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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bank paper and the multitude of our mercantile
failures, the hope that a vigorous enforcement of
his decrees would complete the measure of our
embarrassment. Hence, in the winter of 1810,
the general seizure of British shipping Id the
Prussian harbours ; hence also the ridiculous mea-
sure of burning quantities of our merchandize in
his sea-ports.

In 1811 our corn im])orts were inconsider-
able; but the operations of neutral conmioice


82 Our Cunenctf and EocchanffOi.

were much cramped, our remittances to the Penin-
sula were large, and our exchanges extremely
low. The same causes operated with increased
effect in 181^, the year that our discussions
with the United States unfortunately terminated in
war. Happily, towards the end of" tliat year, the
result of the Russian campaign opened a cheering
prospect in the political horizon ; but the result
was remote ; a great struggle was still necessary,
and the campaign of 1813 required exertions in
Spain, and aid to our allies in Germany, on a scale
of unparalleled magnitude. By this time our me-
tallic currency was exhausted, and the specie
bought up for the cause of the Continent, was
paid for by government in bank notes, at the
enormous premium of twenty-five or thirty per
cent. Such continued to be the difference between
paper and coin, until the overthrow of Bonaparte
in April, 1814,*after which the difference diminished
to ten, and even to eight per cent. His return
from Elba in 1815, and the vast preparations forth-
with made on the Continent by us and our allies,
again lowered the exchange to twenty, and even
twenty-five per cent. — a fall which, after his second
overthrow, disappeared with a rapidity that seemed
destined to exemplify the arguments of the anti-
bullionists ; of tliose who maintained that the de-
preciation of our notes arose not from over-issue,
but from continental demands.

Oicr Currenaf and Exchanges.


Tabular Sketch of the principal Demands on our Currency for
Continental Subsidies ana Purchases of Corn since 1792.




Events Political and


Great mercantile fail-
ures: limitation of our
paper currency.

Confidence reinstated.

1795. Subsidy to Austria.

1796. Subsidy continued, & an

importation of corn.

1797. Reduction of our paper

currency; great scar-
city of money.

(The Bank was exempted from cash

1798. Neither subsidy nor corn


1799. Renewed subsidies fol-

lowed by a deficient

1800. Continuation of subsidy

to Austria; great im-
portation of corn.

1801. Subsidy suspended, but

cornimport continued.

1802. Peace.

From 1802 No large importation of
to 1808. corn, except in the

summer of 1805; nor
any subsidy of mag-
nitude, except in the
autumn of that year.
From 1808 War in Portugal and
to 1814. Spain throughout the

whole period ; war in
Germany in 1809 ;
G ^

State of our Exdumge
with the Continent.

A little above par.
A considerable rise in the

Exchange nearly as in

A fall at first small, after-
wards considerable.

Exchange continues very

A considerable rise in the
exchange ; large im-
ports of specie.

payments in Feb. 1797.)

Exchange continues in

our favour.
Fall of the exchange

after Midsummer.

Continued depression.

Continued depression.

Exchange reinstated.

The exchange little af-
fected during these six
years, except in the
autumn and winter of

The fall in the exchange
great and permanent,
beginning at eight or
ten percent-increasing


Our ('uvrcnc}! and Eachamxcs.




Evt'iifs Poliliccal arnl

in Russia in 1812, and
in Germany & France
in 1813 and 1814.
Corn purchases to a
great amount in 1810.
The Americans ex-
cluded from inter-
course with the Con-
tinent after 1808, but
more particularly af-
ter 1810.

Peace after 1st April,
and a great increase in
the export of our mer-
chandize, but a con-
tinuance of remit-
tances for subsidies
and corn imports.

In April, May, June,
renewal of war.

In August and Septem-
ber, peace; cessation
of corn imports; re-
newal of American
1816. No subsidy or import of
1817. 1818. Large imports of corn.

From 1819 No import of corn or
to 1823. heavy continental


Stntc of our Excltange
with thf Continent.

to twelve, fifteen, twen-
ty-five, and eventually
to nearly thirty per

A considerable reinstate-
ment of the exchange,
leaving it from only
eight to ten per cent,
against England.

Fall of the exchange
twenty and twenty -five
per cent.

The exchange recovered
and brought first within
twelve per cent., after-
wards within five per
cent, of par.

Exchange nearly at par.

Exchange again lowered
three, four, five, and
eventually six percent.

Exchange recovers; rises
to par in 1820, and
has since continued
somewhat above par.

Distribution into Periods during the War. — The
years in the preceding table may be classed into
periods, each marked by distmct features. The
first, from 1793 to 1797, preceded the exemption

Our Currency and Exchanges. 85

act : after that act came an interval of two years,
during which, from a concurrence of favourable
circumstances, the non-convertibility of our bank
paper was not productive of depreciation. A very
different scene was opened by the transactions of
the three years between the summer of 1799 and
that of 180^2; years of heavy continental demand
and of great pressure on the exchange. It was,
however, reinstated by the peace ; nor did it ex-
perience any pressure of magnitude or long con-
tinuance during the long interval tliat elapsed
from the autumn of 1802 to that of 1808. This
period of six years is perhaps the most remarkable
of the whole, exliibiting tlie possibility of carr}ing
on a war of great expence, without a material de-
rangement of our currency, so long as we left to
trade its free course, and abstained from great con-
tinental advances. It was, doubtless, this long
enjoyment of financial ease, this apparent stability
of our money system, that inspired our ministers
and bank directors witli over confidence, leading
tlie former to their unfortunate measures against
the American trade, and impressing the latter
(Evidence, Bulhon Report, pp. 89. 9(). 1 14.) with
tlie notion that their issues of paper had no effect
on the exchange. To the measures founded on
these views, and to the events noticed in the pre-
ceding table, is to be ascribed the depreciation
that prevailed during the last period of the war
— the five years from 1809 to 1814.

