The Sun.
London, England, 1822-06-13 00:00:00

SUN.

land, which, as it possessed the power of regulating the quan-
tity of the circulating medium, could depreciate tie currency
whenever it pleased, without any limit. While the Bank of.
England possessed such a power, why should the country
Banks be obliged to pay their one-pound notes in gold, which
were equal in value to those of the Bank of England of the
same denomination, while no such restriction was imposed
upon that Bank ? Indeed he considered it impossible--
and if it were possible, most unjust, that the country banks
should be obliged to pay in specie, while the great leviathan
was suffered to issue as much paper as it liked. He was very
unfortunate in being misunderstood as to his opinion, that
gold was a proper standard. The worthy Alderman said, if
gold were the index of the depreciation of the currency, his ar-
gument was good ; and a small sacrifice, namely, altering the
value of the currency only three or four per cent., would re-
move the whole difficulty. He (Mr. Ricardo) would suppose a
metallic circulation, and clipt about 10 per cent. Would the
Hon. Alderman call this a depreciated currency ? he thought
he would, because it must have have lost one-tenth of its actual
value. Now, during this depreciation, it was possible that
gold itself might, from several causes, increase in value, while
the currency was depreciated from the cause he had just men-
tioned. This brought him to the 'argnments which he had
used on the subject of the depreciation of the currency. He
( Mr. Ricardo) had always maintained that gold was the index
of the depreciation, but never of the value of the currency. He
had said that if a regular currency were to be established, it
was only necessary to raise it 5 per cent., and bring it to par.
The only effect which would result from this measure, would
be to raise the price of commodities 5 per cent. He never
meant to say there were no causes which would not operate on
the value of gold. He admitted there were many causes; but
these were causes to which all countries were subject as well as
England ; but he maintained that the variation in the value of
gold ought not to be subject now to more causes than be-
tbre the depreciation, or than it is subject to in other coun-
tries. In the same way that abundance, or scarcity, or im-
provements in machinery, operated on the value of com-
modities, so did an abundance or scarcity of gold effect its
value. For instance, the new situation of South America
would impede the getting gold, and consequently would
considerably enhance its value in Europe. When he deli-
vered his opinion on the subject in 1819, he did not exclude
all these possible operations on the value of gold. The
Honourable Gentleman here read an extract from his own
pamphlet, to show that he could have never maintained the
doctrine that gold was not variable, because he stated in that
pamphlet that gold was variable ; but that it was still the best
standard to be adapted, because it was less variable than any
other. He did not consider the question was fairly argued. It
was necessary to consider the state of the currency in 1813,
when under the management of merchants of the highest re-
spectability and character, but who were totally ignorant of the
principles upon which currency should be regulated. During
this period the currency was so driven backward and forward,
that nobody could precisely ascertain the value of a bank note.
In 1819, and even for four years before, the bank was in such a
state, that it brought the currency within 5 per cent. of its real
value. A fixed standard then became necessary, and they had
only to choose between either adopting the standard of that
day, or recurring to the old one. But aien the system was so,
the currency still went on. The standard might have been then
fixed at 4/. 9s. but as it was not determined to adopt that course,
it was considered wiser to turn back to the old standard. He
believed the country, after what it had already suffered, ought
never again to be induced to alter its currency. If the Bank
knew how to manage its affairs ; if it knew the principles upon
which the currency ought to be regulated, it might have main-
tained it at par, by properly apportioning the amount of its is-
sue. If the Bank wished•to show they knew the principles of
currency, they would have made bullion at the Mint price, and
the foreign exchange would have been at par. lie did not ex-
actly understand what the Hon. Member for Essex meant by
saying that corn was the best standard. He must have meant
it either as a substitute for metallic currency, or that the ave-
rage price of corn would be the criterion by which to correct it.—
But lie (31r. Ricardo) considered it unfit for either purpose, be-
cause it was liable to frequent alterations. The Hon. Member
quoted 31r. Locke and Adam Smith in support of his propo-
sition. But what proof did these eminent writers give that
such a standard would be the best ? They gave the price of
corn for ten years ; and because it appeared to continue fixed
for that period, decided it would be the best standard. But
these writers did not see the fallacy under which they la-
boured, because they forgot . that money was variable, and it
was only on the supposition that money was invariable, that
corn could be the best standard, because if money were vari-
able so must corn. Indeed corn was the worst standard that
could be adopted, because it must be admitted there was no
commodity which within a short period was likely to
vary so much. In a very populous country, a great quantity
of bad land must necessarily be thrown into cultivation,
from which a considerable quantity must be produced. • On
this land more capital and labour must be expended, and
corn therefore rise in proportion to remunerate the grower.—
From that cause corn was evidently a variable measure.
No discovery of new manure could be made ; no improved
threshing machine could be invented, which would not tend
to reduce the price of corn. here then were two causes
acting in direct opposition to each other; the one to raise
and the other to lower the price of corn, the result of which
must be a constant variation in its value. Adam Smith
founded his opinion, that corn would be the best
standard on this, that a certain quantity of corn would sus-
tain a man for a given time ' • but this reason was applicable
to other commodities also. On these grounds he contended
that corn was the worst of all standards. If it were object.
ed to gold, that an increased demand might give it an in-
creased value, and thus alter the standard, yet he answered
that such increase would not not be permanent, and that gold
would again come back to its proper value. Though the
Bank, by purchasing 15 or 20 millions of gold, temporarily
increased its value, yet no person would contend that it
would not again be lowered. If the Honourable Member for
Essex, in calculating during the depreciation, the price of
wheat as compared with the standard of 1813, had extended
his research a few years farther back, he would have seen
that corn was then as variable as during the depreciation.—
In 1792, the price of wheat, per quarter, was - 425.
1796 77
1798 50
1801 llB

