current; Page: [304]
30 May 1823


This measure (which had been introduced by Mr. Goulburn, chief secretary for Ireland, on 6 March) ‘proceeded upon the principle of endeavouring to effect a voluntary agreement between the owners and the payers of tithes.’

Mr. Ricardo observed that, by the present bill, land improved within the last 21 years was not to be tithable for such improvement; but as an adjustment was to take place every year, suppose a man possessed of poor land, to improve that land within one year after the passing this bill, he would become liable to pay upon his improved land, while his neighbour, having been so fortunate as to improve a year sooner, would be liable to no such burthen. This would be to give one person a preference, ruinous in its effect, to another. The bill might be favourable to Ireland, but it would be most injurious to the English agriculturist, as it would enable the Irish grower to grow corn cheap, and he might glut the English market, to the ruin of the English grower, unless a protecting duty was imposed on Irish corn.1

Mr. Goulburn said, ‘the argument just introduced by the hon. member for Portarlington, was one quite beside the present question; though it would apply to any measure introduced with a view of assisting agriculture in any part of the empire.... Howwould the hon. gentleman reconcile his proposition with the various instances which existed in Yorkshire and Lincolnshire, in particular, of parishes relieved from the operation of the tithe system by special acts of parliament. According to the hon. gentleman’s doctrine, we must have Custom-houses erected on the borders of those counties, and countervailing duties imposed, to keep up this beautiful system of equilibrium of price.’

Edition: current; Page: [305]
6 June 1823


Mr. Huskisson (President of the Board of Trade) moved two resolutions authorising his majesty, by order in council, to declare that the importation or exportation of merchandise in foreign vessels might take place upon payment of the same duties as were payable on similar merchandise carried in British vessels, from or to countries which allowed reciprocal conditions; and granting powers of retaliation. This, he said, ‘was an entire departure from the principles which had hitherto governed our foreign commerce.... It had for a long time, indeed from thepassing of the Navigation act, been our policy to impose upon cargoes, brought in foreign vessels, higher duties than those imported in British bottoms’; that policy was becoming impossible, owing to retaliatory action taken by foreign countries.

Mr. Ricardo said, that the country was much indebted to his right hon. friend (Mr. Huskisson) for the enlightened views he had taken, and the measures he had brought forward, to improve the commerce of the country. Parliament had, at length, begun to find out, that restrictions on commerce were restrictions, not on other countries, but on ourselves. It certainly was a question of policy whether England should take off the duties without receiving reciprocal advantage from foreign powers; but, if foreign powers recognised the same liberal principle, there could be no doubt that the advantage to England would be double the advantage which any other country could derive from the regulation. An hon. member had said, that it would be to his personal advantage to second the principles laid down, but that personal benefits ought to be sacrificed for the good of the navy. Now, with respect to the navy, he had no apprehension whatever. The state of that navy, the facility for building ships, the superiority of this country in that branch of art, the great capital and enterprise of the people, were so Edition: current; Page: [306]many securities, that the navy would not fall into decay. He hoped soon to see Canada deprived of the preference which she enjoyed in the timber trade, and placed, in that respect, upon the same footing as Norway and Sweden.

The resolutions were agreed to.

9 June 1823


On the report of the bill for the repeal of the Spitalfields acts Mr. F. Buxton moved that it be referred to a select committee, so that the petitioners against the measure [see above, p. 295] might prove their case by evidence. ‘It was indeed objected to the petitioners, that the bill did not rest upon disputed facts, but rested on admitted principles of political economy; but, ... it was rather hard to say to these poor people, that they should lose their bread by principles of political economy.... The petitionersalso begged humbly to represent, that they had seen the greatest fluctuations, as to what the “soundest principles of political economy” were. And indeed the House must know, that certain principles of political economy were acted upon some fifty years ago, and which were then undoubted, until Adam Smith gained great credit by overturning them; and recently they had heard his hon. friend, the member for Portarlington (Mr. Ricardo), combat the doctrines of Adam Smith in many particulars, with a clearness and force which had certainly persuaded him (Mr. F. Buxton) of his hon. friend’s correctness. The petitioners therefore, were certainly entitled to ask, what security there was, that some future system of political economy would not overturn the system of his hon. friend, which had overturned the system of Adam Smith, who, in his day, had overturned the system of those who had gone before him?’ Mr. Huskisson opposed the inquiry. Mr. Bright supported it and asked, ‘ought the House to refuse it merely because some persons talked largely about the principles of political economy?’