Total of our Corn Imports and Si//)sidics. — In
computing the former, it is lit to bear in mind that
we had become previously to 179i^, a corn import-
ing country, and that a certain quantity might be
termed our habitual supply; an import not affecting

86 Our Currenci/ and Exchanges.

the exchaiii^e, but })iii(i hy a correspond ini^ export
of our produce or manufactures; our coals, our tin,
our hardware, our cottons. We dwell, therefore,
only on the years of scarcity and extra import,
which, during the war, were 179^, 1800, 1801,
180'-2, 1805, 1810. After deducting from our total
supply in these years our average annual im})ort,
there remains, as extra import, a quantity of which
the cost, in the six years collectively, was not short
of 25,000,000/.

Next as to the amount of our subsidies :
the total during twenty-one years, from 1793
to 1814, was between 50 and 60,000,000/., form-
ing with the corn purchases, an aggregate of
80,000,000/. Of this great sum, what proportion
was sent abroad in the shape of specie ? Of the
subsidies, the chief part was supplied in clothing,
arms, stores ; of our corn purchases, the larger
share was necessarily paid in money. If, without
attempting nicety of calculation, we assume the
export of specie for these purposes during the
whole war at 30,000,000/., we shall be at no loss
to account for the disappearance of our metallic
currency, and of such supplies of bullion as found
their way to this country.

Our E.Tchajiges since the Peace. — Since the
peace, the different periods, though less mark-
ed by extremes, have been equally deserving
of attention, as illustrative of our view^ of the
causes of fluctuation. In the autumn of 1814
our war charges ceased, our exports had free ac-
cess to the Continent, and the exchange altered
from twenty-five to ten, and even eight per cent,
only, against us : it would have risen farther, had
not our corn imports been large. But no sooner

Our Currency and Exchanges. 87

did the return of Bonaparte from Elba revive
tlie alarm of war and subsidies, than the exchange
fell to eighteen, twenty, and twenty-tive per cent. ;
a depression from which it recovered as suddenly
after the battle of Waterloo, and the prospect of a
speedy })eace. During 181(i there was neither
corn import nor subsidy; the American trade with
the Continent was open, and the exchange returned
to par, at which it for some time remained ; but
the deficient harvest of that year necessitated in
181 7 corn imports on a very large scale, reduced
the exchange, and would have completely overset
it, had not all the coimteracting causes of free
trade been in operation. By their aid we were
enabled, during 1817, 1818, and tlie early part
of 1819, to pay for an unexampled amount of
foreign corn, (above 20,000,000/. as appears by
the Appendix to the Agricultural Report of 1821,
p. 396.) without a greater depreciation than four,
five, or six per cent. Since 1819, these drains
have ceased, and the exchange has been steadily
in our favour.

Our Bank Paper: — Contradictor}! Opinions on the

We have now brought to a close our historical
sketch, and shall proceed to make some remarks
on the very opposite doctrines held in regard to
our* paper currency, by the adherents of ministry
and o])position ; or, to speak more correctly, by
the adversaries and supporters of the Bullion
Committee of 1810. The former are still un-
willing to admit the existence of depreciation in
our bank paper, even in the latter years of the
war : the latter equally unreasonable, refuse to
trace such depreciation to tiie extra demands made

G 4

88 Our ( tirrcurij and Kdcliaji^u;cs.

on lis [\)\ siibsidii's and corn purcliast's, and insist
that it originatcil in over issue on the part otour
banks. A singular discre])ancy this, in a country
of free discussion, after the direction of so much
reasoning to the subject, and the hi})se of so many
years re})lete with commercial and political inform-
ation. 'J'his discrepancy implies, we apprehend,
more than the absence of impartiality : it gives
cause to suspect in one party, an inadequate know-
ledge of the })rinciples of productive industry ; in
the other, an insufficient attention to the evidence
of facts.

In attempting to point out the manner in which
both have deviated from impartial inquiry, and
exceeded the limits of fair inference, we shall
proceed as much as possible by a reference to
documents. We shall have little difficulty in de-
scribing the nature of our currency previous to
1797» initl the effect produced on it by sudden
drains for continental disburse: our more intricate
task will be to define the results of the exemption
act, the operation of which, has, from very dif-
ferent views, been considerably over-rated by each
party. The buUionists attribute to it the whole,
or nearly the whole, of the enhancement of com-
modities during the war ; while their opponents,
regarding it as no less potent in good, than theii'
antagonists in evil, are accustomed to speak of it
as almost the sole engine of our financial support.
Both sides forget that these effects are too great
for the cause, and that the exemption act was
coincident in point of time with a change in our
financial system, of still more powerful operation ;
we mean the increase of our war taxes and the
reduction of our loans.

Our Cuvrencij and Ej:clianges. 81)

Our Money Sijutem jyrevious to 1797- — Tlie nature
of our money system will be best understood bv a
comparison with that of the neiglibouring coun-
tries. The amount of money circulating in France
was com])uted, or rather guessed by Necker at
80,000,000/. sterling ; the amount in England anil
Scotland, not ascertained with more certainty than
that of France, is supposed (Bank Committee Re-
port, May, 1819,) to be between 50 and 60,000,000/.
The currency of France is almost entirely metallic :
there are in that country no banks of ckcuhition,
except the bank of Paris, and none of its notes
being below 20/., paper forms a very small part of
the circulating medium. A foreigner may reside
many years in a provincial town in France without
seeing a bank note, and may occasionally hear the
natives speak of having seen them as of a cir

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 8 of 40)