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A Memorial to the Founder
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Business Administration Library
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HISTORY
OF
PRICES,
AND OF
THE STATE OF THE CIRCULATION,
FROM 1793 TO 1837;
PRECEDED BY
A BRIEF SKETCH OF THE STATE OF THE CORN TRADE
IN THE LAST TWO CENTURIES.
BY
THOMAS TOOKE, ESQ. F.R.S.
IN TWO VOLUMES.
VOL. L
LONDON:
PRINTED FOR
LONGMAN, ORME, BROWN, GREEN, AND LONGMANS,
PATERNOSTER-ROW.
1838.
London :
Printed by A. Spottiswoode,
New-Street- Square.
L.wss Cclicciion
Bus. Adm. Liba
M5
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m%
PREFACE.
The present Work may, in some points of view,
be considered as an enlargement and continuation
of one which was published fifteen years ago under
the title of " Thoughts and Details on the High
and Low Prices of the last Thirty Years," inasmuch
as it embraces the same line of argument, and
proposes to establish the same conclusions j but it
is essentially different, both in its arrangement and
in its details. The view now presented of the
operation on prices of the more general causes,
precedes instead of following, as in that work it
did, the statements bearing upon the period more
immediately under consideration : while the details
are here placed in chronological order, and in
historical connection, embracing a much wider col-
lection of illustrative facts, more especially of those
relating to the state of the circulation j with a con-
A 2
1 F;878.^4
IV PREFACE.
tinuation of the narrative of events in their relation
to prices, and to the state of the circulation, in the
fifteen years which have elapsed since the publi-
cation of the above-named Work. In fact, with
the exception of a very small part, the whole of
that which is now submitted to the public, has
been written afresh, and has therefore every claim
to be considered as a new Work.
London, April 28. 1838.
CONTENTS
THE FIRST VOLUME.
Page
Introduction - - - - - - 1
PART I.
ON THE EFFECT OF THE SEASONS.
CHAPTER I.
General view of the subject - - - . . 7
CHAPTER II.
EfFcets of quantity on price - - - - 10
CHAPTER III.
On the character of the seasons and the state of prices, and
the condition of the agricultural interests previous to
1793 - - - . - . - 21
Sect. 1. Period ending in 1692 - - - - - 21
Sect. 2. 1693 to 1714 - . - . - - 30
Sect. 3. 1715 to 1765 - . - - - - 38
Sect. 4. 1765 to 1J75 ..... - 62
Sect. 5. 1775 to 119^ - - - - - . . 75
VI CONTENTS.
PART II.
ON THE EFFECT OF WAR.
CHAPTER I.
Page
General view of the subject - - - - 86
CHAPTER II.
Effects of taxation on the fluctuation of general prices - 87
CHAPTER III.
Effect of the extra demand or consumption supposed to
arise out of a state of war in general - - - 90
Sect. 1. Extra demand or consumption arising out of a state of war in
general - - - - - - - -90
Sect. 2. Effect of the extra demand or consumption attributed specially
to the last war ..._.._ lOQ
Sect. 3. On the effects of the monopoly of trade enjoyed by this country
during the last war - - - - - - 105
Sect. 4. Effects of the stimulus or excitement supposed to have been
occasioned by the Government expenditure during the last war - 109
CHAPTER IV.
Effect of war, as obstructing supply, and increasing the cost
of production - - - - - -114
PART III.
ON THE CURRENCY.
CHAPTER I.
General view of the subject - - - - 118
CHAPTER II.
Arguments of those who ascribe a greater effect to the bank
restriction than that indicated by the difference between
the market price and the mint price of gold - - 128
Sect. 1. On the alleged effect of the Bank restriction in depreciating the
value of the precious metals •- - - - -130
Sect. 2. Effect of the Bank restriction on the economised use of
money - - - - - - --144
Sect. 3. Effect ascribed to the Bank restriction of the substitution of
credit for currency, and of tlie excessive issues of country paper - 14G
CONTENTS. Vll
I'ago
Sect. 4. On the alleged constant excess of issue by the Bank of Eng-
land, and tlionce of the whole of the circulating medium - - 153
Sect. 5. On the regulation of the Bank issues during the restriction - 163
Sect. C. On the effect of the Bank restriction in raising the prices of
commodities - - - - - - -168
Sect. 7. On the alleged invariable connection of increase of price with
the Bank restriction, and on the effect of the near approach of the ter-
mination of the restriction producing a fall of prices greatly exceeding
the difference between paper and gold - - - - 170
PART IV.
HISTORICAL SKETCH OF PRICES, AND OF THE STATE OF THE
CIRCULATION, FROM 1792 TO 1837.
CHAPTER I.
Introduction __---. 174
CHAPTER II.
On the state of prices, and of the cix'culation, from the com-
mencement of 1793 to the close of 1798 - - 176
Sect. 1. On the seasons in connection with the prices of provisions, from
1793 to the close of 1798 - - - - - - 179
Sect. 2. On the prices of commodities from 1793 to 1798 - _ 188
Sect. 3. Bank circulation, 1793 to 1798 - - - - 192
Sect, 4. Summary of the preceding survey - - . _ 210
CHAPTER III.
On the state of prices, and of the circulation, from 1799
to 1803 - - - - - - 212
Sect. 1. Rise of the prices of provisions and other articles of European
produce from the spring of 1799 to the spring of 1801 - - 213
Sect. 2. Rise of wages from 1799 to 1801 - - - . 225
Sect. 3. Statement of the general causes of the rise of the prices of
commodities and labour from 1799 to 1801 - - . 228
Sect. 4. Great fall of the prices of transatlantic produce from the
spring of 1799 to the spring of 1801 - - ... 233
Sect. 5. Fall of the prices of provisions from the spring of 1801 to the
close of 1 803 ...-.-. 236
Sect. 6. On the state of the circulation from 1799 to 1803 - . 239
Sect. 7. Summary of the preceding survey - - . . 252
CHAPTER IV.
State of prices and of the circulation from the commence-
ment of ISO^ to the close of 1808 - - - 255
Sect. 1. Deficiency of the harvest of 1 804 .... 258
Sect. 2. Seasons of 1805 to 1808, both included - - - 265
Vlll CONTENTS.
Page
Sect. 3. Instances of some of the most prominent of the variations of
the prices of commodities besides those of corn . _ . 272
Sect. 4. New fields of enterprise opened for exports - - - 276
Sect. 5. General excitement and speculations in shares in 1807 and
1808 - - - - - - - - 277
Sect. 6. On the state of the circulation from 1804 to 1808 - - 280
Sect. 7. Advances by the Bank to Government . _ . 286
Sect. 8. General remarks on the state of prices, and of the circulation,
at the close of 1808 . - - - . -287
Sect. 9. Summary of the preceding survey - - • - 290
CHAPTER V.
State of prices, and of the circulation, from 1809 to 1813 - 292
Sect. 1. Prices of agricultural produce, from the commencement of
1809 to the summer of 1811 . . _ _ . 293
Sect. 2. Fall of prices of commodities, and commercial distress, from
1809 to 1811 - - - - - - - 300
Sect. 3. Revival of credit, and improved prospects of trade, in the
summer of 1811 .--.-_. 316
Sect. 4. Rise of tlie prices of agricultural produce, and high range of
them, between the harvest of 1811 and the harvest of 1813 - - 319
f e(;t. 5. On wages and salaries as connected with the prices of neces-
saries --__---_ 328
Sect. 6. Advance of prices on the Continent of Europe in 1811 and
1812 - - - - - - - - 331
Sect. 7. Prices of commodities from the summer of 1 81 1 to the summer
of 1813 - - - - - - - - 339
Sect. 8. Fall of the prices of corn, and other European produce, in
1813 - - - - - - - - 341
Sect. 9. Rise of prices of exportable commodities in 1813 - - 344
Sect. 10. State of the circulation from 1809 to 1813, both years in-
cluded .....--. 348
Sect. 11. Summary of the preceding survey - - - - 373
INTRODUCTION.
Ihe high range of prices which prevailed in the
closing years of the past, and in the earUer part of
the present century, contrasted with the compara-
tively low range, observable in the period which
has elapsed from 1819 to the present time, forms a
very striking feature in the history of the agricul-
ture and commerce of this country. The contrast
thus presented involves fluctuations in the value
of property so great as naturally to have excited,
both from a sense of interest and from a feeling of
rational curiosity, an anxious desire to obtain a
satisfactory solution of phenomena so remarkable.
Accordingly, publications without number or end
have appeared, professing to explain the extra-
ordinary variations of prices which have marked
that eventful period. The explanations hitherto
offered, whatever may have been the nature of the
proofs and illustrations brought forward in sup-
port of them, resolve themselves mostly, if not
wholly, into the assignment of one or other of two
general causes; namely, the war and the currency.
The effect of war in raising the prices of ar-
ticles directly taxed, has been generally admitted.
But as the amount of taxes levied for defraying
the expenses of the war continued (with the ex-
ception of the property tax, which avowedly did
not act upon prices) undiminished down to the
summer of 18^2 ; and as the fall of prices of ar^
tides divested of duty, that of provisions especially,
B
2 INTRODUCTION.
had then been as great, and to as low a point of
depression as has, with trifling exceptions, been
since witnessed ; and moreover, as the very great
reduction of duties of customs and excise, v/hich
has taken place since 182^2, has not been attended
with any corresponding fall of the prices of pro-
visions, or of other articles divested of duty, the
previous elevation of prices cannot be ascribed to
the war, merely on tlie ground of its attendant
taxation.* It is, accordingly, to the war, not as
having caused the taxes, but chiefly as having, by
the enormous amount of tlie government ex-
penditiu'e defrayed by loans, caused a great and
increasing demand for all the leading articles of
consumption, that the remarkable elevation of
prices has been ascribed by a theory which num-
bers among its supporters no mean authorities.
But the theory of war-demand, as having raised
prices, and of the peace as having, by the con-
sequent cessation of that demand, been necessarily
followed by a fall of prices, is now rarely advanced.
The preponderant, and almost exclusive theory, is
that which refers all the phenomena of high prices
from 1792 till 1819, and of the comparative low
prices since 1819, to alterations in tlie system of
our currency, holding all other circumstances that
can have had any influence to be so subordinate as
not to be worth mentioning.
These opinions, however ingeniously and plau-
sibly advanced and maintained, admit, as I conceive,
of being shown, by a careful examination of facts,
to be wholly erroneous. The error, indeed, of
the theory of war- demand, is no longer one which
* The impediments to importation, and the consequently
increased cost of foreign supplies, are occasionally referred to
as accounting for some increase of price. But this effect of the
war is but slightly noticed, and laid little stress upon by any of
the supporters of either of the theories of war-demand or of the
currency.
INTRODUCTION. 3 '
can be attended with any practical evil. The
association of war with high jjrices, and supposed
consequent prosperity, is not likely to exercise any
influence on the foreign policy of our government.
But there is constant danger from the prevalent
tlieory of the currency.
Repeated attempts have, even down to recent
periods, been made to induce thelegislature to revise,
with a view to alter and debase, the present standard
of value ; and such is the pertinacity with which the
opinions infavour of debasement, or of a return to
inconvertible paper are urged, and the weight of
influence by which they are supported, th.at there
is ground for apprehension lest, under the pressure
of any temporary inconvenience, the legislature
might be led to listen to some one or other of the
multifarious schemes for the degradation of the
currency w^liich are always afloat.
The claims for revision, and the plans for alter-
ation, all proceed on tlie assumption that the greater
part, if not the whole, of the rise, and of the high
range of prices observable during the interval in
which cash payments were suspended, was distinctly
caused by the restriction, and that the resumption
of cash payments has been the main, if not the ex-
clusive, cause of the subsequent fliU of prices.
The persons maintaining this doctrine hold,
as a settled article of their creed, that Mr. Ricardo,
and the other promoters of tlie Act of 1819 for the
resumption of cash payments, commonly called
Peel's bill, w^ere manifestly in error when they
contended that the utmost effect of that measure
upon prices would not exceed 4 or 5 per cent.,
that beinsT the difference which then existed be-
tween paper and gold ; for, that in fact, the con-
sequences of the passing of that bill have been felt
in a general fall of prices to the extent of 30 and
40 per cent., and, according to some, even to the
extent of .50 per cent.
B 2
4 INTRODUCTION.
Granting, for the sake of argument, that Mr.
Kicardo and ihe other promoters of Peel's bill
were wrong, and that the whole of the fall of
the prices of commodities and labour, and of
property generally, had been clearly the conse-
quence, and not merely a sequence of that measure,
it would not follow that there would be any claim
on grounds of justice, and still less on grounds of
policy, to unsettle a settlement made so many years
ago. But if it should be made to appear by the
most extensive induction of facts, that Peel's
bill did not, as according to any correct mode of
reasoning it couM not, cause the fall of prices
beyond the diiference between paper and gold,
there would cease to be even the shadow of a
pretence for the clamour which has been raised,
and so pertinaciously maintained, against that just,
wise, and salutary measure.
It is of practical importance in this respect, as
also with the object of forming a just estimate of
many things otherwise inexplicable in the state of
agriculture and trade, at the several periods of the
interval under consideration, to take a more ex-
tended survey than has hitherto been attempted of
facts bearing upon the question. To institute
such a survey, and to endeavour by it to rescue from
misconception and misrepresentation the most
eventful and interesting periods in the history of
the agriculture and commerce of this country, is
the purpose of the present work.
It is perfectly possible, that a knowledge of the
facts about to be stated may lead to conclusions
different from those which I may think them
calculated to establish. But it is quite certain
that without a knowledge of those facts, not only
as to their existence but as to the order of time in
which they occurred, no correct estimates can be
formed, no just conclusions drawn with reference
to the questions under discussion ; and it may not
INTRODUCTION. 5
be assuming too much to add, that without a
knowledge of the circumstances, which will be
detailed in their connection with prices, no just
conception can be formed of the nature and causes
of the great vicissitudes v/hich have marked the
state of agriculture, of manufactures, and com-
merce in the long interval which is to come under
examination.
The general description of the principal causes to
which the phenomena of the high prices observ-
able between 1792 and 1819, and the compara-
tively low prices from 1819 to the present time,
will be found referable, according to my view
of them, may be classed under the following
heads : —
1. The Variety of the Seasons.
2. The War.
3. The Currency.
There are, indeed, two other circumstances of
a general character, which may be supposed to
have influenced prices, viz., the increase of popu-
lation, and the improvements in agriculture and ma-
nufactures. But as these circumstances have been
uniform and progressive in their operation, although
in opposite directions, they do not form any promi-
nent part of the grounds on which the great
Jluctuations of prices can be accounted for.
In as far as the mere increase of population might
be supposed to account for any part of the range of
high prices of provisions, by the necessity of
resorting for production to inferior soils, it must
be admitted (the ratio of increase of population
having been progressive) as a counteraction of any
tendency to fall. And as the improvements in
agriculture and manufactures, all tending greatly
to reduce the cost of production, were in progress
during the whole period, although not so rapidly
in the earlier part of it, they must have operated
as a corrective against so great an advance in price
B 3
0 INTRODUCTION.
of those articles to which they applied, as might
from the operation of other causes have been ex-
pected. This cause need therefore only be inci-
dentally referred to, as accounting for the further
fall of the particular commodities to which it is
applicable, below the level to which they might
otherwise have subsided.
Tiie historical sketch which will be given in the
course of this work, of the circumstances which
may admit of being connected in the relation of
cause and effect with prices, will afibrd the means
of judging of the degree in which each, or any one
or more, of the three general causes above stated
may be supposed to have operated. But the con-
clusions to be drawn from a view of the facts as
they occurred in connection v/ith prices, during
the period immediately under consideration, will
derive additional force in as far as they may be
found to be consistent with what might be inferred
d prion from a reference to the mode and degree
of influence of those general causes, and from ex-
perience of what has been their operation durhig
intervals of some length anterior to 1793.
The course which it seems most expedient to
adopt with this view is, in the first place, to con-
sider the mode of operation of each of these causes,
and the relative degree of importance to be at-
tached to it on general grounds, illustrated by a
reference to any observable influence exercised by
it in some of the most prominent fluctuations of
prices, antecedent to the period more immediately
under examination, and then to jiroceed, with the
inferences thus derived, to investigate the degree
of influence that may be legitimately ascribed,
separately or collectively, to these causes in the
great variations of prices that have occurred since
1792.
PART I.
ON THE EFFECT OF THE SEASONS,
CHAPTER I.
GENERAL VIEW OF THE SUBJECT.
A^OTHiNG has struck me as being more strange in
all the discussions and reasonings upon the subject
of the high and low prices of the period under
consideration, than the little importance which lias
been attached to the effects which a difference in
the character of the seasons is calculated to occa-
sion.
Individuals interested in the markets for agri-
cultural produce are habitually alive to the pro-
digious influence of the weather, at particular
periods, on the result of the harvest in point of
quantity, and still more in point of exchangeable
value ; and yet the same individuals, when called
upon to account for a range of high or low prices
at an antecedent period, perfectly within their re-
collection, seem wholly to neglect or overlook the
consideration of the possibility of any influence on
an extended scale of that cause, to which in detail,
or in accounting for the produce of any particular
year, they cannot help attaching a w^eight prepon-
derating over every other. The farmer naturally,
and almost instinctively, watches, with painful
anxiety, the several critical periods in the growth
B t
8 EFFECT OF THE SEASONS.
of the different descriptions of produce, and infers,
according as appearances are decidedly unfavour-
able or propitious, and as they extend, or are sup-
posed to extend, generally to the same descriptions
of produce in other districts, the probability of a
great alteration in the price : thus severe frost, or
heavy rains at the blooming time, or unfavourable
weather at harvest, or general indications of blight or
mildew, or other extensive injury from some pecu-
liarity in the atmosphere, lead him irresistibly to
the conclusion that, supposing the same cause to
apply to the greater part of the country, there must
be a great rise in price, whatever may be the state
of the currency, or the aspect of politics. If, on the
contrary, after a year of bad produce and high
prices, appearances are favourable for the growing
crops ; or if, after threatening indications of injury
in the earlier stages of vegetation, the weather sud-
denly becomes propitious, all parties interested in
the price immediately anticipate a fall, without re-
fining upon the suj^posed agency of other causes.
Yet such being, in the minds of farmers and
of persons interested in the corn trade, the para-
mount importance of the influence of particular sea-
sons on the production of corn, it is not a little
surprising, that among the numerous witnesses
examined by the parliamentary committees on agri-
cultural distress, there appears to have been, with
a single exception*, none who included in their
consideration of the means of accounting for the
prevalence of the high prices from 1793 to 1815, the
possibility of a more than usually frequent recur-
rence of unfavourable seasons, which, combined with
the impediments from the war to a foreign supply,
might go far to explain the phenomena. The gene-
ral impression has been, both among practical men
* The exception here alluded to, is, that of my evidence
before the Agricultural Committee of the House of Commons
in 182L
EFFECT OF THE SEASONS. 9
and speculative writers, that although there were
two instances of scarcities during the war, viz.
1794, 1795, and 1799, 1800, and one subsequently
in I8I6, there was nothing otherwise of deficiency
from the season of more than usual occurrence, or
such as to justify a higher than usual range of
prices between 1793 and 181 9-*
Even when incidentally admitting the effect of
the more prominent scarcities, little if any notice
is taken of the mode and degree in which deficient
crops promoted, during their prevalence, the pros-
perity of the farmers and landlords, or of the in-
evitable effect of the transition from a long course
of comparative dearth to abundance, in causing
agricultural distress.
With a view to show that there is nothing un-
warranted by experience, in the supposition of the
more frequent recurrence of unfavourable seasons
in intervals of twenty years or upwards, than in
intervals of equal length immediately preceding
or succeeding ; or in the assignment of a succes-
sion of years of plenty, as a cause of suffering to
farmers and landlords ; I propose to adduce in-
stances derived from antecedent periods in the
history of our agriculture. In order, however, to
judge of the degree in which the variations of the
seasons, such as they will be shown to have been,
are calculated to affect the prices of produce and
the condition of the agricultural interests, it may be
necessary to premise some general observations on
the effects of quantity on price.
* The partizans of war-demand, limit their expliination of
high prices to 1814, while those of the currency extend theirs
to 1819.
10 EFFECT OF THK SEASONS.
CHAP. II.
EFFECTS OF QUANTITY ON PRICE.
It is not uncommon to meet with persons, who,
in reasoning upon prices of corn and other com-
modities, take for granted that the variations
in price must be in exact or near proportion to
the variations in the quantity which may, at dif-
ferent times, be actually in the market or in the
country for sale ; and who, if the variations in
price do not correspond with the variations in
quantity in a near proportion, infer that there must
be something in the currency, or some unusual
cause in operation, to account for what appears to
them so anomalous an effect. Thus, the late Mr.
Mushet, in a treatise on tlie currency, the object
of which is to account for all tlie phenoniena of
prices by the state of the circulation, maintained,
that such a fall of price as was in question could
not be the effect of abundance if the currency
remained unaltered, nor be productive of agricul-
tural distress.
" Mr, Tocke has (he says at page 66., referring to a former
work of mine,) laid too much stress upon this argument: the
cheapness that would follow from increased production would
come gradually upon the puhlic ; and, if the amount of currency
remained the same, the fall in prices would be relative to their
abundance. But that one, or even two, good harvests should
cause a fall of price generally from 30 to 45 per cent., is giving
more to the bounty of nature than I think will be found consist-
ent with the fact. But admitting the fact, docs it follow that
this abundance should cause general distress, and reduce the
agricultural community to the verge of ruin ? Admitting the ar-
gument, that a productive harvest would cause a fall of price
beyond the actual abundance, would the farmer have no recom-
pence whatever from such abundance? Would such abundance
EFFECT OF THE SEASONS. 11
render him incapable of paying for two or three years in succes-
sion more than two thirds or three fourths of his rent, when
landholders were obliged to meet their tenants with a reduction to
that extent, or have their farm thrown on their hands? 1 can-
not contemplate such a state of things from bountiful harvests,
even under the operation of our present corn laws. Nor am I
aware that any evidence of such being the case, can be produced
in the history of the agriculture of this country, unaccompanied
with variations in the amount of the currency."
I liave been the more induced to insert this
quotation, because it was chiefly on the authority of
Mr. Mushet's work that Mr. J. B. Say, the most
distinguislied of the French writers on Pohtical
Economy, expressed a most exaggerated opinion
of the depreciation of the currency of this country ;
while, cnriously enongh, Mr. Say had occasion at
the same time to notice variations of prices as great
in France, which he accoimted for upon very ob-
vious grounds, without inferring any alteration of
the value of money.
And more recently an opinion to the same effect
has been stated by one of the most distinguished
of the partisans of the doctrine of the paramount
influence of the currency. Mr. E. S, Cayley, M.P.,
in his evidence before the Lords' Committee on
agriculture, in 1836, said —
" It is one of the false notions entertained by political econo-
mists, that a bad harvest is an advantage. In all periods of
history a good harvest was always considered a blessing, good
both for man and beast, for then there is plenty in the land.
When there is a deficient crop, that increases the price^ but not
sufficiently to compensate for the loss of produce; but the in-
crease of produce by a good crop in a proper state of things,
more than counterbalances the fall of price." — Report of Lords
Committee on Agrieultaral Distress, 1836. p. 321.
But the history of our agriculture tends very
clearly to prove that in all the signal instances of
scarcity and abundance of the crops, the variations
of price have been in a ratio much beyond the
utmost computation of the dift'erence of quan-
tity, and that on every occasion of marked tran-
12 EFFECT OF THE SEASONS.
sition, from dearth to abundance there have been
complaints of agricultural distress.
The fact that a small deficiency in the produce
of corn, compared with the average rate of con-
sumption, occasionally causes a rise in price very
much beyond the ratio of the defect, is obvious
upon the slightest reference to the history of prices
at periods when nothing in the state of politics or
of the currency could be suspected to have had
any influence.
Some writers have attempted to deduce a strict
rule of proportion between a given defect of the
harvest, and the probable rise of price.
The rule of this kind that has been most com-
monly referred to, is one by Gregory King, which
is introduced in the following passage by D'Ave-
nant : —
" It is observed, that but one tenth the defect in the harvest
may raise the price three tenths ; and when we have but half our
crop of v.'heat, which now and then happens, the remainder is
spun out by thrift and good management, and eked out by the
use of other grain : but this will not do for above one year, and
would be a small help in the succession of two or three unseason-
able harvests. For the scarcity even of one year is very de-
structive, in which many of the poorestsort perish, either for want
of sufficient food, or by unwholesome diet.
" We take it, that a defect in the harvest may raise the price
of corn in the following proportions : —
Defect. Above the common rate.
1 tenth
2 tenths
3 tenths
4 tenths
5 tenths
raises the price
3 tenths
8 tenths
1-6 tenths
2-8 tenths
4!'5 tenths
So that when corn rises to treble the common rate, it may be
presumed that we want above one third of the common produce ;
and if we should want five tenths, or half the common produce,
the price would rise to near five times the common rate." —
(D'Avcnant, Vol. II. pages 224 and 225.)
It is perhaps superfluous to add, that no such
strict rule can be deduced ; at the same time,
EFFECT OF THE SEASONS. 13
there is some ground for supposing that the esti-
mate is not very wide of the truth, from observation
of the repeated occurrence of the fact, that the
price of corn in this country has risen from 100 to
200 per cent, and upwards, when the utmost com-
puted deficiency of the crops has not been more
than between one sixth and one third below an
average, and when that deficiency has been relieved
by foreign supplies.
All that can be said, therefore, in general terms,
is, that a decided deficiency of supply is commonly
attended in the case of corn, more than in that of
most other articles, with an advance in price very
much beyond the degree of the deficiency. And
the reason of the fact is as clear, upon a little re-
flection, as the fact itself is upon the slightest ob-
servation.
The process by which the rise beyond the
proportion of defect takes place, is the struggle of
every one to get his accustomed share of that
which is necessary for his subsistence, and of which
there is not enough or so much as usual for all.
Supposing a given deficiency, the degree in which
the money price may rise, will depend upon the
extent of the pecuniary means of the lowest classes
of the community. In countries where the pe-
cuniary means of the lowest classes are limited to
the power of obtaining a bare subsistence in ordinary
times, as in Ireland, and on many parts of the Con-
tinent, and where neither the government, as in
France, nor the poor laws and contributions by
wealthy individuals, as in England, come in aid of
those means, a proportion of the population, ac-
cording to the degree of scarcity, must perish, or
suffer diseases incidental to an insufficient supply
of food, or to a substitution of inferior and un-
wholesome diet. And the increased competition
of purchasers being thus limited to the classes
above the lowest, the rise in price may not be very
14 EFFECT OF THE SEASONS.
considerably beyond the defect of quantity. But
in France, where it is a part of the general policy
of the government to provide by the purchase of
corn, in times of dearth, for the subsistence of the
lowest classes, and particularly for that of the in-
habitants of Paris ; and in this country, where the
poor laws create a fund for the maintenance of the
lowest classes, at the expense of all the classes
above them ; where, moreover, the voluntary con-
tributions of richer individuals swell that fund ; it
is clear that the competition of purchasers would
be greatly increased, while the supply being li-
mited, the price would rise very considerably beyond
the ratio of the deficiency. The final effect of a
rise in })rice so much beyond the defect of the
crops, when that increased rise is produced by the
causes mentioned, is to limit the consumption and
to apportion the privations resulting from scarcity
over a larger part of the population ; thus diminish-
ing the severity of pressure upon the lowest class,
and preventing or tending to prevent any part of
it from perishing, as it might otherwise do, from
actual want of food.
It is of the utmost importance to bear in mind
the operation of the principle of the great increase
of price beyond the degree of deficiency, with a
view to accounting not only for the high range of
prices, but, likewise, for the extraordinary pros-
perity which attended the agricultural interest *
during the first half of the period that will come
under consideration, and which cannot, in my
opinion, be accounted for in any other way.
* By agricultural interest, I mean exclusively farmers and
landlords, and owners of tithes, who are alone benefited by an
advance of price resulting from scarcity. The condition of the
labouring classes, even of those employed in husbandry, is well
known to be deteriorated in periods of dearth, as the wages of
labour do not rise in full proportion to the advance in the price
of provisions.
EFFECT OF THE SEASONS. 15
It is clearly through the medium of prices raised
beyond the ratio of deficiency, that farmers gained
such great profits pending tlie term of their leases,
and that landlords obtained such greatly advanced
rents at the granting of new leases.
If prices of produce had risen only in exact pro-
portion to the deficiency of growth ; thus, if in
commonly good years, an acre of wheat produced
33 bushels, which sold for 6s. per bushel, or 9^ 18.v.,
but, in a bad season, produced only two thirds of a
crop, or 22 bushels, which sold for 9s. the bushel,
or 9/. 18^., supposing the expenses of getting in
the crops to be the same in both cases, the farmer
would be neither gainer nor loser by the deficiency
of his crops, that deficiency being here assumed to
be general. The deficiency would be a general
calamity, and farmers and landlords would bear
their shares of it in their quality of consumers.
But, upon the principle here stated, the case
would be widely different. In the event of a defi-
ciency of one third of an average crop, a bushel of
wheat might rise to I8s. and upwards.* Now, 22
bushels, at 18.9. per bushel, would be worth 19^. l^s.^
whereas, the 33 bushels at 6s., were worth only
9/. 18^., making a clear profit to the grower of
100 per cent. This, of course, is an extreme case,
and cannot, in general, be of long duration ; it
supposes no great surplus from former years, and
no immediate prospect of adequate relief from im-
portation. While the deficiency exists, however,
whether in reality or only in apprehension, such,
and still greater, may be the effect.
For the sake of illustration of the mode and de-
gree in which a deficiency in the crops, compared
* Considering the institutions of this country relative to the
maintenance of the poor, if there should be a deficiency of the
crops amounting to one-third, without amj surplus from a former
year, and tcithout any chance of relief by importation, the price
might rise five, six, or even tenfold.
16 EFFECT OF THE SEASONS.
with an average produce, is calculated to aifect the
condition of the agricultural interest, let us suppose
that the average produce of corn in this country
were 32 millions of quarters * of all kinds, which
would sell at 40.9. per quarter all round as a remu-
nerative price, making an amount of 64,000,000/.
to be distributed as wages, profit, and rent, includ-
ing tithe ; but by the occurrence of a bad crop, de-
ficient one eighth, uncompensated by a surplus
from the former season, the price advanced to 60.9.,
there would then be 28 millions of quarters at 60*.,
making 84,000,000/, being a clear addition of
20,000,000/., to be distributed among the farmers
and landlords, and receivers of tithe in kind, in the
first instance. Eventually, increased wages would
form some deduction, if the advance in price, from
the continuance of deficiency, lasted for more than
one season, or if, by the recurrence of deficiency
at short intervals, the advance were, on an average,
in the same relative proportion If the deficiency
were one quarter, and the price were to rise, as it
infallibly would, to at least double, the gain among
those classes would be
32,000,000 of quarters at 405.=:64-,000,000/.
24,000,000 at 805.^:96,000,000/.
There can be little doubt tliat, in such a state of
things, the agricultural interest would enjoy, not
only the appearance, but the reality of prosperity.
But it is clear, that the increased income distri-
buted among the agricultural interest must, with
the exception of the increased expenses incurred by
the landlords and farmers in their quality of con-
* It was computed by Dr. Colquhoun, that the consumption
of all kinds of grain in this kingdom amounted, in 1812, to 35
millions of quarters, exclusive of seed. Mr. M'Culloch esti-
mates that, in 1834, the consumption might be computed at 44
millions exclusive of seed, and 52 millions including seed. — See
article, Corn Laws and Corn Trade, in his Commercial Dictionary.
EFFECT OF THE SEASONS. IJ
sumers, be at the expense of the other orders of
the community. The advocates, however, for the
agricultural claims, which, if they were admitted
and could be made operative to their full extent,
would artificially perpetuate the effects that could
otherwise arise only from the sterility of the soil or
the unpropitiousness of the seasons, seem to confine
their observation of the consequence of the high
price of provisions to the direct and obvious advan-
tages resulting from the increased sum to be distri-
buted among the farmers and landlords ; and infer
that this increased sum is the creation of so much
additional wealth. It was the same confinement of
view to the increased sum which an advance in the
price of corn occasioned to be distributed in the
shape of profit and rent, that led the sect of econo-
mists in France, who considered the raw produce
of the earth as the only source of wealth, to look
upon every advance in the price of that produce as
so much increase of national wealth.
While the fact, indeed, and the reason of the fact
that, as relates to commodities generally, and to
corn more especially, a deficiency of quantity pro-
duces a great relative advance in price, has been
repeatedly noticed and variously illustrated by
several writers ; the converse of the proposition,
viz. that an excess of quantity operates in depress-
ing the prices of commodities generally, but of corn
more especially, in a ratio much beyond the degree
of that excess, was little noticed until the publica-
tion of the report of tlie Agricultural Committee
in 1821, or, if casually noticed, was not applied
systematically in accounting for instances of great
depression of prices, and of consequent distress
among those who felt the effects of that depression.
In the report of that Committee, the principle
which is here alluded to, and upon which I was
particularly examined, is stated, and some of the
c
18 EFFECT OF THE SEASONS.
consequences flowing from it are pointed out in
the following passage : —
'' Tlie cause which produces this greater susceptibihty in the
corn market, cannot be better explained by your Committee,
than in the following extract from the answer of one of the wit-
nesses who was particularly examined to this point : — ' Why
should a different principle apply to corn than to any other ge-
neral production ? Because a fall in the price of any other com-
modity, not of general necessity, brings the article within the
reach of a greater number of individuals : whereas, in the case
of corn, the average quantity is sufficient for the supply of every
individual ; all beyond that causes a depression of the market
for a great length of time, and a succession of two or three
abundant seasons, must evidently produce an enormously in-
convenient accumulation.' — ' Is there not a greater consump-
tion of corn when it is cheap than when it is dear, as to quantity ?
There may, and doubtless must be, a greater consumption ; but it
is very evident that if the population was before adequately fed,
the increased consumption, from abundance, can amount to little
more than waste ; and this would be in a very small proportion
to the whole excess of a good harvest or two.' "
The report then proceeds to say : —
" In the substance of this reasoning your Committee entirely
concur ; and it appears to them that it cannot be called in ques-
tion without denying either that corn is an article of general
necessity and universal consumption among the population of
this country, or that the demand is materially varied by the
amount of the supply. This latter proposition, except within
very narrow limits altogether disproportioned to fluctuation in
production, is not warranted by experience. The general truth,
therefore, of the observation remains unaltered by any small
degree of waste on the one side, or of economy on the other ;
neither of which are sufficient to counteract the effect which
opinion and speculation must have upon price, when it is felt
how little demand is increased by redundancy, or checked by
scantiness of supply."
It has been chiefly a want of consideration of
the magnitude of the excess or defect of the crops
in particular seasons, and sometimes in a succession
of seasons, beyond the average rate of consumption,
that has led a large, and, probably the largest class
of reasoners on the prices of corn to suppose that
an increase of consumption, arising, whether from
EFFECT OF THE SEASONS. 19
cheapness, or from increased employment of tlie
working classes, in consequence of a flourishing as
contrasted with a dull state of trade and manufac-
ture, could form any considerable proportion to the
excess of a superabundant harvest. * If it is con-
sidered that the produce of an ordinary crop of
wheat in this country, at the commencement of
the century, was estimated at nearly 9 millions of
quarters, and is now variously computed at from
12 to 14 millions, and that the variations from
season have been to the extent of one fourth, or up-
wards, in excess or defect, making in the earlier
period a difference of upwards of 2 millions of
quarters, and in the later of upwards of 3 millions
above or below an average, and a difference of up-
wards of 4 millions in the one case, and of 6 millions
in the other between a very deficient and a very
abundant crop, — it may easily be imagined, that
retrenchment on the one hand, and increased con-
sumption, however wasteful, on the other, can make
comparatively little impression on such enormous
diiference of supply : but more especially, when
such difference of supply is extended to more than
a single season.
It is not therefore to be wondered at, that a
succession of seasons, of somewhat more than ordi-
nary produce relatively to the usual rate of con-
* Of the little comparative influence of retrenchment on the
one hand, or of increased consumption on the other, two striking
instances may be adduced : —
In the parliamentary committee on the scarcity in 1800,
the deficiency of the crop of wheat was estimated at about
2,000,000 quarters ; and in the examination into the resources
for meeting that deficiency, after allowing for importation, the
use of substitutes for wheat, and the stoppage of the distilleries,
the whole amount of retrenchment, reckoned upon as the conse-
quence of the very high price, was taken at 300,000 quarters.
On the other hand, the more recent instance of the crop of
ISS'l' proves, in a striking manner, the insignificant effect of
extra consumption upon a productive harvest.
c 2
20 EFFECT OF THE SEASONS.
sumption, should be attended with an extreme
depression of price ; and that the fall of prices,
consequent upon such a succession of seasons of
more than ordinary produce, must be very ruinous
to farmers, who were under agreement to pay rents
which had been calculated on a higher range of
prices.*
It will accordingly be seen, on reference to
former periods of our history, that there were very
different proportions of favourable or unfavourable
seasons, in periods of considerable length ; and that
on the transition from dearths of some continuance
to abundance, there have been complaints, as in
more modern times, of farmers ruined, and of rents
unpaid.
* The effect of abundance in depressing the price of corn,
although it must be much beyond the ratio of the excess, is not
calculated to be in the same ratio as that of deficiency in raising
the price. In the event of a superabundant harvest, a part
more or less of the excess may, according to the opinion and
the capital, or credit of the farmer, be held over. If, however,
the recurrence of propitious seasons should be such as to render
the accumulation manifestly and inconveniently large, the sub-
sequent depression would be the greater, in proportion to the
previous resistance to a fall, and the only remedy would be an
exportation at ruinously low rates, and eventually a diminished
cultivation. As a general position, tlierefore, it may safely be
laid down that an excess of the supply of corn is attended with
a fall of price much beyond the ratio of excess ; and that the
larger quantity consequently M'ill yield a less sum of money
than the smaller quantity.
EFFECT OF THE SEASONS. 21
CHAP. III.