Mr. Ricardo was as anxious for inquiry as any member, in cases where it was at all necessary; but, admitting all that Edition: current; Page: [307]the opponents of this bill stated they could prove, it would not change his opinion. If these acts were indeed so beneficial, they ought to be adopted all over the country, and applied to every branch of manufacture; but the question was, whether labour should or should not be free? The quantity of work must depend upon the extent of demand; and if the demand was great, the number of persons employed would be in proportion. If these acts were repealed, no doubt the number of weavers employed in London would be greater than at present. They might not, indeed, receive such high wages; but it was improper that those wages should be artificially kept up by the interference of a magistrate. If a manufacturer was obliged to use a certain quantity of labour, he ought to obtain it at a fair price. It had been said, that the weavers of Spital-fields received very little from the poor-rates. True. And why? Because there was so little to be distributed among them. Very little could be raised in the parish; and sometimes, when great distress prevailed, resort had actually been had to government, for large sums for the relief of the poor. An hon. member for Bristol1 had talked about political economy; but the words “political economy” had, of late, become terms of ridicule and reproach. They were used as a substitute for an argument, and had been so used by the hon. member for Wey-mouth.2 Upon every view which he could take of the subject, the bill would be beneficial both to the manufacturers and the workmen.

The House divided: For the Committee, 60. Against it, 68.

Edition: current; Page: [308]
11 June 1823

11 June 1823

Mr. Huskisson having moved the third reading of the bill,

Mr. Ricardo contended, that the effect of the existing law was, to diminish the quantity of labour, and that, though the rate of wages was high,1 the workmen had so little to do, that their wages were, in point of fact, lower than they would be under the proposed alteration of the law. He could not bear to hear it said that they were legislating to the injury of the working classes. He would not stand up in support of the measure, if he thought for one moment that it had any such tendency. The existing law was more injurious to the workmen than to their employers; because, at periods when the trade was brisk, it empowered the magistrates to interfere, and prevent their wages from rising as much as they would if the law imposed no shackles on the regulations of the trade. He was in possession of a number of cases, in which the decision of the magistrates had been resisted, either by the workmen or their masters, where counsel had been employed, and the masters had at length given up the dispute rather than incur the trouble and expense of continuing it. He was perfectly satisfied that, if the present bill should pass, there would be a much greater quantity of work for the weavers in London than there was at present. With respect to wages, he was persuaded, that, in all the common branches of the manufacture, they would not fall; for at the present moment they were as high in the country, with reference to those branches, as they were in London.

The House divided: For the third reading, 53; Against it, 40. The bill was then passed.

Edition: current; Page: [309]

On 18 July, when the amended bill came back from the Lords, Mr. Huskisson declared that ‘it now came down in so altered a state and with so many of the old regulations unrepealed, that, in his view of the subject, it would neither conduce to the public interest, nor be consistent with his duty, to proceed further with it at present.’1

11 June 1823


Mr. Western (the member for Essex) moved ‘That a committee be appointed to take into consideration the changes that have been made in the value of the currency between the year 1793 and the present time, and the consequences produced thereby upon the money-income of the country derived from its industry; the amount of the public debt and taxes considered relatively to the money-income of the country; and the effect of such changes of the currency upon the money-contracts between individuals.’

