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I FEEL perfectly conscious that, in venturing to oppose my opi

nions to the unanimous Resolutions of Committees of the two Houses of Parliament, on the expediency of the Bank resuming Cash Payments, I expose myself to the charge of great presumption, and nothing but a very high sense of the importance of the subject, and an anxious desire for the honor and welfare of my country, could have induced me to intrude on your Lordship's valuable time, even under a borrowed signature. I shall therefore be as brief in my observations as possible. My data is, that the average value of gold in Europe is more than 31. 17s. 10 d. per oz., and if I am wrong in that conclusion, I am willing to admit that my arguments must fall to the ground, and that the only material inconvenience to be apprehended from the return to Cash Payments at the time recommended by the Committee, or even earlier (should we be blessed with good crops, and I am happy to say appearances were never more promising in the country in which I reside than at this time), is a defalcation in the revenue. In the present very depressed state of trade, it is very improbable that we can, by any means whatever, in

3] Letters to the Rt. Hon. the Earl of Liverpool, &c. 143

crease our exports of manufactured goods and colonial produce, or even keep them up to their usual standard; and if the balance of trade is against us (which is generally admitted, though I have my doubts on the subject), the effect of a return to Cash or Bullion Payments would be to restrict our imports from the Continent, and of course injure the revenue. I acknowledge that the state of the exchanges, and the price of Gold Bullion in 1816 and 1817, and also the evidence of some of the gentlemen who were examined by the Committees, seem to militate against my data; but that, I think, is sufficiently accounted for by the abundant harvest at home, and the immense exports of colonial produce, at very high prices, in those years. But even admitting that 31. 17s. 10 d. per oz. is the present value of gold, will it be contended that an additional demand on the market to the amount of thirty or forty, or even fifteen or twenty millions of money will not enhance the price? I am assured by a friend who has a commercial establishment in Italy that the coin in Tuscany and every part of that great Peninsula, bears a very high seignorage, in some states even as high as 20 per cent. and I cannot bring myself to believe that any country in Europe can long retain coin of the denominative and intrinsic value of ourg uinea. I would therefore propose, in lieu of Mr. Ricardo's absurd way of keeping bullion in the kingdom, (that is obliging the bank to offer a premium to send it out, for such it will be when the market price is above 47. Is. Od. and 3l. 19s. 6d. per oz.; as to its becoming the circulating medium, in my humble opinion, it is quite out of the question,) that the Legislature should authorize the Government to redeem from the bank Exchequer bills to the amount of 25,000,000l. with notes of the value of 51. and upwards, not convertible into cash; and that they, the Bank, should be required to pay all their own notes, in a given time, in money. This would prevent the necessity of negotiating a loan on very disadvantageous terms, and, in my humble opinion, be the means of ascertaining without much, if any inconvenience to Agriculture, Trade, and Commerce, the practicability of returning to Cash Payments, with our present Mint regulations. It will be said that the consent of two parties is necessary to this arrangement, and how would the concurrence of the Bank Directors be obtained. I feel perfectly confident that the most cordial co-operation, and the greatest sacrifices may be relied on from them, even to the extent of 5 per cent. on the whole amount of their issues, should the interests of the country require it; indeed, I have no hesitation in saying, they ought to be required to make them (out of their enormous accumulations since the restriction of Cash Payments), if it is at all clear that they would be effectual; but according to

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my view of the subject, it is impossible to foresee what will be the effect of resorting to either Cash or Bullion Payments with our present Mint regulations. As a security to the Bank and the public, I propose that the whole of the stock redeemed since and all future purchases of the National Commissioners, shall be pledged for the payment of those notes, and that out of the interest which will be saved on the Exchequer bills redeemed, the bank shall be allowed one or two hundred thousand pounds per annum for the responsibility and trouble of carrying this measure into execution. In short, the operation of Mr. Ricardo's plan would be to compel Government to redeem, Exchequer Bills to the amount of 10 or 15,000,000l. with bank notes, with which the Directors would, of course, purchase Bullion, and this they must lock up, unless there is a demand for it for exportation or other uses. Thus both Government and the Bank would lose the interest on 15,000,000l., without the paper circulation being diminished one farthing in amount.

By my plan the Government would save the Interest on 25,000,000l., and avoid the necessity of making a loan on very disadvantageous terms, the public might be accommodated with discounts as heretofore, the Bank would be obliged to find Money for all the circulating medium required above the 25,000,000%, and the utmost exertions of the Directors to return to Cash Payments would thereby be insured; for it is clear that until they could issue their own notes in lieu of those of the Government, it is quite impossible they could make anything as mere Bankers. I have the honor to be, With great respect,

Your Lordship's obedient
And very humble servant,
A- C

The remarks transmitted herewith were witten on a hasty perusal of the Commons' Report, and should your Lordship take the trouble of reading them, (which I do not much expect,) I think it right to declare, that I have neither read nor heard anything to induce me to retract the opinions contained therein; nor have I ever been able to assent to Mr. Horner's famous Resolutions on the Bullion question, so highly eulogised by men of all parties; therefore, no doubt, the defect is in my own intellect.