ON THE CHARACTER OF THE SEASONS AND THE
STATE OF PRICES, AND THE CONDITION OF THE
AGRICULTURAL INTERESTS PREVIOUS TO 1793.
Section 1. — Period ending in 1692.
Of the character of the seasons, such as it is to be
inferred from the state of prices down to the latter
part of the lyth century, a concise, and, as it ap-
pears to me, a correct view, is taken in the follow-
ing extract from an article in the Quarterly Review,
No. 57., which contains a critique on a former work
of mine, from the pen, I have reason to believe, of
the late Mr. Malthus : —
" In that very valuable table of prices collected by Sir Fre-
derick Morton Eden, in his work on the Poor, periods of high
and low prices are to be found, of considerable duration, for
which it would be very difficult to give any other adequate solu-
tion, than the comparative abundance or scantiness of the supplies
of corn, arising from the number of favourable or unfavourable
seasons included in such periods.
" After the great plague, which occurred about the middle of
the reign of Edward III., and gave occasion to the first attempt to
regulate wages by law, one should naturally have expected that,
owing to the great loss of people then sustained, corn would be-
come cheaper rather than dearer ; instead of which it appears to
have risen from about 5s. 4c?., the average of the first twenty-
five years of the reign of Edward III. to lis. 9c?., the average of
the last twenty-six years ; with very little difference in the quan-
tity of silver contained in the same nominal sum. For this great
rise of bullion prices, spreading itself over a period of twenty-
six years, it would be scarcely possible to assign an adequate
cause without resorting to a succession of unfavourable seasons.
During the reigns of Richard II. and Henry IV., a period of thirty-
four years, the bullion price of corn seems to have fallen rather
c 3
22 EFFECT OF THE SEASONS.
lower than it was in the first half of the reign of Edward III.
In the first twenty-three years it was 5s. 7d., and in the last
eleven years 6s. Id. ; and as in the latter half of the reign of Ed-
ward III. the pound of silver was coined into 255., and at the
end of the reign of Henry IV. into 30*., the bullion price of this
period was rather below what it was in the first half of the reign
of Edward III. ; and it certainly would be very difficult to explain
the low prices of these thirty-four years, and the high prices of
the preceding twenty-six, without the powei'ful operation of
seasons.
" In l^^i, other statutes regulating the price of labour were
passed, probably owing to the high price of corn, which had risen
on an average of the ten preceding years to 10s. 8d., without any
further alterations in the coin ; and for this rise there seems to
be no adequate cause, but a succession of comparatively scanty
crops, particularly as after this period there was a continuance of
low prices for above sixty years. The average price of wheat
from ]44'4 to the end of the reign of Henry VIII. in 1509, re-
turned to about 6s., while the pound of silver being coined into
I/. 175. 6d. instead of 1/. 2s. 6d., as at the time of passing the
first statute of labourers in 1350, showed a very decided fall in
the bullion price of wheat. This fall, however, was so consi-
derable, and lasted for so very long a period, that we cannot at-
tribute it wholly to the seasons. Still less are we disposed to
attribute it to the cause assigned by Adam Smith — a gradual rise
in the value of silver, because, if we refer to his own criterion of
value, labour, we shall find that while the bullion price of corn
had been falling, the bullion price of labour had been rising, and
consequently, silver had been diminishing, instead of increasing
in value. These prices of corn and labour could only have arisen
from a great and continued abundance of corn, which was evinced
by the very large quantity of it awarded to the labourer ; and
this abundance was occasioned probably by the combined ope-
rations of favourable seasons with the introduction of a better
system of agriculture, before the distribution of property and the
habits of the labouring classes had been so far improved as to
encourage a proportionate increase of their number.
" The rise in the price of corn during the course of the next
century may, no doubt, be easily accounted for by the progress of
population and the discovery of the American mines, without any
aid from unfavourable seasons, although in fact such seasons
did combine with the other causes just mentioned, in raising the
price of wheat towards the end of the century from 1594 to 1598.
The same cause unquestionably operated for twenty years about
the middle of the subsequent century, from 1646 to 1665 in-
clusive, when the price of the quarter of wheat was 2/. IO5. — con-
siderably higher than it was either in the earlier or later part of
the century ; and it is somewhat singular, that while during a
considerable part of the civil wars between the houses of York
EFFECT OF THE SEASONS, ^3
and Lancaster, and subsequently, corn was remarkably cheap ;
during the civil wars under Charles I., and sometime subsequently,
it was as remarkably dear — a pretty strong presumptive proof
that the seasons had more to do with the prices in both cases than
the civil wars."
The following extracts, from the Sloane MSS.
in the British Museum, No. 4174, give a descrip-
tion of the effect, on the payment of rents, of a fall
of prices, which occurred between I6I7 and 1621,
namely, from 4f3s, 3d. the quarter, of 8 bushels,
to 27*.*: —
" Mr. John Chamberlain to Sir Dudley Carleton.
"12 February, 1620.
" We are here in a strange state to complain of plenty ; but
so it is, that corn beareth so low a price that tenants and farmers
are very backward to pay their rents, and in many places plead
disability ; for remedy whereof the council have written letters
into every shire, and some say to every market-town, to provide
a granary or storehouse, with a stock to buy corn, and keep it for
a dear year. But though this be well advised, and make a fair
show in speculation, yet the difficulties be so many, that it will
not be so easy to put it into practice."
The following was written at the same period :
" England was never generally so poor since I was born as it
is at this present ; inasmuch that all complain they cannot re-
ceive their rents. Yet is there plenty of all things but money,
which is so scant, that country people offer corn and cattle, or
whatsoever they have else, in lieu of rent — but bring no money ;
and corn is at so easy rates as I never knew it to be at, twenty
or twenty-two pence a bushel, barley at nine pence, and yet no
quantity will be taken at that price ; so that for all the common
opinion of the wealth of England, I fear, when it comes to the
trial, it will prove as some merchants, who, having carried on a
* The quotations of prices of wheat, until after 1792, will be
confined to those of the Windsor market, as contained in the
Eton tables for the Winchester quarter of 8 bushels. As the
quality is supposed to be superior to middling wheat, it has been
usual among writers on corn to deduct one ninth for the differ-
ence ; but this I conceive is more than is warranted ; and the
quotations, therefore, stand as they are given in the Parliamentary
Papers.
c 4
24 EFFECT OF THE SEASONS.
great show a long time, when they are called upon too fast by
their creditors, be fain to play bankrupt."
And further : —
" Sir Symonds d'Ewes, in his unpublished diary, notices, in
1621, the excessive cheapness and plenty of wheat, the conse-
quence of which was to reduce the price of lands from twenty
years' purchase to sixteen or seventeen.* The best wheat was
then 2s. Sd. and 25. 6d. the bushel, ordinary 2s. ; barley and rye,
Is. 3d.
" The farmers murmured ; the poorer sort traversed the mar-
kets to find out the finest wheats, for none else w^ould now serve
their use, though before they were glad of the coarser rye-bread.
This daintiness was soon after punished by the high prices of all
sorts of grain every where, which never since abated."
Again, in I67O, prices having fallen on a com-
parison with those which had prevailed during
about 20 years, namely, from 1646 to 1665, gave
occasion to considerable suffering.
The distress complained of by the agricultural
interest was the reason of a new corn bill, imposing
duties on the importation amounting to a prohibi-
tion. The state of things after that act is thus
described by Roger Coke in his treatise, entitled
" The Church and State are in equal Danger with
Trade," published in I67I.
" The ends designed by the acts against the importation of
Irish cattle, of raising the rents of the lands of England, are so
far from being attained, that the contrary hath ensued. And here
I wish a survey were taken how many thousand farms are thrown
up since this act ; how many thousand farms are abated, some
above one sixth, others above one fourth, others above one third ;
some, I know, which after two years' lying waste, are abated one
half.
In 1674 there was a considerable dearth. The
price by the Eton Tables for Lady-day I673, had
* The fall in the price of land, as indicated by the reduced
number of years' purchase, has evidently, in this case, been com-
puted upon the rents which were payable, but 7iot paid ; and the
uncertainty whether the low price of produce might not entail a
fall of rent would naturally deter purchasers from giving so much
for land as they would have done before the great reduction in
the value of the produce.
EFFECT OF THE SEASONS. 25
been 35s. 6d., but the harvest of 1673 having proved
defective, the price on the Lady-day 1674 had risen
to 64.9. And the two years 1674 and 1675 are re-
ferred to as a period of great dearth.* The harvests
of 1677 and 1678 appear, by inference from the
prices, likewise to have been defective, t At Lady-
day 1677, the price had been 30*. 3d.: and at
Michaehnas, I678, 56s. lid. On the average of
seven years the price was from I666 to I672, both
years included, 36s.; and from I673 to 1679, 46*.
being a rise of nearly 30 per cent.
This comparative high range of prices had
probably, the tendency to encourage and extend
tillage, the effects of which seem to have been
developed by a succession, in the following twelve
* Comber, on National Subsistence, p. 133.
f It may be a question how far quotations of price are admis-
sible as evidence of the state of the seasons, when the degree in
which price may be affected by the seasons is the very object of
investigation. The answer is, that doubtless direct historical
testimony would be better authority ; but that, in the present
case, the inference to be drawn from any great difference of
price within short periods may be quite sufficient for practical
purposes, when there is no direct description.
From an account in the Appendix of the prices of the Windsor
market, from the Eton Tables, any very marked variation in the
produce or promise of the season may be clearly inferred by a
reference to the difference between the quotations of the spring
and autumn, when nothing in the state of the currency, or any
other important circumstance calculated to affect prices, is re-
corded to have occurred. The inference to this effect is
strengthened by the accordance of direct notices of the state
of the seasons, whenever they are given, with the indication
conveyed by the variation between the Lady day and Michael-
mas prices. Hence, in the absence of any historical notice, it
may be safely concluded, when no considerable difference is ob-
servable in the quotations from six months to six months and
from year to year, that the seasons have preserved a general
uniformity of character as to productiveness.
Dr. Adam Smith, when referring to considerable variations of
price, and considering them, even for a period often years, to be
too sudden to be ascribed to any change in the value of silver,
which is always slow and gradual, adds^ " The suddenness of the
effect can be accounted for only by a cause which can operate
suddenly, — the accidental variation of the seasons."
26 EFFECT OF THE SEASONS.
yearsy of favourable seasons and very low prices,
with the exception only of one year, viz. 1684, in
which, judging by a reference to the price, there
seems to have been a somewhat deficient crop.
The low range of prices in the six years ending
in 1691, is more especially remarkable, the average
for those years being only 29^. 5d. ; but if we take
only the four years ending in I69I, the average
price will be found to be still lower, viz. 9!Js. 'Jd.,
or a fall of upwards of 40 per cent., compared with
the average of the seven years ending in 1679 ;
this price too being for a quality better than
middling.
The state of the currency, instead of account-
ing for this low price, adds to the grounds for
wonder at its being so low. The silver, which
was then the only current coin, had, during some
years before this time, been undergoing a progres-
sive deterioration, and had probably, at the revolu-
tion in 1688, reached nearly to its most degraded
state, inasmuch as it was, very soon after that event,
that the attention of Government was drawn to the
magnitude of the evil, and the necessity of a re-
medy by recoinage. The deterioration of the coin,
previous to the re-coinage, was estimated, by Mr.
Lownds, at 25 per cent. * ; but supposing the de-
gradation, in 1688, to have been only to the extent
of 20 per cent., it would bring the price in money
of full weight, on the average of the four years
ending in 1 691, to 22.9. : and, applying the same de-
duction to the lowest quotation by the Eton Tables
of that period, viz. at Michaelmas I688, 21^. 4^.,
the price in silver coin of standard weight would
be reduced to 17*^ 1^- for the Winchester quarter
* Silver was then the only current coin by which prices were
determined. The guinea commonly exchanging at that time
for 305. of the worn and dipt silver. In 1695 the common price
of silver bullion was 6s. 5d. an ounce, being Is. 5d. or nearly
25 per cent, above the Mint price.
EFFECT OF THE SEASONS. ^7
of wheat, of better than the average quality. That
there is no material error in this very low quota-
tion of the Windsor market is proved by a similar
low quotation of the Oxford market in Mr. Lloyd's
tables, viz. 21*. lid., at Michaelmas 1688. It is
impossible to assign these extremely low rates to any
other cause than that of an inconvenient accumu-
lation arising from a succession of favourable seasons,
operating upon a state of tillage, extended, doubtless,
by the comparatively high prices which liad pre-
vailed some time before.
Dr. Adam Smith, who notices the very low
price of this period, seems inclined to consider it
as an indication of, and resulting from, an increase
in the value of silver. For, according to his view,
the utmost effect of the discovery and working of
the American mines, in reducing the value of silver,
had been completed between 1630 and 1640, or
about 1636. But supposing that there had been
better grounds than there now appear to have been
for the opinion entertained by Dr. Smith, of a
tendency to a rise in the value of silver, this cause
must necessarily have been extremely slow in its
operation, and could most assuredly not account
for so low a price as that of the four years ending
in 1691, viz. QJs. Jd- ; or, allowing for the deterior-
ation of the coin, 22.9. 1^., being the lowest at
which it had ever been since 1595; long before
the American mines could possibly have produced
their full effect.
The bounty system* to which, by its advocates,
* By 1 William and Mary, a bounty was granted, of 5s. per
quarter, on the exportation of wheat, when the price did not ex-
ceed 4:8s. 2s. 6d. per quarter on barley and malt, when not ex-
ceeding 24*. ; and 3*. 6^. per quarter on rye, when not exceeding
S2s. A bounty of 2s. 6d. per quarter was subsequently given
upon the exportation of oats and oatmeal, when the price of the
former did not exceed 1 5s. per quarter. Importation continued
to be regulated by the act of 1670.
28 EFFECT OF THE SEASONS.
the low prices of corn in the first sixty-five years
of the last century were ascribed, cannot in any
way be brought to explain the low rate now under
consideration. The measure was not adopted till
1688 ; and whatever might be its ultimate effect in
encouraging an extended tillage, and thus even-
tually reducing the price, the first operation of it
would be, as it was intended that it should be,
a forced exportation, and a consequent imme-
diate relief to the growers and dealers from the
weight of accumulated stock with which they
were oppressed. Accordingly, the markets did
recover in a slight degree, after the passing of that
measure, although they continued at a low range
till 1692.* But if neither the supposed increase
of the value of silver, nor the operation of the
bounty can by possibility be assigned as the causes
of that low range of prices, as little can any thing
be found in the state of politics or trade to account
for it.
A fall of the price of wheat to 29*. had taken
place after the harvest of I687, when the coun-
try was in a state of perfect political tranquillity:
and it does not appear that the revolution in
1688 had any effect in deranging the markets for
provisions. If, from such a cause, they had been
particularly depressed, the rebound, when the ex-
traordinary cause of depression was removed, would
have been proportionally great ; whereas the quo-
tation at Lady-day 1689, of the Windsor market, was
23s. Id., and of the Oxford market Q,5s. 6d. And
at the end of two years after the revolution, viz.
at Lady- day I69I, wheat in the Windsor market
was only Q9s. — the silver coin being then at nearly
its lowest point of degradation. There appears,
therefore, no ground of inference that any part of
* Indeed it must be perfectly clear, that the prices in the
three years following 1688, low as they were, would have been
still lower but for the bounty on exportation.
EFFECT OF THE SEASONS. 29
the depression of prices so remarkable between
1685 and 1692, can be refeiTed to the state of
poHtics in that interval : and as to any influence
from the state of trade, there is no reason whatever
for ascribing to it a depressing effect on the price
of provisions, unless an impro^dng and flourish-
ing state of it is calculated to have that effect.
The Board of Trade represented in 1697: "We
have made inquiry into the state of trade in gene-
ral, from the year I67O to the present time j and
from the best calculations we can make, by the
duties paid at the Custom House, we are of
opinion, that trade in general did considerably
increase from the end of the Dutch war in 1673
to 1689, when the late war began." — Chalmers's
Estimate^ p. 47.
It is indeed manifestly impossible to discover
any cause for the remarkably low prices from 1685
to 1692 *, but that of a succession of favourable sea-
sons, acting upon a probably extended cultivation.
Ofthe agricultural distress, resulting from such sea-
sons, a sufficient proof is furnished by the enact-
ment of the celebrated measure of the bounty ;
the real object of which was, although professing
to have in view the encouragement of tillage, to
relieve the landed interest from the pressure of
distress arising from low prices.
* In a publication, entitled a General Chronological History
of the Air, Weather, &c., by Dr. Short, 1749, is the following
quotation from a diary of the Rev. S. Say, of St. James's,
Westminster : — " In the latter end of the reign of King James,
and the beginning of the reign of King William, the seasons
were kindly to the fruits ofthe earth ; in 1688, wheat was sold
in Norwich at 2s. per bushel, and in 1691 for about 2s, 6d."
30 EFFECT OF THE SEASONS.
Section 2. — 1693 to 1714.
But if the low prices immediately antecedent to
1693 are, chiefly by inference (irresistible as the
grounds for such inference are) referable to the
state of the seasons, there is direct evidence of the
influence of that cause in the remarkably elevated
range of prices in the following seven years, which
are traditionally known as the barren years at the
close of the seventeenth century.*
Of these seasons there are various notices to be
collected from publications relating to that period.
Among them are the following : —
" 1692. Great rains in autumn ; an earthquake was felt in
England, and in most parts of Europe.
" 1693. A very wet summer ; this unseasonable weather ex-
tended to France, where numbers perished for want, notwith-
standing they imported much corn from Sweden and Denmark.
In Kent, turnips made a considerable share of bread for the
people.
" 1694. A very wet summer.
" 1695. Many of the Scotch are driven into Ireland by the
excessive price of corn.
" 1696. A very wet summer. A great want of money in
* In The Farmers Magazine for January 1800, is a passage
in which the editors, after noticing the importance of a register
of the seasons, add, " Such a register will not only inform the
present generation, but must also prove very interesting to pos-
terity. We need hardly say, that if similar information could
be procured concerning the causes which occasioned the scanty
crops at the end of the seventeenth century, traditionally called
the barren years, it would be considered as a particular obli-
gation." And Mr. M'Culloch, in his very elaborate work, " A
Statistical Account of the British Empire," adverting to the
scarcities with which Scotland has occasionally been visited,
observes, that, " Those from 1693 to 1700, emphatically termed
the ' seven ill years,' were particularly severe. During the
* seven ill years,' the distress was so great that several extensive
parishes in Aberdeenshire, and other parts of the country, were
nearly depopulated ; and some farms remained unoccupied for
several years afterwards." — Vol. i. p. 424.
EFFECT OF THE SEASONS. 31
specie ; but this was soon remedied by the new coin coming
out.*
" 1698. A veiy wet summer. Great complaints are made
of the dearness of provisions and decay of trade.
" These cold and wet seasons lasted more than seven years ;
the dismal effects of famine were felt in most parts of Europe."
An Inquiry into the Prices of Wheat, Malt, and occasionally of
other Provisio7is, as Sold in England from the Year 1000 to the
Year 1765. (Folio, published for T. Longman, 1768.)
The scarcity resulting from such seasons is no-
ticed by Dr. Adam Smith, in the following terms :
" The scarcity which prevailed in England from
* The state of the weather in 1697 is not noticed in this
publication ; but it is noticed in the following description, ex-
tracted from a " Syllabus of the general State of Air, Health,
and Seasons,'' by Thomas Short, M.D.
" 1697. From January 17. to February 11., a hard frost. A
cold north wind all March, and to April 11. July 16. and 17.,
frost and mildew : calm to August 10. By constant daily
rains growing corn sprouted in the ear ; then came good harvest
weather.
" 1698. January had much snow, and deep drifts. February
a cold cloudy month; 14 inches deep snow on the 26th, ice
4 inches thick. April 22., a deep snow. May 3., a general deep
snow ; and to June 18., very rainy. The 16th of June, in a warm
rich soil, was the first wheat-ear seen near London. The back-
wardest spring in forty -seven years. The four months, to the end
of August, had scarce two days together without rain (except
from July 18th to the 26th). The wettest season known.
Whole fields of corn spoilt, even in Kent; much more in the
north. Horses were turned into the pease and barley. The
earliest wheat not cut till the middle of September. In Kent,
September the 29th, barley standing uncut there ; much lay in
the swaith till December ; that which was brought in was
soaked with wet, and almost useless. Much corn in the north
ungot at Christmas ; and, in Scotland, they were throng-reaping
in January, and beating the deep snow off it as they reaped the
poor green empty crop. Bread, made of wheat, was got ; would
not stick together, but fell in pieces, and tasted as sweet as if
made of malt. The seed-time was so wet, that there was hardly
above half a crop sown this year.
" 1699. Now begins the first of several hot summers. June
and July were so hot, that wheat began to be cut the 1st of
August ; and though there was but half a crop sown, yet it fell
from 9*. and 105. a bushel to a reasonable price ; and continued
so for several years."
32 EFFECT OF THE SEASONS.
1693 to 1699, both inclusive, though no doubt
principally owing to the badness of the seasons,
and therefore extending through a considerable
part of Europe, must have been somewhat en-
hanced by the bounty. In 1699, accordingly, the
further exportation of corn was prohibited for nine
months." As the price, on the average, was above
that up to which the bounty was payable, it does
not appear how that measure could have enhanced
the price, and I quote the passage merely as evi-
dence of the notoriety of the fact of the prevalence
of scarcity through the greater part of Europe
during an interval of about seven years.
The relatively high prices of that period cannot,
indeed, be satisfactorily accounted for in any other
way. The bounty must, on the grounds which I
have stated, have been wholly inoperative to that
effect ; or, rather, in as far as it was calculated to
have the effect ascribed to it of forcing a surplus
produce, it might, when the exportation was pro-
hibited, have had a temporary effect in a contrary
direction, viz. of preventing the rise to so great an
extent as might otherwise have taken place.
Of the inveterate tendency which exists to refer
every instance of relatively high prices of corn to
the currency, however palpably attributable to other
causes, there cannot be a stronger instance than
that among speakers in parliament, and among
writers out of it, whenever reference has been made
to the prices of corn in the closing years of the
seventeenth century, it seems to have been taken
for granted that they were exclusively the result of
the deteriorated state of the coin.
The assignment of this cause for the great rise
of prices in the closing years of the seventeenth
century, is at the outset negatived by a very ob-
vious and simple consideration. The silver coins
were, in I69I, at, as nearly as might be, their
greatest debasement j and it is the rise from that
EFFECT OF THE SEASONS. 33
period of nearly 100 per cent, which is to be ac-
counted for. It would be extravagant to suppose
that the further deterioration, till the calling in of
the bad coin in 1695, could have been such as to
produce any sensible effect on prices.
In tlie course of the years l(i94 and 1695, mea-
sures had been taken for a new coinage ; and the
effect of these measures, while they were in progress,
was to occasion great scarcity of circulating medium,
by the inducement to hoard or to export the more
perfect pieces, and to reject the imperfect. In 1695
a proclamation was issued, prohibiting the currency
of the clipped money. In the early part of I696,
being the interval between the crying down of the
old, and the issuing of the new coin, the scarcity
of money seems to have been severely felt, as
appears by the following extracts from Evelyn's
Memoirs.
'•June 11. 1696. Want of current money to carry on
the smallest concerns, even for daily provisions in the markets.
Guineas lowered to 22*., and great sums daily transported to
Holland, where it yields more, with other treasure sent to pay
the armies, and nothing considerable coined of the new, and
now only current stamp, cause such a scarcity, that tumults are
every day feared, nobody paying or receiving : so imprudent
was the late parliament to condemn the old, though clipped and
corrupted, till they had provided supplies. To this, add the
fraud of the bankers and goldsmiths, who, having gotten immense
riches by extortion, keep up their treasure in expectation of en-
hancing its value."
Nothing can indicate more strongly than this
description the great stagnation of the circulation,
and the consequent enhancement of the value of the
circulating medium * ; and it is probable, therefore,
that prices, high as they were from deficiency of
supply arising out of the seasons, would have been
* Mr. Huskisson, in his speech in June, 1 822, on Mr. Western's
motion, quoted from Archdeacon Coxe's publication of the cor-
respondence between king William and the duke of Shrewsbury
several particulars which fully confirm this statement of the
scarcity of money and general stagnation which prevailed in
1696.
D
34f EFFECT OF THE SEASONS.
still higher in the interval immediately preceding
1696, if the contraction of the circulation had not
been greater * with a debased, than it subsequently
was with a more perfect coin. In I696 the new
coin began to appear, .and, in the course of the
two following years, the reformation of the cur-
rency was completed ; but it was precisely in this
interval, viz. from I696 to 1699, both years in-
cluded (the two last being years of peace), that
prices reached their greatest height. The com-
parison of the prices of wheat in the four years
ending in l691j when the coin was deteriorated by
at least 20 per cent., with the price in the four years
ending in 1699, when the coin was restored to its
full standard value, will stand thus :
s. d.
4 years ending 1691 - - - 27 7
4 years ending 1699 - - - 5Q Q>
A further presumption, if any were wanting,
against the supposition of the currency having had
any influence in this high range of prices, is derived
from the circumstance that a still greater pro-
portionate rise, in the same period, occurred in
France.
With regard to the hypothesis of war having
occasioned these high prices, it is to be observed,
that the prices continued low during the first two
years of the war, viz. from 1689 to I692, and that
nearly the highest prices, viz, in 1698 and 1699,
were after the conclusion of peace.
Upon the cessation of the long period of dearth,
in the closing years of the seventeenth century, the
fall of prices was rapid.
The price, after harvest, at Michaelmas 1700,
had fallen to 336^. 9^., and, after the harvest of I702,
* The depression of the exchange immediately previous to
1696, to the extent of nearly 25 per cent., was the effect of the
large foreign expenditure. But that depression could, of course,
not have taken place if the coin had been perfect.
EFFECT OF THE SEASONS. 35
to Q5s. 6d. This fall of upwards of 50 per cent,
took place, notwithstanding a renewal of the war
with France in the year before, and notwithstand-
ing tlie full operation of the bounty on exportation.
The fall being so great, it might naturally be sup-
posed that rents which had probably been regulated
with some reference to the previous long range of
high prices, could not easily be paid, and there
happens to be testimony that rents were not paid.
Evelyn, in his Diary, January, 1703, writes : " Corn
and provisions so cheap, that the farmers are unable
to pay their rents.'*
The harvest of 1703 seems to have been unfa-
vourable, as the price of wheat rose by Lady- day
following to nearly double of what it had been in
the preceding sprmg, viz.
Per Winchester Quarter.
S. d.
1703. Lady-day - - - 26 8
Michaelmas - - - 37 4
1704. Lady-day - - - 51 7
At Michaelmas, 1704, it fell to 30^. 10^., indi-
cating that the crops of that year had proved
abundant ; and, from that time (the government
expenditure, be it remarked, arising from the war
being then on a very large scale) till I7O8, it con-
tinued at a low range, viz. from 23s. Id. to 27s. 3d.
The following is a notice of this period, extracted
from the work which I have already quoted : —
" 1706. — Historians take notice that about this time the
kingdom was blessed with plenty ; that the people cheerfully
contributed to the expense of the war."
The same author proceeds to say :
" 1708.* — A hard frost, which brought on a prodigious
* The winter of 1708-9 is one of the most memorable of
any in the last century for severity and duration. The instances
D 2
3d EFFECT OF THE SEASONS.
scarcity of provisions, more in France than in England. In
general the summer was cold and wet.
" 1709. — The queen, in her speech to parliament, complains
of corn being exported at such high prices as distressed the poor.
Exportation prohibited for one year. There fell this year rain to
the depth of 26^ inches. I think the mean depth of rain falling
in England is 19| inches.
" 1710. — Exportation prohibited for one year."
The eftect of this variation of the seasons on
prices is strikingly exemplified in the following
quotations : —
s.
d.
1708. Lady-day
- 27
3
Michaelmas
- - 46
3
1709. Lady-day
- 57
6
Michaelmas
- - 81
9
1710. Lady-day -
- 81
9
Being a rise of 200 per cent, in two years. We
were then indeed at war, as we had, however,
been during the previous low prices ; but as if to
negative the possibility of ascribing the rise in this
instance to extra demand or consumption arising
from the war, it so happens that the price fell again,
of extreme and prolonged frost were the subject of observations
interchanged among all the scientific societies of Europe. In
this country, and throughout the greater part of the Continent,
the frost began in October, and continued with few intermis-
sions into a very advanced period of the spring. The summer
following was cold and wet. And the dearth with which Europe
was visited in 1709, as the consequence of the severe winter,
and the cold and wet summer, appears to have been very severe
and very general. Dr. Short gives a detailed account, too long
for extract, of this season ; but he notices one circumstance,
which is worth recording, of the effects of the cold backward
spring, following so severe a winter, on the wheat crop : " Wheat
over the kingdom," he says, " was generally destroyed on the
north-east side of the furrows." This is precisely sim.ilar to the
effects ascribed by Mr. Burke, in his publication entitled
" Thoughts and Details on Scarcity," to the cold east winds in
June, 1795.
EFFECT OF THE SEASONS. 37
in 1713, to 33s. 9d. Nay, even farther to prove
how independent of the war the fluctuation was,
the price having continued at about 30s. the quarter
till the peace of Utrecht, in I7IS, immediately
after that event, rose (at Michaelmas, 1713,) to
56s. lid. or 70 pel' cent. During all these
fluctuations, the silver coins were in an undete-
riorated state. There had been some variations
in the value at which the gold passed, but these
did not affect prices which were estimated in
silver.
A comparison with the prices in France may
again be resorted to, as showing, by a coinci-
dence of the fluctuations, that they were produced
by causes common to both countries, and not by
any peculiarity in the currency of this country.
Indeed, whether by reference to that comparison,
or by an inspection of the difference between the
Lady-day and Michaelmas quotation of either the
Eton or the Oxford tables, there can be no
doubt but that there was, on the continent of
Europe as well as in this country, a considerable
proportion of deflcient harvests in the seven years
ending in 1715, as compared with the preceding
seven years.
And taking the whole period from 1692 to
1715, embracing an interval of twenty-three years,
it will be seen that by direct evidence for the
greater part, and by irresistible inference for the
rest, there are not fewer than eleven of these
twenty-three seasons of more or less deficient pro-
duce.
It is to be borne in mind, that in the period
here referred to, the bounty on exportation had
been in full operation, and that previously to the
institution of it, the growth of corn had, in ordi-
nary seasons, been such as afforded some surplus
for exportation. Upon the occurrence, therefore,
D 3
38 EFFECT OF THE SEASONS.
of years of scarcity, the portion of land cultivated
beyond that which in ordinary years was sufficient
to supply our own ordinary consumption, would
be available (especially when enforced by a pro-
hibition of export) in lieu of what, under opposite
circumstances, would be the necessity for an in-
creased importation. So that, if from 1693 to
1715 we had been in the habit of requiring an
annual foreign supply of corn, the prices would
have been higher by at least tlie ordinary charges
of importation, and during the time of war by the
extra charges incidental to the difference in ordi-
nary wars. But as it was, the average prices of
seven consecutive years of that period were up-
wards of 80 per cent, higher than those of the
seven years immediately preceding, and this ob-
viously by the mere effect of the seasons. If, then,
to the prices of the seven years ending in 1699,
were added such extraordinary charges as formed
the condition of a foreign sujDply during the latter
period of last war, the average of those seven years
would be much higher relatively to the interval
of seven years ending in 1692, than the average
from I8O7 to 181 1, relatively to the seven years
ending in 1792.
Section 3. — 1 715 to I765.
But if the period of twenty-three years, ending
m 1715, be remarkable for a high range of prices
of corn, compared with the period immediately
preceding, there is still more ground for remark
in the very low comparative range of prices observ-
able in the 50 years following 1715.
EFFECT OF THE SEASONS. 39
The average of 23 years, ending in 1715, is,
by the Eton tables, 45s. 8d. ; while of the 50 years
following 1715, it is 34.9. lid. In order to obviate
any question as to the accuracy of these quotations,
they may be compared with those of the Oxford
tables, which have been collected with great care by
Mr. Lloyd ; and allowing for the usual difference of
markets, it will be found that they lead to the same
comparative results.*
In this long interval of 50 years, there appear
to have been only five seasons which, whether
by inference from prices, or by historical notice.
* C. Smith, the author of the tracts on the Corn Trade, pub-
lished in 1765, bears the following testimon}^ to the accuracy of
the Windsor prices. Referring to a speech addressed by the
Procureur-general to the parliament of Britany in France, on the
20th August, 1764', wherein he has occasion to state that the
usual price of wheat throughout Europe was reckoned to be
twenty livres the septier, Mr. Smith adds the following re-
marks : —
" Equal to 33s. 6^d. the London quarter. Now, it appears
that the average price for the last 79 years, viz. 1686 to 1765,
hath been 33^. 2-^d. at Windsor ; that is, id. below the general
market of Europe : whereas before for 91 years it was 38*. ^d.
that is, 45. 6d. above the said general price. And that these
Windsor prices are more to be depended on than could at first
be known, is proved, not only by the said average price of Eu-
rope, but also by the average price at London from 1740 to 1764,
being found, on inquiry, to have been only 6d. per quarter less ;
and by the average of all the wheat bought at the victualling
offices at London, Dover, Portsmouth, and Plymouth, for the last
20 years, ending February 18. 1765, as appears by an account
laid before parliament, being only 32^. 6ld., that is, \Qd. above
the Windsor price for the same time; and this last sum will
amount to about 2 per cent, discount on the bills, but we cannot
well call it less than 5 per cent., and then it will be found to
have been 6d. below the Windsor, and to agree with the London
price."
It is to be observed, that C. Smith, in his quotation of the
W^indsor prices of wheat, from the Eton tables, makes a deduc-
tion, not only of one ninth for the reduction from the 9 gallon
measure to the Winchester measure of 8 gallons, but of one
ninth more for the difference of quality above middling wlieat,
D 4
40 EFFECT OF THE SEASONS.
could be considered as of a marked deficiency of
produce, or in any way approaching to what could
be designated as seasons of scarcity. These were
1727 and 1728 ; 1740 ; 1756 and"' 1 757.
It may be a question whether the year 1725
should not be included among the seasons of marked
deficiency inasmuch as the Michaelmas price rose
nearly V2s., namely, from 37 s. to -l-O.s., above that
of Lady-day. But the price gave way in the spring
following ; and as the quantity of wheat exported
was about 200,000 quarters, that of the preceding
year having been still greater, besides about 300,000
quarters of malt, there is every reason to believe
that the advance of price which was of very short
duration, must have arisen mainly, if not exclu-
sively, from the demand for exportation.
If the harvest of 1725 is not to be considered by
inference from the price to have been deficient,
there being no historical notice to that effect, it
would appear that there was not a single season of
marked deficiency of produce from 1715 to I727.
From 1727 to 1729, was a period of some, though
not of a severe, degree of dearth. It is noticed
historically, and is further proved by the circum-
stance, that whereas for thirty years before 1727>
and for thirty years after 1729, there had been a
balance of export of wheat, there was in 1728 a
balance of import of 70,757 quarters, and in I729
of 21,322 quarters.
The price of wheat which had been at Lady-day,
1727, 32.9. lid. rose at Michaelmas to 4fls. 9d., and
at Lady-day, 1728, to 49^. 2rf. Referring to this
period is the following passage, in "An Inquiry on
National Subsistence," by W. T. Comber : —
" We learn from contemporary authority that the scarcity was
owing to much rain which had fliUen that year, and that the
months of March, April, May, June, and part of August of the
following year, were also rainy. This occasioned wlieat to rise
EFFECT OF THE SEASONS. 41
from 4*. per bushel to 8*. But the sprhig and summer of 1729
being remarkably dry, the harvest was abundant, and the prices
of next year were only 28*. 4c?."
Low as the prices had been in the absence of
seasons of scarcity from 1715 to 1727j they were
still lower in the twelve following years, from 17^9
to 1740. There does not indeed appear to have
been in that interval a single season in which either
from prices or from historical reference, any de-
ficiency of produce can be inferred. The writer
last quoted, observes —
'' The average of 1731, 1732, and 1733, was only 22s., in
the latter of which years the amount of all grain exported ex-
ceeded 697,000 quarters, of which 427,000 were wheat : 498,000
quarters of wheat were exported the next year, the price being
30*. The average annual exportation of all grain for the ten
years from 1731 to 1740, inclusive, was 527,000 quarters, and
of wheat 290,000 ; and the average bounty 103,000/. per annum.
The average price of this period was 29.?., but in the concluding
year it was 39*."
The great fall of prices in 1731, 1732, and 1733,
following the slight dearth of I727 and 1728, was,
as might be expected, productive of great agricul-
tural distress. The following extract describes it in
terms which might be supposed to have emanated
from the late Mr. Webb Hall's Committee, or from
the Agricultural Associations of a more recent
period : —
" The interest of our British landholders has been declinins:
several years last past ; it has been a general observation, that
rents have been sinking, and tenants unable to make as good
payments as formerly, even in counties where there is the
greatest circulation of money, the maritime ones, and those near
the capital cities of the kingdom. As this is too well known to
be their case, they deserve the attention and favour of our legis-
lature : it is proper they should make a tolerable interest of their
money, as well as adventurers in other businesses, which few of
them do, who have not enjoyed their bargains twenty years, or
a longer time, for lands are much dearer now. Wheat this year
and last never mounted in some of the extreme parts of the king-
dom, to above three shillings and eight-pence per Winchester ;
barley is now sold in the West of England for two shillings per
42 EFFECT OF THE SEASONS.
Winchester bushel. Prices are often higher fifty miles round
London than elsewhere, which induces several great men to
think that countrymen live better than they really do. Country
measures (which are frequently larger than the Winchester or
legal bushels) contribute farther to such mistakes. Before they
can pay their rents, wheat of middling goodness ought, I think,
to sell for about four shillings and three-pence per Winchester,
not in a few places, but throughout the kingdom ; barley for
2s. 6d., peas, 2s. 3d., and oats 1^. 6d. per Winchester. I know
in former times less prices were sufficient ; but as circumstances
alter, the same thing is altered^: corn farms (iron, timber, har-
vest people, and servants, being much dearer than heretofore)
will not yield sufficient profit to the occupiers of them, unless
they can have such prices, particularly as cattle, pigs, sheep, but-
ter, and cheese, are now one third part cheaper than formerly,
and what is called a living price.