Mr. Ricardo* observed, that the hon. member for Essex, and all those who took his view of the subject, laid down very sound principles, but drew from them conclusions which were altogether untenable. No one doubted, that, in proportion as the quantity of money in a country increased, commerce and transactions remaining the same, its value must fall. No one questioned, that the change from a depreciated to a metallic currency of increased value must have the effect of reducing its quantity, and of lowering the price of all commodities brought to market. These were principles which he had himself on various occasions asserted; but the Edition: current; Page: [310]difference between him and the hon. member for Essex, was, as to the degree in which the value of our currency had been increased, and the degree in which prices generally had been diminished by the bill (called Mr. Peel’s Bill) of 1819. It was from seeing the evils which resulted from a currency without any fixed standard, that he had given his best support to that bill. What he sought was, to guard against the many and the severe mischiefs of a fluctuating currency; fluctuating, not according to the variations in the value of the standard itself, from which no currency could be exempted, but fluctuating according to the caprice or interest of a company of merchants, who, before the passing of that bill, had the power to increase or diminish the amount of money, and consequently to alter the value, whenever they thought proper. It was from seeing the immense power which the Bank, prior to 1819, possessed—a power, which he believed that body had been inclined to exercise fairly, but which had not been always judiciously exercised, and which might have been so used as to have become formidable to the interests of the country—it was from the view which he took of the extent of that power of the Bank, that he had rejoiced, in 1819, in the prospect of a fixed currency. He had cared little, comparatively, what the standard established1 was—whether it continued at its then value, or went back to the old standard: his object had been, a fixed standard of some description or other. In the discussions of 1819, he certainly had said, that he measured the depreciation of the then currency, by the difference of value between paper and gold; and he held to that opinion still. He maintained now, that the depreciation of a currency could only be measured by a reference to the proper standard—that was, to gold; but he did not say, that the standard itself was not variable. The hon. Edition: current; Page: [311]gentleman, and those who supported his opinions, were always confounding the terms “depreciation,” and “value.” A currency might be depreciated, without falling in value; it might fall in value, without being depreciated, because depreciation is estimated only by reference to a standard. He had undoubtedly given an opinion in 1819, that, by the measure then proposed, the prices of commodities would not be altered more than 5 per cent;1 but, let it be explained under what circumstances that opinion had been given. The difference in 1819, between paper and gold, was 5 per cent, and the paper being brought, by the bill of 1819, up to the gold standard, he had considered that, as the value of the currency was only altered 5 per cent, there could be no greater variation than 5 per cent, in the result as to prices. But this calculation had always been subject to a supposition, that no change was to take place in the value of gold. Mr. Peel’s bill, as originally constituted, led the way to no such change. That bill did not require the Bank to provide itself with any additional stock of gold till 1823. It was not a bill demanding that coin should be thrown into circulation, till after the expiration of four years and a half; and before that period, if the system worked well, of which there could be no doubt, parliament could, and in all probability would, have deferred coin payments to a considerably later time. It was a bill by which, if they had followed it strictly, the Bank would have been enabled to carry on the currency of the country in paper, without using an ounce more of gold than was then in their possession.

Gentlemen forgot that, by that bill, the Bank was prohibited from paying their notes in specie, and were required only to pay them in ingots on demand; ingots which nobody Edition: current; Page: [312]wanted, for no one could use them beneficially. The charge against him was, that he had not foreseen the alteration in the value of the standard, to which, by the bill, the paper money was required to conform. No doubt, gold had altered in value; and why? Why, because the Bank, from the moment of the passing of the bill in 1819, set their faces against the due execution of it. Instead of doing nothing, they carried their ingots, which the public might have demanded of them, to the Mint, to be coined into specie, which the public could not demand of them, and which they could not pay if it did. Instead of maintaining an amount of paper money in circulation, which should keep the exchanges at par, they so limited the quantity as to cause an unprecedented influx of the precious metals, which they eagerly bought and coined into money. By their measures they occasioned a demand for gold, which was, in no way, necessarily consequent upon the bill of 1819; and so raising the value of gold in the general market of the world, they changed the value of the standard with reference to which our currency had been calculated, in a manner which had not been presumed upon.

