But the legislation respecting the coinage of the realm did not affect the resumption of cash payments by the Bank, or the discontinuance of an inconvertible paper currency. As was expected, as soon as the great exigencies of war ended, the amount of treasure in the Bank increased enormously; and consequently, in January 1817, the directors offered to pay in cash all the one-pound and two-pound notes bearing date prior to January 1816, but no demand was made. In September, also, another notice was issued to the same effect, but with no other result. In 1818, however, an unfavourable state of the exchange, caused mainly by large foreign loans contracted, and a voluntary engagement entered into by the Bank to pay the fractional part of dividends, as well as a certain portion of their notes in cash, effected a considerable drain, and the treasure was greatly reduced. It was under these circumstances that, early in February 1819, committees of both Houses were appointed to consider the state of the Bank of England with reference to the expediency of the resumption of cash payments. And both committees agreed in reporting that the best mode for restoring a metallic standard would be to permit the Bank to pay its notes in gold bullion at the Mint price instead of gold coin. According to the Lords committee various advantages attended this plan in preference to a simple resumption, in the first instance, of cash payments by the Bank. It established, equally with cash payment, the principle and the salutary control of a metallic standard, while it afforded the best prospect of avoiding or diminishing many of the inconveniences which many persons apprehended from that measure. It exempted the Bank from the obligation of providing a quantity of gold necessary to replace, in case the public should prefer coin to paper, all the smaller notes to the amount probably of 15 or 16 millions. And it continued to the Bank, and therefore to the nation at large, all the advantages to be derived from the employment of a capital equal to the amount of all the small notes in circulation. On May 6 Mr., afterwards Sir Robert, Peel presented the report of the committee to the House of Commons, and, on the 24th, he made his famous speech on moving resolutions for the resumption 6 The resolutions, which were carried and formed the basis of the new law, provided, that after February 1 and before October 1, 1820, the Bank of England should be bound, on any person presenting an amount of their notes not less than of the value of sixty ounces, to pay them on demand at the rate of 41. 18. per ounce in standard gold; that between October 1, 1820, and May 1, 1821, the Bank should pay in a similar manner in gold bullion at the rate of 31. 198. 6d. per ounce; that between May 1, 1821, and May 1, 1823, the rate of gold bullion should be 31. 178. 104d. per ounce; that during the first period above-mentioned the Bank should be at liberty to pay in gold bullion at any rate less than 4. 18., and not less than 31. 198. 6d., per ounce; in the second period at any rate less than 37. 198. 6d. and not less than 37. 178. 103d., upon giving three days' notice in the Gazette, and specifying the rate; but that after loing so they should not be at liberty to raise it again; that the payments should be made in bars of ingots of the weight of 60 ounces each, and that the of cash payments by the Bank. To his mind a return to the old standard of value was absolutely necessary, and every sound writer had come to the same conclusion with Sir Isaac Newton, that a certain weight of gold bullion, with an impression on it denoting it to be of a certain weight and fineness, constitutes the only true, intelligible, and adequate standard of value. Sir Robert Peel proved, by historical facts relating to the reformation of the coinage in the reigns of Edward I., Queen Elizabeth, and William III., that the restoration of the value of the currency was always a striking political feature in the history of this country, and concluded with urging the adoption of the sound policy he had indicated in the following terms:- Let us adhere,' he said, 'to that good faith in time of peace, and towards the public creditor, which we practised in war and towards those foreigners whose country was at war with us. Let us recollect that the fluctuations of price which an inconvertible paper currency occasions are injurious to the labourer, who finds no compensation in the rise of his wages at one time for the evils inflicted by a depression of another. Every consideration of sound policy-every obligation of strict justice-should induce us to restore the ancient and permanent standard of value.' The justness and soundness of these remarks carried conviction in the mind of everyone; and though petitions from merchants and bankers continued to be presented, recommending caution or offering a decided opposition, the bill for the resumption of cash payments met with scarcely any opposition, and became the famous Act of 1819.7 Bank should be able to pay any fractional sum less than 40 oz. above that in the legal silver coin, and the trade in gold bullion was declared to be free and unrestrained. 