" The flourishing condition of the landed interest supports
all trade ; most trades now (except those which supply luxury,
those of gold and silversmiths, lacemen, vintners, painters,
dealers in silks, velvets, and high priced cloths,) are in apparent
decay ; which is not only proved by the general declarations of
tradesmen, but by too many instances of bankruptcy amongst
them. I wish I could say the present times are not the worst.
Our exports are, perhaps, as great as formerly ; whence, then,
all this complaint ? Our farmers are worse customers than for-
merly ; necessity has compelled them to more carefulness and
frugality in laying out their money, than they were accustomed
to do in better times." (The Landholder's Companion, or
Ways and Means to raise the Value of Land, by William Allen,
Esq. of Fobstone, in Pembrokeshire, 1734-.)
As further proofs of the complaints of distress,
and of rents ill paid, as attending the low prices of
corn, are the following extracts. In a publication
by the elder Lord Lyttleton, " Considerations on
the Present State of Affairs" (1738), he says, " In
most parts of England, gentlemen's rents are so
ill paid, and the weight of taxes lies so heavy on
them, that those who have nothing from the court
can scarce support tlieir famihes." And Arthur
Young quotes a writer who, in 1739, speaks of
the landholder as being in so bad a state, that he
asks, " What must have become of them if it had
not been for a demand from abroad ? " (Farmer
Restored, p. 14.)
EFFECT OF THE SEASONS. 43
The winter of 1739-40 was one of extraordinary
severity and duration. It forms one of the three
most memorable winters of last century, the other
two being those of I7O8-9, and 1794-5. A great
number of interesting details of the phenomena
attending it are recorded in contemporary publi-
cations. As in tlie case of the other two remark-
ably severe and long winters, it was followed by
a very deficient harvest. The price consequently,
which had been in the Windsor market at Lady-
day, 1739, Sis. 5d., rose at Lady-day following,
1740, to 41^. 9d., and at Michaelmas to 56s.*
This, and a corresponding high price of other
provisions, was felt after so long a period of cheap-
ness as one of great dearth. The exportation was
prohibited for one year. This prohibition of export,
combined with a favourable harvest in the following
year, had the effect of reducing the price at Michael-
mas, 1741, to 32s. The dearth in this instance, ac-
cordingly, was confined to a single year ; and it
was followed by an uninterrupted succession of ten
good and abundant seasons ; namely, from I7II to
1751.
The testimony to this effect rests on unexcep-
tionable authority. The author of the celebrated
Corn Tracts t, who is often quoted by Dr. Adam
Smith, and who has furnished materials and ficts
for the great bulk of succeeding writers on the
subject of corn, expressly says (page 20. 2d ed.),
" We had ten as good years as ever were known in
succession, from 1741 to 1751." t
* The price in the Oxford market, at Michaehiias, 1710, was
595. ; at Michaehnas, 1738, it had been 20^. 2c?. ; the rise, there-
fore, upon the latter price was nearly 200 per cent.
t These (of which the first edition appeared in 175S) were
published anonymously, but have been generally ascribed to Mr.
Charles Smith.
X In a paper presented to the Royal Society in 1786, on the
variations of the seasons, by Mr. Barker of Lyndon, referring to
44j effect of the seasons.
In addition to this testimony as to the general
character attaching to the term from 1741 to 1751,
I have met with casual descriptions of particular
years ; and the following extracts from the letters
of Mr. Peter Colhnson*, a celebrated botanist, to
Linnaeus, containing those descriptions, may not
be uninteresting, at the same time that they will
tend to form something like a standard of what
may be considered as a fine season, to which to
refer a comparison of the seasons of more recent
occurrence, as well as of those from 1793 to
1813.
" London, Jan. 18. 1743. O. S.
" We have now a wonderful fine season, that makes our spring
flowers come forth. I am sure you would be deHghted to see
my windows filled with six pots of flowers, which the gardener
has sent me to town t, viz. great plenty of aconites, white and
green hellebore, double hepatica, crocus, polyanthus, periwinkle,
laui'istinus, vernal red cyclamen, single anemonies, and snow-
drops. None of these were brought forward by any art, but
entirely owing to the temperature of the season, though some
seasons I have known things forwai'der than now."
" London, Oct. 26. 174.?, O. S.
" My garden is in great beauty, for we have had no frost ;
a long, dry, warm summer, and autumn grapes very ripe.
" The vineyards turn to good profit, much wine being made
this year in England."
" London, Oct. 3. 1748, O. S.
" We have had a fine summer. Great plenty of all sorts of
fruits and grain, and a very delightful autumn. It is now as warm
as summer ; no bearing of fires. My orange trees are yet abroad.
My vineyard grapes are very ripe ; a considerable quantity of
wine will this year be made in England. We have not had one
frosty morning this autumn. Marvel of Peru, double-flowered
these ten years, the writer says of them, that they were neither
very wet nor very dry ; and adds, " This was the most plentiful
and cheapest time for corn I ever remember."
* A selection of the correspondence of Linnaeus and other
Naturalists, by Sir Jas. Edw. Smith, M. D., F. R. S., &c. 1821.
t Mr. Collinson's country house was at Mill Hill, in Middle-
sex. ■*
EFFECT OF THE SEASONS. 45
nasturtium, and all other annuals are not touched. My garden
makes a fine show."
" May 8. 174-9.
" How the wmter has been in Sweden I do not know, but at
London the like warmth and mildness were never remembered.
Our autumn was long, warm, and dry, with a few slight frosts
before Christmas ; but we have had since fine, warm, dry wea-
ther, and no frosts or snow. Our gardens were in great beauty
in January and February : almonds, apricots, and peaches in
blossom. Feb. 23. I went into the country. The elm hedges had
small leaves ; standard plums, almonds, and crocuses in full blos-
som ; gooseberries showing their fruit. In short, it would be
endless to talk to you of the wonders of this season. March 5.
The fig in my London garden had small leaves when peas and
beans under south walls were in blossom."
The exuberant abundance, resulting from sea-
sons of which these letters afford a few specimens,
is moreover referred to in several pamphlets, to
which the dearths of 1756 and 1757* and of some
subsequent periods gave rise. But the most un-
equivocal proof of the exuberance of the produce
of such a succession of plentiful seasons, is afforded
by a reference to the exportations of grain in the
concluding years of that series.*
Years. Wheat. Barley, Malt, and Rye. Total.
174<8 54<3,387 530,830 1,074,267
1749 629,049 515,684 1,144,733
1750 947,602 658,588 1,606,190
* With reference to the ten years from 1741 to 1750, Dr. Adam
Smith, after describing them as years of extraordinary plenty,
and as attended with a remarkably low price, proceeds to ob-
serve, " Between 1741 and 1750, however, tlie bounty must have
hindered the price of corn from falling so low in the home market
as it naturally would have done. During these ten years the quan-
tity of grain of all sorts exported, it appears from the Custom
House books, amounted to no less than 8,029,156 quarters. The
bounty paid for this amounted to 1,514,962^. 17^. 4^(^. In 1749,
Mr. Pelham, at that time prime minister, observed to the House
of Commons, that for the three years preceding, a very extraordi-
nai'y sum had been paid as bounty for the exportation of corn. He
had good reason to make this observation ; and in the following
year he might have had still better. In that single year the
bounty paid amounted to no less than 324,176^. 10*. 6d. It is
unnecessary to observe how much this forced exportation must
46 EFFECT OF T^E SEASONS.
From what the author of the Corn Tracts states,
the seasons from 1752 to 1755 seem to liave been
of doubtful produce ; for his words are, after men-
tioning the ten good years in succession, " Nay, if
tlie common opinion is right, we have had six-
teen." But we may conchide, that if not de-
cidedly abundant, they were not deficient in any
considerable degree ; for there was a large export
in some of those years, a great want of corn being
experienced in the south of Europe in that interval,
and the prices at home were not raised very mate-
rially by that export.
I have been induced to trespass on the patience
of my readers with so long a detail of the seasons
in the interval from 1730 to 1755, because they
present a series of twenty-six years, with the inter-
have raised the price of corn above what it otherwise would
have been in the home market."T— Wealth of Nations, vol.i. ch. 11.
Agreeing as I do with Dr. Smith in his objection to the bounty
as a measure of legislation, I must be allowed to differ from him
in the opinion which he expresses of its operation in the present
instance. As the price of wheat was falling coincidently with
the enormous exportation of the three concluding years of the
series, viz.
In 174-8 - 32s.
1749 - 325.
1750 - 28*.
And as the very low price of this last year (being, moreover,'
low as it was, for a quality better than middling,) coincided with
the largest exportation of the whole period, it is difficult to con-
ceive how it could be said to havt raised the price. The utmost
that can be said by the objectors to the bounty, of its operation
in this instance is, that it may have prevented the price from
falling so much as it might otherwise have done. But the ad-
vocates for that measure might contend, and with apparent
reason, that but for the relief afforded by the bounty to the
growers they must have reduced the cultivation, and thus have
raised the price. In truth, the operation of the bounty appears
to have been during this intei'val rather that of counteracting
the discouragement to cultivation from prices so very low as
those which were the effect of a series of plentiful years than of
raising the price, and of thus, according to the received notion,
inducing a resort to fresh land at an increased cost of pro-
duction.
lOlrf.
per
■ quarter.
lO^d.
do.
10|rf.
do.
EFFECT OF THE SEASONS.
47
vention of only one of a decidedly unfavourable
character, viz. the winter of 1739 and 17^0, followed
by a bad harvest ; and because the inferences from
the fact are of importance as to the probable or
possible eifect of such a succession of favourable
seasons on prices, independent of any alteration in
the currency or in the financial measures of the
government, and independent likewise of transi-
tions from war to peace.
The degree of cheapness resulting from a suc-
cession of good seasons, or of seasons unmarked
by the intervention of any one of great deficiency,
is so curious as to be worth exhibiting more in
detail than is usually done, as the tables containing
average prices are generally confined to the quo-
tations of wheat, and do not give the whole range
of variations even of that single article. The fol-
lowing are the quotations of prices at Mark-lane and
Bear-quay, for fifteen years, and they afford a con-
firmation in detail of the greatest depression having
occurred during a period of war attended by a very
large government expenditure defrayed by loans : —
January Prices of grain at Mark-lane and Bear-quay, extracted
from the Appendix to Sir Frederick Morton Eden's work
(page 80.).
Years.
Wheat.
Barley.
Oats.
S.
s.
S. S.
.$. S.
fl742
26
to 29
15 to 20
12 to 15
1743
20
23
15 20
13 16
1744
19
21
11 13
9 12
War. <( 1745
18
20
12 15
12 16
1746
16
24
10 12
12 14
1747
27
30
8 12
6 9^/.
1748
26
28
13 14
9 12
' 1749
27
32
17 18
14 16
1750
24
29
14 17
12 14
1751
24
27
14 17
13 14
1752
33
34
17 19
12 6d. 16
1753
29
33
17 18
10 6d. 12
1754
27
33
17 19
12 6d. 13
.y ri755
24
26
12 14
10 13
war. <
1756
22
26
14 15
12 13
48 EFFECT OF THE SEASONS.
And the average price by the Eton tables for
wheat of better than average quahty, for the ten
years from 1742 to 1751, was 29.s'. S^^.
The harvest of 1756 proved greatly deficient,
as well in this country, as through the greater part
of Europe. In Smith's Corn Tracts is the follow-
ing description of it : —
" The last season of 1756 from its beginning was extremely
unfavourable; thousands of acres remained unsown, and the bad
condition in which many more were sown rendered them incapable
of producing a good crop, although favourable weather had fol-
lowed. It is certain that the weather, during the spring, sum-
mer, and harvest, was generally unfavourable ; great quantities
of grain perished by the rains and winds, and most of what
remained proved defective, both in quantity and substance, by
its not duly ripening.
The scarcity thence arising was attended with
a very considerable advance of price, and with
severe suffering among the lower classes, which is
thus noticed in the work before quoted : — -
" 1756. Many insurrections in England, on account of the
scarcity of corn, and the high prices of provisions. The king
expresses to the parliament his concern for the sufferings of the
poor, and the disturbances to which they have given rise ; and
exhorts them to consider of proper measures to prevent the like
mischiefs hereafter. The exportation of corn prohibited from
Christmas."
It may be worth while to break the course of
this description of the seasons, in order to show
the prodigious eflfect on price of one season of de-
cided scarcity, when, from previous exportation or
scanty crops, there was no considerable old stock.
The quotations of wheat in Mark-lane, in 1756,
before the deficiency of the harvest of that year had
been ascertained, were Q2s. to 26.9.
In January, 1757, the price rose to - ^Q.?. to 50s.
February - - - - 47*. 51*.
March . - - . 46*. 54s.
April - - - - . 64*.
May - .... 64*.
June - - - 67*. 72*.
EFFECT OF THE SEASONS. 49
The harvest of 1757 appears to have been de-
ficient, although not in the same degree. It is
probable, from the subjoined extract of Colhnson's
letters, that the extreme heat of the summer of
1757 may have rendered the crops hght.
" December 25 and 27. 1757.
*' The extraordinary heat of our summer has ripened all sorts
of fruit to perfection. In two gardens I saw this year pomegra-
nates against south walls, without any art, ripened beyond what
can be imagined in so northern a climate ; they look extremely
beautiful, and are of the size of some brought from abroad. Our
autumn has been long, dry, and warm, and so continues ; for a
few slight frosts have not stripped the garden of flowers at Christ-
mas-day. The winter season has not closed before the spring
flowers begin ; for there are plenty of polyanthus, narcissus,
pansies, and sweet violets," &c.
The six succeeding seasons, viz. from 1758 to
1763, both years inchided, seem to have been
favourable : the particular character of some of
them is noticed in CoUinson's letters.
'< July 25. 1759.
" We had the mildest winter ever known. Our spring was
early and very agreeable, and our summer the finest and warmest
since 1750. Great plenty of all sorts of grain and fruits. New
wheat, of this year's produce, has been the 21st inst. at market."
" London, Sept. 2. 1762.
" We have had a delightful warm summer ; all the fruits of
the earth very good and in great plenty."
The season of 1763 is thus noticed by Collin-
son : —
" London, Sept. 15. 1763.
" Almost every day rain since the middle of July ; the spring
and summer very dry to that time. Very great plenty of grass,
and all sorts of corn, but the weather unkindly for the harvest."
Of the succeeding season I find no direct notice
by Collinson. As the price rose at Michaelmas,
1764, to 44.9. 5f/., a high price at that time, the
harvest of that year may be suspected to have been
unfavourable ; at the same time, as there was a
50 EFFECT OF THE SEASONS.
large export, it is possible that the advanced price
may in some measure have been occasioned by an
unusual demand for corn abroad.*
Mr. Collinson gives the following description of
the season of I765 : —
" London, September 17. 1765.
" You, my dear friend, surprise me with telling me of your
cold and wet summer ; whereas our summer has been as much
in the extreme the other way. For all May, June, and July were
excessively hot and dry ; but six or seven rainy days in three
months, so that all our grass fields look like the sun-burnt coun-
tries of Spain and Africa. The beginning of August we had some
fine rains, but they did not recover our usual verdure ; since to
the present writing, hot and dry weather, not a drop of rain for
fourteen days. Our hay is very short, and oats and barley a mid-
dling crop ; but of wheat, which we most wanted, good Provi-
dence has favoured us with a plentiful crop and a good harvest,
which began two weeks sooner than in common years,"
After this fine, though not very productive season,
there was a series of nearly ten years, marked by a
very frequent recurrence of unpropitious seasons :
and as henceforward a new epoch commenced in
the corn trade of this country, characterised by a
range of relatively high prices, and accompanied by
* In the chronological table of prices, and of the events con-
nected with them, in the work before referred to, is the following
passage : — " 1764'. The king reminds his parliament of the high
prices of corn, occasioned by the exportation of it. The parlia-
ment finds the price of beef to be 3d. per lb. to the vendor. Beef,
mutton, and veal, at Exeter, 4f/. to 'l^d.''
N. B. In the same work, under the date 1724, beef, mutton,
veal, and pork, are stated to have been at Ifd. per lb. at Exeter.
The exportations in the six years following 1758, were con-
siderable, although they exhibit a decided falling off, as com-
pared with the ten years ending in 1750.
Years.
Wheat.
Other Grain.
1759
226,426 qrs.
233,556 qrs.
1760
390,710
313,903
1761
440,746
437,359
1762
294,500
415,081
1763
427,074
218,482
1764
396,537
261,231
EFFECT OF THE SEASONS. 51
a change from a balance of export to a balance of
import of grain, it may be worth while to pause
here for the purpose of considering some of the
phenomena presented by the period ending in
1765.
All the writers who have turned their attention
to the subject of the prices of corn, have been
struck with the circumstance of the cheapness of
the period from I7OO to 1760*, but more espe-
cially in the interval between I715 and 17(J5,
compared with the average price of the preceding
century, and have endeavoured variously to account
for that circumstance. The pamphlets with which
the press teemed, upon the change from low to
high prices, referred all the phenomena of the
fluctuation, according as it suited the views of the
writers, to the operation of the bounty on export-
ation. The question respecting the effects of the
bounty seems, indeed, to have given rise to almost
as much controversy at that time as the question
of the effects of the bank restriction has since
done.
The advocates for the boimty contended, that
the cheapness of corn was wholly attributable to
that measure, while, upon every occurrence of a
season of dearth, the scarcity and consequent high
price was by the adversaries of the bounty re-
* " In the sixty-four first years of the present century, the
avei'age price of the quarter of nine bushels of the best wheat,
at Windsor market, appear by the accounts of Eton College to
have been 21. Os. QYld,, which is about ten shillings and sixpence,
or more than five and twenty per cent, cheaper than it had been
during the sixteen years preceding 1636 ; when the discovery of
the abundant mines of America may be supposed to have pro-
duced its full effect, and about one shilling cheaper than it had
been in the twenty-six years preceding 1620, before that dis-
covery can be supposed to have produced its full effect. Accord-
ing to this account, the average price of middle wheat comes
out to have been about thirty-two shillings the quarter of eight
bushels." — Wealth of Nations, vol. i. chap. xi.
E 2
52 EFFECT OF THE SEASONS.
ferred to the excess of exportation which had been
thus artificially encouraged.
It is not my intention to enter upon a discussion
of the principle and policy of the bounty on the
exportation of corn ; I have only the following
short remarks to make upon it, as connected with
its effects on prices between 1715 and IjGS.
For the reasons already given a few pages back,
while there appear to be no sufficient grounds for
the opinion of Dr. Adam Smith, that the bounty
had the effect of raising the price in that interval
there seems to be as little ground for ascribing to
that measure such encouragement to an extension
of cultivation, as to have had the effect of sensibly
reducing the price. But there is a further diffi-
culty in ascribing to the bounty the remarkable
cheapness of that period, compared with the period
immediately preceding, or succeeding, and that is,
that a similar degree of relative cheapness prevailed
in France, as will appear by the following state-
ment, extracted from the Marquis Garnier's trans-
lation of Smith's " Wealth of Nations.'*
Prices of the Septier of Wheat in France, Paris Measure : —
Years.
Francs.
Cents.
1706 to
1715
29
5
1716
1725
17
1
1726
1735
15
46
1736
1745
18
80
1756
1765
17
64
1766
1775
28
5
This degree of cheapness, be it observed, took
place under a system of corn laws, the very reverse
of that which prevailed in this country, the export-
ation thence being absolutely prohibited. Accord-
ingly, while the low prices in this country were,
by the advocates for the bounty, ascribed to our
encouragement of exportation, a similar depression
of prices in France was, by most French writers.
EFFECT OF THE SEASONS. 53
attributed to the discouragement of exportation,
and to the occasional encouragement of import-
ation. So stroHg was the impression there that
the low prices were occasioned by the restrictive
regulations which prohibited, not only the export-
ation to foreign countries, but the free circulation
from province to province, that in 1763 the go-
vernment of France was induced to issue a de-
claration, allowing the free circulation of grain in
the interior, and an edict in the following year
granting a general liberty of export as well as of
import, subject only to modification as to the price
at which the export was to cease, viz. 12 livres
10 sous the, quintal, equal to about 485. the Win-
chester quarter. It might fairly then be asked,
wdiether effects so exactly similar in the two coun-
tries can with any appearance of truth be ascribed
to systems so exactly opposite.
Dr. Adam Smith has a remark to the same effect
in the following passage : —
" In France, till 1764-, the exportation of grain was by law pro-
hibited; and it is somewhat difficult to suppose, that nearly the
same diminution of price which took place in one country, not-
withstanding this prohibition, should in another be owing to the
extraordinary encouragement given to exportation." — Vol. i.
chap. xi.
There is reason to believe, that in France the
same prevalence of favourable seasons, or rather,
the comparative exemption from years of dearth,
was experienced, although with some considerable
exceptions, during the fifty years which are marked
by such relative cheapness.
On the prevalence of a general similarity of sea-
sons, allowing for differences of climate on the
Continent of Europe within a certain latitude, are
the following remarks, in the justness of which I
concur, in a work entitled, " On the Present State
of England," by J. Lowe. 1823.
" The public, particularly the untravelled part of the public, are
E 3
54 EFFECT OF THE SEASONS.
hardly aware of the similarity of temperature prevailing through-
out what may be called the corn country of Europe, we mean
Great Britain, Ireland, the north of France, the Netherlands,
Denmark, the north-west of Germany, and, in some measure,
Poland, and the north-east of Germany. All this tract is situated
between the 45th and 55th degrees of latitude, and subject, in
a considerable degree, to the prevalence of similar winds. Nei-
ther the superabundance of rain which we experience in one
summer, or its deficiency in another, are by any means confined
to Great Britain and Ireland; while in winter both the intensity
and duration of frost are always greater on the continent. Ex-
ceptions certainly exist in particular tracts ; but in support of
our general argument, we have merely to recall to those of our
readers who are of an age to recollect the early part of the war,
or who have attended to registers of temperature, the more
remarkable seasons of the present age: thus, in ITOl-, the spring
was prematurely warm on the continent, as in England : there,
as with us, the summer of 1798 was dry, and that of 1799 wet :
again, in 1811 the harvest was deficient throughout the north-
west of Europe generally, from one and the same cause, blight ;
while that of 1816 was still more generally deficient, from rain
and want of warmth. In regard to a more remote period, we
mean the 17th and 18th centuries generally, if the temperature
has not been so accurately noted, we find, from the coincidence
in prices, that it is highly probable that there prevailed a great
similarity in the weather of the continent; thus, in France, the
latter years of the 17th century, the seasons of 1708 and 1709,
as well as several of the seasons between 1764' and 1773, were
as unpropitious, and attended with as great an advance of
price, as in England." (Page 149)
One of the most remarkable circumstances at-
tending the state of things here described is, that
while the price of corn had fallen so considerably,
as we have seen, on a comparison with the preced-
ing century, the price of labour in this country had
risen.
Dr. Adam Smith, referring to this period, ob-
serves : —
" The money price of labour in Great Britain has risen
during the present century. This, however, seems to be the
effect, not so much of any diminution in the value of silver
in the European market, as of an increase in the demand for
labour in Great Britain, arising from the great, and almost uni-
versal, prosperity of the country. In France, a country not
altogether so prosperous, the money price of labour has, since
the middle of the last century, been observed to sink gradually
EFFECT OF THE SEASONS. 55
with the average money price of corn. Botli in the last century
and the present, the day wages of common labour are said to
have been pretty uniformly about the twentieth part of the aver-
age price of the septier of wheat, a measure which contains a
little more than four Winchester bushels. In Great Britain,
the real recompense of labour, it has already been shown
the real quantities of the necessaries and conveniences of life
which are given to the labourer, has increased considerably dur-
ing the course of the present century. The rise in its money
price seems to have been the effect, not of any diminution of the
value of silver in the general market of Europe, but of a rise in
the real price of labour in the particular market of Great Britain,
owing to the peculiarly happy circumstances of the country." —
Wealth of Nations, vol. i. chap. xi.
According to Arthur Young, the average price
of wheat was, for the Avhole of the 17th century,
SSs. '■2d. per Winchester quarter ; and for the QQ
years from I7OI to 17 66, 326'. 1^/., being a fill of
16 per cent ; w^hile the price of agricultural labour,
which, on the average of the 17th century had
been 10\d. per day, was, for 66 years ending in
1766, 12c?., or a rise of 16 per cent.
The fact, indeed, of a rise of money wages in
this country, coincidently with a fall in the price
of corn during the long interval in question, rests
on unquestionable authorities.
Dr. Adam Smith, in the passage quoted, con-
siders the advance in the rate of wages as the con-
sequence of an increased demand for labour, and the
decline in the price of corn as a consequence of
an increased value of silver. The utmost effect of
the supplies of gold and silver since the discovery
of the American mines had, in his opinion, (found-
ed, as it should seem, chiefly, if not entirely, on
the price of corn,) been felt somewhat before the
middle of the 17th century. The Marquis Garnier,
likewise, taking wheat for long periods as the
measure for estimating the value of silver, came
to the conclusion, that the utmost depreciation
of it by the American mines had been produced
about 1689 ; and he and other French writers,
E i
56 EFFECT OF THE SEASONS.
who had made great researches on the subject,
seem disposed to concur in the opinion enter-
tained by Adam Smith, that, considering the price
of wheat for a series of years of some length as the
best measure of value, a rise in the value of silver
was to be inferred by the fall in the price of wheat
during the first 65 years of the last century. But
without going into the general question of a mea-
sure of value, or of the connection between the
price of corn and the price of labour, it may now
be, it is to be presumed, considered as a conceded
point, although still not without difficulty, that the
money price of common day labour is a better cri-
terion than corn, of the value of the precious metals.
According to this criterion, combined with the
circumstance that many other important articles of
consumption besides corn had risen, tliere can be
little hesitation in coming to the conclusion, that
the value of the precious metals was undergoing
some depreciation through the whole of the 65
years of last century, during which there had been
so marked a fall in the price of provisions. And
the fall and the low range of the price of corn, wiiile
money was undergoing, however slowly, a depreci-
ation, prove how powerful must have been the
depressing circumstances operating upon the price
of corn, to be sufficient, not only to prevent a rise
corresponding with the diminished value of silver,
but to cause a tendency in an opposite direction.
The tendency to a decline of prices through so
large a portion of last century occurred too, not-
withstanding an increase, although slow, of the
population, and a change which was in progress to
the use of a higher diet.
That this cheapness of corn was not owing to any
decline or decay of trade, as might be inferred
according to the doctrine which ascribes the varia-
tions of price to demand, might easily be shown by
reference to the fact that, with the exception of the
EFFECT OF THE SEASONS. 57
short interval from 1739 to 1744 *, the commerce
of the comitry throughout the reign of George II.,
was according to the usual tests of tonnage, and
exports and imports progressively increasing, al-
though not so rapidly as in the subsequent reign.
It will appear by a reference to the following
division of this work, " On the Effect of War on
Prices," that whatever may have been the influ-
ence of war in other periods of our history, it had
not the effect of raising prices during the intervals
in whicli it prevailed in the period under consider-
ation : and that the longer intervals of peace, during
which the prices were higher than during the wars,
cannot therefore be adduced as among the means
of accounting for the low prices from I7OO to 1760.
The profound internal tranquillity which this
country enjoyed during that interval (for the at-
tempts in 1715 and 1745 in favour of the Stuart
family were too feeble and too short-lived to be
worth mentioning, as affecting the general state of
internal peace and security,) may be considered as
having had some influence when compared with the
17th century.
The civil wars which prevailed near the middle
of the 17tli century might, doubtless, be supposed
to have interfered in some degree with tillage,
although, for the reasons already stated, it should
seem that the high prices of that interval were
more owing to the seasons than to the civil war ;
and this is the more probable, because the same
* This exception is readily accounted for, partly by the ef-
fects of the war in which we were then engaged with France,
and partly, as far, at least, as regards the amount of tonnage,
by the prohibition against the export of corn ; a prohibition
which was in force during a part of that period, and which, of
course, while it lasted, would cause a diminution of the tonnage
usually employed in the transport of grain. The shipping re-
quired for the export of corn in the middle of last century must
have formed no inconsiderable proportion of the whole of the
tonnage employed in the trade of the kingdom.
58 EFFECT OF THE SEASONS.
relatively high prices prevailed in France during
the middle of the 17th century as in this country.
But admitting the disturbed state of the country to
have contributed to the high range of prices which
prevailed during the civil wars, these were at an
end before 1650. And during the concluding 50
years of the 17th century, there was no such inter-
ruption of internal peace as could be supposed to
interfere with the operations of husbandry, or the
general inducements to cultivation.
If, then, the fall of prices in question cannot be
accounted for by our corn laws, nor by the price of
labour, nor by the state of the country in respect
of population, of trade, of war or peace, or internal
tranquillity, nor by any supposed increase^, of the
value of silver, we have to seek for some cause more
distinctly affecting the production of corn.
It is universally admitted, however, that no single
cause affects the production of corn in respect of
quantity from year to year, so much as the differ-
ence of the seasons ; and the variation of price from
this cause, is, as we have had occasion to observe,
in a ratio much beyond the difference of quantity.
The only difficulty therefore which attends the sup-
position of the seasons having had the principal in-
fluence in producing the cheapness of provisions
in the period alluded to of last century, is in the
length of time to which the operation of that cause
is assigned. It has been assumed, most arbitrarily,
that the differences of seasons, in their influence
on the production of corn, must be equalised within
certain periods, limited to suit some particular con-
clusion. And by such reasoners, the idea of any
important difference in the produce, and the still
greater difference in the price, in a period of 20,
or even of 10 years, as compared with an equal
period immediately preceding or following, is
treated superciliously as a perfectly gratuitous hy-
pothesis. Now, it will be for the reader to judge.
EFFECT OF THE SEASONS. 59
whether there is not, from such historical evidence
as the nature of the subject admits of, combined
with inferences from variations of price from year
to year, the strongest possible ground of presump-
tion, that the period of 50 years from 1715 to
1765, was characterised by a marked exemption
from seasons of scarcity, compared with the 50
years preceding.*
If the fact of such comparative exemption
be allowed, there can be no difficulty in con-
sidering it as sufficient to account for the greatest
part, if not for the whole, of the relative cheap-
ness of that period. If in the 50 years, instead
of only 5 years of recorded scarcity, there
had been upwards of 20 years, it is perfectly
clear that the produce must have been much less,
and the price much higher. The difference in
respect of the quantity of produce, is equivalent
to a difference in the average fertihty of the soil
during the period. A comparative frequent recur-
rence of bad seasons affords a less produce for the
same labour and capital, and therefore resolves
itself, during the preponderance of that description
of seasons, into an increased cost of production.
* In this view of the effect of the seasons, more stress has been
laid on the exemption from those of marked scarcity than on
the prevalence of those of more than ordinary produce. Not but
that there appear to be strong grounds for inferring the greater
than usual prevalence of plentiful seasons in the period here
referred to ; but^ because the grounds for such inference do not
admit of being so well made out. A very deficient harvest, by
the privations which it entails on the bulk of the community, in-
evitably attracts general notice, and is in many, if not in most,
instances the subject of historical notice ; besides that, in in-
stances of deficiency short of dearth, the suddenness of the
rise of price may afford strong grounds of inference as to the
cause. Whereas the indications of a superabundant harvest
are not always immediately manifest. The fact of excess of
produce may, and commonly does, escape immediate notice, and
is known only in its ultimate effects upon price, which are com-
paratively slow, however sure to follow.
60 EFFECT OF THE SEASONS.
The comparative exemption from adverse seasons
would consequently be equivalent, during the period
to which it applied, to a diminished cost of pro-
duction ; and would thus, with the aid of the
bounty, prevent the throwing of land out of cul-
tivation, or even might admit ofan extended tillage,
notwithstanding the fall and low range of prices
observable in this period.*
This long period of great abundance, and con-
sequent cheapness of the prices of provisions, was
one which appears to have been attended with a
great improvement in the condition and habits of
the great bulk of the population. In the passage
already quoted from Adam Smith, he refers to '• the
peculiarly happy circumstances of the country "
during that period, and Mr. Hallam, in his *' Consti-
tutional History," describes the reign of George II.
as " the most prosperous period that England had
ever experienced.'* The author of the Corn Tracts,
writing in 1765, observes, that " bread made of
wheat is become more generally the food of the
labouring people." This resort to a higher diet is
a most indisputable sign of the improvement of
their condition. The great command which the
labouring classes possessed over the necessaries of
life during that interval, might, according to the
received theory of population, be expected to have
been attended with an accelerated ratio of increase
of numbers. But, according to the best evidence
of the progress of population in this country, the
ratio of increase during the long interval under
* There is at the same time a consideration which may have
some weight in aid of the influence of a series of plentiful years
in reducing the cost of production, and thus admitting of keep-
ing up or extending the cultivation — I mean the very low rate
of interest which prevailed through the reigns of George I.
and II., and which would render the outlay of capital on
land remunerative with smaller returns, than when the rate of
interest was, as it had previously and has since been, so much
higher.
EFFECT OF THE SEASONS. Gl
consideration, was much slower than it has been
since, under circumstances of diminished command
of necessaries by the labouring classes. Mr. Mal-
thus seems to have been struck by the apparent
anomaly, and gives the following explanation of it
in his work entitled, " Principles of Political Eco-
nomy, considered with a View to their practical
Application," p. 255. : —
" It is well known that during this period the price of corn
fell considerably, while the wages of labour are stated to have
risen. During the last forty years of the 17th century, and the
first twenty of the 1 8th, the average price of corn was such, as,
compared with the wages of labour, would enable the labourer
to purchase with a day's earnings two thirds of a peck of wheat.
From 1720 to 1750 the price of wheat had so fallen, while wages
had risen, that instead of two thirds, the labourer could purchase
the whole of a peck of wheat with a day's labour.
This great increase of command over the necessaries of life
did not, however, produce a proportionate increase of population.
It found the people of this country living under an excellent go-
vernment, and enjoying all the advantages of civil and political
liberty in an unusual degree. The lower classes of people had
been in the habit of being respected, both by the laws and
the higher orders of their fellow-citizens, and had learned, in
consequence, to respect themselves : and the result was, that,
instead of an increase of population exclusively, a considerable
portion of their increased real wages was expended in a marked
improvement of the quality of the food consumed, and a decided
elevation in the standard of their comforts and conveniences."
The solution here given is apparently just. But
the fact itself speaks volumes against the theory
by which the partisans, whether of depreciation or
of corn monopoly, seek to connect a high price of
provisions with a state of public prosperity ; and
it equally militates against the theory of demand,
which, as will be seen in the next section, attempts
to explain the sudden rise of prices following this
long interval of cheapness, by the hypothesis of a
sudden increase of consumption.
6^ EFFECT OF THE SEASONS.
Section 4.— I765 to 1775.
The change which dates from 1765 in the prices
of provisions from cheapness to dearth, and in the
corn trade from a regular exportation to a prepon-
derance of importation, has been the subject of
general remark, and has given rise, as usual, on oc-
casions of great change, to controversy as to the
causes of it. The same change from cheapness to
dearth occurred coincidently through the rest of
Europe ; and this dearness, like the preceding cheap-
ness, was referred to the most contradictory causes.
In France it was ascribed to the recent permission
of export, at the same time that, in this country, it
was attributed to the occasional prohibitions of ex-
port and suspensions of the restrictions of import,
such prohibitions and suspensions being argued to
operate as a discouragement of tillage ; not to
mention the clamours which were then universally
prevalent against the supposed improper practices
of farmers, millers, and bakers, in raising and keep-
ing up prices.
The most plausible of the reasons among the
numerous ones which have been advanced for the
great rise was the supposition of a fall in the value
of silver. A considerable increase in the produce
of the American mines is noticed by Humboldt
and other writers, to have taken place in the
middle of last century, and more especially about
the year 1770** But the influence of this cause,
if to be traced at all, which appears to be doubtful,
must have been very gradual, and scarcely per-
ceptible ; and it could not come into operation at
all so as to affect prices in Europe, till after all the
phenomena of the high prices now under consider-
ation had occurred ; at any rate, it would not
* See Mr. Jacob's valuable Treatise, entitled " Inquiry into
the Precious Metals/' vol. ii. p. l.^^.
EFFECT OF THE SEASONS. 6S
account for so sudden a rise as took place in I766,
and still less would it account for so great and
sudden a transition from a large export to a large
import of grain, as took place between I7 65 and
1775.
But another mode of accounting for the phe-
nomena in question has of late years become more
general. The very able and well-informed writer
of an article in the supplement to the " Encyclo-
paedia Britannica" on the Corn Laws and the Corn
Trade, gives the following explanation of the
change : —
" After the peace of Paris in 1763, the national improvement
was prodigiously accelerated. The extension of industry caused
by the acquisition of new branches of commerce, by the increase
of our colonial possessions, and, perhaps, more than all the rest,
by the introduction of improved machinery into the cotton ma-
nufactories, was followed by a sudden increase of the population,
and, as importation was prohibited, by a corresponding rise of
prices."
And the late Sir Edward West, the distinguished
author of an "Essay on the Application of Capital
to Land," in a subsequent " Essay on the Price of
Corn," referring to the rise of price between I765
and 1 775, says : —
" The true cause of this rise of price, in all probability, was
the increasing population, and the increased cost of providing
the additional produce for that increasing population, according
to the principle which I have endeavoured to explain in my
former publication. This opinion is confirmed by the fact of the
very great increase of the population between the years 1760
and 1780. On reference to Mr. Rickman's Preliminary Observ-
ations to the Population Abstract, it will be found that the
population increased at a rate far more rapid during this in-
terval than at any former period. At about the same period,
too — namely, between 1766 and 1773, our imports of corn began
to exceed our exports, and we have since been a regularly import-
ing instead of an exporting country."
The opinion to this effect has become very ge-
neral, constituting a theory which refers the prin-
cipal phenomena of the prices of corn to difference
64 EFFECT OF THE SEA.^ONS.
of demand or consumption, neglecting or treating as
subordinate any variations of supply ; but it is a
theory which will be found to be constructed on a
supposition of facts which did not exist, and to be
irreconcileable with those which will be shown to
have existed in the clear relation of cause and
effect.