This, then, was the error which he (Mr. Ricardo) had been guilty of: he had not foreseen these unnecessary, and, as he must add, mischievous operations of the Bank. Fully allowing, as he did, for the effect thus produced on the value of gold, it remained to consider what that effect really had been. The hon. member for Essex estimated it at 30 per cent; he (Mr. Ricardo) calculated it at 5 per cent; and he was therefore now ready to admit, that Mr. Peel’s bill had raised the value of the currency 10 per cent. By increasing the value of gold 5 per cent, it had become necessary to raise the value of paper 10 per cent, instead of 5 per cent, to make it conform to the enhanced value of gold. To estimate what the effect of this demand for gold had had upon its value in the general Edition: current; Page: [313]market of the world, he contended, that we should compare the quantity actually purchased, with the whole quantity used in the different currencies of the world; and he was satisfied that, on such a principle of calculation, 5 per cent would be found to be an ample allowance for the effect of such purchases. But the hon. member for Essex had said nothing of all this. He merely came down to the House and said, “My proof that there has been an alteration of 30 per cent in the value of money is, that there is a change to that amount in the price of wheat, and of various other commodities.” Every alteration, under every circumstance, in the price of commodities might so be solved, without the trouble of inquiry, by reference to the value of gold. If this argument were good for any thing now, it was good for all times; and we never had had any variations in the value of commodities: the variations in price, which had often occurred, were to be attributed to no other cause but to the alteration in the value of money.

But, suppose the calculation of the hon. member to be correct, and that all the alteration which had taken place in the price of corn had been owing to the alteration in the value of money, he (Mr. Ricardo) should ask him, whether, even in that case, the agricultural interest had suffered any injustice? It was not pretended, that money was now of a higher value than it was previous to the Bank Restriction bill, nor corn at a lower price. The favourite argument was, that they, the landed interest, had to pay the interest of the debt in a medium of a different value from that in which it had been contracted, and therefore, that they actually pay 30 per cent more than they would have paid, if money had never altered in value. He (Mr. Ricardo) had once before endeavoured to show the fallacy of this argument,1 and had Edition: current; Page: [314]attempted to prove, that the payers of taxes actually paid no more now, than they would have paid, if we had had the wisdom never to depart from the sound principles of currency; and that the stock-holders, taking them as a class, receive no more than what is justly due to them. The hon. member would lead the House to believe, that the whole of our immense debt was contracted in a depreciated currency; but the fact was, that nearly five hundred millions of that debt was contracted before the currency had suffered any depreciation; and the rest of the debt had been contracted in currency depreciated in various degrees. Mr. Mushett had been at the trouble of making very minute calculations on this subject,1 and had proved, that the loss to the stock-holders, from receiving their dividends in a depreciated currency for twenty years, on the stock contracted for in a sound currency, would amount to a sum sufficiently large to buy a perpetual annuity, equal to the additional value of the dividends paid on the three hundred millions of debt contracted for in the depreciated currency. He should be glad to hear an answer given to this statement. For his own part, it did appear to him, that the success of the present motion would not benefit the landed interest a jot: because the motion asked for an examination as to the changes from the year 1793 to the present moment; and, as it must be admitted, that the landed interest had derived vast advantages from the depreciation between the years 1800 and 1819, the present motion compelling them to make due allowance for the benefits they had acquired during those years, would take from them an amount equal to that which they had lost by the subsequent change.

The hon. member for Essex said, that the currency had altered 30 per cent in value; but his chief proof rested on the Edition: current; Page: [315]altered price of corn. The true cause of the greater part of this alteration was, not the change in the currency, but the abundance of the supply. The stimulus to agriculture had been great during the war, and we were now suffering from a re-action, operating at the same time with the effect of two or three abundant crops. Could the agricultural interest be ruined by an alteration in the value of money, without its affecting, in the same manner, the manufacturing and commercial interests of the country? If corn fell 30 per cent from an alteration in the value of money, must not all other commodities fall in something like the same proportion? But, had they so fallen? Was the manufacturing interest so distressed? Quite the contrary. Every thing was flourishing, but agriculture. The legacy duty, the probate duty, the advalorem duty on stamps, were all on the increase; and certainly, if a raised value of money had lessened the value of property, less might be expected to be paid generally upon transfers of property. The state of the revenue was to him (Mr. Ricardo) a satisfactory proof, if every other were wanting, of the erroneous conclusions of the hon. gentleman.

