Joseph Lowe.

The present state of England in regard to agriculture, trade and finance; with a comparison of the prospects of England and France online

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This excess on our part in tiie ratio of enhance-
ment, added to a nearly similar excess in prices
previous to 1792, makes a total difference between
this country and the Continent of from 20 to 30
per cent. The leading causes of this are our lieavy
excise duties, the larger size of our towns, and the
occasional operation of our corn laws. The balance
against us would be still greater, were it not in a
considerable degree counteracted by the cheapness
of fuel and of several articles of manufacture, in
particular hardware, in which our connnand of
capital, our inland navigation, and our machinery,
afford us a considerable advantage over the Con-

Rise of Prices apparently indicative of Prosperity.
— An increase in the money value of commodities,
of land, houses, and stock in trade, accom})anied
by a general augmentation of salaries and wages,
suggested during the war the idea of a general
increase of wealth in correspondence, as was com-
monly believed, to the increase in our circulating

We have already shown that this was, in a great
measure, nominal: the augmented })rice of com-
modities, of" land, houses, merchandise, re(juii"ed,
to represent it, a larger sum of money, but that
such money was of less value. Or, if we admit

F '2

f,H General Bhc of Prices

thai there was in several respects an inciease of
i)roperty, tliat the general briskness caused by the
(liMnands of government led to an actual rise of
])rices, a rise over and above that Avliich was recjni-
site to meet the alteration in the value of the cur-
rency, it is fit, on the other hand, to recollect that
the fixed money property of the country, such as
the stocks and loans on mortgage, all underwent
depreciation, because in these the same sums repre-
sented a reduced value. What then was the real
result? That, on the one hand, the national pro-
})erty was lessened by the great additional charge
arising from the war : on the other, it was aug-
mented in proportion, not to the rise of prices, but
to the progress of national improvement and in-
crease of population. No such limitations, how-
ever, were admitted in the estimate of the public,
or, as far as we can perceive, in that of ministers :
both confidently inferred prosperity from rise of
prices, and appear never to have suspected that
such a rise was deceptive, and might take its origin,
in great part, from an increase of burden.

What a train of misconception, w^hat a series of
sanguine and fallacious notions would have been
prevented, had the public been earlier aware of
these simple truths ! During the Avar, the rise of
price was so regular, and of such long continuance,
(from 1793 to 181 i), that the majority of the pre-
sent generation took for granted that it would be
permanent, ascribing it less to the war and the de-
mands of government, than to causes likely to be per-
manent, — such as the unknown gains of our foreign
commerce, or the influx of the precious metals of
America. But in this, as in other points, the return of
peace has undeceived us ; it has shown that the
amount of our commercial gains, and the influx of

14 "

during the War. Cf)


specie, were botli over-rated ; ami tliat the origin of
Iiii;Ii prices is to be sought in less welcome causes.
Of these, the demand for men for the public service,
the insufficiency of our growth of corn, and the de-
preciation of our bank paper, have all, for some time,^
ceased to operate, but their effects have by no means
ceased ; while the fburtli cause, we mean taxation,
continues to press on us with almost undiminished

ILvll of high Prices wheii peculiar to a Country. —
The pernicious tendency of fluctuation in the value
of money is generally admitted, but that of a ge-
neral rise of prices is less understood : it is even
the notion of a number of writers, and of a still
greater number of practical men, that taxation,
though a great cause of enhancement, is productive
of no injury in a public sense, because the money
thus collected is almost all expended at home.
This idea has induced the writer already men-
tioned (Mr. S. Gray), whose views, sound and
liberal in several respects, are in others greatly im-
paired by over-confidence, to give our national
debt the convenient name of " public service ca-
])ital." " The payment of the interest is,** says
Mr. Gray, in the work entitled, * All Classes pro-
ductive of National Wealth,* (p. 13G.) " no dis-
advantage : the public is just where it was before :
they have had thirty millions charged on them, for
the interest of the national debt, and they have
charged thirty millions in return.'* — All this might
be true were the British Islands a distinct })lanet,
or were they separated from the rest of the world
by a " wall of brass ten thousand cubits high : '*
l)ut, doomed as we are to intercourse with our con-
tinental brethren, does not an excess of taxation
place us under a great relati\e tlisad\antage in a

1-^ 3

JO General Rise uf Prices

competition witli foreign nuinufacturers ? And,
before the liill in our corn market, was it not to
be apprehended, tliat our capitalists might transfer
to less burdened countries, tliat money, that ma-
chinery, and, in part, those hands, which have so
eflTectually conduced to make us support our finan-
cial pressure?