That a prosperous state of manufactures and
trade, and a generally flourishing condition of the
country, accompanied by an increasing population
employed at full and increasing wages, would have
a tendency to increase the consumption, and that
the effect of a continued increase of consumption,
under a given state of supply, would be to raise
prices, diminishing the exportable surplus in the
first instance, and forcing eventually a resort to
fresh soils at an increased cost, or to an impoi'tation
in as far as permitted, may readily be allowed.
But an increase of population, even in its most
accelerated progress, and allowing for the utmost
possible difference between a full and restricted con-
sumption, cannot o\:^erate j^ersaltum. And supposing
even that the assumed increase of consumption had
not been accompanied and in a great degree compen-
sated by a coincident improvement and extension
of cultivation, it would not account for the enor-
mous difference between an export in I763 and
1764 of 820,000 quarters of wheat, and an import
in 1767 and I768 of 830,000 quarters ; the whole
annual consumption of wheat at that period not
being estimated at more than about 4,000,000 of
quarters. Still less would it account for so great and
sudden an increase of price, as from 33^. 2^d. at
Ladyday, 1763, to 58*. 8d. at Michaelmas, I767.
There is, however, reason to believe that
there was not only no increase of consumption to
account for that rise of price and transition from
export to import, but that the rise of price was
required to limit, and did limit, the consumption
EFFECT OF THE SEASONS. 65
below its former rate, and was further required to
induce a foreign supply to make good the de-
ficiencies of our own growth.
The reason for supposing that the consumption
was diminished instead of having been increased,
compared with what it had been in tiie period im-
mediately preceding, is, that the rise of wages did
not precede, but follow, very inadequately, the rise
in the price of provisions.
Arthur Young* states, as the general result of the
information obtained by him in his extensive agricul-
tural tour inl 767, I768, and I77O, that the mean rate
of wages for the whole year was Js. 4.^kd. per week.
Taking an average of the five years, from I766 to
1770 inclusive, the price of the quarter of wheat
WTis 47s. 8f/., or nearly 48^., whicli would be 6s.
the bushel, and Is. 6d. the peck. At these prices
of labour and wheat, the earnings of the labourer
would be somewhat under five sixths of a peck.
Now, in I7G3, and for SO years before, his wages
had been 7'^'t a week, and the average price of
wheat in the 5 years ending in 1763 being 33.s\ 1^//.,
his daily earnings would be equal to very nearly a
peck of wheat. And if the price of wheat be taken
at the average of 20 years preceding 1755, it would
appear that he then earned somewhat upwards of
a peck. It is difficult, therefore, to conceive that
earning so much less wheat in 1767* he should have
consumed more than in 17^3. But if, from diminished
command of necessaries, the inference were not clear
against the supposition of an increased consump-
tion, there is sufficient presumption, from the con-
trast between the contented state of the population
in the interval from I72O to 1755, and the dis-
turbed and insurrectionary state of it between I765
* Annals of Agriculture, No. 271. p. 215.
t Malthus, Political Economy, p. 279. Arthur Young, Pro-
gressive Value of Money, p. 90.
F
60 EFFECT OF THE SEASONS.
and 1775, of their being fully fed in the former
interval, and under-fed in the latter.
There is, moreover, a further objection to the
theory which supposes a direct and observable in-
fluence of the alternations of prosperous or de-
clining trade, on the prices of provisions, that the
supposed coincidence is, as will be seen, not borne
out by facts.
Dr. Adam Smith, in the following passage, refers,
in my opinion, to the right cause. At the same
time I would observe upon this passage, that inas-
much as the ten or twelve bad seasons account,
in his opinion, for the range of high prices without
inferring a diminished value of silv^er, the ten years
of extraordinary plenty, to which he refers, might
be considered as accounting for the low prices
without inferring as he has done an increased value
of silver.
" The high price of corn during these ten or twelve years past,
indeed, has occasioned a suspicion that the real value of silver
still continues to fall in the European market. This high price
of corn, however, seems evidently to have been the effect of the
extraordinary unfavourableness of the seasons, and ought there-
fore to be regarded not as a permanent, but as a transitory and
occasional event. The seasons for these ten or twelve years
past have been unfavourable through the greater part of Europe ;
and the disorders of Poland have very much increased the scarcity
in all those countries, which in dear years used to be supplied
from that market. So long a course of bad seasons, though not
a very common event, is by no means a singular one ; and who-
ever has inquired much into the history of the prices of corn in
former times will be at no loss to recollect several other exam-
ples of the same kind. Ten years of extraordinary scarcity,
besides, are not more wonderful than ten years of extraordinary
plenty. The low price of corn from IT-il to 1750, both inclu-
sivej may very well be set in opposition to its high price during
the last eight or ten years." (Vol. i. p. 310. 3d ed.)
Of the prevalence of a series of bad seasons, or,
at least, of the very frequent recurrence of them in
this country, and in a still greater degree, perhaps,
in the rest of Europe, in the interval between
17^4^ and 177«5, there can be no reasonable doubt.
EFFECT OF THE SEASONS. Gj
The price rose considerably after the harvest of
I7G4, viz. to 44,9. 5d. at Michaehnas, and 49^. 9^.
at Lady-day following. This rise might be occa-
sioned by a moderate degree of deficiency, there
being, probably, little or no surplus in consequence
of tlie very large exportation, which, in 17^4,
amounted to no less than 396,857 quarters of wheat.
The season of I766, and some of the effects of the
deficient crops of the harvest of that year, are thus
described by Collinson : —
" London, Septenaber 25. 1166.
" We have had a most uncommon rainy summer, which was
no way propitious to the growth of wheat ; but it pleased Provi-
dence to send us the finest hot and dry harvest ever known, yet
the warm constant rains drew up the wheat so much to stalk,
that the ears are very light. I hope there will be sufficient to
support the nation, now we have prudently stopped the export-
ation ; for so great are the wants, and the demand for foreign
markets was so great and so pressing, that it advanced the price
so considerably as to occasion insurrections in many parts of the
kingdom, to stop by force the corn from being exported; but
now a proclamation is come out to prevent it, I hope all will be
quiet again."
The letters of Collinson are discontinued after
the winter of that year ; but the following details,
extracted from the Annual Register, will, it is
presumed, afford sufficient evidence of severe and
long-continued dearths : —
In 1766, the quartern loaf in London was, at
one time, as high as l.v. (id. Addresses were sent
from different parts of the kingdom, stating the
general distress of the people. A proclamation
was issued in September to suspend the exportation,
and enforce the laws against forestallers and re-
graters ; and the speech from the throne on the
meeting of parliament in November of that year
began in the following terms : —
" The high price of wheat, and the defective produce of that
grain last harvest, together with the extraordinary demands for
the same fi-om foreign parts, have principally determined me to
F 2
68
EFFECT OF THE SEASONS.
call you thus early together, that I might have the sense of par-
liament as soon as convenientlj^ might be, on a matter so import-
ant, and particularly affecting the poorer sort of my subjects."
The harvest of I767 appears to have been defi-
cient in a still greater degree.* The price at
Michaelmas, I7G7, rose to 58^. 8d. ; and although
the exportation was prohibited for another year, it
continued high till the following harvest, which,
with that of I769, may be inferred to have been of
ordinary produce, inasmuch as the prices gradually
gave way, and in the latter year got down to 4<0s.
But although the privilege of export under a
bounty was restored, the exportation was trifling.
The five years from 1770 to 1774, both years in-
cluded, were attended with unproductive harvests.
The dearth arising from them caused considerable
distress, and consequent commotions among the
people, and uneasiness on the part of government.
In the year 1770, an act passed, empowering jus-
tices, at the quarter sessions, to order returns of the
prices of grain ; and the returns thus obtained
formed the materials for the average prices, thence-
forward periodically published. The exportation
was again prohibited in that and the following year.t
* Such was the severity of the sufferings of the people from
the dearth of provisions, that serious disturbances broke out, and
prevailed with greater or less violence over the greater part of the
kingdom. Much mischief was done ; and many lives were lost in
different places. The military were called out, and the gaols
filled with prisoners, for the trial of whom a special commission
was issued.
The king in his speech on the meeting of parliament in No-
vember, ITSTj referred to the continued scarcity in the follow-
ing terms : —
" Among the objects of a domestic nature, none can demand
more speedy, or serious attention, than what regards the high
price of corn, which neither the salutary laws passed in the
last session of parliament, nor the produce of the late harvest,
have been able so far to reduce as to give sufficient relief to
the distresses of the poorer sort of my people."
-}• " The lord mayor ordered the meal-weighers to stick up in a
conspicuous place, in the corn-market, in Mark Lane, the quan-
EFFECT OF THE SEASONS. 69
In 1772, importation was allowed dnty free, to
the 1st May, 1773. In 1773, the city of London
offered a bounty of 4.s'. for 20,000 quarters of
wheat, to be imported between March and June.
These were all indications of scarcity, and of
alarm arising from it, not to be mistaken.
Mr. Arbuthnot, a contemporary writer, remarked,
in 1773j " that we had had five successive bad crops,
and this last more generally so than any of the
former ; that it had been nearly the same all over
Europe ; and, therefore, till there was a plentiful
year, corn could not be cheap." He conceived
that no effectual measure could be taken to prevent
the recurrence of scarcity till this event happened,
and till wheat was nearly the same price all over
Europe.
It is said by this author, that by accounts laid
before parliament at this time, the yearly produce
of wheat alone was calculated to be four millions
of quarters, which he believed to be short of the
reality. *
It was in consequence of this state of things that
the opponents of the corn law, as it then existed,
succeeded in carrying a fresh act in 1773, by
which importation was allowed at a duty of 6^?. per
quarter, when the price of wheat was at, or above,
48.S'. per quarter, and the bounty and exportation
together were to cease when the price was at, or
above, 44*. The importation and exportation, and
bounty for other grain, in their relative proportions
to wheat.
titles and prices of wheat sold, and the names of the buyers." —
Comber on National Subsistence, p. 167.
The following extract from the Annual Register will shew
that the scarcity extended to Ireland : —
"Dublin, May 4. 1771.
" We have cause of complaint of the dearness of provisions as
well as the English ; prime pieces of beef and mutton are here
6d. per pound, lamb 8d., veal 7d., and butter lOd."
* Comber, p. 168.
F 3
70 EFFECT OF THE SEASONS.
The year 1774* was equally adverse with the
preceding "season. And indisputable proofs exist
* In the Tiansactions of the Royal Society, vol. Ixxvi. p. 24-0.^
is a paper entitled " Qn the Variations of the Seasons, from Ob-
servations at London by Mr. Barker." And as it refers to the
period now under consideration, a copy of it is here in-
serted.
" On the Variations of the Seasons.
" Measuring the rain for a few years will not show com-
pletely the general quantity of rain which falls in anyplace ; for
there is a very great difference at different periods of time. If
I had measured the rain at Lyndon only in the four years, 174-0,
1741, 174'2, 174-3, the mean would have been found to be only
16^ inches in the year, yet they were not at all complained of
as dry summers. 1740 was cold and dry till July 30.; 1741
was cold and dry ; the summer hot, dry, and burning, till the
beginning of September ; then ten days wet, and very warm
again, being the finest autumn for grass ever known. 1742 was
a showery summer, and 1743 wet in the middle; but then
the winters were dry ; so that the quantity of rain on the
whole was small. 1741 to 1750, the mean was 18^ inches.
1741 and 1750 were hot, dry and burning, 1750 being the
hottest year I have known. The intermediate years were neither
very wet nor very dry ; and this was the most plentiful and
cheapest time for corn of any ten years I remember; for grain
oftener fails in England from too much wet than from too little.
1751 to 1760, the mean year was 22tV. 1760 was hot, dry, and
burning ; but several of the summers were wet, and not so plen-
tiful. Three wet summers together, — 1754, 1755, and 1756, —
were a time of scarcity, and we have had more failing crops
since that time than before it. From 1761 to 1770 there was
23:} in a year. 1762 was hot, dry, and burning, and 1765 cold
and dry ; but several years were wet — 1763 and 1768 remarkably
so ; and of those ten several had failing crops, and some had
great snows. There was a great change of the seasons at 1763 ;
for I have had more rain since that time than I had before it,
in the proportion of five to four. From 1770 to 1780 there was
at a mean 26 inches. 1771 was dry, and 1778 and 1779 were
hot, yet not without fits of rain ; and most of the other years
were wet, and some great snows. 1773, 1774, and 1775 were
so wet that there came 32 inches in a year, which is nearly
double what there was from 1740 to 1743. In twelve months
from October, 1773, to September, 1774, there came 39-390
inches of rain, which is a Lancashire year. And in one month,
September, 1774, there was 8 inches ; this was in barley and
pease harvest, and for three weeks together not a load could be
carried. By the above state of the case it appears that for four
EFFECT OF THE SEASONS. 7 1
of the scarcity arising from that and the preceding
season, inasmuch as the importations were, in
Years.
Qrs. of Wheat.
Including all other Grain.
1774
-
269,235
803,844
1775
-
544,641
1,039,122
When these quantities, and the equally large
importations of IjGj and 1708, are considered with
reference to the total estimated produce at tliat
period, and with reference also to the very large
surplus which the seasons immediately preceding
had yielded for exportation at low prices, some
conception may be formed of the enormous dif-
ference of the productiveness of the crops ; but
the conception would be inadequate, unless al-
low^ance were made for an excess above an average
in the one case much beyond the mere quantity
exported, and in the other for a deficiency greater
than the quantity imported.
The average price from the Eton tables of ten
years, from 1755 to 1764, was 37 -sf. Gd. ; and of
ten years, from I765 to 1774-, was 51.s. ; being
a rise of upwards of 33 per cent. ; but the ten
years ending in I764 comprise two seasons, viz.,
1756 and 1757j of bad, and one, viz., 1664, of in-
different produce. If w^e compare the ten years
ending in 1774 with a series of ten good seasons,
such as from 1742 to 1751, the difference will be
more striking : —
s. d.
10 years, ending 1751, average 29 2
10 years, ending 1774 51 0
successive periods of ten years, the quantity of rain has been
increasing each time." (Philosophical Transactions, vol. Ixxv.
p. 240.)
And in another paper Mr. Barker writes : —
" In four years, 1740, 1741, 1742, 1743, there came but
66-361 of rain. In the four years, 1772, 1773, 1774, 1775,
there was r24--957, which is nearly twice as much."
F 4
72 EFFECT OF THE SEASONS.
The advance therefore in the ten years ending
1774 was 75 per cent, upon the price for the ten
years ending in 1751^ ; the clieap period, be it
observed, embracing five years of war, accom-
panied by large loans, while the dear period w^as one
of universal peace. It may be worth while too,
with a view of having some notion, however im-
perfect, of the difference of produce in these two
periods, to contrast the aggregate quantity ex-
ported in the one with the balance of importation
in the other.
Balance of Exjiorts.
Years. Wheat. Grain of all Kinds.
174-2 10 1751 - - 4,700,-509 qrs. 8,869,190 qrs.
Balance o^ Imports.
1766 to 1775 - - 1,363,149 qrs. 3,782,734 qrs.
It is true that the population had increased
greatly during the interval ; but so likewise had
the extent of cultivation. The numbers of acts of
inclosure had been,
In the reign of George I. - - - - 16
George II. - - - - 226
And in the first fifteen years of George III., viz. from
1760 to 1775 - - - - - 734
The probability, therefore, is that the increased
extent of cultivation had nearly, if not quite, kept
pace with the increase of the population: besides
that there is every reason to believe that improve-
ments in the mode of cultivation, although not so
great as those which have been strikingly observ-
able of late years, must have been more or less in
progress during the above-mentioned period.
l^he whole interval from 1765 to 1775, in which
there was so frequent a recurrence of seasons of
* It is probable that if in the period of dearth from 1765 to
1775, the practice had prevailed M'hich was introduced twenty
years later, of making up for deficiency of wages by parish al*
lowance, the prices would have been still higher.
EFFECT OF THE SEASONS. 73
scarcity in this country, was marked by dearths of
equal, if not greater severity, on tlie continent of
Europe. Reference to the inclemency of some of
the winters, and to the cold, wet, and stormy cha-
racter of the summers, are to be met with in the
published correspondence of several French writers
of that period. But it will be sufficient for the
present purpose to refer to the following passages
from the " Annual Register : " —
" 1767. The irregularity and inclemency of the seasons for
some years past in different parts of Europe has occasioned an
uncertainty and great deficiency in the crops of several countries,
by which the poor have suffered great distresses. The Eccle-
siastical State, and some other parts of Italy, have been severely
affected by this calamity. England, which usually supplied its
neighbours with such immense quantities of grain, and allowed
a considerable bounty on the exportation of it, has been a suf-
ferer from the same cause, and it has required the utmost atten-
tion of the legislature to guard against and prevent the dreadful
consequences attending it.
" 1768. The badness of the late harvest in France had oc-
casioned provisions of all sorts to bear an immoderate price ;
and corn, in particular, was not only very dear, but, in general,
very bad, and the bread, consequently, disagreeable and un-
wholesome. The distresses of the people were excessive, and
their complaints and murmurings became universal. In such
situations, all the world fancy themselves ingenious in finding
out the causes of public calamities ; and if any novelties have
been introduced, they always come in for a great share of popu-
lar odium. It was so upon this occasion ; and, without any re-
gard to the influence of seasons, or to the will of Heaven, the
miseries of the people were attributed to the edicts which the
king had passed some time ago, for the free importation and
exportation of corn in all the ports, and an unlimited circulation
of it through all the interior parts of the kingdom.
" 1770. A scarcity of provisions prevailed in France. The
distresses of the people were this year so excessive, that it is
said 4000 persons perished by famine in Limousin and the
Marche onl}' ; and in Normandy, the most fruitful province of
France, barley bread sold at above 2f/. a pound. This misery
produced numberless riots and insurrections in different parts,
in which much mischief was done, and many lives lost.
" Berlin, April 13. 1771. The present severity and extreme
rigour of the weather is so very remarkable, that the oldest
people here do not remember to have seen or heard the like ;
for it still continues to freeze every night as in the middle of
74" EFFECT OF THE SEASONS.
'winter, and a great quantity of snow lies on the ground, which
so distresses the poor inhabitants of the country, that the most
melancholy accounts are daily received of the misery and
wretchedness occasioned by this dreadful calamity.
'^ Frankfort, April 7. 1771. The want of provisions is very
great, both here and in the circle of Swabia. Our magistrates
distribute bread to the poor gratis, and those of Nuremberg do
the same. In Bavaria, bread is at an excessive high price.
" 1773. The dearth which has so long afflicted different parts
of Europe has this year been grievously felt in several coun-
tries. Germany, Bohemia, and Sweden have presented scenes
of the greatest calamity, and multitudes have perished in that
miserable extremity of wanting the plainest and most common
necessaries of life. France, though in a lesser degree, has been
a considerable sharer in this misfortune ; and the distresses of
the people have occasioned riots and disturbances in several of
the provinces. Nor has the taking off of the bounty on export-
ation in England, with all the other measures that have been
adopted to answer the same purpose, been sufficient to remedy
the evils proceeding from inclement skies, and unusual seasons.
" 1775. The distresses of the people, owing to the scarcity
and dearness of corn in France, threw that kingdom into an un-
common state of disturbance and commotion during a great part
of the spring and summer. Bread in several places could not
be procured for money ; and the beggars are said to have refused
the latter, whilst they rent the air with cries for the former ; so
that gold was no longer a security against want. This distress
was the more irremediable, as other nations were not abun-
dantly supplied. The scarcity of corn in England not only cut
off that resource, but diverted a still greater by the immense
quantities which it drew from the American colonies." (After
enumerating instances of violence, the account proceeds.) "In
the mean time no means were left untried by the government,
either to quell these disturbances, or to alleviate their cause.
Troops were stationed to protect the markets, and the roads
and rivers by which they were supplied ; great companies of the
burghers were armed for the same purpose. The king granted
a considerable bounty on the importation of corn. The public
disorders, notwithstanding all these measures, increased to so
alarming a degree, as at length to excite apprehensions of a ge-
neral insurrection, and to make it appear necessary to call in the
troops from the frontiers to the centre of the kingdom ; so that
the Isle of France, with some other of the interior provinces,
were, in a manner, surrounded and intersected with lines of
armed men. It at length pleased Providence that a most plen-
tiful liarvest removed the distresses of the people, both in France
and most other parts of Europe."
efi'ect of the seasons. 75
Section 5. — 1775 to 1793.
The seasons immediately following that of 1774'>
and comprised within the interval terminating in
1792, appear to have been irregular, but not cha-
racterised by such a preponderance of the pro-
portion of inclement and unproductive seasons as
occurred between 1760 and 177^*
The harvest of 1775 is described at the close of
the extracts from the " Annual Register" which
have been referred to, as having been plentiful in
France and most other parts of Europe. And ac-
cordingly, immediately after the harvest, the price
which at Lady-day, 1775, had been 59*. lid,, fell
to 435. 7d' at Michaelmas, and continued at about
that rate till the harvest of 1777> when the price
rose to 51s. 7d. In the mean time there had been
a balance of export in 1776 of about 200,000
quarters of wheat; while in 1777 there was an im-
portation of a like quantity.
The seasons of I778 and 1779 were favourable,
and were followed by a considerable fall of prices,
the decline having been from .51.v. 7d-, the quo-
tation of the Windsor market at Michaehnas 1777,
to S5s. 7d. at Michaehnas 1779-.
In the " Farmer's Magazine," vol. ii. p. 139., is
the following reference to the season of 1779 : —
" Suppose a season of great fertility, such as the ever me-
morable year 1779, when the crop was one fourth above a
medium crop."
This transition to abundance, after a long period of
dearth, was attended, as is usual on such occasions,
with stagnation and declining prices, and a general
depression of the landed interest, or what is more
familiarly known under the designation of " agri-
cultural distress."
In the " Annals of Agriculture," vol. xxv.
p. 460., is the following description in the extract
76 EFFECT OF THE SEASONS.
of a letter written by Arthur Young, in 1780, of
the fall of prices and consequent distress at the
period referred to : —
" In the years 1776;, 1777, prices fell considerably; and, in
1779, so low, that very general complaints have been heard of
ruined farmers, and distressed landlords; and at the time I
am now writing, the fact holds that there is a considerable fall in
all products, and great numbers of farmers ruined. I have the
prices of wool for forty years now before me, and that which
from 1758 to 1767 was from 18*. to 21 5. a tod, is for 1779 only
125., and was in 1778 but 145. We must go back to 1754 to
find a year so low as the last. Wheat and all sorts of grain are
greatly fallen."
The decline of prices here noticed has, by the
theory which accounted for the previous rise as
the effect of an increased consumption arising from
a prosperous state of trade, been ascribed to a di-
minished consumption occasioned by a dull and de-
clining trade. But as the state of trade, judging
not only from exports and imports, but from the
best authenticated contemporary accounts, was
still declining in the three following years, being
the concluding ones of the American war, viz.
from 1780 to 1784, the supposed diminished con.
sumption ought to have had the effect of further
depressing, or, at all events, of keeping down the
price, instead of which there was a considerable
rise. For instance — ■
s. a.
1779
- m 3
1780
- 43 l\
1781
- 52 5
Of the seasons of 1780 and 1781, I have not
met with any particular notice* ; but that of 1782
is recorded as having been very unfavourable.
* As far as can be inferred from a reference to the Lady-day
and Michaelmas prices, it should seem that the produce of 1780
must have been considered to be deficient, inasmuch as the price
of wheat, which, at Lady-day 1780, had been 385. 3d., rose, at
Michaelmas, to 48^., and at Lady-day, 1781, to 565. lie?. The
price declined near IO5. the quarter after the harvest of 1781,
which may therefore be presumed to have been considered as
moderately good.
EFFECT OF THE SEASONS. 77
In Scotland the weather during the whole of
that year was as inclement as the season of 1799
afterwards proved to be ; and in the " Farmers'
Magazine" for 1800, there is a minute description
of the similarity in point of weather of those two
years. In tlie rest of the island there was a de-
ficiency of produce, although not to so great a
degree as in Scotland. A winter of great severity
followed, prices rose considerably, and a large im-
portation of corn took place in 1783.
As an example of the great and sudden alter-
ation of prices occasionally arising from the occur-
rence of even a single bad season, when there is
not, as there appears not to have been in this
instance, a large stock on hand, I subjoin an
extract from the " Annals of Agriculture," vol. iii.
p. 366., of a communication from Mr. William
Pitt, dated Pendeford, April 4. 1785, entitled
" CONTRASTS."
The following contrast of effects arising from dissimilar seasons,
now so recent, may perhaps appear striking in some future suc-
cession of regular seasons ; and, as it will not take up much
room, may be worth preserving from oblivion, by registering it in
the Annals of Agriculture. I doubt not but yourself and many
others can recollect circumstances more remarkable: the following
have come under my own immediate observation : —
Winter succeeding the Harvest of Winter succeeding the Harvest of
1781. 1782.
£ s. d. £ s. d.
Barley of the best qua- Barley of the same qua-
lity sold in the mar- lity sold in the same
kets of Staffordshire, markets, same mea-
our customary bushel sure, common price,
of 9^ gallons, down to 0 2 9 per bushel, 7s. to -0 7 2
Wheat, immediately af- Wlieat of the best qua-
ter the harvest, clean lity, same measure,
for seed, the above per bushel, 10s. to 0 10 6
measure per bushel - 0 5 0
Spring Season, 1782. Spring, 1783.
Bought sixty bushels of Sold out of the product
Dutch oats for seed, oats that had lain a
78 EFFECT OF THE SEASONS.
£ s. d. £ s. d.
delivered at home, per month in the wet, and
bushel - - - 0 1 8 so damaged in the
stack by rain during
making and carrying
in bad order, that they
moulded and grew to-
gether, per bushel 0 3 6
A friend of mine sold Bought again clover-
clover seed of a good seed of the same qua-
quality at the com- lity for his own sow-
mon market price, ing, at per cwt. - 5 10 0
which was per cwt. 1 11 6
1782. Bought Worces- 1784. Hops inferior in
tershire hops, of ex- quality to the oppo-
cellent quality, at per site, bought at per
cwt. - - - 2 2 0 cwt. - - - 5 12 0
The season of 1783, although not so unfavour-
able as the preceding, seems not to have been a
productive one. It was followed by two severe
wmters ; and the spring and ; ^mmer of 1784 were
cold and ungenial.
The effect of so frequent a recurrence of winters
of great severity was felt in a comparative scarcity
and high price of animal food ; and this description
of dearth induced the Corporation of London, in
1786, to appoint a committee for the purpose of in-
quiring into the causes of the high price of pro-
visions. The first resolution of the committee in their
report is sagely couched in the following terms : —
" Resolved, That it appears to your committee, from the three
different papers mentioned in the evidence of Mr. Montague,
principal clerk in the Chamberlain's office, and Mr. Tomlinson,
receiver of the tolls in Smithfield market, containing an account
of the number of cattle and sheep brought into the said market
during the last thirty-six years, that from the year 1732 to 1778,
the same had annually increased in a very considerable degree ;
and that there has been a greater increase from 1V78 to 1783 ;
but the decrease that has happened during the years 1784 and
1785, we are of opinion, from the evidence that has been laid
before us, arises from the pernicious system of forestalling in the
vicinity of this metropolis."
The committee likewise attacked the prevailing
EFFECT OF THE SEASONS. 79
tendency to new enclosures, as one of the con-
current causes. I should not have noticed tliis
strange document, but for the following information
wliich the inquiry brought forth. The magistrates
of Sunderland, in answer to the inquiries, write —
" For the last three years we have had two very dry summers,
and three very severe winters, wliich caused much destruction
among sheep and lambs in the spring, and occasioned a great
consumption of all kinds of fodder ; and even great quantities of
oats were used after hay, straw, and turnips were eaten up."
There are other answers to a similar purport : I
shall only further extract the concluding part of
one from Arthur Young, dated August, I786 : —
" Last winter hay, straw, and fodder of all kinds were scarcer
and dearer than ever known in this kingdom. Severe frosts de-
stroyed the turnips and cattle of all kinds, and sheep suffered
dreadfully ; many died, and the rest were in ill plight to fatten
early in this summer."
The seasons of 1780 and I786 seem to have
been attended with an ordinary produce of the
wheat crops, and prices fell within the rate at
which the bounty on exportation attached. There
was accordingly a balance of export of wheat.
The average price of the Years s,
1782, 1783, 1784 - - was 54
1785, 1786, 1787 - - - 44
Now it is very well known that there was an
amazing burst of prosperity in the three latter, as
compared with tlie three former years, which had
been marked by great commercial and financial dif-
ficulties, and by a great contraction of the circu-
lation, and yet we see a fall in the price of 10s. per
quarter in the latter period. This fall is readily
ascribed to the difference of seasons ; but had the
effect of the seasons been reversed, the low prices
of 1782, 1783, and 1784, would, according to the
theory of demand, have been ascribed to the de-
clining, and the high prices of 1785, I786, and
1787, to the prosperous, state of trade, with just as
much reason as there is for the supposition that the
80 EFFECT OF THE SEASONS.
low prices of 1777, 1778, and I779 were caused
by the dull state of trade, as compared with the
preceding period of high prices.
The winter of 1788-9 was again a very severe
one, and followed by a backward spring. The
crops of 1789 were considered to be deficient in this
country ; and as they had failed in a still greater
degree abroad, it was apprehended that an ex-
portation, if allowed, might entail a dearth. There
was consequently, after an inquiry by the Board of
Trade, as to the result of the harvest of 1789, and
upon information received of scarcity and very high
prices abroad, as well as of a deficiency of our own
crop of wheat, an order in council issued in Decem-
ber, 1789, prohibiting the export, and allowing im-
portation duty free for a time limited. This order was
confirmed by an act passed in the session of 1790.
As a consequence of the deficient harvest of
1789, the price which at Michaelmas, I788, had
been 48«., rose at Michaelmas, 1789, to 57*. ;
and had it not been for the prohibition of export-
ation, it would have risen much more, because in
France the scarcity was such as to amount almost
to a famine, and the government of that country,
then under the administration of M. Necker, ex-
pended very large sums in procuring corn from
abroad. In proof of the effect produced by those
purchases on the general prices of Europe, of
which those of Holland may be considered to have
been at that time the best criterion, it may beob-
served, that the price of wheat at Amsterdam rose
in 1789 to between 60.v. and 7O.9. the quarter. Our
bullion price accordingly was below the bullion
prices of Europe in that year.
The summer of 1790 was wet, and the prices
ranged high, so as to induce a large importation,
the ports being open at the low duty of 6d. per
quarter. At the close of the year the ports were
shut to importation, but opened again in the spring
EFFECT OF THE SEASONS. 81
following, thus affording a presumption that even
with the aid of a considerable foreign supply, the
produce of the preceding harvest had been below
the consumption.
The season of 1791 is described in the *' Annals
of Agriculture," vol. xxiv. p. 321. as one of
great abundance. And the produce of that harvest,
following a large foreign supply, had the effect of
reducing the price to 40.s'. 11^., and thus of closing
the ports, which remained shut through the fol-
lowing year. But the low price was productive, as
usual, of complaint on the part of the landed in-
terest, and was the occasion of a fresh corn bill. *
The year 1792 is stated in the " Annals of Agri-
culture" to have been " remarkable for an ex-
tremely wet summer, by which the crop of wheat
was much injured every w'here." This inferiority
of the harvest, which raised the price at Mi-
chaelmas to 53s. id., combined perhaps w^ith ap-
prehensions on political grounds, induced the
government on the 9th of November, 1792, to
issue an order in council, prohibiting exportation
until the following spring ; and subsequently par-
liament passed an act, 33 Geo. 3. c. 3., authorising
the king in council to prohibit at any time during
the session the exportation of all kinds of grain,
and to permit the importation at the low duty.
On a review of the eighteen years from 177<5 to
1793, it appears that, although not marked by any
extraordinary inclemency of weather, or by a con-
siderable degree of scarcity, as far at least as
regards wheat, excepting from 1782 to I78I', the
seasons were irregular, and that a large proportion
* By 31 G.S. c. 30. from 15. November, the former laws were
repealed, and a new one enacted, by which wheat was subject to
a duty of 245. Sd. if the price was under 50s. ; "2$. 6d. at or
above 50*. and under 54^. ; 6d. at or above 54*. ; and a bount}^ of
5s. on exportation at a price under 44*. The duty and bounty
on other grain, in the usual proportion.
G
82 EFFECT OF THE SEASONS.
of them were attended with harvests of scanty pro-
duce ; not scanty merely with reference to an in-
creasing rate of consumption, but scanty relatively
to the average produce of a given extent of cul-
tivation.
If compared with an equal number of years in the
middle of the century, for instance, from 1730 to
1748, the preponderance of unfivourable seasons
here described, between 1775 and 1793, is very
great ; there having been in the former series of
eighteen years only one year of scarcity, or even
of any thing like deficient produce, while in the
latter series there were several of acknowledged
deficiency, namely, 1782, 1783, and 1784^ 1789,
1790, and 1792, besides others, which, by inference
from prices, and from the sudden transition from
export to import, may be considered to have been
defective. And it is difficult to resist the conclu-
sion, that if there had been an equal exemption, not
only in this country but throughout Europe, from
adverse seasons in the latter, as in the former
period, we shonld have witnessed, notwithstanding
the increase of population, a much lower range of
prices, and have continued, under the operation of
the bounty, to have been an exporting country.
The contrast in that case would have been still
greater than it is between the prices of corn im-
mediately before, and those subsequent to 1793.
As it was, the irregularity of the seasons, and the
more frequent recurrence of comparatively deficient
crops in the last 35 years of the 18th century, ap-
pear to have compensated for the lower range of the
first 65 years, and to have had the effect of raising
the average price of the entire century to a level
with the average price of the whole of the 17th
century. The comparison of the average prices
of wheat in the two centuries is thus given by Ar-
thur Young : —
EFFECT OF THE SEASONS. 83
/. s. d.
17th century - - 118 2 1 the Winchester
18th century - - 1 18 7 J quarter.*
It would lead into too wide a field of discussion
to enter upon the various questions which are sug-
gested by this very remarkable coincidence of the
* The following is an extract from the passage in which the
above statement of the averages is given : —
" By collecting the average prices of wheat for various periods,
with all the attention in my power, I find the progress through
four centuries has been the following : —
I. s. d.
Average of the 13th century - 12 9 per quarter.
14th century - 16 0
15th century - 0 12 0
16th century - 13 8
" This result does not correspond with any general authority I
have met with, which should not cause surprise, because the docu-
ments were equally unknown to Dr. Adam Smith, Sir George
Shuckburgh, and probably to some other writers who have
treated generally on the subject.
" From 1595 we have fortunately a regular register of wheat at
Windsor ; but as the measure there is nine gallons, and the price
minuted that of the best wheat in the market, the sums are re-
duced two ninths to bring them to the Winchester measure and
average quality, until the year 1771, when Catherwood's tables
for the average of the whole kingdom, by the authority of the
Register Act, commenced ; the price of this long period I have
reduced to the following average : —
That of the 17th century was
18th century
Being a rise of only ^d. per bushel.
" The equality between these two centuries is one of the most
remarkable circumstances to be met with in the economical his-
tory of this country. The average from 1701 to 1766, was
\l. 12^. W., which is a fall of sixteen per cent, below the price
of the whole preceding century. The average of the 23 years
from 1767 to 1789, both inclusive, was 21. 5s. 3d. ; from 1767
to 1800, being 34 years, the price was 21. 10s. 6d. — Progressive
Value of Money, p. 75.
G 2
/. s.
d.
1 18
2
1 18
7
84 EFFECT OF THE SEASONS.
price on a comparison of the two centuries.* It is
sufficient for the purpose of the present inquiry,
tliat in the surveys which have been taken of series
extending as far as 50 and 60t years each, compared
with a series of an equal number of years imme-
diately preceding or succeeding, during those two
centuries, it has appeared that seasons of a favour-
able or unfavourable cliaracter have prevailed in a
very different degree or frequency of occurrence in
the respective series ; and that there is nothing
therefore at variance with experience derived from
former periods of our history, in the assignment of
* Any attempt to explain that extraordinary fact would involve
the necessity of a consideration of many points, upon which the
means of information are wanting ; such, for instance, as to how
far the cost of production might not be in the course of progres-
sive reduction, so as, with the aid of a more than ordinary exemp-
tion from seasons of scarcity, to countervail the continued depre-
ciation w^hich gold and silver appear to have been, however
slowly, undergoing in the ISth century. The corn laws must
be supposed to have had some operation, the precise nature
of which it would be very difficult, if not impossible, to trace.
At the same time, as the price in this country did not, during
those two centuries, differ materially from the general prices of
Europe, the presumption is, that the corn laws, although they
might, and doubtless did, occasionally operate in aggravation of
other causes of variation, must, in some instances, have operated
in compensation ; so that, however unjust and impolitic, however
complex and absurd the system, its influence on prices is not
very discernible down to the conclusion of the last century.
f It Is not essential to the purposes of the argument on the
effect to be ascribed to a frequent recurrence of bad seasons in
the interval between 1793 and 1818, to seek to establish the
difference of frequency of recurrence of seasons of scarcity or
abundance in series of more than twenty-four or twenty -five
years. And to this extent, at least, it is to be presumed that the
evidence adduced will have left little room for doubt. But the
great difference which has been pointed out in the comparative
productiveness arising apparently in a great measure from the
exemption from bad seasons during an interval of fifty years,
combined with the near approximation of the average prices of
each of the tvvo last centuries, may fairly justify a suspicion, if it
does not go the length of authorising the conclusion, that a series
of 100 years at least is requisite to reduce to a fair average the
inequalities of the seasons.
EFFECT OF THE SEASONS. 85
a greater proportion of unfavourable seasons in the
interval between 1792 and 1819, than in an equal
interval anterior or subsequent to that period.