The hon. member for Essex had asked, if any man would say, that under the present system of currency the country could bear the expenses of a war? would any man say now, that the country could pay, as it did in the former war, eighty-four millions per annum? Now, this question was not put quite fairly; because, as the hon. member contended, that our currency was increased in value 30 per cent, he ought to ask, whether we could now afford to pay sixty millions per annum for a war, as we paid eighty-four millions formerly? He (Mr. Ricardo) would answer, that the country would be able to pay just as much real value under the existing system, as under any system of the hon. member for Essex’s recommendation; for he thought, that a change Edition: current; Page: [316]in the value of her currency could have no effect at all upon the powers of a country. An unrestricted paper currency created a new distribution of property. It transferred wealth from the pockets of one man to whom it really belonged, to the pockets of another who was in no way entitled to it; but it imparted no strength to a country.

Agreeing as he did most sincerely, with almost all the opinions of his right hon. friend, the president of the Board of Trade (Mr. Huskisson) on this subject, he still considered, that his right hon. friend had given too much currency to the opinion, that an unrestricted paper issue enabled us to meet with increased strength the public enemy. It was not useful to war—it was most injurious in peace—and could not again be put under control, without the grossest injustice to a great portion of the community. We had happily recovered from those effects; and he sincerely trusted, that the country would never again be subjected to a similar calamity.

It was singular, that the objection against the restoration of our currency from a depreciation of 5 per cent in a period of four years, should have come from the hon. member for Essex, who, in 1811, saw no danger in restoring it from its depreciated state of 15 per cent in a single day. The House might recollect that, in 1811, a bill had been brought in, to make paper money equivalent to a legal tender, in consequence of lord King having, most justly, demanded the payment of his rents in the coin of the realm, according to the value of the currency at the time the leases were granted. Suppose that bill had been thrown out, agreeably to the views of the hon. gentleman, who in a speech strenuously opposed the bill,1 and that the law had taken its course, and that creditors had been defended, in demanding their payments in Edition: current; Page: [317]coin—what would have been the result in that case? Would not the ounce of gold have fallen the very next day from 4l. 10s. to 3l. 17s. 10½d.? Would there have been no inconvenience in an enhancement in the value of the currency to that amount? or was the hon. gentleman prepared to say, that a rise in the value of paper of 15 per cent in one day, in 1811, would have been harmless, but that it would be ruinous to raise it to the amount of 5 per cent only, in a period of four years from 1819?

The hon. member for Essex had not dealt quite fairly by him (Mr. Ricardo) in a pamphlet which he had recently published.1 In speaking of Mr. Peel’s bill, he acquitted his majesty’s ministers of any intention of plunging the country into the difficulties which he thought that bill had caused: he paid a compliment to their integrity, by supposing them ignorant: but not so to him (Mr. Ricardo). Without naming him, the hon. gentleman alluded to him and his opinion, in a way that no one could mistake the person meant, and said, that it required the utmost extent of charity to believe, that in the advice he had given he was not influenced by interested motives. The hon. gentleman would have acted a more manly part, if he had explicitly and boldly made his charge, and openly mentioned his name. He (Mr. Ricardo) did not pretend to be more exempted from the weaknesses and errors of human nature than other men, but he could assure the House and the hon. member for Essex, that it would puzzle a good accountant to make out on which side his interest predominated. He (Mr. R.) would find it difficult himself, from the different kinds of property which he possessed (no part funded property), to determine the question. But, by whom was this effort of charity found so difficult? By the Edition: current; Page: [318]hon. gentleman, whose interest in this question could not, for one moment be doubted—whose whole property consisted of land—and who would greatly benefit by any measure which should lessen the value of money. He imputed no bad motive to the hon. gentleman. He believed he would perform his duty as well as most men, even when it was opposed to his interest; but he asked the hon. gentleman to state, on what grounds he inferred, that he (Mr. Ricardo) should, under similar circumstances, be wanting in his.