7 59 Geo. III. c. 49. CHAPTER VII. COMMERCIAL AND ECONOMIC PROGRESS, 1801-1821. Condition of France and other Countries at the Termination of the War.Operation of War on the Rise and Fluctuations of Prices.-Population of the United Kingdom in 1801 and 1821.-Amount of Property assessed to Income Tax in 1814-15.-Savings Banks.-Advance of Science in England.-Progress of Geography and Navigation.-Diagrams of the Price of Wheat and other Commodities, 1760-1820. YEARS of warfare, pursued with the utmost vigour, and on a scale altogether unprecedented, paralysed and destroyed the resources of most states in Europe, and left them in many cases ruined and exhausted. France had to suffer the loss of the flower of her manhood, and it was long before she was able to give herself to the arts of peace. Spain immensely suffered from her war with England. Her finances were exhausted; her taxes were heavy; her industry was shattered; and she was paralysed by a terrible war in her colonies, which ended with the emancipation, one after another, of Mexico, Caracas, Brazil, Peru, and other states. Portugal, which by the aid of England succeeded in repelling Spanish invasion, concluded a treaty with England in 1807, by which British goods were to enter Portugal at a duty of 15 per cent. ad valorem, whilst all other goods were to pay double. In 1819 she resolved to impose heavy duties both on grain and foreign products, and to strengthen the monopoly of the Douro Company. Holland was crushed by the invasion of French troops, whilst the blockade of Texel destroyed the commerce of Amsterdam. Belgium maintained herself as well as she could, and at the reopening of the mouths of the Escaut, Antwerp was able to carry on some trade side by side with Amsterdam after the union of Belgium with Holland under the name of the Netherlands. The Treaty of Paris of 1814 restored to Holland her colonies in the East Indies, except Ceylon, the Cape of Good Hope, Demerara, and Berbice, which were annexed to England. Germany, which had so long been the battle-field of the Continent, had but little commerce left; but Prussia, which gained in political ascendency by the treaty of 1815, began to carry into effect the principles of Frederick the Great, by abolishing the internal customs duties and adopting the principles of protection to native industry in her tariff of imports. The treaty of Prussia with the Prince of Schwarzburg-Rudolstadt, negotiated in 1819, was the commencement of the German Customs League, well known as the Zollverein. Russia and other states were as yet far behind as commercial and industrial countries. In England and elsewhere there was throughout the period an extreme fluctuation of prices, whilst trade continued most uncertain and speculative. At the commencement of the war a considerable fall of prices took place, caused in a great measure by the monetary crisis, which set in with force. Gradually, however, the loss of the vintage in France, the extraordinary competition in the purchase of naval stores for the belligerent powers, the prospect of war, first with one and then with another of the great producing countries, the close of the ports, and the long-continued deficiency of the crops in this country, caused prices to run up to an extraordinary height in 1795 and 1796, so high, indeed, as to cause a reduction of consumption and a consequent reaction. The following are specimens of fluctuations, taken from Mr. Tooke's "History of Prices: War had the effect of enhancing the prices of many articles of foreign produce and raw materials,' but the highest prices were realised at different times, from circumstances partly of a general character, and partly special to each article. By reference to Tooke's History of Prices' it will be seen that ashes, Barilla, rose from 178. to 188. per cwt. in 1792 to 578. to 59s. in 1797, and to 758. to 808. in 1808; bristles, from 1878. per cwt. in 1792 to 2278. in 1801, and 470s. in 1809; coffee, from 1098. to 120s. per cwt. in 1792 to 1658. to 1808. in 1804; cochineal, from 138. 'Mr. Tooke, in his Thoughts and Details on High and Low Prices, showed that it is an error to suppose that war necessarily raises the prices of provisions and commodities. Whilst a disturbance of the channels of circulation may tend to increase the cost of certain merchandises, diminished employment and national prosperity will have the effect of diminishing the demand. During war from 1740-1748 the price of beef averaged 21427d. per lb. During peace, 1748-1754, the average price was 2.841d. per lb. During war, 1755-1762, the average was 21-617d. per lb. During peace, 1763-74, it was 23.195d. per lb. During war, 1775-82, the average was 3.312d. per lb. During peace, 1783-92, it was 3-119d. per lb. |