It is moreover to be borne in mind, in estimating
the effects of a more than usually frequent recur-
rence of seasons of scarcity or plenty, that an enor-
mous difference must be the result on prices,
according as there may be more or less of impedi-
ments, wliether from the corn laws, or from a state
of war, to importation under deficiency, or to ex-
portation of a surplus, of the home growth.
The corn laws were inoperative, or nearly so,
between 1792 and 1815 : but the war which pre-
vailed during that interval operated most powerfully
in aggravation of the influence of the seasons. The
very great difference arising from the effects of the
last war on the prices of corn will be exemplified
in the period of high prices, which is about to come
under examination. But before proceeding to the
consideration of that period, it is desirable to obtain
a clear view of the o-eneral effects of war on prices,
and of the specific effects which may be ascribed
to the last war.
G 3
86
PART II.
ON THE EFFECT OF WAR.
CHAP. I.
GENERAL VIEW OF THE SUBJECT.
In estimating the manner and degree in which war
and transition from war to peace may affect general
prices, two distinct questions arise : the one is, how
far the taxes requisite to defray the extraordinary
expenses attending a state of war are calculated to
raise prices ; and the other is, whether the prices
of commodities in general (including food and ne-
cessaries), independent of the degree in which they
may be affected directly or indirectly by taxation,
are liable to be influenced by war, and in what
degree, through the medium of supply and de-
mand.
EFFECT OF WAR. 87
CHAP. II.
EFFECTS OF TAXATION ON THE FLUCTJJATION OF
GENERAL PRICES.
The effects of taxation on prices are liable to vary
according to the mode in which the taxes are
imposed.
An income or property tax, equally levied upon
all classes, would not, in any way that I can con-
ceive, tend to raise general prices.
Taxes levied upon particular commodities have,
in general, the effect of raising the price of those
commodities ; and manufactured articles must be
raised in price in some proportion to whatever tax
may be imposed on the raw materials. But it
does not seem to be a necessary consequence of
taxes upon one set of commodities, that all other
commodities, although untaxed, should be raised
in price, while there are strong grounds of pre-
sumption that, under some circumstances, there
might be an opposite tendency.
The conditions through which taxes upon one
set of commodities are calculated to have an in-
direct or circuitous effect in raising the price of
untaxed commodities, are, that the objects taxed
should be the ingredients or the instruments of
production ; and that such taxes should not apply •
generally, and nearly equally, to all productions.
If the taxes be laid on the ingredients or instru-
ments of production of some particular article and
not of others, it is clear that such article must
G 4-
88 EFFECT OF WAR.
advance in price as the condition of continued
supply ; without such advance tlie article would
not yield a profit equal to that derived from other
productions, and it would, after some interval, cease
to be produced in equal quantity, till the diminished
supply should raise the price in some proportion
to the tax.
But if taxes on the instruments of production,
as on corn, or other necessaries of the labourer, or
on tlie materials composing machinery and the
implements of husbandry, apply equally, or nearly
equally, to all branches of industry, they cannot
have the effect of raising the price of the produce
to which they are applied ; for, provided the power
of reproducing in general be not impaired, there
will be no inducement to withdraw capital from one
occupation and to transfer it to another. An ad-
vance of price is not, under such circumstances,
a condition of continued supply.
In this country the taxes on the necessaries of
the labourer, and on the instruments of production,
do not apply^exclusively to agriculture ; they apply,
at least in an equal, and probably in more than an
equal, degree, to other branches of industry ; and
therefore, according to the principles here stated,
they are not calculated to have the effect of raising
the prices of agricultural produce, nor, in general,
of raising the prices of other articles that are not
the immediate objects of taxation.
It is not my intention, at present, to enter into
a detailed statement of the grounds for this opinion,
which would involve a discussion of the principles
of taxation ; a subject foreign to the purpose of
this inquiry. It is sufficient to remark, in general
terms, that if the level of the prices of articles not
taxed, agircultural produce, for instance, were
raised by the taxes laid on other articles, it would
follow, that if the whole amount of taxation levied
during a war were continued in peace, there would.
EFFECT OF WAR. 89
as far as taxation is concerned, be no fall of prices
in the transition from war to peace.
As, therefore, the whole amount of taxation
(including land-tax, tithe, and poor-rate) down to
the summer of 1822, was as great as during the
war, with the exception of the income tax, the in-
ference is, tliatin as far as untaxed commodities and
labour were raised in price by that cause, the same
cause, subsisting down to the summer of 1822,
should have prevented prices from falling to the
level to which they would otherwise have declined.
And as the controversy has mainly turned upon the
contrast between prices during the war and since
the peace, till the close of 1822, the lowest point
having been reached before any remission of tax-
ation, the income tax excepted, we may fairly
exclude the operation of taxes from among the
causes of the fluctuations in the prices of untaxed
commodities, such as agricultural produce, or of
commodities divested of the taxes to which they
may be liable on importation or consumption.
I shall therefore proceed to examine how far
war, independent of taxation, may have contri-
buted to the fluctuation of prices.
90 EFFECT OF WAR.
CHAP. III.
EFFECT OF THE EXTRA DEMAND OR CONSUMPTION
SUPPOSED TO ARISE OUT OF A STATE OF WAR IN
GENERAL.
Those persons who consider the range of high
prices which prevailed from 1793 to 1814, as being
fully accounted for by the war, independently of
its attendant taxation, proceed on the assumed
operation of the following causes : —
1. An extra demand or consumption arising out
of a state of war in general.
2. The extra demand or consumption peculiarly
characterising the last war.
3. The monopoly of trade enjoyed b}'^ this coun-
try. And,
4. The stimulus or excitement to increased po-
pulation, production, and consumption, occasioned
by the profuse government expenditure during the
above period.
Section 1. — Extra Demand or Conswmption
arising out of a state of War in general.
The reasoning in support of the opinion, that
the principal phenomena of high prices may be
ascribed to the effects of war in general, through the
medium of extra demand, independently of any
reference to circumstances affecting the supply,
may be stated in substance as follows : —
EFFECT OF WAR. 91
That the whole of the government expenditure
for naval and military purposes may be regarded as
creating a new source of demand for the articles
constituting that expenditure, and consequently as
tending to raise the price of such articles.
That not only the price of those commodities,
which come directly under the description of naval
and military stores, must experience an advance in
consequence of the increased demand, but that
the price of corn and other necessaries must like-
wise be affected in a considerable degree by the
additional consumption occasioned by the main-
tenance of the men composing the fleets and
armies.
That not only the demand for seamen and
soldiers must tend directly to raise the rate of
wages of that description of labourers from among
whom these men are taken, and indirectly the
rate of wages generally ; but that the increased
demand for various kinds of manufactured articles
requisite for the equipment of fleets and armies, is
calculated further to raise the rate of wages ; and
that this increased demand for labour, and the
consequent advance of wages in general, naturally
occasion increased population and increased con-
sumption by the labouring classes.
Thus the government expenditure in all its
ramifications is thought to extend the sphere and
increase the activity of demand for necessaries,
to operate directly or indirectly in promoting
briskness of circulation, to vivify every branch of
industry, and consequently to stimulate exertion to
an increase of every kind of production.
The cessation, by the peace, of all such extra
demand, the great customer war being withdrawn,
(when by the stimulus of previous high prices
there was a general increase of production,) v/ould
naturally, it is supposed, account for falling markets
and consequent distress among the producing
92 EFFECT OF WAR.
classes, and for reduced wages and diminished
consumption ; these leading, through a long course
of suffering, to the only remedy, viz. a diminished
production.
The fallacy of this doctrine, which represents a
general elevation of prices, both of commodities
and labour, to be a necessary consequence of a
state of war, proceeds (and cannot otherwise than
so proceed) on the supposition that the money
expended by the government consists of funds
distinct from and over and above any that before
existed ; whereas, it is perfectly demonstrable, that
an expenditure by government, whether defrayed
by immediate taxes to the whole amount, or by
loan on the anticipation of taxes to be levied, is
nothing but a change in the mode of laying out
the same sum of money ; and that what is ex-
pended by government would and must have been
laid out by individuals upon objects of consump-
tion, productive or unproductive.
I am here supposing that, both on the part of
government and on that of individuals, the habit of
hoarding to any extent is out of the question. If
government were in the practice of collecting a
surplus *revenue in coin in time of peace, and of
accumulating it as treasure to be expended on the
occurrence of a war, then indeed there would be a
marked difference in general prices on the tran-
sition from peace to war ; but even this addition to
the circulating medium would be limited in its
effect on prices to the time within which the trea-
sure was in a course of progressive outlay, until its
natural distribution into other countries was ef-
fected. A similar effect would follow, if indi-
viduals were in the habit of hoarding, and if, for
the purposes of war, they were obliged to give up
their hoards to the use of government. These sup-
positions, however, are quite foreign to the practice
of the times which are under consideration.
EFFECT OF WAR. 93
But although, upon the breaking out of a war,
there would not and could not be any increase in
the sum total of demand (the quantum of the cir-
culating medium remaining unaltered), there would
be a disturbance of the proportion of the prices of
commodities, relativ^ely to each other, and relatively
also to the price of labour. The articles which
might suddenly be the objects of government de-
mand would rise ; but, on the other hand, those
articles which would, but for the war, have been
purchased by individuals, from the fund which is
withdrawn from them, would experience an equi-
valent fldl ; in general, on such occasions, the de-
mand by government, being sudden and on a large
scale, for commodities of which the supply has not
had time to accommodate itself to such extra de-
mand, may produce a considerable rise in the price
of such commodities ; while the corresponding ab-
straction of demand being spread over an infinitely
greater surflice, would operate in a manner that
might be hardly perceptible, but would not be the
less real on the sum of general prices.
I have assumed that the quantity of money in
circulation remains the same. If a state of war
includes the supposition of an increase in the quan-
tity of money, then indeed the case would be al-
tered. But an increase of currency for government
purposes must be either in coin, which can only be
obtained by cheapness relatively to other countries,
and consequently supposes the reverse of dearness,
which is ascribed to war ; or in paper, which in-
volves the question of depreciation, and this will
be separately considered.*
* It may be supposed that government might and did avail
itself of its credit, in order to carry on its expenditure through
that medium without requiring advances from capitalists, who
would thus have their funds at liberty for their ordinary pur-
poses ; and thus the government expenditure might constitute
an additional demand. But a slight consideration will show that
such use of its credit by government cannot furnish any per-
94 EFFECT OF WAR.
If the war supplies are raised within the year by
direct taxation, that is, by an income or property
tax, it is so perfectly clear, that whatever is ex-
pended by government must be exactly so much
abstracted from what would otherwise have been
the expenditure by individuals, and that there can
consequently be no elevation of the aggregate of
prices, whatever may be the disturbance of the
relative value of commodities and labour among
each other (the aggregate supply of these remain-
ing the same), as to appear like a truism.
But it may be a question whether the raising of
money by loan* , the interest of which only is to be
defrayed by direct taxation, might not enable go-
vernment to buy to a greater amount than would be
manent addition to the means of purchase. If Exchequer, or
Navy, or Victualling bills are issued in payment, these bills will
occupy the money of the capitalists who buy them, as much as
if the latter lent the same sum to government. Or if mere
book credit were taken by government, the parties selling on
such credit will have so much less money to go to market with.
There is no doubt that a use of credit, whether by government
or by individuals, is virtually, while in operation, equivalent, in
its effect on prices, to money ; but if its effect be to raise prices
beyond the level which they could otherwise maintain, such
effect would be felt in a depression of the exchange, and (if the
paper were inconvertible) in a rise of the Mint price of gold
above the market price, thus constituting that excess and conse-
quent depreciation of the currency, which, as connected with
general prices, forms a distinct branch of this inquiry.
* Dr. Chalmers, in his very elaborate work •' On Political Eco-
nomy, in connection with the Morals, State, and Prospects of
Society," 1832, has done me the honour of making some remarks
on this part of my argument contained in a former work of mine.
After having given it as his opinion that a government expendi-
ture defrayed wholly by taxes would not have the effect of raising
prices, except of the articles taxed, he proceeds to say, that " Mr.
Tooke has not fully adverted to the distinction, in point of effect,
between a war expenditure, that is defrayed wholly by taxes, and
a war expenditure that is defrayed partly by loans." Dr. Chal-
mers agrees with me in considering that " the money which is in
the hands of capitalists is as much spent as would be the same
money in the hands of government ; and that, therefore, when
transferred from the one to the other, there is no greater demand
EFFECT OF WAR. 95
counterbalanced by the diminished power of indi-
viduals to purchase. A moment's consideration,
however, will be sufficient to convince any one that
there can be no rise of general prices in tliis case any
more than in the former : the money advanced to
government would, but for such loan, have been laid
out equally in purchases, though probably not of the
same commodities, or would have been lent on pri-
vate securities to such persons as would have laid it
out in purchases. It is precisely of the nature of
money advanced by way of mortgage to individuals;
the lender would have, when he had advanced the
money, just so much less to lay out as the borrower
had more. It may be said that the borrower might
spend it in the maintenance of unproductive labour,
whereas the lender might otherwise have laid it out
reproductively : this might or might not be the case,
and the difference might eventually aifect the quan-
tum of production ; but we have supposed the
aggregate supply to be undiminished by war ; for
how far it may be calculated to diminish supply is
a separate question. All that is now contended
for is, that there cannot, by the mere loan to go-
vernment, be any addition to the total of demand for
commodities, whatever might be the difference in
the relative proportions of them.*
thereby created to bear on the general market, and so to raise
prices. But," he adds, " it should be considered that though
such a transference gives rise to no greater demand, it gives rise
to a less supply; and that this will raise prices just as effectu-
ally." It will be seen, however, that I have not neglected this
consideration, but have referred to it as a distinct branch of the
argument, viz. the effect of war in diminishing or obstructing
supply.
* The raising of the funds requisite for the purposes of the war,
by loan, might be supposed to have the effect of temporarily
affecting the channels of circulation. The amount advanced to
government would be, it may be thought, collected from among
large sums of monied capital, seeking investment, some of
which might have lain dormant, w^aiting to be so called forth.
And if, w hen paid into the Exchequer, or into the Bank, it were
96 EFFECT OF WAR.
In the case of indirect taxation, that is, of taxes
on commodities, whether for defraying the whole
expenditure or the mere interest of loans, the ar-
ticles immediately taxed must, as I have already
admitted, rise in price in some proportion to the
tax : but a rise in price from this cause would be
unconnected with any such increased demand af-
fecting commodities generally, as is assumed by
those who consider that the expenditure of govern,
ment forms a fresh fund, whether arising from
taxes or loans.
Viewed therefore upon general grounds, the
conclusion appears to be irresistible, that the extra
demand or consumption arising from government
expenditure cannot have the effect of raising the
aggregate of prices ; and this conclusion from ge-
neral reasoning is fully borne out by a reference to
experience of the effect of former wars upon
prices.
It is of course to be understood that articles
which are subject to a tax, such as malt, or to in-
creased charges of importation, such as colonial
and foreign produce, or to extra demand for naval
and military stores, such as saltpetre and cordage,
do not come into the comparison of general prices.
immediately distributed in payments by government, there might
be a temporary briskness of demand upon the distribution through
the minuter channels of the circulation of sums which were pre-
viously collected in masses. There does not appear to be much
ground for the supposition, that any marked effect would be pro-
duced in this way, even admitting that it were consonant to the
practice, which it is not. For, in point of fact, the payments by
government were made, not suddenly, but distributed over inter-
vals of some length. And so far from the distribution of the sums
paid into the Bank by the subscribers to the loans being imme-
diate, they would, in some instances, have been inconveniently
withheld from circulation, had it not been that the Bank, with
a view to avoid such inconvenient contraction, used to make ad-
vances to the subscribers for a limited time for the amount of
their subscriptions after the first payment.
EFFECT OF WAR. 97
With these exceptions it will appear, on reference to
former periods of our history, that there is no observ-
able coincidence of a rise of price during war, and a
fall during peace. On the contrary, it so happens
that, in the case of the agricultural produce of this
country, there was for upwards of a hundred years
previous to 1793 as low a range of prices during
periods of war as during the intervals of peace.
This has been eminently the case with respect to
wheat, as will appear by the following statement
of the Windsor prices from the Eton Tables : —
£ s. d.
1688 to 1697
10 years
5 War
- 2 2 6|
1698
1701
4.
Peace ■
■ 2 G 0
1702
1712
11
War •
"220
1713
1739
27
Peace ■
• 1 15 lOf
1740
1748
9
War .
. 1 11 6i
1749
1754
6
Peace ■
- 1 13 Hi
1755
1762
8
War ■
• 1 17 It
1763
1774
12
Peace ■
■ 2 8 11^
1775
1782
8
War
-266^
1783
1792
10
Peace •
■ 2 10 2^
A result nearly similar is observable in the price
of meat, as may be seen by reference to Sir F.
Morton Eden's work, entitled " State of the Poor,"
containing extracts from the Victualling Office
prices. See also the prices of the Greenwich and
Bethlem Hospital contracts, in the Appendix to
the several Bullion and Agricultural Reports of
the Lords and Commons, by all of whiqh it will
appear that the prices of meat and other provisions
were as low in the periods of war as in those of
peace, and in some instances lower. The Victual-
ling Office returns are the more striking, because
the demands for the navy must be supposed to be
calculated to operate in a greater degree on this
description of food than on corn.
The prices of wool would offier nearly the same
result.
Other articles might be enumerated, as affiarding
a similar conclusion.
H
98
EFFECT OF WAR.
Nor do the wages of labour appear to have been,
in general, higlier during war than in the intervals
of peace : this will appear from the following ex-
tract from the Greenwich Hospital prices in the
Appendix to the Commons' Report on the Re-
sumption of Cash Payments (page 338.).
Carpenters
Bricklayers
Masons
Plumbers
per
Day.
per
Day.
per Day.
per Day.
S.
^.
S.
rf.
s. d.
s. d.
Peace i]l^°
2
2
6
6
2
2
6
6
2 6
2 6
3 0
3 0
War i I'^^^O
^^"^ \ 1745
2
6
2
6
2 8
3 0
2
6
2
6
2 8
3 6
Peace 1750
2
6
2
6
2 8
2 6
War P"^^^
^^^ 1 1760
2
6
2
6
2 8
2 6
2
6
2
6
2 8
2 6
Peace [Hf^
2
2
6
6
2
2
4
4
2 8
2 8
3 0
3 0
War -f^^^^
^^"^ \ 1780
2
6
2
4
2 10
3 0
2
6
2
4
2 10
3 0
Peace P^^^
reace | j^qq
2
6
2
4
2 10
3 3
2
6
2
4
2 10
3 3
Here then, through the course of such a series
of years, we have surely proof sufficient that it is
not a necessary consequence of a state of war that
the prices of labour * of agricultural produce, and
* It has been contended, that the government expenditure, by
creating an extra demand for men for the army and navy, raised
the general rate of wages ; and that the rise of wages enabled
the labouring classes to expend more money on the purchase of
food and other necessaries. If the demand for men by govern-
ment was not a substitution only for the demand which would
otherwise have existed by individual employers, but constituted
a clear additio?ial demand for labour, the supply of it remaining
the same, some rise in the general price of labour would be the
consequence. It does not appear that, in the wars preceding the
last, there was any sensible increase of wages ; the probability,
therefore, is, that the employment of men by the government of
those times was merely substituted for what, but for the war,
would have been their employment for other purposes. And
the only ground for distinguishing the operation of the last war
from former wars, in that respect, is the larger numbers, rela-
EFFECT OF WAR. 99
other articles not taxed, or not the immediate
objects of war consumption, should rise ; for in fact
they were lowei', in the majority of instances, dur-
ing the periods of war, than in the intervals of
peace. That they should in some have been lower
in war than in peace might, perhaps, to a certain
extent, have been owing to a disturbance of the
channels of circulation, and to an increase in the
functions of money, while the principles and prac-
tice of banking and credit were so imperfectly
understood. At the same time, there can be no
doubt that the greater cheapness of the periods of
war must have arisen mainly from their co-inci-
dence with more favourable seasons. Be this as
it may, the flict itself of the relative cheapness of
periods of war in tlie whole term is decisive against
the effect ascribed to it, of raising the prices of
provisions, and of commodities generally, inde-
tively to the population, who were employed by government in
the last war. But, on the other hand, the vicissitudes of manu-
factures and commerce were, from the character of the last
war, more frequent than in former wars ; and, in many instances,
the government demand did little more than absorb the numbers
thus thrown out of employ. Mr. M' Culloch in the following
passage seems to consider that the demand for men by govern-
ment is a mere substituted demand : —
" It has sometimes been stated that a loan occasions, while
government is spending it, a greater demand for labour than it
would have afforded had it continued in the possession of indi-
viduals. I confess, however, that I have not been able to dis-
cover any grounds for this opinion. If the government expend
the loan in the purchase of military stores, they will not by
doing so give any greater stimulus to labour than the capital-
ists, who have made the loan, would have given had they em-
ployed it to purchase raw or manufactured goods ; and suppose
government employed it in hiring soldiers and sailors, they will
not thereby occasion a greater demand for labour than would
have been occasioned by employing it to hire common la-
bour. That there is frequently a very brisk demand for labour
during periods of war is no doubt true ; but we shall cer-
tainly find the cause of it in something else than the mere sub-
stitution of government employment for that afforded by in-
dividuals."— Principles of Political Economy, 2d edit. p. 498.
H 52
100 EFFECT OF WAR.
pendent of the degree in whicli they were taxed ;
and what, perhaps, is the most decisive consider-
ation of all against the assumption of that prepon-
derating influence, is that the period of the greatest
cheapness in the whole term of 105 years, viz. the
period between 1740 and 1748*, is precisely that
of an uninterrupted and very large war expendi-
ture, defrayed chiefly by loans. t
Section 2. — Effect of the extra Demand or Con-
sumption attributed specialli/ to the last JVar.
So far as to the presumption of the eflPect of war
generally, in raising prices : but it has been asked,
*' who, that contemplated the character of the
late war, that referred to the great military force
which was employed in Europe, and to the conse-
quent demand of all the great articles of consump-
tion, could for a moment think of comparing the
events of that war, and the state of things growing
out of it, with the events and effects of former
wars ?"t Now, the obvious answer is, that as to this
* There is in this instance a specific cause of a reduction of
the price in consequence of the war. As we had at that time a
large exportable surplus of corn, chiefly destined for France,
with which we were at that time at war, the increased freight and
insurance would, if the demand from abroad were not so urgent
as to compel the foreign buyer to pay those charges, fall on the
exporter, and consequently form a deduction from the price.
f The government expenditui'e arising from the war of that
period must be considered to have been very large, relatively to
the ordinary peace establishment, and relatively likewise to the
general level of the prices of commodities and labour. To con-
temporaries it appeared of extraordinary magnitude. Lord
Bolingbroke says, " Our parliamentary aids, from the year 1740
exclusively, to the year 174-8 inclusively, amount to 55,522,159/.
16s. 3(/. ; a sum that will appear incredible to future generations,
and is so almost to the present." — Some Reflections on llwpresent
State of the Nation, 1749, edit. 1773, vol.iv. p. 137.
:j: Lord Liverpool's Speech, 16th July, 1822.
EFFECT OF WAR. 101
particular effect of war consumption upon prices, it
is only a question of degree, whatever the difference
of the nature of the contest may have been in other
respects ; and further, that, upon the general
grounds before stated, the extra demand for such
objects by the belligerent powers must be compen-
sated, and probably more than compensated, by
corresponding privations on the part of their
subjects.
With regard to the alleged influence of war-
demand in raising the price of provisions, it must
doubtless be admitted as operating in the imme-
diate neighbourhood of large armies in a state of
active military operations ; for it is scarcely pos-
sible that the local supply can accommodate itself,
except at a great advance of price, to so sudden
and casual a source of extra demand. But apply-
ing to this country the supposition of extra demand,
arising out of a state of war, it is to be observed,
that the quantity of food required for the main-
tenance of the soldiers and sailors composing the
war establishment is not all so much beyond what
would otherwise have been consumed. The only
effectual addition of demand is for that part which
is beyond w^hat would have been the consumption
of the same individuals in their former occupa-
tions * J but from this addition, small as it must
* This additional consumption is hardlj'^ worth mentioning ;
for, take it at its utmost amount, it is a quantity quite insig-
nificant compared with the difference between a good and a bad
crop of wheat. — Suppose, for instance, that the extra con-
sumption is four bushels of wheat per head for each (an extra-
vagant supposition) of the men composing the army and navy ;
suppose these to have amounted to 300,000, there is an extra
demand for 150,000 quarters. While, between the limits of a
bad harvest like 1816, which has been computed as low as
9,000,000 quarters, and an abundant one like 1820, which
was supposed to have yielded 16,000,000, there is a difference
of supply of 7?000,000 quarters. And accordingly it is well
known, by recent experience, that the most wasteful consump-
tion produces very little impression on a superabundant crop.
H 3
10^ EFFECT OF WAR.
be, compared with the mass over which it is dis-
tributed, is to be deducted that proportion which
was suppUed from the places abroad where our
fleets and armies were occasionally stationed. Sub-
ject to these deductions, the mere extra quantity
consumed by the army and navy must, when com-
pared witli the total production, be quite insigni-
ficant, and not calculated to have any perceptible
influence on the price of the principal articles of
food.*
But, as consumption is the measure of the
extent of demand t, and as consumption has of
* The insignificance of the extra consumption or waste of
provisions by soldiers is expressly admitted by one of the ablest
advocates for the doctrine of the great influence of a government
expenditure defrayed by loans, on general prices. " That part
of the loan which is distributed in pay to the troops is mostly
expended in provisions for their maintenance. Probably a greater
quantity may be consumed by them as soldiers than if they
continued in their usual occupation : and this is much dwelt
upon by some writers as the great cause of extra consumption
during war ; but I think more importance has been attached to
this species of waste than can be justly ascribed to it.'" — Ob-
servations on the Effects produced by the Expenditure of Govern-
ment during the Restriction of Cash Payments, by William Blake,
Esq. F.K.S. page 69.
-j- This is the sense in which Mr. Ricardo uses the word de-
mand, and he expressly objects to admit the use of the term when
applied to a rise in the price of a commodity from an alteration
in the value of money. " The demand for a commodity cannot
be said to increase, if no additional quantity of it be purchased
or consumed ; and yet under such circumstances its money value
may rise. Thus, if the value of money were to fall, the price of
every commodity would rise, for each of the competitors would
be willing to give more money than before on its purchase ; but
when its price rose 10 or 20 per cent., if no more were bought
than before, it would not, I apprehend, be admissible to say,
that the variation in the price of the commodity was caused by
the increased demand for it." — Principles of Political Eco-
nomy and Taxation, 3d edition, page 46l.
There is another sense in which the word demand is fre-
quently used, which is, in my opinion, inadmissible in a dis-
cussion of this kind ; and that is, where it is applied to signify
the increased eagerness or competition of buyers, and consequent
EFFECT OF WAR. 103
late been considerably greater, and has increased
at a more rapid rate than at any period of the war,
it is incumbent on those who ascribe all the pheno-
mena of high prices of provisions to war-demand,
to show why the smaller consumption during the
war should be the cause of a rise of prices, while
the greatly increased consumption since the peace
should have been attended by a fall of prices.
Considering the progressive increase of population,
with the rapid improvement of our manufactures,
which was going on down to the breaking out of
the war, there is every reason to believe that, but
for the war, there would have been a still greater
demand for food and other necessaries than ac-
tually occurred ; and that consequently, supposing
advance of price, occasioned by the scarcity of any particular
commodity, or, in other words, by an under supply of it relatively
to the average rate of consumption.
The object of the present discussion is to determine whether
the high prices during the war were occasioned by an extra
consumption arising out of the war, that is, by a consumption
beyond the average rate at which it was proceeding, inde-
pendent of the war, or by an under-supply, compared with that
average rate; it is, therefore, of the greatest practical importance
so to confine the use of the term, as to preserve the consideration
of the alternative of these two causes, or of the proportion in
which each operated, perfectly distinct. The advocates of the
doctrine of war-demand have not attended to this distinction; and
to the neglect of it may be traced a good deal of the confusion and
looseness of reasoning which pei'vades their arguments in sup-
port of that doctrine. If, in their use of the term, they actually
mean an under-supply, relatively to what had been, independent
of the war, the average rate of consumption, there is no difference
between us, as it will be seen that I admit the influence of the
late war in raising prices, by increasing the cost of production, and
by obstructing and diminishing supply. But it is evident from
the general tenor of their reasoning, however loosely expressed,
that they do not so understand the term, and that they, in fact,
use it synonymously with consumption ; for they constantly
refer to the war expenditure as having afforded the means of an
extra consumption. It is in this sense, therefore, that I under-
stand and use the term, in its application to the question now
under discussion.
H 4
104 EFFECT OF WAR.
the scarcity arising from the seasons, and the ob-
structions to importation, to have been the same
in peace as in war, we should have had prices full
as high, if not higher, less only the difference be-
tween paper and gold.
There are particular articles of which the demand
for naval and military purposes forms so large a
proportion to the total supply, that no diminution
of consumption by individuals can keep pace with
the immediate increase of demand by government;
and, consequently, the breaking out of a war tends
to raise the price of such articles to a great rela-
tive height ; but, even of such articles, if the
consumption were not on a progressive scale of
increase so rapid that the supply, with all the en-
couragement of a relatively high price, could not
keep pace with the demand, the tendency is (sup-
posing no impediment, natural or artificial, to
production or importation) to occasion such an
increase of quantity, as to reduce the price to
nearly the same level as that from which it had ad-
vanced. And accordingly it will be observed, by
reference to the table of prices, that saltpetre,
hemp, iron, &c., after advancing very considerably
under the influence of a greatly extended demand
for military and naval purposes, tended downwards
again whenever that demand was not progressively
and rapidly increasing. Any fluctuation indepen-
dent of variations in the extent of government
demand, may be clearly traced to the greater or
Jess obstructions to supply.
EFFECT OF AVAR. 105
Section 3. — On the Effects of the Monopoly of
Trade enjoyed hy this Country dui'ing the last
War.
It has been contended that, admitting no influence
by war-demand upon prices, except of articles that
are used as naval and military stores, there was a
considerable effect produced on general prices by
the monopoly which the war, as a consequence of
our ascendency at sea, and of our exclusive pos-
session of the East and West Indies, conferred on
the trade of this country. As instances of the
extent of the monopoly of trade which we thus
enjoyed, we are referred to the number of British
vessels, which were progressively increasing (and
employed at advanced freights) with the continu-
ance of the war ; to the crowded state of the river
and of the docks ; to the consequently full employ-
ment of the various branches of industry con-
nected with the building, repairing, and outfit of
ships in the port of London, and in many of the
outports ; and, in short, to all the signs of great
commercial activity.
A part of this description is true. Never before
was the shipping of this country employed at
higher freights ; and scarcely a ship belonging to
any other nation could sail without a licence from
the government of this country. The whole of
the exportable produce of the East and West
Indies, and of a great part of South America,
came to our ports ; and no part of the continent of
Europe could obtain a supply of coffee, sugar,
and other colonial articles, or of the raw materials
of some of their manufactures, except from this
country. So far we may be said to have enjoyed
the monopoly of trade ; but the effects of this
species of monopoly, in its supposed extension of
106 EFFECT OF WAR.
our shipping and foreign commerce, have been
o'reatlv mistaken and overrated.
On a reference to the parhamentary returns, of
tlie tonnage of British shipping, it will be seen
that the rate of increase of it during the war was
less than it had been during the immediately pre-
ceding years of peace, or than it has been since
the termination of the war.
From the amount, however, of the tonnage re-
gistered during the war, ought to be deducted the
ships which were engaged as transports, and which
could not therefore be considered as forming a
part of our mercantile marine. The sliipping
engaged as transports amounted to no less, on an
average of the latter years of the war, than about
700 sail, registering nearly 200,000 tons ; which,
deducted from the total amount of registered ton-
nage, leaves a greatly reduced quantity of shipping
appUcable to the purposes of trade during the war,
compared with the subsequent years of peace. It
is to be observ^ed, too, that this smaller amount of
shipping during the war was, in consequence of
the detention of convoys — circuitous voyages, to
elude the anti-commercial decrees of the enemy —
occasional embargoes, and other causes of delay
even in our own or friendly ports — incapable of
carrying on nearly so much trade then, as it would
at present, more especially since the introduction
of steam navigation. The difference hence aris-
ing, in the number of voyages performed by the
same ship in a given time, will account in some
degree for the different proportion of the tonnage
cleared outwards, to the amount of registered
tonnage at the several periods. The same cir-
cumstance, combined with the advanced cost of
building materials and of stores, will account for the
high freights which prevailed during the war.
It may be said that this reduced employment of
British shipping, for commercial purposes, was
EFFECT OF WAR. 107
compensated by a greater employment of foreign
sliips during the war. True ; but does not this
circumstance militate with the received ideas of
the nature of our boasted monopoly of trade ?
With regard to the crowded state of the river and of
the docks during the war, it is sufficient to remark as
a matter of notoriety, that the resort of shipping to
the port of London has been much greater since the
peace. And if the building of ships in the river has
declined, it is because, in consequence of the greater
expenses attending the river yards, a large proportion
of that branch of business is transferred to the out-
ports, and not because the annual amount of ship-
building has diminished during the peace, on a
comparison with the average of the war, as must
be evident from the statements of the relative
amount of tonnage at the several periods. The
most rapid increase of ship-building, however, is
that which has been going on in British America,
in consequence of the great cheapness of the ma-
terials in that part of the world.*
But what must be conclusive on this and all
minor points referred to, in proof of the supposed
effects of our monopoly of trade by the w^ar, is
that the aggregate amount of our foreign trade,
which can alone be in question as affected by the
monopoly, was not nearly so great during the war
as it has been since the peace ; and that the rate
of increase was as great in the peace preceding
1793, as in the succeeding interval of war.
One of the effects of our monopoly of trade was an
increase in the exports of foreign and colonial pro-
* Ships built in that quarter are, as may easily be supposed,
from the nature of the timber, less durable, and of an inferior
description in every other respect to those built in this country.
The regulation of the timber duties, acting as a premium for
dry rot, and yielding in impolicy and injustice to our corn laws
only, is calculated greatly to increase the proportion of that in-
ferior, and in every way objectionable, class of shipping.
lOS EFFECT OF WAR.
diice,the amountof which must previously have swel-
led the imports in a corresponding degree. In the
interval, however, between 1807 and 1814, there
was no corresponding export of the colonial pro-
duce compulsorily brought hither ; as it was only in
1814 that an adequate vent could be found, on the
opening of the ports of the Continent by the peace,
for the accumulation of sugar, coffee, &;c. that had
taken place in the preceding five years. The
value of the colonial produce so accumulated could
be little short of fifteen milhons sterling.
But, grantingtheutmostthat ever has been claimed
(upon very insufficient grounds) for the effects of the
monopoly arising out of the war, in extending the
shipping and trade of this country, it still remains to
connect the description of monopoly with the high
prices ascribed to it. Now it so happens, that not
an article which was the subject of monopoly was,
as far as I am aware, at a higher price in this coun-
try than it would have been under the most free
competition. While that monopoly was most
strict, viz. in 1811 and 1812, prices of sugar,
coffee, dye-woods, spices, and some descriptions of
manufacture, which were the objects of our ex-
clusive trade, were precisely those which, if a de-
duction be made for the difference between paper
and gold, were more depressed than they ever
were before or have been since. And it was only
in the almost certain prospect of peace ^ and con-
sequently of the near termination of the monopoly ■>
that the prices of those commodities experienced
any decided advance, viz. in 1813 and 1814.
Dr. Johnson defines the word " Monopoly" as
" the exclusive privilege of selling :" but, if the
thing to be sold exists, and is offered for sale in as
unlimited a quantity as it would have been without
that privilege, what is the use of it to the party
invested with it ? If, when the French and Dutch
colonies in the East and West Indies were ceded
EFFECT OF WAR. 109
to this country, their produce had been suppressed
or destroyed, and their cultivation prohibited, then
indeed there would have been something sub-
stantial in our monopoly, as far at least as related
to price ; and the planters, or the proprietors of
the produce of our old colonies, would have de-
rived from that circumstance a decided benefit.
Instead of which, by a large outlay of British ca-
pital, the French West Indian islands, and the
Dutch settlements of Demerara and Surinam in
the West, and Java in the East, were rendered more
productive than they ever before had been. The
collective and increased produce from all these
sources, when poured into this country, while the
export to the Continent was restricted, occasioned
the real depression attending a glut ; the very op-
posite state to that which is commonly supposed
to be the consequence of a monopoly. The very
high prices of colonial produce in 1813 and 1814
were, as I have already shown, in great part the
result of ill-judged speculations on the prospect of
peace ; and those prices were not realised by the
exporters in the eventual returns ; but even sup-
posing them to have been realised, they were so
transitory, as not to afford a compensation for the
long previous depression ; and they cannot at
any rate be considered as the result of monopoly
arising out of the war, seeing that they were only the
consequence of the opening of the new markets by
a peace.
Section 4. — Effects of the Stimulus or Excite-
ment supposed to have been occasioned hy the
Government Expenditure during the last War.
The advocates of the theory which accounts for
the high prices observable during the late war, by
110 EFFECT OF WAR.
the excitement supposed to arise from the profuse
government expenditure, assume implictly that
the operation of that cause was distincitly marked
by an unusually rapid increase of population*, of
* " These peculiarities (that is, of the late war) were the un-
iisually rapid increase of the pojmlation," &c. — Quarterly Review,
No. 57. p. 222.
" It may still most safely be said, that in no twenty-two years
of our history, of tvhich tve have authentic accounts, has there ever
been so rapid an increase of production and consumption, both in
respect of quantity and value, as in the twenty -two years ending
with 1814." — Ibid. p. 229.
" The population increased with extraordinary rapidity, which
necessarily implies such a rise in the money price of labour, as,
combined with more general employment, and other advantages
in the purchase of clothing and foreign commodities, would enable
the labouring classes to bring up larger families than before." —
Ibid. p. 233.
" Examine the evidence of Alderman Rothwell, Mr. Rous, and
various other witnesses, who all agree that during the tvar there
were both greater production and greater consumption.''^ — Ob-
servations on the Effects of the Expenditure of Government,
p. 67.