I beg particularly (continued Mr. Ricardo) to call the attention of the House, to the opinions which I have given on the cause of our recent difficulties, and which the hon. member for Essex now reprobates; as I think that, for every one of those opinions, I can appeal to an authority which the hon. gentleman will be the last to question—for it is to his own. I contend, that the present low price of corn is mainly owing to an excess of supply, and not to an alteration in the value of the currency. What said the hon. gentleman in this House, in the year 1816, when corn had fallen considerably, and when the causes of that fall was the subject of discussion? “The first and obvious cause, I say, has been a redundant supply beyond the demand, and that created chiefly by the produce of our own agriculture. Permit me, Sir, here to call to the recollection of the House the effect of a small surplus or deficit of supply above or below the demand of the market. It is perfectly well known, that if there is a small deficiency of supply, the price will rise in a ratio far beyond any proportion of such deficiency: the effect, indeed, is almost incalculable. So likewise on a surplus of supply beyond demand, the price will fall in a ratio exceeding almost tenfold the amount of such surplus. Corn being an article of prime necessity, is peculiarly liable to such variations: upon a deficit of supply the price is further advanced by alarm; and Edition: current; Page: [319]upon a surplus, it is further diminished by the difficulty the growers have in contracting the amount of their growth, compared to the means which other manufacturers have of limiting the amount of their manufacture.”1

Now, I would ask the House in what these sentiments differ from those which I have had the honour of supporting in this House, and which the hon. gentleman now thinks so reprehensible? But further, the hon. gentleman contended, in the speech alluded to, that the diminution which at that time had taken place in the amount of the circulating medium was not in any way the cause of the fall in the price of corn, but on the contrary it was the fall in the price of corn which was the cause of the diminution of the quantity of the circulating medium—“I say” (continued he) “there is nothing which will prevent it” (corn) “so falling, nor are there any means to force a re-issue of this paper currency which has thus vanished in a moment: nothing but a revival of the value on which it was founded can accomplish the object.”

On this point, I rather agree with the hon. gentleman’s present opinions, than with his former ones, that there are means of forcing a re-issue of paper, and of raising the price of corn; but I trust that we shall not have recourse to them. The hon. gentleman proceeds to say—“Now, Sir, let us turn from the contemplation of this gloomy picture, and consider what prospect there is of remedy, or what means we have of affording relief. If I am right in attributing the primary cause of all these calamities to the effects of a surplus in the market beyond the demand, the remedy must be found in taking off that surplus; or it will remedy itself in a short time by a reduction of supply. The danger is, that the Edition: current; Page: [320]11 June 1823 present abundant supply should be converted into an alarming deficiency.” The hon. gentleman goes on to say, that it is impossible, for any length of time, for the price of corn to be below a remunerating price, and that it is possible for the harvest to be so abundant as to produce loss instead of advantage to the grower. These were the opinions which he (Mr. Ricardo) held on this subject, and which he had at various times, though with much less ability, attempted to support in that House. If he had learned them from the hon. member, it was very extraordinary that at the moment he adopted them the hon. member should turn round and reproach him for conforming to his sentiments.

The hon. gentleman proceeded to animadvert on the arguments and statements set forth by the hon. mover in a pamphlet recently published,1 and particularly on one, in which the hon. member, in making up the balance of advantage which the stock-holder had derived from the several measures affecting the currency, entirely omitted to set on one side of the account, the various sums which had been paid to him in discharge of his debt by the sinking fund in the depreciated currency, and which, amounted to upwards of one hundred millions. If the money advanced by the stockholder to the public had been in a depreciated currency, so had been the payments made to the stock-holder; and it was not fair for the hon. gentleman to calculate on the sum of such advances, but on the difference between the advances and payments. As the hon. gentleman stated the question, it would appear as if all the advances to government had been in depreciated money, and all the payments from government to the stock-holder had been in currency of the Mint value. Nothing could be so little conformable to the fact; as the advances and payments were made in the same medium, and, Edition: current; Page: [321]as far as the amounts were equal, they were equally injurious to both parties.