A writer of great notoriety, without carrying
his doctrine so far as Mr. Gray, expresses, in more
places than one, an opinion that high taxation im-
poses on us no disadvantage relatively to our neigh-
bours, or, to use his own words, that *' a generally
high })rice of commodities in consequence of tax-
ation would be of no disadvantage to a state." *
This opinion Mr. Ilicardo repeats in another pas-
sage (p. 305.) where he says, that the " amount of
taxes and the increased price of labour in a coun-
try does not, according to his ideas, place it under
any other disadvantage with respect to foreign
countries, except the unavoidable one of paying
these taxes.'* But he soon after makes a highly
important qualification, by admitting that these
charges render it the interest of every contributor
to " withdraw his shoulder from the burden, and,
in many cases, to remove himself and liis capital to
another country ;" a course replete with the most
injurious results.

Were we to suppose, for the sake of illustration,
that the whole of the civihzed world, the whole of
the states who carry on a commercial intercourse
with each other, were simultaneously involved in
war, and obliged to impose on themselves burdens
which bear the same proportion to the taxable
income of each : — the consequence would be a

* Ilicardo on Political Econoiuy, 2d edition, p. 283.

during the War. 71

concurrent and uniform rise of prices ; and a con-
test, after lasting twenty years, miglit terminate
without any relative disadvantage to any of the
belligerents, as far as regarded thek finances, or
the state of their productive labour. But in every
war there are certain states, whose rulers have the
prudence to avoid participating in the unprofitable
struggle, and who secure to their subjects the ad-
vantages of neutrality, along with an exemption
from the burdens entailed on their neighbours.
Such, in the present age, was the case of Denmark
until I8O7 : such also was, for a time, the case of
Sweden, Prussia, and, above all, of the United States
of America.

Holland, a country particularly inclined to a
pacific policy, has, firom her geographical position,
been unavoidably involved in most of the great
contests which have taken place since she became
a power, so that, during the last two centuries, her
history exhibits hardly any period of exemption
from them, except in the war of 1756. We, whe-
ther from the necessity or belligerent ardour, have
so seldom enjoyed the blessing of neutrality, that
to trace it in our history, we are obliged to reciu"
to the reign of James I., who, whatever might be
his weakness in other respects, stedfastly maintained
peace amidst the convulsions of Germany, the dis-
sensions of France, the prolonged hostilities of
Spain and Holland. A striking illustration, not
indeed of neutrality, but of that prudent mode of
warfare which secures national independence, with-
out aiming at foreign acquisitions, is to be found
in the troubled reign of Elizabeth, and the wise
administration of Cecil. How different would have
been our situation in regard to pubUc burdens, had

1- 4

7'i (itiural Rise ()f' Prices (luring I lie War.

tlie reins of «;ovcrnmcnt \\\ the ])rcsent age been
held by such experienced hands !

Elfi'cl of the Rise of Prices on our Finances.
— This rise, hke all artificial clianges, was pro-
iluctive of little j)ermanent eHect : it increased
the numerical amount of the revenue, but it was
ultimately followed by an equivalent loss in aug-
mented expenditure ; enhancing stores, salaries,
the pay of the army and navy, in short, almost every
object of government disburse. Unluckily, the
amount of our loans was greatest at the time that
money was of the least value. If we calculate
the debt contracted since 1792 at 460,000,000/.,
and divide the period with reference to the value
of money, we shall find that the smaller part of this
debt was incurred when money was more valuable
than at present, the larger when money was more
depreciated. Since the cessation of war, money has
risen progressively in value, and the interest of our
debt, without augmenting in amount, has increased
in pressure to a degree which, coupled with the
evils of sudden transition, has unfortunately borne
hard on the majority of the public.



Our Currcnc}) and Exchanges since 1 792.