" There cannot be a doubt that during the war more produce
was raised, and more ivorh doner — Ibid. p. 72.
" It is to be observed, too, that though in the first instance the
demand might be for the materials of war, it tvould gradually ex-
tend to almost every commodity ordinarily consumed by man." —
Ibid. p. 76.
" The low prices ( 1822) are not confined to corn alone: it is
well known that manufactures are less in quantity, and less in
price also." — Ibid. p. 93.
" The exciiement was not confined to manufactures. It ex-
tended to the producers of the raw materials in every branch of
employment : the mines of copper, lead, tin, iron, coals, were all
in activity." — Ibid. p. 89.
" It appears to me, that in whatever degree minor circum-
stances may have co-operated, the great and mighty source of the
distresses felt by all classes of producers has been the transition
that took place at the termination of the war ; not the transition
from war to peace, in the usual acceptation of those terms ; not
the transition that arises iiom the diversion of capital from one
employment to another employment ; not the transition from the
waste occasioned by the extra consumption of troops, either at
home or engaged in actual warfare ; but the transition from an
immense, unremitting, protracted, effectual demand for almost
every article of consumption to a comparative cessation of that
demand." — Ibid. p. 88.
EFFECT OF WAR. Ill
production, and consumption ; and that the trans-
ition from war to peace occasioned tlie fall of
prices, not by an increased supply and diminished
cost of production since the peace, relatively to the
same or an increased rate of consumption, but
but by a diminution of demand or consumption,
relatively to the same or a diminished extent of
supply.
Some distinguished writers, too, have supposed
that the greater part of the period of the war was
marked by an active and flourishing state of our ma-
nufactures, and that this was a cause of an increased
demand for, and price oi", agricultural produce.
Thus, in the article before quoted of the Quar-
terly Review, No. 57., ascribed to the pen of an
eminent writer, is the following passage: — " It is
undeniable, that during the greater part of that
period (from 1793 to 1814) the trade of the
country was in a state of unexampled prosperity."
And Sir Edward West, in his very able treatise
on the price of corn and the wages of labour,
builds the greater part of his theory on this found-
ation.
It may be observed, however, that the principal
arguments in favour of this theory were brought
forward in publications and speeches of some years
back, when the transition from war to peace was
comparatively recent, and when many otherwise
well informed persons entertained the belief that
there was a retarded rate of population, and less con-
sumed, and less produced, and less trade, after the
peace, than there had been during the war. The as-
sumption to this effect is essential to the theory of
the stimulus of war-demand ; the stimulus being
"distinctly inferred from the assumed increase of
population, production, and consumption during
the war, as compared with the period which had
elapsed after the peace ; and if the facts tallied with
the theory, the conclusion would be inevitable.
11^ EFFECT OF WAR,
that the state of war was more favourable than the
state of peace to the progress of population and
wealth. A hypothesis so utterly irreconcileable
with any reasoning upon the general effects of
war, or with any experience of the effects of
former wars, might naturally raise doubts, whether
it was possible that it could be sustained by facts.
But whatever question there might be when those
theories were broached, and in some degree of
vogue, the statistical information since collected,
has proved incontestibly, that there is not the
shadow of a foundation in fact, for the assumptions
on which the theory proceeds. To enter into a
detailed proof to this effect would be at present
a work of superogation, and would needlessly swell
this branch of the subject to a disproportionate
extent ; inasmuch as an easy reference may be
had to indisputable evidence* of the progress of
population, production, and consumption, by which
it appears that these were in a greatly accelerated
ratio from 1814 to the present time, as compared
with the long interval of war.
If, then, an increased rate of production and con-
sumption be going on at the end of two and twenty
years of peace, such an effect must be referred to some
other cause than the previous war expenditure ;
and some cause must be found for the fall of prices,
other than a supposed diminution of demand from
the cessation of that expenditure. What the cause
or causes of the great variation of prices, beyond
the difference between paper and gold, may have
been, is what will be matter of further examin-
ation. In the mean time we may safely dismiss
a hypothesis, which proceeds on the assumption
* See Tables of Revenue, Population, &c. from the statistical
department of the Board of Trade, compiled under the super-
intendence of Mr. Porter ; Statistical Account of the British Em-
pire, by J. R, M'Culloch, Esq. ; Progress of the Nation from the
l)eginning of the 19th century to the present time, 1836, by G.
R. Porter, Esq.
EFFECT OF WAR. 113
of facts which never had any existence, which
overlooks the most important of the facts that did
occur, and is utterly irreconcil cable with any ra-
tional or consistent explanation of the actual phe-
nomena.
The only reason, indeed, for having entered
into this examination, brief as it is, of the doc-
trine of the stimulus of war demand is, that the
arguments in support of it have been advanced by
very distinguished authorities ; and that although
the grounds on which that doctrine has been
founded fail in every part^ there is still a vague
but strong impression in favour of it, by persons
who, seeing the extravagance of the ultra cur-
rency doctrine, are not aware of any alternative
but that of the hypothesis of increased consump-
tion, to account for the high prices which prevailed
during the w^ar.
114 EFFECT OF WAR.
CHAP. VII.
EFFECT OF WAR, AS OBSTRUCTING SUPPLY, AND
INCREASING THE COST OF PRODUCTION.
Enough has been said to prove that war cannot
operate in raising general prices through the me-
dium of increased demand ; and that there is no
sufficient ground for ascribing any effect in raising
general prices to the monopoly of trade, or to the
increased excitement and activity which charac-
terized the last war.
The remaining question is, what effects are to
be ascribed to war as regards supply ? And the
answer may be, in general terms, that it is the
tendency of war to diminish supply.
The mode in which war may be calculated to
operate to this effect is, 1st, by a diminution of re-
production, and 2dly, by increased cost of pro-
duction, and by impediments to commercial com-
munication.
It will be readily admitted, that the immediate
and obvious tendency of a state of war is to ab-
stract a portion of the capital and labour, which
would otherwise have been employed in reproduc-
tion ; and if, from the course of military operations,
or from arbitrary government exactions, an appre-
hension should be superadded of insecurity of
property, there will be a further cause for dimi-
nished production ; so that dearth and impoverish-
ment are likely to be the consequences of a state
of war in a country thus situated. It is probable
that circumstances of this knid operated in dimi-
nishing and deteriorating the cultivation among
some of the states of the continent of Europe, in
EFFECT OF WAR. 115
different periods of the war. In the early part of
the war, the extensive miUtary operations were
calculated to diminish the produce of the Nether-
lands, Germany, and Italy ; and, at the same
time, the political convulsions attending the re-
volutionary period might affect the extent and
quality of the cultivation of the land in France. In
the subsequent periods of the war the course of
military operations can hardly have failed to di-
minish the produce of Poland, Prussia, Saxony,
and Russia, as likewise of Spain, Portugal, and
Italy. And while causes like these were, perhaps,
operating in a diminished reproduction in some of
the countries alluded to, there were circumstances
arising out of the war, which, beyond all question,
added greatly to the cost of production in this
country ; these were —
1. The increased rate of interest of money,
which, more especially as regarded all outlay as
fixed capital, formed an important element in the
calculation of the price at which reproduction could
be continued, or a new production afforded.
2. The increased rates of freight and insurance,
which applied to the whole period of the war, but
which in the last six years of it amounted (as will
be seen when the period comes under consider-
ation) to an enormous charge on all importations
from the continent of Europe. And, although the
greatest charge under this head applied to our
foreign trade, there was also a great increase of
freight and insurance attaching to our coasting
trade, forming no inconsiderable item in the cost
of all commodities, the more bulky ones especially,
such as corn, coals, building materials, &c. con-
veyed coast-wise.
On the other hand, there may be, coincidently
with a state of war in any particular country, cir-
cumstances arising from other causes calculated to
I 2
116 EFFECT OF WAR.
counterbalance, and even to outweigh, the tend-
ency in question : —
1. Increased activity, industry, and intelhgence,
in the mass of the population, so that the portion
remaining, after the abstraction of labourers for
the purposes of war, may be able and willing to
produce as much as, or even more than, was pre-
viously produced.
2. Increased disposition on the part of indivi-
duals to accumulate capital, so as to compensate
for the war expenditure, without any diminution of
the funds applicable to reproduction.
3. Improvements in agriculture and machinery,
tending to increase reproduction with the same or
less capital and labour.
4. Greater security of property relatively to
other countries, thus inducing an influx of capital
from abroad.
All these circumstances concurred in this coun-
try, during the whole of the last war, and the
consequence was an increase of production and po-
pulation in spite of the opposite tendency arising out
of a state of war.
The effects, however, of the preponderating
tendency of circumstances favourable to repro-
duction, as far as relates to agriculture, were re-
pressed, or, at least, prevented from receiving their
full development, by a course of seasons which
were, as will be seen, more than usually unpropi-
tious.
Although the war cannot be said to have oper-
ated upon the supply of agricultural produce of
our own growtli and of other native commodities,
sufficiently to outweigh the circumstances favour-
able to reproduction, it operated most powerfully
in increasing the cost of production, and in ob-
structing the supply of such commodities as we
stood in need of from abroad. It is therefore to
war chiefly as affecting the cost of production and
EFFECT OF WAR. 117
diminishing the supply, by obstructions to import-
ation, at a time when (as it will appear hereafter),
by a succession of unfavourable seasons, our own
produce became inadequate to the average con-
sumption, that any considerable proportion of the
range of high prices is to be attributed. It is, in
fact, only with reference to the nature and degree
of the impediments to commercial communica-
tions, tliat the last war, as fur as relates to prices,
is to be distinguished from former wars — coincid-
ing as it did with a succession of seasons which
made us dependent on other countries for an ade-
quate supply of food.
Gigantic and terrific as that contest was, of
which it has been truly said, tliat '* compared with
that crisis, there was nothing similar, unless it
were that sera at which the irruption of the Bar-
barians subverted the Roman empire," the effect
of it upon prices would have been very different,
if, allowing the same scale of military and naval
operations, and consequently of war expenditure,
it had been divested of its anti-commercial charac-
ter ; or if, possessing its anti-commercial charac-
ter, it liad not occurred contemporaneously with
years of scarcity in this country, approaching in
some instances to famine.
But the extraordinary nature of the contest should
be more especially borne in mind, as a caution against
drawing any inference from average prices during
last war. The prices were regulated by the increase,
whicli was enormous, of the cost of production
arising from the obstructions to commercial inter-
course, which were peculiar to the last war, and
not, in all human probability, likely ever again to
occur. To compare, therefore, the average prices
of the last war with those of any preceding or
succeeding period, is perfectly illusory for the
purposes for which they have usuall}' been brought
forward.
I 3
PART III.
ON THE CURRENCY.
CHAPTER I.
GENERAL VIEW OF THE SUBJECT.
At the time when the paper system was at its
height, when there was the greatest cUfFerence be-
tween paper and gold, it was confidently main-
tained by the adv^ocates of that system (and these
then included not only the government, but the
great majority of persons, and more especially of
the mercantile class, who took part in the discus-
sions on the subject), that it was not the paper
that was depreciated by abundance, but the gold
that had become scarce, and consequently that no
part of the advance of the price of commodities
was attributable to the Bank restriction. That
doctrine seems now to be generally abandoned,
and to have been replaced by one of an exactly
opposite description. An opinion has since arisen
and become almost universally prevalent, that a
depreciation of the currency was caused by the
Bank restriction, not merely to the degree indi-
cated by the rise of gold above the Mint price,
but to a much greater, and almost indefinite extent;
and that the resumption of cash payments caused
an increase of the value of the currency greatly
beyond the difference between paper and gold.
THE CURRENCY. 119
So much of the discussions, which have arisen
out of these opposing views, has turned on the
word depreciation : it has been used in senses so
various, in some being a matter of mere definition,
but in no agreed acceptation ; in others, involv-
ing facts, or, rather, disputed assumptions of facts,
leading to the most discordant conchisions, that it
is impossible to advance a step, having for its
object an explanation of the phenomena of prices
during the period under consideration, without
feeling the necessity of attempting to clear the
ground of this difficulty, which presents itself i/i
limine ; and the follow^ing explanations are offered
accordingly : —
Depreciation of mone^, in its most extensive
sense, is to be considered as signifying a dimi-
nished ^•alue, from increased quantity of money
indicated by, and commensurate with, a general rise
in the prices of commodities and labour. The term
has not unfrequently been used to designate a rise
of prices of some of the leading articles of con-
sumption, without reference to the cause of the
rise. But this use of it is evidently incorrect, and
at any rate is inconveniently and unnecessarily
ambiguous.
Depreciation, or diminished value of money, is,
for the purposes, at least, of the present inquiry,
to be understood as signifying an increased price
of all objects measured in money, the alteration of
price being assumed to have originated in an in-
crease of the quantity of money, and to be confined
to an alteration, exclusively on the side of the
money ; while the cost of production, and the
supply relatively to the rate of consumption of
commodities, are considered to be unaltered.
Depreciation of money may be either general,
as applying to the world at large, or local, as
applying to a particular country or state. When
I 4
120 THE CURRENCY.
applied to the world at large, it is synonymous
with a diminished value of gold and silver among
all countries, which are in communication by inter-
national exchanges. This is the sense in w^hich
it has been used by the various authors, who have
treated distinctly of the value of money, without
reference to local currencies ; and when it is said,
that since the discovery of the American mines,
the value of money has been diminished to one
fourth, or one sixth ; or, in other words, that prices
have been raised by that event fourfold, or sixfold,
it is meant that the rise of bullion prices to that
extent has been general throughout the commer-
cial world, according to certain laws, by which
the distribution of the precious metals among dif-
ferent countries is regulated.
When applied to local currencies, the term de-
preciation of money has been used indiscrimin-
ately to signify a rise of prices, whether caused
by a diminished value of the precious metals, or
by a degradation of the standard, or by an excessive
issue of paper.
If the value of a local currency is diminished
by the same general causes only, which operate
upon the value of money in the commercial world,
it is hardly consistent with the correct use of
language ; and at any rate it is inconvenient to apply
to such diminished value the term depreciation of
the currency.
Depreciation of the currency, as I conceive,
must be, in strictness, understood to mean that
«tate of it in which the coin is of less value in the
market than, by the mint regulations, it purports to
be, or in which the paper, if compulsorily current,
is of less value than the coin in which it promises
to be payable.
A debased coinage, or one subject to a seignor-
age, if not accompanied by a principle of limit-
ation as to the total amount of money in circulation,
THE CURRENCY. 121
will naturally not be of the same value in exchange,
as if the coin were perfect, or if a principle of
limitation were strictly enforced and maintained*;
* As the principle of limitation here alluded to, through
which alone a selgnorage can be compatible with the main-
tenance of the full nominal value of the coin to which it is ap-
plied, may not be quite familiar to all my readers, I subjoin a
short explanation of It from a paper which I delivered In to
the Lords' Committee on the resumption of cash payments in
1819. (See Appendix to the Report, p. 181.)
" Selgnorage Is synonymous with debasement, unless con-
nected with a principle of limitation.
" The rationale of this principle may be thus illustrated.
Suppose the circulation of the whole countVy to be confined to
gold, and to consist of twenty millions of sovereigns of the
present weight and standard ; If, by some sudden process,
each piece were reduced by one twentieth, or five per cent.,
but the whole number of pieces strictly confined to the same
amount of twenty millions ; then, other circumstances being the
same, the relation of commodities, <S:c., to the numerical amount
of coin being undisturbed, there would not, it is evident, be
any disturbance of prices ; and if gold bullion in the market
was previously at 3l. lis. lO^d. per ounce, it would, other
things remaining the same, continue at that price ; or, in other
words, 46/. 14s. 6d. in gold coin, weighing nineteen-twentleths
of a pound, would purchase in the market a whole pound of
uncoined gold of the same standard.
" But if the quantity of gold thus abstracted from each piece
were coined into one million of additional pieces, and reissued
into circulation, the twenty-one millions would then exchange
for no more than the former twenty millions ; all commodities
would rise 5 per cent., and among them gold bullion, which
would then be at 4/. \s. 9\d. ; or. In other words, 46/. 14.9. Qd.
in coin would only purchase nineteen-twentleths of a pound of
uncoined gold.
" This is the keystone to all reasoning on the subject of cur-
rency, and the application of It is clear enough as to the power
of a state, by the monopoly of issue, to raise the nominal, com-
pared with the intrinsic, value of the coin in a currency wholly
metallic. The only limit to the extent of this power is the in-
ducement to counterfeit on the genuine metal ; and this limit I
am Inclined to think Is much wider tlian is commonly imagined.
" But there is a difficulty in the application of the limiting
principle to a selgnorage on the coin, as In the case of our gold
coin, where it circulates along with paper ; for, as has been
justly remarked by Mr. Ilicardo, on the supposition which he
makes of a selgnorage of 5 per cent, on the gold coin, the cur-
122 THE CURRENCY.
and the difference will be marked by an excess of
the market price above the mint price of the metals.
With regard to the term depreciation, as ap-
plied to paper, if bank promissory notes be issued
in a deteriorated state of the coinage, and be
really convertible on demand into the coin in
which they purport to be payable, they cannot be
said to be depreciated : the actual payment is
equal to the promise to pay ; the fault is in the
coinage, not in the paper. There may, therefore,
be a depreciation of tlie currency in which paper
circulates, and an increase of the market price
above the mint price of the metals, without any
depreciation chargeable to the paper : such was
the state of the currency in this country imme-
diately previous to the great reformation of the
gold coin in 1773.
But if the metallic part of the currency be
really deteriorated, and if the paper, which pur-
ports to be payable on demand in that coin, be
not so in fact, and cannot command as much gold
or other commodities in this market and in foreign
markets, as the same nominal amount in coin
would do, the paper is depreciated, and the mea-
sure of its depreciation is the difference of the
quantity of gold which the coin and the paper can
respectively purchase.
In a perfect state of the coin, provided the ex-
portation and melting of it be allowed, there cannot,
it is evident, be an excess in the market price above
the mint price of the metal, as measured in coin. It
is possible, in such a case, that the coin may, even
rency, by an abundant issue of bank notes, might be depreciated
5 per cent., before it would be the interest of the holder to de-
mand coin for the purpose of melting it into bullion. A remedy
is suggested by him, viz. that the holders of bank notes might
demand bullion and not coin in exchange for them, at the mint
price of 3/. 175. lOhdr
THE CUIIRENCY. 123
without a seignorage, be more valuable than bullion ;
but it is hardly conceivable that it should be less
valuable: if, therefore, in a perfect state of the coin,
there be in general circulation bank notes which,
by law or custom, pass current in all transactions ;
and if, under these circumstances, the market
price should be above the mint price of gold — the
whole of the difference would constitute the exact
measure of the depreciation of the paper.
Till, however, the act]of of 1819, the gold coin, al-
though not materially deteriorated, could not by law
be exported or melted ; if, therefore, there happened
to be an extra demand for gold, for exportation or
for consumption in domestic manufacture, the price
of bullion might rise above the mint price by the
amount of the risk of the penalty on the export or
melting ; and this difference might, for limited
periods, exist in a purely metallic currency consist-
ing, it is true of undeteriorated coin, but of coin
rendered less valuable by being divested by law of
some of the uses to which it might otherwise be
applied. This difference has been variously esti-
mated. In the treatise by Lord Liverpool " on the
Coins of the Realm," one per cent, is considered as
the measure of the risk of exporting coin. In the
evidence, however, before the Bullion Committee
of 1810, it was stated, that the difference between
the value of gold bullion that might be sworn off
for exportation, and that of the gold produced, or
supposed to be produced, from our own coin,
amounted to between Ss. and 4.9. per ounce.
As far, then, as this difference goes, an allow-
ance may be made in deduction, under the cir-
cumstances supposed, from the excess of the
market price above the mint price of gold, as a
measure of the depreciation of bank notes previous
to the passing of Peel's bill. There may, therefore,
it is evident, be cases — rare ones indeed, and to
so small an extent that they may safely be neg-
lected — in which the depreciation of paper may
124 THE CURRENCY.
not be considered as being exactly commensurate
with the excess of the market price above the mint
price of gold. And to this hmited extent is there
a difference in estimating the depreciation of bank
notes, according as the standard is assumed to
have been buUion or coin.*
According to the foregoing explanation of the
term depreciation, as applied to coin or paper, it
is to be distinguished from a diminished value of
the currency.
By alterations in the iialue of the cuiTencij are to
be understood variations of the combined value of
bullion and coin and paper, or, in other words, of
the standard as well as of the coin and paper.
For instance, if, while the market price of gold
should be 10 per cent, above the mint price, indi-
cating a depreciation of the paper, or coin, or both,
to that extent, gold, or, in other words, the stand-
ard itself, should, from a great diminution of the
produce of the mines, or from extended functions,
(as for military purposes or hoarding, or for a
circulation retarded by want of confidence and
credit, or for a very general substitution of gold
for paper,) become more valuable by 10 per
cent., then although the currency would, according
to the definition, be depreciated to that extent, i. e.
be less in price than it ought legally to be, yet,
* But it was not a difterence to this limited extent that was
involved in the controversy between the Bullion Committee of
1810 and their opponents, upon the question whether coin or
bullion should be assumed as the standard by which the value
of bank notes was to be measured. It was distinctly on the
ground, and on the ground only, that coin and not bullion was
the standard of the paper, and that bank notes were applicable
to all purposes to which coin was laivftdly applicable, that
Mr. Vansittart, in May, 1811, brought forward, and prevailed
on the House of Commons to pass, his resolution of unhappy
celebrity, declaring, "that the promissory notes of the Bank of
England had hitherto been, and are now held, in public estima-
tion to be equivalent to the legal coin of the realm, and generally
accepted as such, in all pecuniary transactions to which such
coin is lawfully applicable."
THE CURRENCY. 125
the standard itself being increased in value in the
same degree, there would be no alteration in the
value of the currenci). On the other hand, if while
paper and coin were depreciated by excess or
debasement 10 per cent, compared w^ith iheir
standard, and the standard itself g^o/^/ were, whether
from increased produce or diminished functions,
reduced in value likewise 10 per cent., I shoidd
say that the alteration in the value of the cur-
rency generally was to the extent of 20 per cent.
But if the metal of which the standard is com-
posed were assumed to be of uniform value, the
variations of the value of the currency would then,
and then only, be measured by the degree of con-
formity of the paper or coin to its standard.
Of variations in the value of the standard itself
there is no infallible criterion. Variations, therefore,
in the value of the standard, if they occur, can only
be inferred from variations of considerable extentand
duration, in the bullion prices of commodities and
labour, in cases in which these variations do not, ac-
cording to the widest induction of facts, admit of
being accounted for, by circumstances which may
have influenced the prices of the commodities and
labour in question, independently of the supposi-
tion of any alteration in the quantity or rate of
circulation of the currency.*
* These definitions correspond with the sense in which Mr.
Ricardo has used the terms " depreciation of the currency," and
" value of the currency ; " and he fully and accurately defined and
illustrated his meaning, in his speech of the 12th June, 1822, on
a motion of Mr. Western. The following is an extract from a
printed copy of that speech : —
" Now the whole difficulty, in reference to this part of his
opinions, was as to the meaning of the word ' depreciation : ' it
was quite evident that his opponents and himself attached a dif-
ferent sense to that word. Suppose the only currency in the
country was a metallic one, and that, by clipping, it had lost 10
percent, of its weight ; suppose, for instance, that the sovereign
only retained nine tenths of the metal which by law it should
contain, and that, in consequence, gold bullion, in such a medium ,
126 THE CURRENCY.
These definitions and the deductions from them
will, probably, by those whose opinions I am about
should rise above its mint price, would not the money of the
country be depreciated ? He was quite sure that his opponents
would admit the truth of such an inference. It was quite possible
that, notwithstanding this depreciation, some of those general
causes which operate on the value of gold bullion, such as war,
or the mines from which gold is annually supplied becoming less
productive, that gold might be so enhanced in value as to make
the clipped sovereign comparatively of greater value in the mar-
ket than it was before the reduction in its weight. Would it not
then be true that we should possess a depreciated currency,
although it should be increased in value ? The great mistake
committed on this subject was, in confounding the words ' de-
preciation,' and ' diminution in value.' With reference to the
currency, he had said, and he now repeated it, that the price of
gold was the index of the depreciation of the currency, not the in-
dex of the value of the currency, and there he had been misun-
derstood. If, for instance, the standard of the currency remained
at the same fixed value, and the coin was depreciated by clip-
ping, or if the paper money were depreciated by the increase of
its quantity 5 per cent., that fall, and no more, would constitute
the alteration in the price of commodities, as''afFected by the de-
preciation of the currency. If the metal gold (the standard)
continued of the same precise value, and it was required to re-
store the currency, depreciated 5 per cent., to par, it would be
necessary only to raise its value 5 per cent., and no greater
than that proportionate fall could take place in the price of com-
modities. In these cases he had supposed gold always to remain
at the same fixed value ; but had he ever said that there were not
many causes which might operate on the value of gold as well as
on the value of all other commodities ? No, he had not, but just
the contrary. No country that used the precious metals as a
standard was exempted from variations in the prices of commo-
dities, occasioned by a variation in the value of their standard.
To such variations we had been subject before 1797, and must
be subject to again, now that we have reverted to a metallic
standard."
On this I have further to remark, that if the currency consisted
exclusively of coin, and if that coin were reduced in value below
its legal standard, whether, by increased alloy, or diminished
weight, uncompensated by any principle of limitation of issue,
the simplest term to apply to that state would be " debasement
of the currency." All ambiguity arising from the word depre-
ciation, in a case where the value of the rnctal had risen in a de-
gree beyond the degree of debasement of the coin, would thus
be avoided. But, in the case of paper issued to such an extent as
THE CURRENCY. 127
to examine, be admitted to prove the depreciation
of the currency, during the Bank restriction, to
the extent for which I contend ; but those persons
maintain that the alterations in the vahie of our
currency, that is, in the vahie of the metals as well
as in tlie value of the paper measured by the
metals, as a consequence of the suspension of cash
payments, were greater than can be inferred by a
reference to those tests ; that those tests may
be allowed in proof of the minimum, but not
of the maximum, of its effect on the prices of corn
and other commodities. That in fact, though
other causes may have concurred in producing the
elevation of general prices in this country between
1797 and 1814, and the decline since that period;
such other causes, whether in detail or collectively,
sink into utter insignificance, compared with the
alterations in the sifstem of our currency. Now,
as in one part of that period the prices of neces-
saries, and of many other articles, advanced to the
extent of from 50 to 100 per cent, and upwards,
and have subsequently declined to, or below the
level from which they had risen ; and, as the
average excess of the market price above the mint
price of gold did not, in the first twelve years after
the suspension of cash payments, exceed about 4 per
cent., nor on the average of the succeeding hve
years about 20 per cent., we have to seek in the
onocle of operation of the Bank restriction, and in the
state of facts connected with prices of commodities,
for all the excess of the alleged effect, beyond the
mere difference between the paper and its standard.
to reduce its value, and that of the coui in which it professed to
be convertible, below the standard, the term debasement would
hardly be allowed as applicable to the currency in general : if it
were so, I should prefer that word. But, as it is, I am not aware
of any adequate substitute for the term depreciation of the cur-
rency, in the sense to which I have confined it.
128 THE CURRENCY.
CHAP. II.
ARGUMENTS OF THOSE WHO ASCRIBE A GREATER
EFFECT TO THE BANK RESTRICTION THAN THAT
INDICATED BY THE DIFFERENCE BETWEEN THE
MARKET PRICE AND THE MINT PRICE OF GOLD.
The arguments in support of the opinion that the
value of the currency was depreciated by the Bank
restriction, and enhanced by the resumption of cash
payments, in a much greater degree than that
indicated, at any time, by the difference between
paper and gold, proceed upon the following
grounds : —
1. That the banishment of the metals, gold prin-
cipally, from the circulation of this country during
the restriction, and the recall of them for the re-
sumption, affected in a considerable degree the
value of gold and silver in the commercial world,
diminishing their value during the former, and in-
creasing it in the latter period.
2. That the compulsory paper system established
by the Bank restriction, had the effect of " height-
ening " all those expedients to which a prosperous
state of society naturally gives birth, for economis-
ing the circulating medium, bringing the whole of
it into activity, and multiplying it virtually by the
substitution of credit for currency.
3. That the restriction was the cause of exces-
sive issues from the Bank, a fact which is (as-
sumed to be) hardly open to dispute, and that,
if so, it must be charged with producing that ex-
cessive issue of country paper also which was an
invariable concomitant of Bank of England paper.
THE CURRENCY. 129
4. That " the increase of prices was progressive
from the year 1797 to 1814, subject only to such
fluctuations as arise out of the nature of the re-
spective commodities ;" and " that it was not ac-
companied by a growing* difference in the value
of Bank paper and gold." " That the constant and
invariable connexion of increase of price with the
Bank restriction, is a forcible proof of such a re-
lation as that of cause and effect subsisting be-
tween the two phenomena ; " and " that the near
approach of the termination of that restj'iction has
produced a fall of prices, greatly exceeding the
difference between paper and gold ; thus still fur-
ther corroborating that connexion, and proving, al-
most demonstratively, that the prices from 1797 to
1814 were, to a certain degree, artificial ; and that
the comparison of paper with gold, during that pe-
riod, did not afford a test of the real amount of the
fall in the value of the currency."
This summary of the arguments in support of the
doctrine of the indefinite depreciation of the cur-
rency caused by the Bank restriction, is extracted
from the Quarterly Review, vol. xviii., and was re-
ferred to in a former ])ublication of mine, entitled
" Thoughts and Details on High and Low Prices,"
as the ablest and m.ost compendious exposition which
had then appeared of that doctrine. And among the
numberless publications and speeches in which the
doctrine in question has been since asserted and
maintained, there are none in which the supposed
grounds for it, untenable as I consider them to be,
are more fully and intelligibly stated. These argu-
ments, therefore, as thus set forth, it is now proposed
to examine under their several heads.
K
130
THE CURRENCY.
Section 1. — On the alleged Effect of the Bank
Hesttiction in dep7'eciating the Value of the
Precious Metals.
The only ground that is at all intelligible for
the opinion that the value of gold was depreci-
ated during and by the restriction, and increased
in value subsequently to and by the operation of
Peel's bill, is that by which it is to be inferred,
" That the banishment of the metals, gold principally, from the
circulation of this country during the restriction, and the recall
of them for the resumption, affected in a considerable degree
the value of gold and silver in the commercial world, diminish-
ing their value during the former, and increasing it in the latter
period."
Of this theory it is to be observed, in the first
place, that the cause assigned is wholly inadequate
to have produced any considerable effect on bullion
prices, supposing it to have been uncompensated
by circumstances of an opposite character; and in
the next place, that, in point of fact, circumstances
did occur of a description calculated, at least, to
balance, if not to outweigh, the alleged effect ; and
lastly, that the periods of the highest prices on the
Continent do not accord with those of the greatest
disengagement of the metals from this country, or
the periods of the lowest prices abroad, with the
greatest influx of bullion into this country.
The amount of gold coin circulating in this
country previously to 1797» has been variously es-
timated. Mr. Rose, in his speech on the bullion
question, in 1811, entered into an elaborate state-
ment, with a view to prove that the amount of
gold coin in circulation, previous to the Bank re-
striction, was at least forty millions.*
* Mr. Rose, in the speech here referred to, rested his com-
putation upon the returns of the Mint from the great recoinage
in 1773 to 1798, making an aggregate of the amount of gold
THE CURRENCY. 131
The first Lord Liverpool, in his " Treatise on the
Coins of the Reahn," stated it at thirty millions. In
the Lords* Bulhon Report, 1819, page 11., the
amount is assumed at twenty-five millions. Mr.
Whitmore (Bullion Report, 1810, ])age 120.), and
Mr. Harman (Commons' Report, 1819, page 10.),
computed that it did not exceed twenty millions in
the three years preceding the Bank restriction.
Upon this last estimate, the writer of an able ar-
ticle in the Supplement to the " Encyclopedia Bri-
tannica," under the title of" Money," remarks, that
though it is probably rather below the mark, there
are good grounds for concluding, that it is the most
accurate of any that have hitherto been framed,
and that it has come as near the truth as is perhaps
possible in such matters. Allowing, therefore, that
this last sum is a little, or only a little, underrated,
and that, consequently, the estimate in the Lords*
Report is decidedly beyond the mark, a medium
between these will leave about twenty-two millions
and a half, as the utmost probable amount of gold
coin in circulation previous to 1797*
coined of 43,355,119/. And, as he considered that there hav-
ing been in that interval no temptation to send coin out of the
kingdom, or to melt it, the price of gold never having exceeded
the Mint price in that whole period (except in a i'ew months
l^d. an ounce, in 1783), and was generally below it, the coin
in circulation might be fairly estimated at 40,000,0000/., after
making a large allowance for wear. Sec. But he evidently under-
rated the inducements to export and to melting of the coin, for
although the market price of standard gold was not, and, as the
paper was convertible and the coin perfect, could not be for any
length of time, much above the Mint price, the exchanges were,
for considerable intervals during the American war, so much
below par, and the price o'ifoi'eiffn gold so much above the Mint
price, as to induce a considerable exportation and melting
of gold, notwithstanding the penalties attached to it. And
so far from supposing that a sum of about 3^ millions would
cover both the exportation and the wear. Sec. in the long in-
terval of twenty-five years, it must obviously be much more
probable, that not much short of one half of the amount that had
been coined must have disappeared by exportation, melting, wear,
and loss.
K 2
132 THE CURRENCY.
That this estimate is not very wide of the truth,
may be concluded from a reference to the amount
of sovereigns issued by the Bank from May, 1821,
to the end of June, 1824. This comprises the in-
terval from the first issue till tlie time when the cir-
culation may be considered to have had as large
an amount of gold, less the amount of country
small notes, as it had before 1797- The amount
issued witliin the above interval was,
In sovereigns and half-sovereigns, 16,671,030/.
To this add country small notes,
a large estimate _ . . 5,500,000
22,171,030/.
There were considerable additional issues of sove-
reigns after June, 1821 ; but, as the exchanges
then became adverse, those further issues were
probably exported, or replaced only those which
had been exported.
Assuming the amount to have been, on the
grounds stated, at the utmost 22^: millions, there
is to be deducted the quantity that was hoarded
in this country ; an amount that must have
been probably much larger than has commonly
been supposed. There was scarcely an individual
of a class above that which is limited to the means
of bare subsistence, who had not a hoard, greater
or less, of guineas that were put by as a provision
against the various contingencies whicli were con-
sidered as endangering the value of pa])er, either
in degree, as by depreciation, or totally, as by
foreign invasion or domestic convulsion. And in
proof of the existence of the practice of hoarding
to a considerable extent, it may be sufficient to refer
to the fact, that between the summer of 1815 and
that of 1817, when peace had been fully established,
and a new gold coinage was about being issued,
and when, by the notices from the Bank of partial
THE CURRENCY. 133
payments in specie, there was a near prospect of the
complete restoration of the value and security of
paper, large sums of guineas were poured into the
hands of the London bankers, by their correspond-
ents in the country, and by their customers in
town. Those sums have been variously estimated :
but, upon the whole, it is probable that an allow-
ance of from four to five millions would be rather
within than beyond the mark.
The following quotation from the evidence of
Mr. Stuckey, an eminent banker in Somersetshire,
given before the Lords* Committee of 1819, will serve
as an instance of the extent of the practice of
hoarding : —
" In 1817, we had a circulation of guineas, wliich we found
very inconvenient. It cost us near 100/. to transmit gold and sil-
ver to London in the first six months of the year 1817. People
were then in the habit of coming to our bank with guineas, re-
questing we would give our notes for them. I suppose they had
been hoarded. I brought up 1000 guineas in May, 1817, and
taking them to our London banker, they requested as a favour
I would not leave them ; they had lately sent in so many to the
Bank of England, that they did not like to trouble them any more.
Besides, the Bank only took those which were quite full weight.
The result was, that I took them to a dealer in coin, and sold
them at 31. 17s. 6d. per ounce."
Among other inducements to bring out hoards in
1816, one was, that light guineas, which had been
previously of more value than those of full weight,
from being legally saleable, were, in consequence
of the fall in the market price of gold, becoming of
less than the current value.
Mr. liuskisson expressed his opinion of the ex-
tent of the practice of hoarding, in the following-
passage of his pamphlet on the currency question,
in islo: —
" A great quantity of gold, which is now hoarded, would also
make its appearance, if guineas were restored to their use
and value as currency. In this respect, the country is in the
same situation as it was in King William's time, when our me-
tallic currency was so much depreciated. Before the determin-
ation to restore that currency to its standard, pieces of full
k3
134i THE CURRENCY.
weight were as scarce as guineas are now; but when tliat
determination was taken and carried into effect, a great quantity
of good money which had been hoarded, was brought back into
circulation."
The treasure in the coffers of the Bank during
the twelve years immediately following the re-
striction, was larger, too, than it had been on the
average of the five years preceding that measure.*
And, although guineas rarely appeared in circula-
tion, yet there were cases of payment, for which
they were reserved : Mr. Rose, in his speech on the
bullion question, in 1811, supposed although as a
high estimate, that three millions might then be
still in circulation.
From these considerations it should seem, that
a sum of from twelve to fifteen millions is an ample
allowance for the quantity of gold which went to
increase the mass of the precious metals in the
rest of the world, and which, so far as it went,
must have tended, ccptcris paribus, to diminish
their value in the rest of the world.
In estimating what effect, other things being the
same, the addition of twelve or fifteen millions to
the circulation of the rest of the commercial world
might have on general prices, or, in other words, on
the value of the precious metals, as compared with
corn and other commodities, it would be requisite
to have some idea of the total amount of gold and
silver existing in the world for the general pur-
poses of use and ornament, viz. as coin, bullion,
plate, and jewellery. By some authorities the total
amount has been computed as high as two thousand
* There cannot be a stronger ground of presumption that
the Bank had in view the eventual resumption of cash payments,
than that which is afforded by the large amount of treasure
in its coffers, on an average of the twelve years immediately
following the suspension ; for if it had not been for that view,
there could have been no possible motive on the part of tlie Di-
rectors to forego the obtaining for their proprietors the interest
which would be made, or saved, by selling, and, at any rate, by
not buying bullion.