After going through various other objections which he took to the contents of the same pamphlet, Mr. Ricardo went on to justify the opinions which he had given before the Bank committee from an attack which had been made upon them, in another pamphlet, by the hon. member for Callington (Mr. Attwood).1 He concluded by objecting to the motion. It was too late to make any alteration in the currency. The difficulties of the measure of 1819 were now got over. The people were reconciled to it. Agriculture, he believed, would soon be in the same flourishing condition as the other interests of the country. If it were not, it would only be on account of the mischievous corn law, which would always be a bar to its prosperity. As a punishment to the hon. gentleman, he could almost wish that a committee should be granted. He would, of course, be chairman of it; and tired enough he would be of his office, by the time he had “adjusted” all the interests relative to his new modus! He could not tell how the hon. gentleman would go about the performance of such a labour; but this he would say, that the immediate result of granting such a committee would be, to produce the most mischievous effects, and to renew all the inconveniences which had been previously occasioned by the uncertainty and fluctuations of the currency.

The debate extended to the following day, when Mr. Peel and Mr. Huskisson opposed the motion. Most of the speakers for the motion attacked Ricardo; one of them, Mr. Wodehouse, said that Ministers ‘were too ready to listen to the suggestions of Edition: current; Page: [322]the hon. member for Portarlington (Mr. Ricardo), whose conclusions on this head appeared to him to be utterly incomprehensible. Never could he introduce that hon. member’s name without feeling what was due to his talents, and also to his character; and, as this observation from himself must carry with it an air of presumption, perhaps he might be allowed to state in explanation, that he had sat with the hon. member for weeks on the same Committee [the Agricultural Committee], had differed with him on almost every point that had been started, but was so struck with the entire absence of all illiberal imputation, and such a manifest desire on his part of establishing only that which was fair, that somehow it was impossible not to have acquired a facility of communication, even with one so infinitely his superior. But, to believe that he had a clear perception on the subject of money, was utterly impossible.’

Mr. Western’s motion, with the addition of a clause for ‘establishing an equitable adjustment of contracts’, proposed by Lord Folkestone, being put, the House divided: Ayes, 27; Noes, 96.

13 June 1823


On the report of this bill (which added to the two kinds of beer, then taxed respectively 10s. and 2s. per barrel according to strength, an ‘intermediate beer’, to be taxed 5s., and prohibited the brewing of different kinds of beer on the same premises),

Mr. Ricardo thought the bill would be inoperative and it certainly was very unjust; as it, in fact, confiscated the property of the table-beer brewers. As to the idea of preventing weak beer from being put off on the public for strong, the public might be safely left to take care of itself. No harm could be done by passing the bill without the vexatious restrictions; at least for a year, by way of experiment.

On 17 June the bill was read a third time and passed. Ricardo voted against the third reading.

Edition: current; Page: [323]
17 June 1823


Mr. Serjeant Onslow moved that the usury laws repeal bill be committed. Mr. Davenport opposed the motion.

Mr. Ricardo argued, that money ought to be placed on the same footing as any other commodity. The lender and borrower ought to be allowed to bargain together, as freely as the buyer and seller did when goods were to be disposed of. The hon. member who spoke last,1 feared that this measure would place the borrower entirely in the power of the lender. But, did the present laws alter his situation? Certainly not. Means were found to evade the law; for though the law said, “You shall not take more than a certain interest for your money,” it could not compel a man to lend at that particular rate; and, therefore, he who wished to borrow at all events, and he who wished to lend at as high a rate of interest as he could get, both conspired to evade the law. These laws operated precisely in the same way as the laws against exporting the coin of the realm. Now, notwithstanding those laws, did not the exportation of that coin take place? The only effect of the statutes in that case was, to place the traffic in the hands of characters who had no scruples against taking a false oath. They were encouraged to evade the law, and made a great profit by so doing.

The House divided: For the motion, 38; Against it, 15. On the report stage (27 June) the bill was lost.

Edition: current; Page: [324]
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.