Now during the last of these three years, it was seen the price
of corn more than doubled.
In 1803, wheat per quarter was - - - 1565.
1810 - - - - - - 106
1814 - - - - - - 73
He would next consider flour, and it would appear it was
equally fluctuating in value. In July, 1801, the price of flour
at the Victualling-office at Deptford was per sack 1245.
In December of the same year - - - 72
December, 1802 - - - - 52
December, 1804 - - - - 89
1809 - - - - 50
These variations in price, so far from being new difficulties,
it was impossible to find any two or three years in which the
prices were not equally variable—a proof of the impracticability
of making corn a standard of currency. It was true that Mr.
Tooke mentioned in his evidence before the Agricultural Com-
mittee the fall in the value of commodities; but he was ready
to assign as the cause of this fall, the increased quantity of the
articles in which a reduction in price took place, which com-
pletely agreed with his (Mr. R.'s) doctrine, that superabundance
was the cause of the present distress. The Hon. Member for
Essex referred to the loans, and said that they should now pay
a larger quantity of wheat for these loans than they were worth
when borrowed ; but he was astonished to hear a rise in the
Funds ascribed to the currency. Jf so, the diminution of
the quantity of money in circulation ought to lower them.—
Did the Honourable Member forget, that in the American,
war the three per cents. were so low as 53, and rose to 97,
without any alteration in the currency ? The -Honourable
Member for Shrewsbury (Mr. G. Bennet) admitted that all
alterations of the currency were injurious to one party or ano-
ther, and the measure now proposed was not likely to quiet, but
keep alive a feverish agitation in the country. The decision
to which the House now came ought to set the question
at rest—its discussion being attended with so much injury.—
If the motion of the Hon. Member Wien expected to succeed,
every man would invest his capital in land, gold, or some
other commodity, and not keep it in that currency in which he
expected further depreciation. The measure of 1819, he be-
lieved, did most injury, by the fears and alarms which it ex-
cited ; but now, as the country got over them, and no further
depreciation was apprehended, he thought it would be a very
unwise measure to repeal the Bill by which the alteration was
effected. The Hon. Member for Essex said that the alteration of
the currency in 1813 depreciated it 42 per cent. Now, taking the
Price of gold at Si. 10s, then, And its real value at 3/. 17s. 10d.