THE CURRENCY. 135
millions. But Mr. Jacob, in his valuable work
" On the Production and Consumption of the
Precious Metals," computes, vol. ii. p. 347., the
existing amount of coined and uncoined gold
and silver in Europe and America, and Asia,
about twelve hundred millions. And, as in his
computations, he appears to be disposed in no
case to overrate the production, wliile on every
occasion he gives the utmost weight to the causes
of increased consumption, that amount may safely
be assumed as the lowest upon which the quantity
disengaged, and resumed in consequence of the
restriction and resumption of casli payments can
have operated. Tliere is little hazard, therefore,
in assuming, that the addition or abstraction of
from twelve to fifteen millions, other tilings re-
maining the same, would make Uttle more than
1 per cent., and certainly not 2 per cent., difference
in their value.
In this view of the utter inadequateness of the
quantity of gold disengaged from, and eventually
restored into, the circulation of this country,
to have produced any sensible impression on the
value of bulHon, I have the concurrence of very
eminent authorities. Mr. Malthus, in a pub-
lication entitled " On the Measure of Value,'*
■18'23, when referring to the fall in the price of
labour, as indicating a greater difference than that
between paper and gold, adds,
" This difference, of course, includes the effects which have
been attributed to the purchases of the Bank, with a view
to a return to cash payments, the amount of which separately
it is scarcely possible to calculate ; but I am inclined to agree
with Mr. Tooke in thinking that it is not above one or two per
cent."
Mr. Senior, in a very luminous exposition of
an ingenious theory, the object of which is to
account for some remarkable differences in the
quantity of silver awarded as the price of labour
in different countries, has the following passage : —
K 4
136 THE CURRENCY.
" It is a lamentable proof of the public ignorance on these sub-
jects, that the general fall of prices, or, in other words, the in-
creasing difficulty of obtaining the precious metals, of which every
one is sensible should, by almost every one, be attributed to some
causes of almost ridiculous inadequacy. It has been attributed
to our return to a metallic currency, as if the subtraction of
twenty millions of sovereigns, or less than four hundred thousand
pounds troy of gold, from the ten millions of pounds troy of gold
bullion coin, and plate, supposed to be in use throughout the
world, that is, the removal of one twenty-fifth part, could sen-
sibly affect the value of gold. It has been attributed even to
the substitution of gold and silver for the three or four millions of
one-pound notes lately called in, as if the value of the two thou-
sand millions sterling of gold and silver bullion, coin and plate,
could be materially afi'ected by the subtraction of less than one
five-hundredth part of it." — On the Cost of obtaining Money.
1830. P. 21.
The arguments and authorities already adduced,
sliow how insignificant this supposed influence
must have been ; but an important fact may here
be referred to, as afibrding, by analogy, a strong
confirmation of that conclusion. The fact alluded
to, as bearing upon the question of the currency,
was first noticed, as far as I am aware, by the late
Lord King, in a publication which, at the time
when it appeared, deservedly attracted great at-
tention.
" On the supposition of the whole quantity of gold and silver
remaining the same, they must, in a certain degree, be rendered
chea}) by every increase of paper currency. But as these me-
tals are in universal request, and circulate more generally than
any other articles of commerce, the effect thus produced cannot
be partial, but must extend to all other countries ; and it will,
therefore, follow that the actual reduction in the value of gold
and silver which is produced by tlie paper circulation of any
particular country, is in the proportion of the amount of such
circulation to the whole quantity of the precious metals, appli-
cable to the purposes of coinage and commerce throughout the
world. It is probable that this ])roportion can never be very
great ; and experience seems to fhow that no considerable de-
preciation is ever produced in this manner. Previous to the
revolution in France, the currency of that extensive country
was carried on almost entirely in silver ; and the rapid emission
of assignats, which was the consequence of that event, must
liave very suddenly withdrawn a considerable quantity of that
metal from circuliition. Yet this violent operation does n">t
THE CURRENCY. 187
appear to liave produced any perceptible effect on prices, or even
on the value of silver in Europe." — Thoughts on the Bank Re-
stncliou, 180 k
The circumstance alluded to by Lord King,
namely, thc3 total absence of any observable effect
on bullion prices, by the large amount of gold and
silver displaced from circulation in France as coin
by the assignats, in the early part of the revo-
lution, appears to be quite decisive against the
hypothesis of a considerable influence on the value
of the metals, by the quantity disengaged from the
circulation of tins country. The amount of coin
circulating in France, immediately previous to the
revolution, has, by some authorities, been computed
at nearly a hundred millions sterling ; but according
to Peuchet, whose estimate appears to be formed
upon the best grounds, the amount was about
seventy-four milUons. Nearly the whole of this was
banished from circulation, when the system of terror
was at its height between I79O and 1791^. It is
probable, that some portion of the coin displaced
by the assignats, was retained in a dormant state in
France ; but there can be no doubt, that a con-
siderable proportion must have been brought away,
as being the most portable and valuable descrip-
tion of property, by the numerous emigrants from
thence to the other parts of Europe, and chiefly
to this country ; besides that, the export of coin
was a necessary effect of the great fall of the ex-
changes of France on other countries. Supposing
that only about one half of the coin was exported
from thence, it would amount to no less than about
thirty-six m.iliions of gold and silver, suddenly
added to the circulation of tiie rest of the world,
and in the first instance to that of the rest of Eu-
rope. To this vast amount of gold and silver,
in the shape of coin, must be added a great
quantity of plate belonging both to the cluirches
and to individuals, which must have found its way
138 THE CURRENCY.
out of France about tlie same period. If then,
there was no distinctly perceptible increase of
the bullion prices of commodities between 1790
and 1791s notwithstanding the addition of about
forty millions from France to the rest of Europe,
the effect of less than half tliat amount disengaged
from the circulation of this country cannot but
have been most insignificant. It must there-
fore be evident fi'om these considerations that
the utmost effect of the disengagement and re-
absorption of gold and silver, by the circulation of
this country, must have been hardly perceptible on
prices, supposing other things to have remained the
same.
But other things were ?20^the same. For while,
as a consequence of the Bank restriction, about
twelve or fifteen millions of our coin may be sup-
posed to have gone abroad, there was, in conse-
quence of the wars on the Continent, which were,
with few intervals, coincident with the period re-
ferred to, a great and unusual demand for the pre-
cious metals. The mihtary chests and the treasuries
of the great belligerent powers, whose operations
were on so vast a scale, necessarily absorbed a very
large amount of specie. And it may be a question
wliether a still larger amount was not absorbed by
the very extensive practice of hoarding which pre-
vailed among the inliabitants of those states of the
Continent which were either the seat of war, or
which had issued paper to excess. There were
likewise some periods of the war, particularly the
hiterval between 1808 and 1813, when, by the
violent anti-commercial decrees and regulations of
the French government, there was great difficulty
and danger attending the transmission of bills of
exchange, and when, in fact, commercial oper-
ations, depending on credit, were nearly suspended.
Such obstructions to circulation were equivalent
to a diminution of the quantity of money.
THE CURRENCY. 139
So striking were these circumstances, both sepa-
rately and collectively considered, that they were, by
the great majority of those who at that time took a
part in the discussions on this subject, appealed to as
very much outweighing the effect of the quantity of
gold rendered available for the purposes of the Con-
tinent, by the substitution of paper in this country.
It was, as has before been stated, the general
answer to all charges against the conduct of the
Bank, in suffering the depreciation of its notes,
tliat gold liad become scarce, and not paper over-
abundant : and it must be admitted, that there
was ground for so much of the answer as went on
a pr'nnd facie presum})tion that gold had become
somewhat scarce relatively to a former period ;
or, that supposing the precious metals to have
been otherwise of a aiven value, the obvious eflfect
of the war, and of the peculiar circumstances attend-
ing it, was to enhance their value. Accordingly,
the Bullion Report of lS10(p. ^2.), nearly at its
outset states as follows : — " It will be found by the
evidence, that the high price of gold is ascribed
by most of the witnesses entirely to an alledged
scarcity of the article, arising out of an unusual
demand for it upon the Continent of Europe.
This unusual demand for gold upon the Contin-
ent is described by some of them as being chiefly
for the use of the French armies, though increased
also by that state of alarm and failure of confi-
dence which leads to the practice of hoarding."
It seems hardly possible to resist the conclusion
that under these circumstances there must have
been a greatly increased demand for the precious
metals, and a consequently increased value of them
during the war, more tfian sufficient to compensate
for the utmost quantity spared from circulation as
coin in this country, or even for the utmost rate of
annual increase from the mines.
An important circumstance, too, may here be
140 THE CURRENCY.
noticed, as affecting the value of the precious metals
m Europe during the periods under consideration,
and that is, that whereas, previously to 1820, the
exports of the precious metals, chiefly silver, to the
East Indies and China were on a large and increas-
ing scale ; insomuch that in the three years ending
witii the season of 1819--0, the balance of import
of treasure into India, on the Company's and pri-
vate account, amounted to nearly nineteen millions
sterling; the stream had, after 1821, reversed its
course, and for some years thenceforward there was
a balance of e^\io\'i from the East into Europe.
Much stress has been laid upon the circumstance
of Russia, Austria, and the United States of Ame-
rica, having at the same time with this country
substituted a paper ibr a metallic circulation, there-
by further diminishing the value of the metals
during the war and the restriction. But it will be
found that the flicts are erroneously assumed.
Russia had established a compulsory paper cur-
rency for many years before our Bank restriction,
and the circulation of that em})ire was as fully
saturated with paper to the exclusion of the pre-
cious metals before the year 1797j ^s at any sub-
sequent period. *
Austria had but little of a pure metallic currency
remaining in 1797- And that country being often
* But not only, liowever, did Russia not add to the mass of
metals by disengagement from her circidation, but, in truth, she
absorbed a considerable amount of bullion in 1812; for the fact
is, and rather a curious one, that the value of the Russian paper
money increased coincidently with the advance into that country
of the French armies ; insomuch that the exchange for the ruble,
which, a 'tew months before, h.ad been 14f/., rose, by the time
they reached Moscow, to 'l\d. Thus gold and silver formed
the best remittance from this country to Russia, in exchange
for her produce, which was then in great demand, from the fear
that the French might cut off all further supplies : accordingly,
a good deal of specie was sent thither, and probably did not
return from thence till between ISH and 1816, when the q\-
change fell again below its former lowest level.
THE CURRENCY. 141
the seat of war, the tendency among its inhabitants
to hoard what gold and silver they could collect
beyond their immediate necessities for expenditure,
would probably more tlian compensate for the
quantity liberated by paper issues from circulation
as coin. The same remark applies to Prussia and
the minor German States.
The United States of America never till recently
possessed any large stock of the precious metals in
circulation as coin. And it was not till 1812, after
all the phenomena of high bullion prices had oc-
curred, that there was any general suspension of
payment by their banks.
It is clear, therefore, that no part of the high
bullion prices during the war and the restriction
can be accounted for by any increased quantity
of the precious metals disengaged from the circu-
lation of the countries just mentioned. If, how-
ever, there had been such increase, it might indeed
have been an accessory circumstance in producing
the depreciation of the metals which is alleged.
But if a depreciation from this cause did occur, it
has not and ouglit not to have any connexion with
tlie question, how far the Bank restriction caused
a diminution of the value of gold, or a rise of
bullion prices beyond the difference between
paper and gold in this country. As far as regards
the disengagment, if such there had been, of the
precious metals from other countries, coincidently
with our Bank restriction, there v/ould equally, to
whatever extent that cause might be supposed to
operate, have been a rise of bullion prices if the
paper of this country had continued to be con-
vertible. *
* The same observation applies to the effects of the varying
produce of the mines of gold and silver. If the increased pro-
duce of the mines, anterior to 1819, was an element in the high
range of prices, and if a diminished produce subsequently had
been one of the causes of the lov/er range, these causes of varia-
tion of bullion prices must be viewed as totally distinct from
Its THE CURRENCY.
Whenever a reference has been made to tlie
rise of bulhon prices in other countries, prior
to 1819, and to the subsequent fall, the only
answer given has been that the alterations in our
currency deranged the currencies of other coun-
tries. I3ut we have never been told in what way
our alterations produced that effect, with the single
exception of the supposed influence of the quan-
tity of gold disengaged from this country on the
value of that metal in the rest of the world.*
Independently of the argument derived from the
insufficiency of the cause assigned to have produced
the alleged effect, it will be seen in the historical
sketch which Vv^ill be found in the further part of
this work, that the great variations of bullion
prices abroad do not correspond, in point of either
time or magnitude, with the variations in the quan-
tity of metals disengaged from use, and resumed as
coin in this country.
This cause, therefore, namely, the quantity of
bullion disengaged from circulation as coin by the
suspension of cash payments in this country, and
added to the general mass in the rest of the world,
those which can be imputetl to alterations in the system of our
currency. But in the opinions which prevail among the sup-
porters of the ultra doctrine of depreciation, there is an extraor-
dinary confusion of ideas in blending as the effects of the Bank
restriction, and of the resumption of cash payments, variations
(greatly exaggerated, if existing at all) in the value of the
metals, arising from causes avowedly distinct, by the very assign-
ment of such causes, from the possibility of having been pro-
duced by the operation of the measures affecting exclusively
the footing of the currency of this country.
* The influence here alluded to of our currency on the cur-
rencies abroad does not refer to the occasion;il fluctuations arising
from speculations and operations on credit, and from the neces-
sary reactions which communicate themselves to those countries
abroad with which we are in commercial connection. The
argument in the text is coniined to a supposed influence, which
applies to the whole period of the restriction in raising prices,
and of cash payments in reducing them.
THE CURRENCY. 143
may be considered as wholly inadmissible in ac-
counting for any part of the great elevation of
prices observable at different periods during the
restriction.
But if the addition to the general mass of the
precious metals, by the substitution of paper for
coin in this country, pending the Bank restric-
tion, cannot, on the grounds which I have stated,
be fairly inferred to have produced, under any cir-
cumstances, a sensible effect on the value of those
metals ; and if there were circumstances such as
those already mentioned, which were calculated, at
least to compensate, if not to outweigh that effect :
then it follows, by parity of reasoning, that the re-
absorption, by the resumption of cash payments, of
a similar amount of bullion to that which had be-
fore been spared, cannot have been attended with
a greater effect in an opposite direction. This
must be understood mutatis mutandis, viz. tlie dis-
engagement of the sums employed for military
purposes, and the return of security to commercial
intercourse, renewing the facilities of circulation
on the Continent, and diminishing the inducement
to hoarding.
Having thus offered arguments, which to m}'-
mind are conclusive, against the presumption of
any sensible effect from the alterations in the system
of our currency, under the circumstances in which
they took place, on the value of the ])recious metals
in Europe, I shall proceed to examine what influ-
ence may be ascribed to the second class of circinn-
stances, wdiich, as a consequence of the Bank
restriction, are stated to have affected the value of
the currency in this country, in a much greater de-
gree than that indicated by the difference between
paper and gold.
14<4i THE CURRENCY.
Section 2. — Effect of the Bcmk ReHtriction on the
economised line of Money.
The expedients for economising the use of the
currency, althougli they date from a period long
anterior to the Bank restriction, and certainly had
their origin in causes wholly distinct from it, did
experience a considerable improvement about that
time. But the economising practices which were
then in progress, have not only subsisted in full
force since the resumption of cash payments, but
have experienced further improvements. Allowing,
however, for the sake of argument, that the Bank
restriction was the cause of greater economy in the
use of the currency, and that this greater economy
was one of the causes of a diminution of the value of
the currency, beyond the degree indicated by the
difference between paper and gold, how happens it
that, although all the refined machinery of the bank-
ing system subsists unimpaired, and is perhaps
undergoing further improvements, it has no longer
the depreciating eflect ascribed to it? * Really, in
order to have been good for any thing in the argu-
ment which it was brought forward to support, this
* It was on the ground of the economised use of the cur-
rency that the Bullion Committee of 1810 endeavoured to ac-
count, consistently with their view, for the striking and rather
puzzling fact of the very small numerical inciease of Bank notes
to which they ascribed such depreciating effects. Their infer-
ence, from the improvements referred to, might have been jus-
tified if it had been found that the price of gold had not lailen
until the amount of Bank notes had been reduced, as compared
with that which had been pronounced to lu.ve been rendered
excessive by those improvements. Whereas, while the economy
in the use of the currency was undergoing j^rogiessive improve-
ment, an increased amount of Bank notes was found to be re-
quisite for the transactions of the country, consistently with a
fall of the market j)rice of bullion to its Mint price, and with a
much greater fall in the prices of commodities.
THE CURRENCY. 145
economy of the currency should have been proved,
not only to have arisen from, but to have terminated
with, the restriction : and it is proved to have done
neither. On the contrary, while the prevailing
complaint is of a tendency the \ery reverse of di-
minution in the value of the currency, it is noto-
rious that circumstances are in progress calculated
still further to economise the use of it. Not only
are improvements daily taking place among the
bankers, in their ])ayments on the largest scale ;
not only is the practice of lodging money with a
banker becoming more general, as including a large
proportion of the smallest classes of tradesmen ;
but there is less detention in the very minutest
channels of circulation, inasmuch as, by the insti-
tution of savings' banks, the most inconsiderable
sums, which must, but for this mode of investment,
have been dormant as petty hoards in tiie hands of
mechanics and menial servants, have become, and
are becoming daily, more available to swell the
amount of currency applicable to general purposes.
So large is the aggregate saving of the use of
Bank notes and coin, from the foregoing causes,
which have acquired their principal activitysince the
termination of the Bank restriction, and whicli have
not yet apparently reached their utmostdevelopment;
that, notwithstanding the extended functions of
money consequent on an increased population, and
on an enlarged scale of pecuniary transactions, it
is perfectly conceivable that a smaller numerical
amount of coin and bank notes is now requisite to
circulate commodities at the same prices than be-
fore that period.
We may therefore safely dismiss the economised
use of the currency from the list of causes concur-
ring to produce the diminution and subsequent
increase of the value oftlie precious metals, result-
ing from the restriction and resumption of cash
payments by the Bank.
146 THE CURRENCY.
Section 3. — Effect ascribed to the Bank Restric-
tion of the Substitution of Credit for Currenci/,
and of the excessive Issues of Country Paper.
The next effect ascribed to the Bank restriction is
*' the miiltipUcation of the circulating medium
virtually by the substitution of credit for currency."
The manner in which the Bank restriction is
supposed to have produced these effects, is thus
stated in the review already quoted : —
" In such a system, country banks find a less stock necessary
to answer demands than they would keep if liable to pay in
specie. In the former case, one in twenty is deemed sufficient ;
in the latter, one-fifth, or perhaps one-fourth, would be the safe
proportion. The moral certainty that a banker feels, that he
shall not be called upon to discount his own notes, is a strong temp-
tation to issue them to the utmost practicable extent. He sets all
the canvass his vessel will carry, more than in common prudence
he would do if there were any apprehensions of a coming gale.
But the Bank restriction was a kind of security against all sud-
den and unexpected movements, a sort of monsoon, which, after
passing one session of parliament, he was sure would continue
to the next ; and wdiile that lasted, nothing was likely to hap-
pen that could disturb its course."
" All the merchants examined agree in stating, that country
paper increased with the increase of Bank paper. If, there-
fore, the Bank restriction was the cause of excessive issues
from the Bank — a fact which is at this time hardly open to
dispute — it must be charged with producing that excessive issue
of country paper also, which was an invariable concomitant of
the other."
" It has already been observed, that the power of procuring
money, if wanted, is tantamount to the actual possession. To
use a scholastic phrase, monej^ in posse is equivalent for all
purposes of trade to money in esse : it gives an equal spirit of
enterprise to the buyer ; and, when that power is become noto-
rious, equal confidence to the seller. Now, it cannot be doubted
that this hypothetical wealth was greatly augmented by the sys-
tem of the Bank restriction. If the Bank was always ready to
discount bills upon real mercantile transactions ; if country
banks, in imitation of this example, did the same ; not only
were transactions entered into which, without such facility, ne-
ver could have taken place, but numerous contracts were effected
for which actual payment was not required at the time, and
was, in fact, never made ; other transactions in the mean time
THE CURRENCY. 147
having taken place which either directly or indirectly had the
effect of balancing these ; thus perforniiiig, without regular book
entries, the very office of a bank : the seller building as securely
upon the credit of the buyer (a credit never actually put to the
test), as upon his tangible property."
On this statement, which conveys the fullest view
that I liave met with of the specific manner in
which the excessive issues of the Bank of Eng-
land, asserted to have been caused by the restric-
tion, are supposed to have swelled to a propor-
tionate excess the whole of the circulating medium,
the following observations occur : —
1. It is possible that the country bankers might ha-
bitually keep a somewhat smaller stock, or reserve,
during the restriction than in a convertible state of
the paper, and there might, to this extent, be some
increased economy in the use of the currency,
although hardly amounting to a set off against the
progressive improvements which have since taken
place. This effect, therefore, if it existed at all,
must have been the most trifling imaginable.
2. A most erroneous impression is conveyed by
the description in the foregoing extract, and is en-
tertained very generally to this day, that during
the restriction there was a sort of exemption from
the penalties of overtrading ; that bankers might
issue ad libitum, and merchants trade to the utmost
extent of their credit, without experiencing the
usual penalties of loss and failure. The bank re-
striction is supposed to have operated as "a kind of
security to the banker against all sudden and
unexpected movements ; a sort of monsoon,
which, after passing one session of parliament,
he was sure would continue to the next, and while
that lasted, nothing was likely to happen that
could disturb his coiu'se." But it did so hap])en,
that his course was disturbed by exactly the same
process as we have seen exemplified in more recent
instances. The reaction from undue specuhition
148 THE CURRENCY.
seems to liave been as iDevitable during the re-
striction as before and since ; witness the extensive
failures in 1810 to 1812, and again, in 1814 to
1816, which will be more distinctly noticed here-
after. Of the latter it may be, as it has been said,
although without the slighest foundation, that they
were the consequence of preparations for cash pay-
ments ; but neither this nor any other reason con-
sistent with the currency theory, can be brought to
account for the former.
3. The country bank paper is supposed to have
increased with every increase of Bank of England
paper, and an excessive issue of the one, to have
been an invariable concomitant of the other.
Of the amount of the country bank paper, it is
impossible to give any accurate account. No ma-
terials whatever exist for the computation of it pre-
vious to 1804, when first a separation was made
of the stamps for bankers' notes from those for
bills of exchange and notes after date. In 1804, dis-
tinct stamps were issued for bankers' notes, which
were not to be re-issued after three years from their
date. Upon the stamps so issued, computations
have been made, but they are the most vague and
unsatisfactory imaginable, of the amount actually
in circulation. These wall occasionally be referred
to hereafter. In the mieanwhile it may be re-
marked of this portion of the circulating medium,
that, supposing it to bear for local purposes a cer-
tain due proportion to the basis of the currency,
the deviations from this, its due level, have been,
not only during, but before and since the restriction,
very considerable, expanding under circumstances,
and in a state of opinion, favouring a rise of prices,
and collapsing under the opposite circumstances ;
and these expansions and contractions have, in the
majority of instances, not been preceded by any
corresponding variations of the Bank issues, al-
though eventually tliey have come under the limit-
ation and control of the Bank regulation.
THE CURRENCY. 149
The same, and perhaps in a still greater degree,
maybe said of those other component parts of the
circulating medium, bills of exchange, and book
credits, to wliich alhision is made in the passages
quoted from the review. The expansion and con-
traction of these and of country bank notes, are, as
will be abundantly exemplified, tlie consequences,
and not the causes, of a rise and fall of prices.
Credit, in its ordinary and legitimate application,
forms one of the more important means of sparing
the use of the currency, as well as of effecting
the best and cheapest distribution of capital and
revenue among the several orders of the commu-
nity. But it is also a medium, which admits, during
short intervals, of expansion, under the influence of
the spirit of adventure, to an ahnost indefinite ex-
tent. Some striking instances of this expansiveness
of the medium of credit will be exhibited in the fol-
lowing historical sketch. But it will be seen, that
the susceptibility of expansion, and the consequent
liability to coliapse, have not been confined to the
inconvertible state of ourcurrency. And a reference,
not only to the state of the currency in this coun-
try anterior to the Bank restriction, but to the cur-
rencies of the continental states of Europe, in
which the basis of the currency has been purely
metallic, will serve to show that a great abuse of
credit has not been peculiar to an inconvertible
currency.*
* The following notices, extracted from contemporary ac-
counts, of considerable derangement of credit, in consequence
of a previous undue extension of it among the principal com-
mercial cities of the Continent of Europe, in the course of last
century, may be considered as not altogether uninteresting or
irrelevant to the subject under discussion : —
" Letter from the Bankers at Hamburgh to the Bankers at
Amsterdam."
" Hamburgh, Aug. 4. 1763."
" Gentlemen,
" This morning at eleven, when wc were met to consider of
L 3
150 THE CURRENCY.
The Bank of England, in the regulation of its
issues of notes, which, during the restriction,
constituted tlie basis of the currency, and into
which, with the small and diminishing proportion
the methods to be taken to assist the houses at this place that
are tottering, we received a fatal express, with the terrible
news, that you, the gentlemen of Amsterdam, would leave the
Neufvilles to sink, by which we were all thunderstruck ; never
dreaming that so many men in their senses in your city could
take such a step — a step which will infallibly plunge all Europe
in an abyss of distress, if not remedied by you whilst it is still
time. We therefore send this circular and general letter to you
by an express, to exhort and conjure you, as soon as you re-
ceive this, to undertake still to support the Neufvilles, by fur-
nishing what money they want, and giving them two or three
persons of unquestionable probity and skill, for curators, that
their affairs and their engagements may be concluded and ter-
minated, without causing a general ruin, which will otherwise
infallibly happen. If you do not, gentlemen, we hereby declare to
you, that our resolution is taken, that is to say, that although we
represent, a very respectable body of rich and respectable men,
we have unanimously resolved to suspend our own payments as
long as we shall judge it proper and necessary ; and that we
will not acquit them, or the counterprotests that shall come
from you, or any whatever.
"This is the resolution which we have unanimously taken; and
from which we will not depart, happen what will. The fate of
the general commerce of all Europe is at present absolutely in
your hands ; determine, gentlemen, whether you should crush
it totall3^ or support it. You are all too intelligent not to per-
ceive, that by letting the whole machine fall to pieces, you will
suffer heavy losses in all parts, which you may prevent to your-
selves, and a thousand others, by assisting the Neufvilles to pay
and wind up their affairs. Let us have your final resolution
speedily, by express ; for till that time all will remain in sus-
pense here, and none of us will pay one penny of the bills we
have accepted till we know what you will do. Meanwhile, we
have the honour to be, c'v.'C.
'• Pierre Corstens, Albert Schulte, Hetling and
Ooni, Venne C. Tanni and Moller, Matthiessen
and Sillem, Cornells Jacob Berenberg, Wurmb
and Cvidorff, Vierre Bouvefils, P. Henry
Trunaner, J .F. Liscke, Daniel L. Strenglin and
Co., Henry Kornig." — Gentlemcms Magazine,
1763.
THE CURRENCY. 151
of coin, all pecuniary engagements were, in the last
resort, resolvable, controled and limited the other
constituent elements of the circulating medium,
exactly in the same way as a purely metallic basis
controls and limits the convertible paper and tlie
credit part of the circulation.
In the metallic currency of commercial com-
munities, there are expansions and contractions
And they seem to have stopped accordingly, as such appears
to be the alUision in the following extract from the Annual Re-
gister for 1763: —
"Aug. 29. 1763."
" There has been lately at Amsterdam, Hambiu'gh, and some
other of the principal towns of Germany, a surprising number of
bankruptcies. They began at Amsterdam about the 29. July,
by the bankruptcy of two brothers named Neufville, who failed
for above 330,000 guineas, and a Jew, who, a few days before,
failed for between 30,000 and 40,000/. This was followed by a
stoppage of payment by no less than eighteen houses in that
city ; and soon after by a much greater number at Hamburgh
and other places, which put a stop to private credit, that no bu-
siness was for some time transacted, but for ready money. But
the Lombard houses at Amsterdam and Hamburgh, having sup-
plied with large quantities of cash, such as could give real or
personal security, enabled many, who must otherwise have
stopped, to stand the run.
Another recorded instance of great derangement of credit
occurred ten years later : —
" The great commercial failures, which threw such a damp
last year upon all business in this country, arrived at their ut-
most extent about the beginning of the present in Holland, and
were of so alarming a nature, and so extensive in their influence,
as to threaten a mortal blow to all public and private credit
throughout Europe. These failures were the effect of an arti-
ficial credit, and of great speculative dealings in trade, as well
as in the public funds of different countries, and though
attended with an immense loss to individuals, of not less, perhaps,
than ten millions sterling, took nothing out of the general stock,
neither money nor goods being thereby lessened. They would,
however, by lessening the value of those commodities, have
been as pernicious in their effects as if the loss had bean real,
and nothing but the most judicious and timely remedies could
prevent this fatal consequence." — Amuial Register for 1773,
vol. xvi. p. ix.
L 4
15^ THE CURRENCY.
of the circulation, without any corresponding
movements of the metallic basis. But if from
accidental circumstances there should coincidently
with the tendency to speculation, through the
means of credit, happen to be an enlargement
of the metallic basis, an increased facility would
arise, to the extension of the circulation, and
to the spirit of speculation ; and the converse
would be the consequence of a contraction of the
basis coinciding with a reaction from speculation
and its attendant discredit.
So likewise in the regulation of the Bank issues, if
an undue enlargement of them happened to coincide
with a tendency to an extension of the other con-
stituent parts of the circulation, there would be a
proportionate excess in the whole of the circu-
lating medium. And the converse under the op-
posite circumstances.
If, therefore, the allegation of constant excess of
issues by the Bank of England be substantiated,
there can be no hesitation in admitting a corre-
sponding excess in the whole of the circulation.
It is proposed accordingly, to examine the grounds
for that allegation upon which the question of de-
preciation beyond the difference between the paper
and gold mainly turns. *
* In the comparisons Instituted for the purpose of judging of
the relative quantities of money at different periods, it has been
made a question whether the deposits in the hands of the Bank
should not be added to the amount of the circulation. The Bank
is doubtless as much liable to the payment of all the deposits, in
gold if so required, as if the depositors were holders of bank
notes. And it may be said, and truly said, that as the London
bankers now are in the habit of lodging with the Bank certain
portions of their reserves, instead of holding them, as they for-
merly did, in their own drawers in bank notes, so much of the
amount under the head of deposits in the Bank returns, should
be considered as forming a part of the circulation. In fact,
some part of the private deposits at the Bank, besides those of
the London bankers, may come under the same description ;
because the common drawing accounts, if they had been kept
THE CURRENCY. 153
Section 4. — On the alleged constant Excess of
Issue by the Bank of England, and thence of the
whole of the Circulating Medium.
The charge of excess or over-issues of paper
from the Bank of England cannot but be admitted,
if by tliat charge be meant only that during the
restriction the issues were, for the most part, larger
than could under the unusual circumstances ope-
rating on the exchanges, have been maintained
under a convertible state of the currency. The
issues were in that sense excessive, inasmuch as
the amount exceeded that which was compatible
with the maintenance of the value of the paper
on a level with that of its standard. And as al-
ready noticed of the term depreciation, the mea-
sure o^ excess, in this case, would be the degree in
which the value of the paper fell short of the
value of the specific quantity of gold in which it
with private bankers, would have added to their reserves,
and wouUl, consequently, have increased, in some degree, the
bankers' deposits in the Bank of England. These are reasons
for supposing that the same amount of bank notes issued is now
much more effective than an equal amount formerly was, before
J;he practice became so extended, that is, prior to 1825. And
in comparing the quantity of money emanating from the Bank
of England, it might depend upon the object for instituting tbe
comparison, whether or not to blend the amount of the private
deposits with the Bank circulation. But, generally speaking, as
it is the Bank issues coming under the head of circulation,
which enter more immediately into the money market, and thus
influence, directly, the rate of interest, and, eventually and in-
directly, the prices of commodities ; and as it is the amount of
the Bank circulation, and not of its liabilities, which has been
the standard chosen by the advocates of the ultra doctrine of
depreciation, for the measure of the expansion and contraction
of the currency, it will be chiefly to the circulation that in the
following examination of the supposed influence of the Bank
restriction, reference will be made.
154 THE CURRENCY.
purported to be payable. The charge o^ excessive
issue being so confined, would be independent of
any question whether tlie difference arose from
an increase of the circulation, relatively to its
functions, the value of gold being unaltered, or
from an increased demand for gold, the quantity
of money, or in other words, of the circulating
medium being unaltered in its relation to the or-
dinary amount of revenue and trade, of commo-
dities and labour, to be circulated.
But this is not the common acceptation of the
term, nor evidently so intended in the argument
under consideration. The restriction is supposed
to have been the cause of a constant increase of
the Bank issues, and thence of the quantity of
money, not only beyond that amount, which under
the pressure of extraordinary foreign payments,
could have been maintained consistently with the
preservation of the par of the exchanges, and of
the price of gold ; but much beyond that which
could have been maintained in an undisturbed
state of politics and trade, and in the ordinary state
of the bahmce of payments, without raising the
price of gold, and, in a still greater degree, the
prices of commodities and labour. The question
is one of fact, determinable, however, only by pre-
sumptive evidence: — IVJiether, in the altered pro-
portions between money and the objects exchanged
bi) it^ the variations of prices^ consequent on those
altered proportio7is, originated in, and ivere depend-
a7it upon, alterations in the quantity of money on
tlie one hand, or in the cost of production, and the
accidents ajfccting supply, on the other.
Of the circumstances affecting the cost of pro-
duction and the supply of the objects exchanged
by money during the restriction, a historical sketch
will hereafter be given. In the mean time, it is
desirable to premise some general observations
on the nature of the presumptive evidence to be
THE CURRENCY. 155
offered as to the relative quantity of money in cir-
culation, and of the inferences to be drawn from it
as to its influence on prices.
We have had occasion to observe, that although
the amount of Bank of England notes con-
trolled and limited, in the long run, the other
parts of the circulating medium, there might be,
as indeed tliere have been, intervals of great diverg-
ence, which might equally occur for limited pe-
riods in a convertible state of the paper.
It may here be the place to remark, that, whether
in a convertible or inconvertible state of the paper,
there are, and must be, a variety of circumstances in
constant operation to affect the numerical amount
of the Bank circulation, without justifying the in-
ference of any corresponding alteration in the
quantity of the circulating medium, or of its being
in excess or defect, with reference to tlie revenue
and commodities to be circulated by it. There is
a constantly varying proportion of Bank of Eng-
land notes, applicable to country payments com-
pared with London payments ; this was probably
more the case during than subsequent to the re-
striction. And in cases of discredit of the country
banks, sometimes only local, sometimes general, a
sudden increase of Bank of England issues has
taken place, in order merely to fill the temporary
chasm of the country circulation. The amount
too of London payments is liable to vary very
considerably in short intervals. * Sometimes the
* Till within the last few years, there was, in the interval
during which the books of the Bank were shut, preparatory
to the payment of" dividends, a very considerable reduction of
the amount of Bank notes in circulation, and a corresponding
increase immediately after the payment of the dividends. This
cause of a periodical variation in the amount of tiie circulation,
which was occasionally found to be inconvenient, has since been
remedied by the practice adopted by the Bank of making ad-
vances, by way of loan, en stock and other approved securities,
for the few weeks immediately preceding the payment of the
dividends.
156 THE CURRENCY.
prompts for periodical sales coincide with the fall-
ing due of large acceptances in particular branches
of trade. The payments passing between the re-
ceivers of the taxes and the exchequer, and be-
tween the exchequer and the Bank, influence the
amount of notes issued by the Bank although they
may not pass at all into the hands of the public.
The same sum, circulating in times of confidence
and speculation with rapidity from hand to hand,
will perform a great many more exchanges, and
act upon prices with much greater effect than a
larger sum in periods of dulness and absence
of grounds for specuhition : or at times when
alarm and want of confidence induce the bankers
and possessors generally of monied capitals to
increase their reserves, and to withhold their usual
advances.
This would equally be the case if the currency
were purely metallic ; and for short periods, there-
fore, considerable variations of prices might take
place consistently with a uniform amount of money,
as, on the other hand, an undisturbed sate of prices
might prevail consistently with marked variations
of the quantity of money.
But although for short intervals the variations of
the Bank of England issues afford no certain criterion
of the amount of the circulating medium, or of its
being in excess or defect, yet for longer periods the
regulation by the Bank of England of its issues during
the restriction can be shown distinctly to have ope-
rated in limiting the other component parts of the cir-
culation along with its own, in such a manner as that
the whole quantity of money, or of the circulating
medium, should seem not to have exceeded the
amount which, but for the circumstances operating
upon the exchanges, might have existed in a con-
vertible state of the currencv.
The grounds of presumption on which this opi-
nion is founded, are derived from observation of a
THE CURRENCY. 157
circumstance to which it is of importance tliat tlie
attention of the reader should be specially directed,
as being one which essentially bears upon the ques-
tion of alleged excess of Bank issues during the
restriction. The circumstance here alluded to, the
proofs of which will be brought forward hereafter,
is that, while the amount of the Bank issues was
from 1797 to I8I7 undergoing, with trifling excep-
tions, a progressive increase, the exchanges upon
every pause from the pressure of exfraordinary
foreign payments tended to a recovery *, and when
* The authority of the opinions of Mr. Henry Thornton and
Mr. F. Horner may be adduced, in proof of the importance of
the inference to be derived from the fact of a constant ten-
dency of the exchanges to a recovery, upon every occasion of
the restoration of the balance of foreign payments in our favour.
Mr. Tliornton, in his work on Paper Credit^ lias the following
passage, in a note at page 236.: —
" In general it may perhaps be assumed, that an excessive
issue of paper has not been the leading cause of a fall in the
exchange, (/' it aftenvards turns out that the exchange is able to
recover itself without any material reduction of the cpiantity of
paper!' And at page 24-2., when referring to the difficulty of
determining the effect of variation in the amount of Bank of
England notes on prices, he proceeds to observe, " The per-
plexities of this subject, being such as I have now described, it
naturally occurs to us to reason from the eff"ect to the cause,
and to infer a too great issue of paper, when we perceive that
there is an excess of the market price above the mint price of
gold. But this inference is one which should be very cautiously
made, for it is to be borne in mind, that the excess may arise
from other causes besides that of a loo great emission of paper.
