CHAP. VII. 1811. 27. the present disturbed state of the world, that by contracting its issues to three or four millions of notes, the Bank might continue to pay uninterruptedly in cash; the unnatural value thus given to the circulating medium from its scarcity counterbalancing the extraordinary demand. for gold to send abroad. But the effect must be, that the nation, for all practical purposes, would be left without an adequate circulating medium, the Bank would suffer in a comparatively small degree, but the nation would be ruined. "Sir F. Baring, an authority entitled to the very Continued. highest respect, declares that he does not consider banknotes to be depreciated;' and the Continental merchant referred to in the report says, 'Bank-notes may not represent what is on the face of them, because that something has risen in value, but something in fact equally real, though not equally available to equalise the balance of trade. What is called depreciation of the notes, is not the consequence of an over-issue, but of the enemy's measures; and it has not recovered for that reason, not because they are not convertible into cash.' Doubtless, as long as cash could be procured on demand and exported, the exchange and price of gold could never rise. But where is the gold to come from to equalise this account, when our extraordinary expenditure within the last two years for corn, foreign freights, and Government expenditure alone, exclusive of the price of our ordinary imports, is estimated at from twenty to twenty-five millions sterling, leaving a balance upon our whole payments, commercial and political, of from eight to seventeen millions against us. With such a balance against us, how is it possible for the banks or any other body to add to its stock of gold, so as to make a recurrence to cash payments? With such a balance against us, which must be provided for, how or where are we to purchase it abroad, or retain it in circulation, if we have got it? Are you prepared to withdraw your army from the Continent, to let down your expenditure, and abandon your allies, in order to bring the VII. 1811. exchanges round, and call back the precious metals. I CHAP. can understand such a system, whatever I may think of it. But to continue your exertions against the enemy, and at the same time break down the system of currency, by which alone it has or can be supported, is the most impracticable thing that ever was attempted. 28. "The advantages are great of a local circulation of adequate and not superfluous amount, and duly secured, Continued. undisturbed in its operations by being directed to the liquidation of foreign demands. See this advantage in the most striking manner in the internal state of the empire at this moment. We feel the inconveniences of an adverse exchange in our foreign commerce, but it does not affect our internal prosperity in the slightest degree. The enemy may disturb us in the disposal of our surplus produce, in our external expenditure and supplies from the Continent, but he cannot affect our internal industry for our own markets in the smallest degree. How small, comparatively speaking, is the external question, and how absurd would it be for us to suffer our immense transactions at home to be deranged, by attempting to conform them to all the violent fluctuations which the enemy's lawless power can give to the Continental exchanges, and through it to the price of bullion! We have, happily, through the integrity and wealth of our Bank, and a state of credit between man and man unexampled in any other State, succeeded in realising a system which the enemy cannot shake, and which, if preserved, is likely, under Providence, to carry us safely through all our difficulties. Let us recollect the successive efforts which have been made by its opponents to shake this mighty empire, first by arms and invasion, next by Jacobinical principles and rebellion, latterly through the extinction of commerce. All these have failed, and he now rests his last hopes on shaking our safety through the destruction of our established currency, the instrument of our prosperity, and the source of all our power. It is CHAP. VII. 1811. 29. well known that when the report we are now considering was received in Paris at the close of last session, the ruler of France was on the point of abandoning his Continental System. But when he read that document he resolved to continue it, for he believed that he had at last struck us in a vulnerable point-that what had annoyed France had ruined Britain. "Let it be recollected that I thoroughly admit a recurConcluded. rence to cash payments, when circumstances will permit, to be essential to public credit. I rest my justification of the existing system upon the plea alone of an overruling necessity-a necessity not arising from an ordinary state of war, but arising out of the extraordinary and new principles on which the present contest has been conducted by the enemy. When the necessity ceases, I trust xix. 986 the system now in operation will cease with it; and I am sanguine in my belief that, with industry and commerce so flourishing, the return to our former habits, the drain of war being at an end, will not be a work of difficulty, and need not be a work of time. But, in the mean time, as it has been our policy in conducting the war to annoy the enemy abroad rather than await his attack on our own shores, so let us preserve that system of currency which enables us to confine his violence to the Continent, and to deny to him the power of interfering with or shaking the most vital branch of a system under which 1 Parl. Deb. we flourish as a nation, and through the fruits of which we are enabled to maintain the contest on behalf of the world as well as ourselves."1 1011. 30. debate. 15, 1811. Upon a division after this debate, Mr Horner's resoluResult of the tions, which went to the adopting the report of the comMay 9 and mittee, were lost by a majority of 76, the numbers being 75 to 151; and the counter-resolutions of Mr Vansittart were carried by a majority of 40, the numbers being 82 to 42.2 The material parts of Lord Castlereagh's speech on this occasion have been transcribed thus at length, because they exhibit a favourable specimen of his peculiar style of 2 Parl. Deb. xix. 919967-1126; xx. 73, 74128. CHAP. VII. 1811. 31. speech. oratory-calm, weighty, and argumentative-as well as of his turn of mind, combining in a rare degree the principles of philosophy with the dictates of experience. This is the more remarkable from the contrast which it Reflections exhibits to the views adopted at the same time by the on this. numerous and weighty body who composed the majority of the committee. It embraced all the leading political economists of the day-those whose writings had given the Edinburgh Review its great and deserved celebrity. The report was drawn up by Mr Horner. It had the cordial concurrence of Mr Huskisson, Mr Ricardo, Mr Ponsonby, Mr Tierney, and, except on the one point of resuming cash payments in two years, of Mr Canning. It was supported by the whole strength of the Whig party, united to that body, already respectable from their talents, who might be called the English doctrinaires, who afterwards, under the guidance of Sir Robert Peel, wrought so great a change in the commercial policy of Great Britain. Yet, strange to say, their doctrine was not less at variance with the principles of political economy than the evidence, nearly unanimous, of the whole practical men who were examined on the subject. It set at defiance the general principle that price is regulated by the proportion between supply and demand, and that the interests of commerce will cause an article in request to leave the country where it is cheap, and flow into the country where it is dear; it ignored the evidence of all the practical men, who ascribed the irresistible tendency to gold to go abroad to its being more in request on the Continent than in this country, and consequently bearing a higher price; it repudiated the idea that the unfavourable state of the exchanges indicated an outward tendency in the precious metals greater than the inward demand. Its authors had embraced one dogma to which they ascribed the whole-viz., that the over-issue of notes at home had driven the notes abroad; and they were resolute in their determination to ascribe everything to VOL. I. 2 K VIL CHAP. that, and that alone. Lord Castlereagh was held up as wedded to the old school, and behind the light of the 1811. age, because he refused to adopt this dogma, and in preference supported the simple principle that the coin was sent abroad because it bore a higher price there than it did at home. Which of these two opinions has been confirmed by the event, and is now generally adopted among men? Probably there is no man whose opinion is not warped by party or swayed by interest, who will not admit that Castlereagh was perfectly right, and his opponents entirely in the wrong, on the occasion. In truth, his words descriptive of the effects of the untimely resumption of cash payments have proved prophetic. They have been too fatally realised by the result; and his opinions, original when uttered, but since confirmed by the seal of time, have received that vindication of all others the most decisive. At the time they were uttered they were denounced as paradox; they are now regarded as platitude. 32. But this is not all. Not only has subsequent experiWhat if the ence during the long peace completely established the Committee truth of his principles, but the events of the war have adopted. proved not less decisively the vast importance of their report of the had been The having been uttered and given effect to by the Legislature |