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time. However, fortunately, the firmness of King William and Mr. Montague triumphed over prejudices in theory, misconceptions in reasoning, and the greatest financial and political difficulties. The idea that this country owed its glory and military honours to an inconvertible paper currency was ridiculous; we had abundance of prosperity and military glory before 1797, before we were blessed with an inconvertible paper currency. The true reason of her difference from other States was that she always kept her faith inviolate. It was this that cheered the country under all dangers, and caused her to exult in victory. It was this feeling that carried the country through the dismal voyage she had just accomplished, and now that they had reached the other shore in safety, let them not abandon the great principle which had supported them. Every consideration of policy, good faith, and justice, called upon them to restore the ancient and permanent standard of value. He allowed that he had once entertained views different from those he now held, but he had given his mind candidly to a re-investigation of the whole subject, and he felt himself bound to state honestly, that he was now a convert to the doctrines regarding our currency he had once opposed.
132. The debate that followed was chiefly composed of a strain of congratulation and rejoicing at the course adopted by the Government, and approval of the resolution. Mr. Tierney was averse to compliment Mr. Peel too much, as he was thereby only complimenting the opinions he himself and his friends had been advocating for many years. But, nevertheless, it was a source of sincere pleasure to him to see the maxims he had so long been contending for adopted as true policy by the House, especially as such ample justice had been done to them by Mr. Peel, who now avowed them for the first time. Mr. Ricardo said that, when the directors of the Bank were called individually before the Committee, they fully admitted that the price of gold and the foreign exchanges were affected by the amount of their issues, but, when collected as a court they resolved in direct opposition to such opinions. When they avowed such inconsistent opinions, and after the experience the House had had of their conduct, it would be the highest indiscretion in Parliament not to take the preparations for the resumption of cash payments
out of their hands. Mr. Alderman Heygate was almost left alone, to adhere to the opinions of Parliament in 1811; he maintained that no depreciation of the paper did exist at that time, or ever could exist. However, the current of opinion was so strong and unanimous, that, though some unimportant amendments were brought forward, modifying some details in the resolutions, but not at all denying their general truth, these were all withdrawn, and the resolutions were passed without a dissentient voice. Mr. Canning declared, amidst loud and general cheering, that it was the unanimous determination of Parliament that the country should return as soon as possible to the ancient standard of value, in the establishment of a metallic currency. The bill passed the Commons with little further remark.
133. In the House of Lords the Marquis of Lansdowne rejoiced at the introduction of the Bill, on account of the sound principles of political economy it contained, by recognising a metallic standard as the only safe foundation for the circulating medium. It recognised the great principles, that the price of gold and the foreign exchanges depended upon the state of the currency. He hoped the country never again would hear the wild theories about the currency, which had been so prevalent, which were very properly stigmatised by the bill before them, every enactment of which declared their falsehood. By acting on those ruinous ideas, the country had been burdened with an overwhelming mass of debt and taxation. The Earl of Liverpool said the bill had met with no opposition, and required no defence. The chief provisions of this Act, Statute 1819, c. 49, were—
1. "The Acts then in force for restraining cash payments should be continued till the 1st May, 1823, when they were finally to cease.'
2. "That, on and after the 1st February, and before the 1st October, 1820, the Bank of England should be bound, on any person presenting an amount of their notes, not less than of the value or price of 60 ounces, to pay them on demand at the rate of £4 1s. per ounce, in standard gold bullion, stamped and assayed at the Mint."
3. "That between the 1st October, 1820, and the 1st May, 1821, it should pay in a similar manner in gold bullion at the rate of £3 19s. 6d. per ounce."
4. "That between the 1st May, 1821, and 1st May, 1823, the rate of the gold bullion should be £3 17s. 10 d. per ounce."
5. "During the first period above mentioned, it might pay in gold bullion, at any rate, less than £4 1s., and not less than £3 19s. 6d. per ounce; in the second period, at any rate, less than £3 19s. 6d., and not less than £3 17s. 10 d., upon giving three days' notice in the Gazette,' and specifying the rate; but, after doing so, they were not to raise it again."
6. "These payments were to be made in bars or ingots of the weight of 60 oz. each, and the Bank might pay any fractional sum less than 40s. above that in the legal silver coin."
7. "The trade in gold bullion and coin was declared entirely free and unrestrained."
134. In conjunction with this Act, a most salutary measure was passed (Statute 1819, c. 76), to put a stop to the evil which the Bank directors themselves alleged had brought about the catastrophe of 1797, viz., the enormous sums the Government had been in the habit of demanding from the Bank by way of advances, without any parliamentary security, which Mr. Pitt had so grossly abused. By this Act, the Bank was forbidden to make any advances of any description, without the express and distinct authority of Parliament for that purpose first had and obtained.
