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practice which 22 years' usage had accustomed some to consider as the natural state of the currency of the country.
129. Lord Grenville spoke with great earnestness in favour of the resolutions, and his sentiments deserve most particular attention, because he was one of the Cabinet who originally proposed the Restriction Act. He now, however, came forward to repeat, in the most emphatic terms, what he had already avowed, that he considered the restriction as one of the greatest calamities under which this suffering country laboured. He had frequently had occasion to lament and deplore the part which he had himself taken on its original proposition, in prolonging it for the term of the then existing war. Having avowed his error in so doing, as became an honest man, at the commencement of the last war, and having foreseen, but too truly, all the misery that followed, he felt great joy that the country could now look forward with certainty to the repeal of that injudicious and unfortunate measure. There was no difference in principle between the excessive issues of the Bank of England and those of Austria, Prussia, and Russia. He was most anxious to place on record his opinion, that the evils of the restriction had far counterbalanced its good, and that future statesmen might know that the opinion that this measure had saved the country was not unanimous. He hoped it would be recorded of him, as his decided conviction, that in proportion to the danger under which the country laboured, was the impolicy and desperate madness of such a measure as they were now considering how to rescind. Whatever temporary advantages might be furnished to individuals from too liberal issues, those very individuals generally suffered tenfold injury. While the Bank was lending money with one hand, with the other it was shaking the foundation of contracts, affecting all prices, involving the country in distress, and individuals in ruin ten times greater than any benefits they could derive from liberal issues. Increased bankruptcies invariably followed increased issues. The miseries of 1816 were the sure consequences of the extravagant issues of the preceding year; the country bank paper, which was not propped up by law like Bank paper, was fearfully depreciated and had involved the whole kingdom in general desolation. Trade, commerce, agriculture, the classes even most remote from any
connection with the paper system, found themselves suddenly consigned to total and inexplicable ruin. The sight of the misery thus caused would fill them with horror. In commerce, as in war, there could be but one sure basis of management, and that was a currency regulated by a standard of metallic value. Not that metal was necessary as metal, but as possessing value. It was impossible to represent value except by value. For this reason, all civilised countries had adopted a metallic standard. The original names of the divisions of money in all known languages referred to the weight of the metal. It was so among the Hebrews, the Greeks, the Romans, the French, the English. The pound in England, and the livre in France, were originally a pound weight of metal. The weight of the metal had been diminished in each country in the coins at different periods, but each case of such reduction was a fraud upon the people, and it had always been done in times of discontent and turbulence. It was attempted to be done in the days of Edward VI., but the advisers of the measure were compelled to retrace their steps through fear of an insurrection. It was time, therefore, to return to a fixed measure, and to put an end to a system of variable value, when every one's property was at the mercy of a body of individuals. We must have a currency established on public faith-on public laws. The depreciation of the paper currency had been nearly one third, and every one who held it had lost to that amount. There was no disposition now in any class to deny this. The Directors of the Bank of England alone refused to admit the principles of the Bullion Report-so wisely and irrefragably established by that great man, the late Mr. Horner-a report, which could not be read without instruction and admiration, for the depth and soundness of its doctrines, and bitter regret for the premature loss of a statesman who was so well calculated to serve and adorn his country. If the Directors would only now believe in the Bullion Report, there might be some hope of them, but as they did not, they were the last persons who should be left to manage the currency at their own discretion. He did not believe in any calculations as to the quantity of circulating medium necessary. It was now time that the connection between the Government and the Bank of England should be dissolved. It was in direct violation of the principles upon which the Bank
was founded. They must revert to the legitimate standard of this country, in respect to its currency. It was not the value of that currency, but the value of the metal by which it was regulated, as paper was regulated by the price of bullion. In the Bullion Report, which, hereafter, he did not doubt, WOULD FORM A STANDARD, CONSTANT AND UNERRING, in the political economy of this country, of whose extraordinary merit he was not aware until lately, this subject was clearly defined. He gave his entire, unlimited, and unqualified approbation to the ministerial resolutions.
130. Such are short outlines of the speeches of Lord Liverpool and Lord Grenville upon this momentous question, which well deserve to be studied at length in the present time, when many of the heresies and fallacies they combated so strongly and convincingly, seem springing up again in the public mind. The resolutions were then put and agreed to without a division.