Having now traced the fluctuation in the price
of commodities during the last thirty years, we
proceed to a topic closely connected with it, the
variations in our continental exchanges. In this,
one of our chief objects will be to describe the
operation of our subsidies, and of our purchases,
occasionally to a great amount, of foreign corn;
these being the causes which mainly affect our
exchanges, and are productive of great and rapid
fluctuation. They are, in general, demands both
of large amount, and of sudden occurrence, super-
added to our customary disburse, and requiring to
be paid before time can be given to our merchants
and manufacturers to prepare and send abroad
an equivalent amount in commodities. This chap-
ter will accordingly comprise,

A historical sketch of our continental ex-
changes ;

The eflects of the exemption of the Bank from
cash payments ; and

The questions of depreciation and over-issue.

Historical Sketch of our Excf/angoi.

From 17D'2 /o 1707.— In the lir^t year of the
war, our participation iu the contest produced
little eliect ou the exchange, in consequence ot

74 Our Currcncjj and Exchanges.

our aitl hein*^ liirnished less in money tlian in
troops iuul military stores. Next siimmei- (I7fjl')
a sudden depression was produced Ijy the remit-
tances commenced for the Prussian sul)sidy; but
it ceased as soon as it became known that that
])ower, a far less zealous ally in those days than
subsequently, was not likely to fulfil its engage-
ments. In 1795, circumstances became very
different : oiu- troops had been withdrawn from
the Continent, our contribution to the allied cause
was made, in a great measure, in money, and an
unfortunate deficiency in our harvest, forced us
to make large importations of corn. A balance
from commercial payments began thus to be added
to the remittances of government, and the result
was a considerable fall in the exchange ; money
in England becoming inferior in value by five per
cent, to the money of the Continent. This dif-
ference was of serious moment to the Bank, and
obliged them to limit greatly the discount of
mercantile bills, under an apprehension that the
notes issued for such discount would be presented
at the Bank for specie, and the latter exported to
the Continent. Of the distress caused to mer-
chants by this limitation, those only can judge
who witnessed the pecuniary difficulties of 1795
an4 179^^ or who have had access to read in the
parliamentary papers the anxious correspondence
of that date between Mr. Pitt and the Bank di-
rectors. At one time (November, 1795) the price
of gold, when purchased with Bank notes, had
risen to eight per cent, above its value in coin,
and necessitated a farther and most distressing
reduction of Bank paper. In the autumn of 1796,
a better harvest delivered us from one cause of
drain ; but towards the end of that year, and the

Our Currencij and Exchanges. 75

beginning of 1797» distrust and alarm were re-
newed by a threatened invasion from France. The
failure of several country banks having unluckily
occurred at that critical moment, tlie consequence
was a run on other country banks, and a great de-
mand for gold from the Bank of England. In vain
did the Directors resort to their hitherto unfailing
expedient, a reduction of the quantity of their notes:
the evil was new and peculiar ; the drain conti-
nued without a prospect of abatement, when, after
bringing down their circulation to nearly 8, (iOO, 000/.
and communicating their situation to ministers, the
Directors received, on the 25th February, 1797,
the well-known injunction from the Privy Council,
to suspend all farther payments in cash.

This order, limited at first to a few weeks, was
soon after prolonged to the end ofthe current session
of parliament, and eventually to the opening of the
succeeding session. In the interval, circumstances
became more favourable, corn was abundant, our
continental subsidies drew to a close, our exports
of merchandize were large, the exchange rose, and
specie flowed into the country from causes very
similar to those which had lately made it flow out.
The bank was now in a state to resume cash })ay-
ments; but parliament, finding that no >incon-
venience had resulted from the suspension, deter-
mined to adhere to it, and passed resolutions
which made exemption from cash payments be con-
sidered our settled policy during the remainder of
the war.

From \l^.)'-i to 1802. — The year 1708 was more
than usually pros})erous, l)eing marked by a favour-
able season at home, an exemption from the bur-
den of subsidies abroad, and distinguished success

70 Our Cunrnci/ and E^rclum^cs.

in our n:i\ al operations. Confidence bein*^ now re-
stored, money became more rapid of circulation
and comparatively plentiful, while our exclian^es
with the Continent experienced no full, althou

Online LibraryJoseph LoweThe present state of England in regard to agriculture, trade and finance; with a comparison of the prospects of England and France → online text (page 7 of 40)