135. Thus, at length, this great act of national good faith was accomplished. The final triumph of these great principles of truth and honesty is a memorable example of the innate power of truth to gain the ultimate victory when allowed the inestimable advantage of free discussion. No one of ordinary intelligence will now venture to deny that the currency was greatly depreciated at the time the Bullion Committee were appointed, and if the coin had been degraded to the value of the paper, it would simply have been a national bankruptcy. An amazing amount of ingenious sophistry was employed, no doubt much of it proceeding from honest though mistaken conviction, a still larger portion of it arising from the supposed interests of commerce, to maintain that Bank notes were not depreciated. The real truth, however, was discovered by Mr. Thornton and Lord King, and published by them, in the pamphlets alluded to above. It was
unhesitatingly adopted by the greatest statesmen of that day, as appears by the Report of the Committee of 1804; it was then pronounced more loudly and distinctly, and with greater authority by the Bullion Committee in 1810, but it was ridiculed and condemned by the great majority of the commercial world, whose wild speculations it had a tendency to curb, and rejected by an immense majority in Parliament in 1811. But the labour was not wasted in vain. The seeds of truth were firmly planted in the public mind; the doctrines, thus despised and rejected in 1811, were sifted and discussed by the public during the next eight years, and when the next discussion upon them took place in 1819, they had obtained the irresistible ascendancy in the public mind, so that they were enthusiastically adopted by Parliament without a dissentient voice.
136. The overwhelming preponderance of mercantile opinion in 1819 adhered to the doctrines of the Bullion Report. One body alone obstinately refused to be convinced-the majority of the court of directors of the Bank of England. Six of their directors had given their evidence in favour of the new doctrines; but the court determined, with inveterate pertinacity, to have a last fling at them, and passed the resolution we have already quoted. It took eight years longer for the light to penetrate the Bank parlour. At length, in 1827, the Bank was at last compelled to strike its colours, and the resolution of 1819 was solemnly expunged from its books.
137. When, as we have already seen, the doctrine of the rise of the market price of bullion, and the fall of the foreign exchanges from a depreciated currency, were so well understood by the merchants and statesmen of 1696-7, and the political economists of the last century, it may be interesting to inquire what was the fallacy that so long imposed upon men of undoubted ability, and who doubtless held their convictions in perfect good faith and honesty? What was the cause of the great degeneracy in sound doctrine between 1696 and 1811, so that it became necessary to argue the question from its very foundations? It was this, that the men of 1696 could see that the coinage did not contain much more than half of its proper weight of bullion. But the men of 1811 failed to see that the Bank note
could only preserve its value by maintaining a certain proportion with the metallic currency. That an excess of quantity of the notes diminished their value relatively to gold; and this diminution in the value of the promise compared to what it professed to represent, was exactly identical in principle with a debasement of the coinage by alloy, or a depreciation of it from deficiency in weight of bullion. When the Bank note became the measure of value, it was imperatively necessary that they should be able to purchase in the market the weight of bullion they professed to represent. When bullion rose to £5 10s. when paid in Bank notes, they were exactly in the same predicament as the coinage was under William III., when it had lost 25 per cent. of its weight. The diminution in the weight of the coinage was palpable to the senses, the diminution of the value of the "promises to pay" was only perceptible to the eye of reason and intelligence, and long escaped the observation of men who conscientiously disbelieved it.
138. We will now bring this long but important discussion to a close, by observing that the grand principles of the Bullion Report are not what are properly termed matters of OPINION at all, but of DEMONSTRATION. Persons of the most excellent taste and judgment may entertain the widest differences of opinion on the comparative merits of various poems, or pictures, or pieces of music. There is no absolute standard of truth, which will enable any man to assume the office of arbiter on any of these subjects; at least none has yet been discovered. Different poets, artists, and musicians are most in harmony with different mental constitutions, of which there is no unerring standard of excellence. So in politics, it is a pure matter of opinion and judgment which is the best form of government, and which is most suitable for any particular people. But the principles of monetary science, as laid down in the Bullion Report, are matters of a totally different nature, they are matters of pure geometrical demonstration. They are no more matters of opinion, in the proper sense of the expression, than the demonstrations of Euclid are matters of opinion. It is acknowledged that there is an absolute standard of truth in such matters. There are many excellent persons, and of good ability in other respects, whose mental constitution is such that they never can follow out the