Edition: current; Page: [325]

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 Edition: current; Page: [326]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 Edition: current; Page: [327]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 Edition: current; Page: [328]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 Edition: current; Page: [329]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 Edition: current; Page: [330]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 Edition: current; Page: [331]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.]

Edition: current; Page: [332]
12 Feb. 1824

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.’

Edition: current; Page: [333]


(see p. xxx)

Edition: current; Page: [none]
Edition: current; Page: [none]
Edition: current; Page: [none]
Edition: current; Page: [none]
Edition: current; Page: [none]
Edition: current; Page: [none]
Edition: current; Page: [none]
Edition: current; Page: [none]
Edition: current; Page: [none] Edition: current; Page: [none]


Edition: current; Page: [334] Edition: current; Page: [335]


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 Edition: current; Page: [336]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.

Edition: current; Page: [337]


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?


[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.

Edition: current; Page: [338]

[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?


[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.

Edition: current; Page: [339]

[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?

Edition: current; Page: [340]

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?


[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.

Edition: current; Page: [341]

[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?

Edition: current; Page: [342]

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?


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

Edition: current; Page: [343]

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, Edition: current; Page: [344]does it not proceed, as a necessary consequence, that they, the Government, are enabled to borrow when individuals are not?


[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 Edition: current; Page: [345]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.

Edition: current; Page: [346]

[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.

Edition: current; Page: [347]

[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.

Edition: current; Page: [348] Edition: current; Page: [349]


Edition: current; Page: [350]


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, Edition: current; Page: [351]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.

Edition: current; Page: [352]

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 Edition: current; Page: [353]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 Edition: current; Page: [354]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 Edition: current; Page: [355]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 Edition: current; Page: [356]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, Edition: current; Page: [357]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 Edition: current; Page: [358]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 Edition: current; Page: [359]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

Edition: current; Page: [360]

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?’

Edition: current; Page: [361]

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 Edition: current; Page: [362]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 Edition: current; Page: [363]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 Edition: current; Page: [364]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 McCulloch 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.

Edition: current; Page: [365]

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 Edition: current; Page: [366]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 Edition: current; Page: [367]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 McCulloch 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 Edition: current; Page: [368]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 Edition: current; Page: [369]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.’

Edition: current; Page: [370]

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.


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.

Edition: current; Page: [371]


Jovis,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 Edition: current; Page: [372]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 Edition: current; Page: [373]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 Edition: current; Page: [374]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 Edition: current; Page: [375]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 Edition: current; Page: [376]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.

Edition: current; Page: [377]

[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 Edition: current; Page: [378]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?

Edition: current; Page: [379]

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?


[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.

Edition: current; Page: [380]

[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.

Edition: current; Page: [381]

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


[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 Edition: current; Page: [382]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.

Edition: current; Page: [383]

[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?

Edition: current; Page: [384]

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?

Edition: current; Page: [385]

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.

Edition: current; Page: [386]

[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?


[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?


[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?


[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 Edition: current; Page: [387]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.

Edition: current; Page: [388]

[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, Edition: current; Page: [389]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 Edition: current; Page: [390]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 Edition: current; Page: [391]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 Edition: current; Page: [392]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 Edition: current; Page: [393]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 Edition: current; Page: [394]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?

Edition: current; Page: [395]

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?

Edition: current; Page: [396]

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 Edition: current; Page: [397]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?

Edition: current; Page: [398]

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, Edition: current; Page: [399]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?


[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.

Edition: current; Page: [400]

[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.

Edition: current; Page: [401]

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 Edition: current; Page: [402]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 Edition: current; Page: [403]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?

Edition: current; Page: [404]

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?

Edition: current; Page: [405]

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 Edition: current; Page: [406]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.

Edition: current; Page: [407]

[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 Edition: current; Page: [408]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 Edition: current; Page: [409]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.

Edition: current; Page: [410]

[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?


[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 Edition: current; Page: [411]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 Edition: current; Page: [412]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 Edition: current; Page: [413]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?


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


[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.

Edition: current; Page: [414]

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 tha