N. B. Having omitted to keep a copy of the remarks men-, tioned above, they are not printed herewith.

To THE RIGHT HON.

NICHOLAS VANSITTART.

SIR,

I HAVE observed with deep regret the determination of Government, to persevere in the ruinous measure adopted last Session of Parliament for enforcing the return to Cash Payments, at the present Mint price of gold, on or before the 1st of May, 1821. After the arguments you and other members of the Administration have used in opposition to that measure on former occasions, I cannot for a moment believe that you have really been induced to alter your view of the subject by the evidence adduced before the Committees of the two Houses of Parliament, because I feel confident every impartial person must allow that the weight of evidence is decidedly against that measure. In general it is confused, contradictory, and absurd; but I must exempt from that description the evidence of a Mr. Smith in particular, (who that gentleman is I have not been able to learn, although I have asked several members of Parliament the question,) which is luminous in the extreme, and displays a most comprehensive and profound acquaintance with the subject: to the evidence of Mr. Baring I think I am warranted in applying the term absurd, for nothing can differ more widely in their nature than the paper of arbitrary governments and the notes of the Bank of England, issued merely as circulating medium when called for; and yet that gentleman has been pleased to draw inferences from a comparison of the two descriptions of paper. Mr. Baring, having been a Bank Director himself, ought to have known that it is not in the power of that company to keep more of their notes in circulation than the wants of the country require. Any attempt to force more into circulation, would be as fruitless as the attempt to put a quart of wine into a pint decanter: a spunge will only absorb a certain quantity of water; and our revenue, agriculture, manufactures, trade, and commerce, will only absorb a given quantity of Bank paper: therefore to talk of its being depreciated by overissues, is, in my humble opinion, absurd. I will admit, for the sake of argument, that the Directors have used their power indiscreetly, by discounting the bills of known speculators; and still I contend they would not thereby increase the circulating medium of the country beyond its natural limit. The effect would only be to drive out of circulation an equal amount of paper issued VOL. XVI. NO. XXXI.

Pam.

K

for legitimate purposes. In this enlightened age no man hoards even coin; and therefore it would be preposterous to suppose that he would hoard paper, which has no intrinsic value, when he can invest the amount in government or other securities, which afford income. It is much easier to demonstrate the impossibility of a country banker's keeping more of his notes in circulation than the current transactions of a given district require; but as I know there are persons who readily admit the one position, and yet doubt, and even deny the other, I have thought it best to confine my observations to Bank of England notes. Having observed the ruinous effects of the mere anticipation of the return to cash payments, I, in May last, took the liberty of expressing, in a letter to Lord Liverpool, my apprehensions with respect to the effect of the measure then before Parliament (conceiving it to be a mere sacrifice to popular clamor and prejudice); and truly sorry am I to say, my fears have been completely justified by the result. In my humble opinion, it has been the means of narrowing our circuland to the extent of fifteen or twenty millions, and annihilating property to an enormous amount. Every man knows that trade and commerce are limited by capital; and I declare, on my conscience, I cannot conceive any measure better calculated to produce the distress we are all so much deploring than this, except the immediate resumption of cash payments; and I confess I am so dull as not to be able to comprehend in what way bullion payments can POSSIBLY operate beneficially. If the Bank Directors had a gold mine in Threadneedle-street, I could imagine some motive for the measure, although I should not then think it a politic one. We are told from the highest authority, that " although the revenue has undergone some fluctuations since the close of the last session of parliament, I have the satisfaction to inform you it appears to be again in a course of progressive improvement :" which I presume is intended to encourage the hope and expectation that there will be no material defalcation. Even admitting that to prove the fact, it would only convince me that it is hardly possible to destroy the energies and resources of the country. In my humble opinion, it might as well be contended that a man of 5000l. a year can afford to spend as much as one of 10,0007., as that diminishing the circuland and capital of the country will not have an unfavorable effect on the revenue. I am old enough to recollect the rapid growth of the revenue, and the advance of the 3 per cent. Consols. from 55 to 92 or 93 per cent. after the American war; and I feel perfectly confident that nothing but the dread of this ruinous measure prevented the complete success of your finance scheme of 1818: but for that, I am fully persuaded, the 3 per cents. would now have been above par, say 100, and the great capitalists re

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