131. The resolutions in the Commons were introduced by Mr. Peel, on the 24th May, who freely owned that, in consequence of the evidence he had heard, and the discussions upon it, his opinions had undergone a material change. He acknowledged, without shame or remorse, that his opinions were very different now to what they were when he voted against Mr. Horner's resolution in 1811. Having determined to dismiss from his mind all former impressions, and the memory of the vote he had formerly given, and to give the question his unprejudiced and undivided attention, he had now come to the conclusion that Mr. Horner's resolutions represented the true nature and laws of our monetary system. Every sound writer agreed that the true standard of value consisted of a definite quantity of gold bullion, a certain weight of which, with an impression on it denoting it to be of that certain weight and fineness, constituted the only true, intelligible, and adequate standard of value. No doubt the Bank was perfectly solvent, but did it follow from that there could be no over-issue of its paper? If solvency alone was a sufficient proof that there was no excess of circulation, the theory of Mr. Law was just, and the land, as well as the funds, might be safely converted into a circulating medium. There was, in fact, no test of excess or deficiency, but a comparison with the price of gold,
As the Bank had so entirely repudiated the principles of the Bullion Report, they could not be expected to act upon them; it might, therefore, appear necessary to prescribe such a limitation of their issues as would secure the power of the Bank over the foreign exchanges. He himself thought this a very unwise plan because it depended so much on circumstances, whether or not there was an excess of circulation. There were occasions when
what was called a run on the Bank might be arrested in its injurious consequences by an increase of its issues. There were other occasions when such a state of things demanded a curtailment. In the year 1797, when a run was made on the Bank, but when the exchanges were favourable, and the price of gold had not risen, it was proved that an extension of issues might, by restoring confidence, have rendered the original restriction unnecessary. On the other hand, if the run was the effect of unfavourable exchanges and the consequent rise in the price of gold, the alarm must be met by a reduction of the issues. It was, therefore, impossible to prescribe any specific limitation of issues to be brought into operation at any period, however remote. The quantity of circulation which was demanded in a time of confidence, varied so materially from the amount which a period of despondency required, that it was an absolute impossibility to fix any circumscribed amount. He said that the time was come when the connection that existed between the Government and the Bank must be dissolved, and it must revert to its original principle of business. The obstinate opinions of the Directors of the Bank, shewed that they were unfit to be trusted with the management of the pecuniary interests of the British community. The House must resume its powers which it had abdicated too long. There could be no inconvenience in compelling the Bank to pay in specie at the Mint price. They had done so from 1776 to 1797, and the price of gold never rose above £3 17s. 6d. But it was said that it had since risen to
The fact was, we gold, and its price
£5 2s., and that the standard was variable. had since then introduced a substitute for was considered in relation to that substitute. Let not the House be led away by any calculation to mistake the PRICE for the VALUE. When people talked of gold rising in price, were they prepared to shew that it had risen in intrinsic value? Let them not talk of its price in paper, but in any other commodity
of a real and fixed value. So far from gold having risen in value, since the last fifty years, it had actually fallen in value, partly from the greater abundance of the metal itself, and partly from the substitutes that were used for it. A very prevalent theory was, that instead of regulating paper by the value of gold-gold should be regulated by the value of paper. This was nothing
less than a fraud upon the public creditor. It was vain to think that foreign nations could be imposed upon by such a deception. The only result would be, that after the public creditor had been cheated, the coin would be debased. The only course was, to revert to the ancient standard of the realm, and to beware of arguments, which were were not only fraudulent, but would not accomplish their own objects, while they would aggravate present difficulties. Every deviation from the ancient practice would be quoted as a precedent for a more extended departure from that practice. Under future difficulties the conduct of their ancestors would be panegyrised by the advocates of the suspension of cash payments, and conclude because the price of gold had risen still further in its relation to paper, that the principle by analogy ought to be extended. The restoration of the value of our currency had always been a striking political feature in the history of the country, and an object of the most earnest solicitude of our most distinguished statesmen. Three periods were especially memorable for great reforms in the coinage-in the reigns of Edward I., Queen Elizabeth, . and William III. These periods must ever be regarded with pride and satisfaction. greater difficulty than the present. accession, the coin was reduced to Under Burleigh's advice she resolved to restore the value. Plenty of persons dissuaded her from that idea, alleging the difficulties of the attempt. But Burleigh maintained that those very difficulties should constitute the motives for perseverance, as they must raise and establish the character of the country, and inspire its enemies with respect. The Queen had nobly persevered, and in her monumental inscription, above all her titles to distinction, this one shone preeminent "MONETA IN JUSTUM VALOREM REDUCTA." He then detailed the restoration of the coinage by William III. The arguments against it in those times were identical with those used against it at the present
They were of much On Queen Elizabeth's of its nominal value.