A suspension of the foreign demand for British manufactures,
or an increase of the British demand for foreign articles, circum-
stances which may arise when there is no increase of bank paper,
are the much more frequent, as well as the more obvious, causes
of a fall in our exchange, and therefore also of a high price of
bullion."
In a critique on Mr. Thornton's work, in tlie first number of
the Edinburgh Review, Mr. Horner, the writer of the article,
observes, " We have expressed ourselves with unfeigned doubt,
with regard to the alleged dependence of the present rate of
prices on the state of our paper currenc}', because it appears to
us a problem of which a satisfactory solution has not yet been
offered. According to that view of the question indeed, which
158 THE CURRENCY.
the pressure had entirely ceased, the exchanges and
the price of gold were restored to par, ivliile tlie
Bank circulation was larger in amount than at any
preceding period : tlius affording tlie strongest
presumption that the previous increase had not been
the cause of the fall of the exchanges ; and had not
been greater than would have been required if there
had been no restriction, but also no extra foreign
payments, in order to supply the extended func-
tions of money incidental to an increased popula-
tion, and to a vast extension of trade and revenue,
and generally of pecuniary transactions ; — or, in
other words, that, in the divergence between the
paper and the gold, it was the gold that, by in-
creased demand departed from the paper, and not
the paper by increased quantity from the gold.
Admitting such to be the fair inference, it be-
comes a curious matter of speculation to inquire
how, with motives so strong to constant and pro-
gressive excess, and under the guidance of maxims
and principles so unsound and of such apparently
mischievous tendency, as those professed by the
governors and some of the directors of the Bank
in 1810, such moderation and (with some excep-
tions which will be noticed hereafter), such regu-
larity of issue should, under chances and changes
in politics and trade, unprecedented in violence and
extent, have been preserved, as that a spontaneous
seems to us the most correct, as well as the most simple, a suf-
ficient answer will be assigned, if the excess of the market price
of gold above its mint price shall be found to continue, notwith-
standing the permanent restoration of the balance of trade to
its accustomed preponderancy in our favour."
The foregoing extracts are from works of which the former
was written in 1801, and the latter early in 1802, before either
of the authors could have seen that without any diminution of
the Bank issues, the exchanges and the price of gold were re-
verting to their par value, when a fresh set of disturbing causes
again deranged them.
THE CURRENCY. loQ
readjustment between the value of the gold and the
paper .should have taken place, as it did without
any reduction of their circulation.
The explanation of the difficulty seems to be this.
The rule by which the Bank directors professed to
be, and were in the main, guided, viz. the demand
for discount of good mercantile bills, not exceeding
sixty-one days' date, at the rate of five per cent,
per annum, did, with the necessary policy of go-
vernment in periodically reducing the floating
debt within certain limits by funding, operate as a
principle of limitation upon the total issues of the
Bank. And the reason of the rule having so ope-
rated, is to be found in the fact, that the market
rate of interest for hills of the description ichich
were alone discountable at the Bank, did not materi-
ally, or for any length of time together, exceed the
rate of five per cent, per annum.
But the Bank directors seem to have been una-
ware of the precise mode of operation by which
their rule had the effect of a principle of limitation
against great or permanent excess in their circula-
tion ; and the explanation by them in their evidence
before the bullion committee of 1810 was so un-
guardedly given as to expose them to the reductio
ah absurdum.
In the bullion report of 1810 it is stated, *'that
the Bank directors, as well as some of the merchants
who were examined, showed a great anxiety to state
to the committee a doctrine, of the truth of which
they professed themselves to be most thoroughly
convinced, — that there can be no possible excess in
the issue of Bank of England paper so long as the
advances in which it is issued are made upon the
principles which at present guide the conduct of
the directors ; that is, so long as the discount of
mercantile bills is confined to paper of undoubted
solidity, arising out of real commercial transactions,
and payable at short and fixed periods." And the
160 THE CURRENCY.
following are extracts of the evidence to that effect.
Mr. Whitmore, governor of the Bank : —
Mill. p. 91. "The Bank never forces a note in circulation:
and there will not remain a note in circulation more than the
immediate wants of the public require, for no banker, I presume,
will keep a larger stock of bank notes by him than his immediate
payments require, as he can at all times procure them."
Min. p. 127. " The bank notes would revert to us if there
was a redundancy in circulation, as no one would pay interest
for a bank note that he did not want to make use of."
Mr. Pearse, the governor, stated distinctly his
concurrence in the opinion upon this particular
point, Min., p. 126. He referred to the manner
in which bank notes are issued, resulting from the
applications made for discounts to supply the ne-
cessary want of bank notes, by which their issue in
amount is so controlled that it can never amount
to an excess.
He considered " the amount of the bank notes
in circulation as being controlled by the occasions
of the public for internal purposes ; " and, page
157., that " from the manner in v*'hich the issue
of bank notes is controlled, the public will never
call for more than is absolutely necessary for their
wants."
The part, however, of the evidence which at-
tracted most notice, and created no little surprise,
was the following : —
*' Is it vour opinion that the same security would exist against
any excess in the issues of the Bank, if the rate of the discount
were reduced from 5 to 4 per cent.?" Answer by Mr. Whit-
more: "The security of an excess would be, 1 conceive, pre-
cisely the same." Mr. Pearse : " I concur in that answer."
"If it were reduced to 3 per cent.?" Mr. Whitmore : " I con-
ceive there would be no diiference, if our practice remained the
same as now, of not forcing a note into circulation." Mr. Pearse :
" I concur in that answer,"
If the governor and deputy-governor had added
the proviso, that the market rate of interest should
be, in the cases supposed, viz. of discounting at
four or three per cent., as near to the I]ank rate^r
hills of the prescribed description, as it then was
THE CURRENCY. l6l
to 5 per cent., they would have escaped the severe
criticisms to which their answers, so unguardedly
given, were exposed.
The truth is, that if the market rate of interest
for such bills as came within the prescribed rules of
the Bank had fluctuated more than it did, and had
likewise on an average very materially exceeded
the fixed rate of discount, and more especially if it
had risen progressively during the whole period
of the restriction, not only would the fluctu-
ations in the amount of bank notes have been
greater, but there would also have been such a con-
stant tendency to excess through this channel of
issue, as would not have admitted of compensation
by diminished issues through other channels, and
the total increase of the circulation would have
been greater than it has proved to be. But it so
happened that the market rate of interest for such
hills as came within the Bank rules did not con-
stantly nor materially exceed 5 per cent. ; nor did
it rise progressively through the greater part of the
interval of the restriction. The rate of interest for
such bills was at its highest long before the termi-
nation of the war, as may be inferred from the cir-
cumstance, that in the three last years of it the
applications for discount at the Bank fell oflT, com-
pared with what they had been for seme years
before.
The fact of a rate of interest in some degree
steady at about 5 per cent, on this description of
securities is perfectly compatible with a consi-
derably higher rate for other securities. It is
well known that, within these few years past,
such bills have occasionally been eagerly sought by
bankers and other capitalists at a rate as low as
2 per cent, per annum, while, on mortgages or
other securities not immediately or readily con-
vertible, advances were rarely to be had under 4,
and frequently not under 5, per cent. On the other
M
lO'^ THE CURRliNCY.
hand, during the war, while bills of undoubted so-
lidity, and at short dates, were generally discount-
able at about .5 per cent., it was difficult to raise
money on longer dated bills without a commission,
or on mortgages or other securities imperfectly or
distantly convertible, on any terms but such as, by
annuities, premiums, or other evasions of the usury
laws, were equivalent to from 6 to 10 per cent, per
annum.
It was, therefore, the coincidence, through the
greater part of the interval of the restriction, be-
tween the market rate and the Bank rate of in-
terest, that prevented the tendency through this
medium to progressive increase and irremediable
excess of issues, which might have been appre-
hended if the Bank rate had been for any length
of time much below the market rate.
The principal causes of the fluctuations in the
amount of discounts at the Bank down to 1816,
besides those which are incidental to the growth
and varying exigencies of trade, the greater or less
inducement to speculation and occasional derange-
ments of commercial credit, may be traced to the
financial operations of Government.
When considerable public loans were negoti-
ated, or when Exchequer Bills, to a larger amount
than usual, were issued on the money market, the
immediate effect was to create a temporary absorp-
tion of floating capital, and, consequently, to oc-
casion a temj)orary rise in the rate of interest.
This would naturally be followed by increased ap-
plications for discount at the Bank. But in the
intervals between loans, or when Excliequer Bills
were in less amount than usual, either by Govern-
ment not issuing so many, or by the Bank taking
a portion of them off* the market, that is, making-
advances upon them, there would be diminished
applications for discount.
THE CURRENCY. \6S
Section 5. — On the Regulation of the Bank
Issues durmg the Restriction,
With reference to the foregoing explanation it is
to be observed, that the regulation of the Bank
issues, when the pressure on the exchanges for
foreign payments was unusually great, became in-
evitably exposed to the alternative of very extensive
and sudden variations of the exchanges or of the
rate of interest.*
If the circulation had been regulated, as it ought
to have been, by a view to the exchanges, and had
been contracted in proportion to the depressing
causes acting upon them, the consequent diminution
of bank notes would have been felt in a severe pres-
sure on the money market, or, in other words, in a
considerable rise in tlie rate of interest, attended
with serious inconvenience, both commercial and
financial, the former aggravated by the operation
of the mischievous and absurd provisions of the
usury law. During the intervals of such forced
contraction of the circulation, sales of land and
houses, and of fixed property generally, would
have been difficult, and exposed to enormous sacri-
fices, in cases in which it was necessary to realise ;
and the prices of goods would, of course, have
experienced considerable depression in all in-
stances in which the supply at all exceeded the
wants for immediate consumption. A fall of the
rate of interest would have followed upon the
cessation of the causes for contraction, and upon
the consequent necessary enlargement of the
circulation.
* Of the manner in which the rate of interest is affected
by the variations in the circulation, an explanation will be found
in an extract, inserted in the Appendix, from a former publi-
cation of mine, entitled " Considerations on the State of the
Currency."
M 2
I64f THE CURRENCY.
On the other hand, a regulation on the principle,
if such it can be called, by which the Bank directors
professed to be guided, disregarding the exchanges,
and allowing the amount of the issues to be governed
by, and in its turn to act upon, the rate of interest,
was calculated, as long as the market rate did not ma-
terially exceed the Bank rate of discount (for bills
coming within the Bank rules), to produce a consi-
derable degree of uniformity in the circulation, and
to prevent such violent changes in the state of the
money market as would otlierwise have occurred ;
but it was calculated at the same time to leave the
exchanges liable to extraordinary fluctuations, and
such as did, in point of fact, occur — fluctuations
which exposed all transactions connected with the
foreign trade of the country to the greatest possi-
ble hazards and losses, in addition to those which
were necessarily incidentalto a state of war. The
great depression of the exchanges added also enor-
mously to the expenses of the war, and to the
cost of production of all imported articles, and
the depreciation, thence resulting, of the paper
compared with its standard, was a flagrant breach
of faith, and a national discredit.
In other words, the alternative in the regulation
of the Bank issues, presented by the extraordinary
state of things which prevailed at particular pe-
riods of the war, but more especially during the
closing years of it, was that of causing great and
rapid changes in the quantity of money, with cor-
responding violent alterations in the rate of interest
and in the state of credit, both commercial and
flrmncial, or, of preserving a greater degree of uni-
formity in the amount of the circulation and in the
rate of interest, at the expense of very great fluc-
tuations of the exchanges, and their enormous
attendant and preponderating evils.
If the currency, during the war, had been
purely metallic, there must have been occasion-
THE CURRENCY.
1(3,5
ally, and sometimes for a considerable interval,
a very great diminution of the quantity of money,
caused by the demand for gold for export,
to defray the unusually large foreign payments
beyond the amount that could, in the ordinary
course of trade, be met by increased exports of
commodities. But, independently of the interval
which, in an uninterrupted state of foreign inter-
course, would be required for the adaptation of an
increased amount of exports of commodities to
meet the demand for extra foreign payments, that
interval was greatly extended in the latter years of
the war, inasmuch as insurmountable impediments
are well known to have been opposed to the export
of commodities from this country to the Continent
of Europe : so that the state of greatly dimi-
nished quantity of money, by export of coin, in
order to meet the foreign expenditure, would, in
a purely metallic currency, have been of consider-
able duration. And the same would have been
the case if the regulation of the Bank issues had
been guided by the exchanges, and had conse-
quently been such as to have preserved the value
of the paper on a level with that of gold.
Thus, for example, in the latter years of the
American war, and in the earlier part of the last
war with France, prior to the suspension of cash
payments, the alternations between contraction and
enlargement of the Bank issues (and, as far as can
be judged, of the whole circulation) were very
much greater than during the restriction.
The amount of Bank of England notes was, in
February, 1773, 6,037,060/., and in February,
1775, 9,135,930/., being an increase of upwards
of 50 per cent. After intermediate considerable
variations, the amount which, in March, 1782,
had been 9,lC0,000/., was in December follow-
ing reduced to 5,995,000/. ; a degree and sudden-
ness of contraction to which there was nothing
M 3
166 THE CURRENCY.
approaciiing to a parallel during the restriction, or
subsequent to it. *
The variations, also, between 1793 and 1797
were very considerable ; but these will be more
{)articularly noticed in the subsequent historical
sketch.
If, however, the greater exemption from violent
changes in the amount of the circulation, during
* The extraordinary degree of contraction to which the Bank
was obliged to resort in 1782, and again in 1796, in order to
counteract the drain on its treasure, by the pressure on the
foreign exchanges, is, independently of its importance in other
points of view, deserving of remark, with reference to an
opinion entertained by the partisans of the currency theory,
namely, that the penalty on melting and exporting the coin,
which existed prior to Peel's bill, operated, according to its
extent, as a protection to the Bank, in maintaining a larger cir-
culation than it otherwise could have done ; or, in the language
of that theory, that it operated to that extent, as a relaxation
of the standard. (Evidence before the Agricultural Committee
of the House of Commons, 1836. Third Report, p. 484-.) But
they overlook the consideration, that in proportion as the
penalty on exportation admitted of a greater enlargement of the
circulation, before the drain commenced, it required so much
greater contraction to stop the drain, and still more to bring
back the coin when the drain had been established.
As a specimen of the great fluctuation of the exchanges, and of
the discrepancy between their indications and the primdfacie in-
ference presented by the amount of the bank issues, Mr. Van-
sittart moved the following resolution, among those that were
passed in 1811 : —
*' That during the latter part of, and for some time after, the Ame-
rican war, during the years 1781, 1782, and 1783, the exchange
with Hamburg fell from 34«. \d. to 31*. 5d., being about 8 per
cent., and the price of foreign gold rose from 3/. 17*. 6d. to
4/. 2*. 5d. per ounce ; and the price of dollars, from 5s. 4^c?.
per ounce to 5s. W^d.; and that the bank notes in circulation
were reduced between March, 1782, and December, 1782,
from 9,160,000/. to 5,995,000/., being a diminution of above
one third, and continued (with occasional variations) at such
reduced rate until December, 1784. And that the exchange
with Hamburg rose to 34*. 6f/. ; and the price of gold fell to
3/. 175. 6d. and dollars to 5s. \hd. per ounce, before the 25th
Februar}', 1787, the amount of bank notes being then increased
to 8,688,000/."
THE CURRENCY. 1^7
the restriction, than in the periods anterior and
subsequent to it, had been still more striking than
it is, it would not be a compensation for the mani-
fold evils and dangers attending an inconvertible
paper currency.
The observation of the comparative uniformity
of the amount of the Bank circulation, and of its
not having exceeded, during the suspension of
cash payments, the quantity which was found
consistent eventually with the I'estoration of its
standard value, is not here introduced for the pur-
pose of vindicating the policy which imposed and
continued the restriction, but it may fairly be
adduced as an answer to the charge of constant
excess* of issue, by which, in the arguments
quoted, the whole period of the restriction is as-
* But charges still wider of the truth have been urged
against that measure. The most exaggerated statements have
been made in general terms, of the violent changes occasioned by
it in the quantity of the paper circulation. The following speci-
men of such charges is taken from a publication on " Corn and
Currency," by Sir James Graham, which attracted considerable
notice in its day : —
" Mr. Pitt, when he introduced his bold measure of the Bank
restriction, which rendered the paper of the Bank of England
no longer convertible into cash on demand, and imposed no
h'mit on its issues beyond the will of the Government, or the
caprice of the Directors, declared, with prophetic warning,
(Hansard's Parliamentary Debates, vol. xxxiii. p. 71.) * That, if
the country be once surcharged with paper, it would have as
ruinous effects as would be produced by lessening the quantity
of the paper circulation ; a sudden diminution '^of the paper
currency would prove the most violent shock which the trade
and credit of this country could receive.'
" Notwithstanding this sound prediction from the author of
the measure, his successors, who profess to tread in his steps,
and to venerate his name, have despised the warning, have
rejected the admonition, and applied the power precisely in the
two modes which Mr. Pitt thought most dangerous. ' The
country has been surcharged with paper ;'— there has been a
' sudden diminution of the currency,' not once, but repeatedly;
and exactly as Mr. Pitt foretold, each violent change, in either
direction, has shaken to their foundations ' the trade and credit
of the country.' '' P. '28.
M 4
168 THE CURRENCY.
serted to have been characterised, the term excess
not being confined to mean an amount beyond what
could, under the extraordinary circumstances, be
maintained, consistently with the par value^ but such
an increase and excess as would, under ordinary
circumstances, have entailed depreciation.
vSection 6. — On the Effect of the Ba7ik Restric-
tion in raising the Prices of Commodities.
It may be asked, whether, if it be admitted that
there was no excess during the restriction of the
amount of circulation beyond what might have
been maintained, but for the pressure of foreign
payments, the restriction can be charged with any
part of the nominal rise of prices, which prevailed
during the suspension of casli payments ? Tlie
answer would necessarily be in the negative, as
far as relates to depreciation attributable to an
increase in the quantity of money. But the re-
striction admitted of a greater depression of the
exchanges, than could have occurred in a con-
vertible state of the paper. And as the depres-
sion of the exchanges constituted an element of
increased cost of all imported commodities, and
thus, directly or indirectly, affected the price of
a considerable proportion of native productions,
the restriction may be considered to have been
the condition without which so much of the rise
of prices as was attributable to increased cost by
adverse exchanges could not have occurred. Be-
sides that, it is the general tendency of a fall of the
exchange to raise the prices of exportable com-
modities.
It is in this sense only, if, even in this sense, the
word can be correctly so applied, that the Bank
restriction can be said to have been the cause of so
much of the advance of prices, as may be measured
THE CURRENCY. l69
by the de])ression of the exchanges below the point
to which, previous to the restriction, they had, un-
der the pressure of extra foreign payments in former
wars, occasionally fallen.* But the variations of
the exchanges, taking them in the aggregate, and
allowing for partial discrepancies of occasional
quotations arising from impediments to exchange
operations, and from hazards attending the trans-
mission of bullion, allowing also for the difference
arising from the varying proportions between silver
and gold, will be found to correspond in the main
with the variations in the price of gold. There
would, therefore, be little difference in the result,
whether the price of gold or the exchanges were
taken as the measure of the utmost advance of
prices during the restriction, beyond the rate at
which, c(Eteris paribus^ they could have been main-
tained in a convertible state of the currency. The
same reasoning will apply as to the measure of the
utmost fall of prices that can be ascribed to a re-
turn to the convertibility of the paper. But the
price of gold is the simplest and clearest expression
of the result of the quotations of all the different
exchanges. On this ground, therefore, as well as
because the price of gold is, by the definition of
the standard, the measure of the depreciation spe-
cifically predicated of bank notes, the explana-
tion about to be given of the causes of the great
variations of prices, in the period which is to come
under examination, is to be considered as subject
always to an allowance (as a maximum, however,)
of the difference between j)aper and gold. But an
admission to this extent, which is beyond what, in
point of fact, is likely to be found necessary, is
utterly insufficient, according to the currency
* During the American war, the exchange on Hamburg
was occasionally, and for some length of time, at about 31*. 6d.
And it is only, therefore, for the fall below this rate that the
Bank restriction is accountable.
170 THE CURRENCY.
theory, to account for the great rise of prices dur-
ing the restriction, and for the gi-eat fall subse-
quently ; the rise being, by that theory, ascribed to
an excessive enlargement of the issues, which the
Bank was, by the restriction, enabled and induced
to make and maintain ; and the fall being attributed
to the contraction which, by the same theory, is
considered to have been necessarily effected as a
preparation and means for the restoration of cash
payments.
Section 7« — On the alleged invariable Connection
of' Increase of Price ivith the Bank Bestrictiony
and on the Effect of the near Approach of the
Termination of the Restriction producmg a Fall
of Prices greatly exceeding theDiff'erence between
Paper and Gold.
Proceeding on the assumption of the constant
excess of the issues of the Bank of England, and
of the country banks, the concluding allegations,
among the arguments wliich have been stated in
support of the doctrine of ultra depreciation, are,
*' That the constant and invariable connection of
increase of price with the Bank restriction is a
forcible proof of such a relation, as that of cause
and effect subsisting between the two pheenomena ;
and that the near approach of the termination of
that restriction had produced a fall of prices, greatly
exceeding the difference between paper and gold ;
thus still further corroborating that connection,
and proving, almost demonstratively, that the prices
from 1797 to 1814 were, to a certain degree, arti-
ficial, and that the comparison of paper with gold
did not afford a test of the real amount of the fall
in the value of our currency.'* Here it is evi-
dently meant to imply, that the near approach of
THE CURUKNCY. 171
the termination of the restriction, and, still more,
the actual passing of Peel's bill, had been the ori-
ginating and the cJiief, if not only^ cause of the fall
of prices. And of course, if the mere removal
of the restriction was the chief cause of the fall,
the restriction must be supposed to have been the
chief, if not the only, cause of the previous rise.
It appears to me that a total absence of know-
ledge of many facts bearing upon the question, a
great misapprehension of others, and a general
confusion of the order of time, in which the
principal circumstances in connection with prices,
and with the state of the circulation, are supposed
to have taken place, can alone account for the
prevalence of opinions so erroneous as those in-
volved in the above propositions ; opinions which,
destitute as they are of any real foundation, are
almost universally prevalent.
It is the purpose, therefore, of the following
historical sketch to lay before the reader the most
prominent of the facts, which are calculated to
elucidate the causes of the great variations of prices
from the close of 1792 to the present time ; and
as the result of the view, which it is thus proposed
to take, I expect to be able to show —
1- That there were circumstances during the
period under consideration, affecting the cost of
production, and the casual supply relatively to
the rate of consumption of the principal articles,
the fluctuations of which are in question, sufficient
to account for the variations of prices, independ-
ently of any supposed influence of the currency,
beyond the degree indicated by the difference
between paper and gold.
2. That the theory which supposes the disen-
gagement and reabsorption of gold by this country,
arising from the restriction and the resumption of
cash payments, to have sensibly affected bullion
prices is (independently of the inadequateness of the
172 THE CURRENCY.
supposed cause as has already been shown) not
borne out by a reference to the periods in which,
or to the circumstances under which, the great
alterations of price took place.
3. That the alterations in the amount of the
circulation did not occur in such order of time
with reference to the variations of prices, as to
justify the assignment of such a relation as that of
cause and effect ; for that in point of fact in the
majority of instances the alleged effects preceded
the supposed causes.
4. That the increase of the Bank circulation
during the restriction, although excessive, as being
beyond what could, under the pressure of foreign
payments, be maintained consistently with the pre-
servation of the par of the exchanges, and of the
price of gold, was not greater than it is probable
would, in an midisturbed state of politics and trade,
have been required to carry on the greatly ex-
tended pecuniary transactions of the country at
bullion prices on their ordinary level with those
of other countries. The proof, or at least the
strongest possible presumption to this effect being,
that upon every cessation of the pressure of foreign
payments the exchanges tended to a recovery, and
were, when those payments finally ceased, restored
to par, not only without any reduction of Bank
paper, but coincidently with an increase of it.
5. That the growth and contraction of country
bank notes greatly beyond, and within, the extent
to which they served for ordinary local purposes,
were governed during the restriction by the same
general causes as operated before and since.
They expanded under circumstances favouring
speculation, and a rise of prices, and became con-
tracted under the opposite circumstances.
6. That a contraction of the currency was not
a necessary consequence of, or, in point of fact,
produced by. Peel's bill, or by any anterior prepar-
THE CURRENCY. 173
ation on the part of the Bank for cash payments ;
for that, according to the rules by which the Bank
regulated its issues, there is every reason to believe
that, without any reference whatever to that bill,
or to any anterior preparation, the circulation of
Bank of England notes and coin together, con-
stituting the basis of the currency, would have
been neither more nor less than it actually proved
to be.
17 J'
PART IV.
HISTORICAL SKETCH OF PRICES, AND OF THE
STATE OF THE CIRCUL/iTION, FROM 1792 TO
1 8S7.
CHAPTER I.
INTRODUCTION.
The whole qLiestion of the degree in which the
causes that liave been severally assigned as account-
ing for the great variations of price in the period
which is to come under consideration, viz. from
the commencement of 179^^ to the present time,
mainly rests upon the sequence observable between
prices, and the circumstances connected with them
in the relation of cause and effect. It is absolutely
essential in this view to trace the events in strict
connection with prices. In a former work of
mine on prices, a cursory glance only was taken
of the state of things in relation to prices at par-
ticular periods, without, as I have since perceived,
a sufficiently distinct arrangement of the whole
series of them in chronological order. It is my
present purpose, accordingly, to give them in that
order. But with that view it is necessary to make
a division into points, upon which the attention
may rest, or, in other words, into epochs, through
which the several sets of prices and circumstances
may be traced distinctly. In determining the
question how that object may best be accomplished,
HISTORICAL SKKTCH. 17.^
the most convenient mode that has suggested
itself to me is that of a division into epochs of
about five years each. Shorter intervals, annual
periods, for instance, would, properly speaking, be
of the nature of annals, and would weary and
distract the attention by the inevitable minuteness
of the details, besides that an interval so short
would not admit of continuous observation of the
whole, or even of the greater part of the phases,
within which the changes and alternations between
periods of confidence and discredit, of the spirit of
enterprise and despondency, have revolved. On
the other hand, intervals often years would be too
long for the purpose, as they would embrace too
many particulars to admit easily of such arrange-
ment and classification as are essential to the
formation of any clear conclusions. Not only,
therefore, as a medium between these extremes,
but because, in point of fact, it so happens that
intervals of about five years do afford resting-
places, at each of which an examination may con-
veniently take place of the rise and progress, and
in many instances of the termination, of a series of
events, all tending to throw light on each other,
and to bring out a legitimate conclusion, it is
heie proposed to adopt a division of the time
which is to pass in review into intervals of about
five years.
The first division will, however, most con-
veniently embrace six years, viz. from the com-
mencement of 1793 to the close of 1798 ; and the
period ending 1822 will comprise only four years,
for reasons which will be obvious when those
epochs come under consideration.
176 PRICES AND CIRCULATION, 1793 1798.
CHAP. II.
ON THE STATE OF PRICES, AND OF THE CIRCULA-
TION, FROM THE COMMENCEMENT OF 1793 TO
THE CLOSE OF 1798.
The commencement of 1793 is among the most
memorable in the annals of this country, and of
Europe, and indeed of the civihsed world. It was
in February of that year that the war with France,
which, with the intermission of a few months,
lasted for upwards of twenty years, was declared.*
There had been immediately preceding that
event a great revulsion and derangement of com-
mercial credit, not only in this country, but in
the principal trading cities of the Continent of
Europe.
By some persons it was supposed, that the de-
claration of war had materially contributed to
produce the derangement of credit. Thus Sir
Francis Baring, in a pamphlet published in 1797»
observed : —
" A circumstance which very materially contributed to pro-
duce the distress of 1793 was the sudden unexpected declara-
tion of war. That dreadful calamity is usually preceded by
some indication which enables the commercial community to
make preparation. On this occasion the short notice rendered
the least degree of general preparation impossible, and which
may be ascertained by the prices of stocks in the preceding
month of October and various collateral authorities."
Notwithstanding this deservedly high authority
for the supposition, that the breaking out of the
* The preparations for war on both sides were made in
January, but the actual declaration of war was made by France
against this country on the 1st of February, 1793.
PRICES AND CIRCULATION, 1793 — 1798. 177
war had contributed in a considerable degree to
the memorable derangement of commercial credit,
which occurred about that time ; I am disposed,
both from my own recollection, and from all that
I have been able to collect by research, to doubt
whether the war had much influence in the origin
of the discredit, although it can hardly have failed
of operating in aggravation of the main causes.
These seem to have been pre-existing in a great
and undue extension of the system of credit and
paper circulation, not only in the internal trade and
banking of this country, but in the commercial
transactions of the principal cities of the Continent
of Europe, and in the United States of America.
The commercial failures both here and on the
Continent of Europe, and in America, began in
the autumn of 1792, while the price of the funds
was still comparatively high, the 3 per cent. Con-
sols being at 90 in September, and at 88 in
November of that year, and while, therefore, it
could not be supposed, that the alarm of impend-
ing hostilities could have had much effect. Nor
did it appear from the character of the mercantile
failures which occurred, and which proved in most
instances to have been insolvencies of some stand-
ing, how war, or the apprehension of war, could
have produced tlieir embarrassment. At the same
time it must be admitted, that the breaking out of
the war, although apparently not an originating
cause, must necessarily have added to whatever
were the pre-existing causes of derangement, not
only by the increased rate of interest occasioned
by the loan for the purposes of the war, but by the
inevitable disturbance of some of the channels of
demand.*
* It is probable, that, although the failures and the attendant
commercial discredit began in 1792, before any great fall in the
funds of this country had occurred, the further failures and con-
sequent discredit, particularly of the country bankers, were ex~
N
lyS PRICES AND CIRCULATIONT,
There is a very prevalent impression, that the
orighi of speculations and Ingh prices is to be
dated from the commencement of the war in 1793.
The fact, however, is, that there was a very gene-
ral fall of prices, from the close of 1792 to the com-
mencement of 1791'- On looking over the Table
of prices, it will be seen that there were very
few commodities which were not lower at the
close of 1792, and at different periods in 1793 and
1791, than they had been at the commencement
of 1792. And the real fliU was still greater than
the apparent one ; because the cost of production
of all imported commodities was greater by the
difference of freights and insurance, after the
breaking out of the war.
This fall of prices does not seem to have been
a direct or obvious consequence of the war : it
was rather the effect of a recoil from extensive spe-
culations, which had their origin two or three years
before, connected with the extensive circulation of
mercantile paper already alluded to. One of the chief
causes of those speculations seems to have arisen
on the ground of apprehended scarcity of colo-
nial produce in consequence of the revolution in
St. Domingo, which at that time constituted the
largest source of supply of sugar and coffee to
the Continent of Europe. Other grounds were
afforded by the unsettled aspect of politics. As
usual, in times of confidence and tendency to spe-
culation, many articles, for the rise of which there
was no sufficient ground of actual or apprehended
scarcity, participated in the advance. But the
tended and aggravated by the great fall of the funds which im-
mediately followed the declaration of war. And there is reason
to believe, that some of the failures of the Continental houses
were aggravated, if not caused, by previous speculations in the
French assignats which subsequently experienced the extreme
of depreciation.
1793—1798. 179
rise proved to have been greater than the occasion
justified, and prices fell. It may be observed,
however, that as, during the previous rise, there
had been no manifestation of extravagance of ad-
vance in any one article, so, in the fall, the number
of articles to which it applied was extensive ; but
to none did it apply in a very marked degree. The
lowest point of depression of the prices of such
articles as had risen most between 1790 and 1792,
seems to have been reached in 1794.
It was not till the latter part of 1794 and the
commencement of 1795 that circumstances arose,
which were calculated to create a great disturb-
ance of prices, both of corn and of other leading-
articles of consumption. In proceeding to notice
in some detail and consecutively the great varia-
tions in prices, which henceforth occurred, those
of corn, as bearing most, according to general opi-
nion, on the doctrine of depreciation, will be more
particularly referred to and dwelt upon. Those of
other commodities will be noticed only when un-
der the influence of extraordinary circumstances,
and more especially hi connection with, and illus-
trative of, the influence of the circulating medium,
the state of which will be the subject of consider-
ation at the end of each interval.
The general character of the seasons, as to pro-
ductiveness, will be noticed with more or less of
detail, according as they may appear to have been
attended with less or more of influence on prices.
Section 1. — On the Seasons in Connection with
the Prices of Provisions, from 1793 to the Close
of 1798.
Of the season of 1793 it is said by Arthur Young,
in the Annals of Agriculture, vol. xxv., that the
N 2
180 PRICES AND CIRCULATION,
" Summer was a very dry one, in which, though the wheat
was moderate, the spring crops generally proved deficient."
Moderate only, however, as the crop of wheat is
described to have been, the price gave way after
harvest. The quotation of the Windsor market,
which at Lady-day, 1793, had been 5is. Id., fell
at Michaelmas following to 45^. And the ports,
which had been open by proclamation in the
spring, were shut again at the low duty in June
of that year.*
On the seasons of 1794 and 1795, the results of
which form so prominent a feature in the history
of the Corn Trade, it is necessary to dwell some-
what more in detail. Arthur Young, writing in
1795, says of the former,
" In the last summer, 1794, the wheat turned out, very un-
expectedly to many growers, a failing produce; the drought in
many parts of England parched the spring corn to that degree,
that I believe the leguminous crops have scarcely returned
even the seed committed to the ground for them."
" Here we find that there have been three seasons in succes-
sion unfavourable to the production of some kinds of grain ;
the dearness of all is a natural consequence."
The spring of 1794 was the most forward,
and the summer tlie most uninterruptedly hot
* According to the Gazette return of the averages for Eng-
land and Wales, there does not appear to have been so great
a fall in the price of wheat immediately following the harvest of
1793, namely, from 51,?. to 47* ; but the discrepancy maybe
explained partly by the very incorrect manner in which the
averages were taken and partly by the circumstance that the
harvest weather of 1792 had been wet, while that of 1793
was dry, which would account for a greater difference than
usual, between the better wheat and that of average quality in
the spring of 1793. Notwithstanding, however, the objections
which, as regards cori'ectness, apply to the average returns,
they will henceforth be referred to in preference to the Eton
Tables for two reasons : the one is that the currency contro-
versy has proceeded chiefly upon a reference to those returns ;
and the other is, that these admit of occasionally introducing
into the same line of comparison the prices of spring corn.
1793—1798. 181
and dry, of wliich I have been able to meet with
any record : as, however, the degree of deficiency
arising from the excessive drought and scanty
crops of 1794s and the want of a surphis from
1793, had not, in consequence of the harvest
being unusually forward (the cutting of wlieat
having been begun in the south and midhuid dis-
tricts, by the middle of July, and the crops mostly
secured by the end of that month), and the wlieat
having been brought in line condition and very
early to the market, been sufficiently appreciated,
the price did not rise soon enough to check the
consumption ; and it was not till the winter and
spring following, that the insufficiency of the stock
on hand, to meet the average rate of consump-
tion, was discovered.
The winter of 1794-5 had set in remarkably
early, and proved to be of extraordinary severity
and mclemency, so that independently of the in-
creased consumption, thence arising, of the stock
of dry food, apprehensions were justly entertained
of injury to the growing crop. A very general alarm
arose, and the average prices advanced as follows : — ■
Years.
Wheat.
Barley.
Oats.
1 Jan. 1795,
55s. qd.
34*. 2f/.
21*. \\d.
1 July, do.
775. '2d.
41.9. lOf/.
Tin. 8d.
Government had, early in 1795, and indeed,
for some time before, taken the alarm at the indi-
cations of impending dearth, and adopted some
extraordinary measures of precaution. All neu-
tral ships bound with corn to France were seized
and brought into this country, and their cargoes
paid for, with an ample profit to the proprietors.
This measure was adopted with a double view,
of relief to ourselves and distress to the enemy,
there being still greater scarcity in France than in
this country. At the same time government em-
ployed agents to buy corn at the ports in the
N o
182 PRICES AND CIRCULATION,
Baltic. This was done because it was apprehended
that our own merchants would be deterred from
purchasing so freely as was desirable, by the great
advance of prices, which had taken place in the
North of Europe, in consequence of large purchases
for account of the French government.
Of the })olicy of this measure, as interfering with
the ordinary course and true principles of trade, Mr.
Pitt spoke doubtingly ; but rested the justification of
it upon the extraordinary and alarming character of
the emergency. Sir Francis Baring also offered a
hesitating opinion in justification of the measure.
Notwithstanding all these precautionary measures
for obtaining a foreign supply, and the induce-
ments held out by an unprecedentedly high price
in this country, such was the scarcity in the north
of Europe and in America*, and such the com-
petition of the government of France with ours,
that the importation in the whole of the year 1795,
after deducting small casual exports, did not quite
reach three hundred thousand quarters of wheat.
The spring of 1795 was very cold and backward,
the summer wet and stormy, and the harvest con-
sequently unusually late. Under these threatening
circumstances the prices experienced a continued
advance, the average for England and Wales having
reached 1086-. 4c?. in August of that year. The wea-
ther, however, having cleared up towards the latter
part of August, and having proved fine throughout
September, so as to admit of securing the wliole of
the crop in good order, the markets experienced
a decline, the average price in October having
got down to jGs. Od- But tlie original de-
ficiency then manifested itself, and prices rose
* In the United States of America the crops of wheat, in
1795, were as deficient as they were in Europe. The deficiency
was mainly ascribed to the ravages of an insect called the Hes-
sian Fly. And the price of flour reached the enormous rate of
fifteen dollars the barrel.
1793—1798. 183
again considerably before the close of the year ;
On the meeting of parliament, 29th October, 1795,
the khig in his speech alluded to the dearth in the
following terms : —
" I have observed for some time past with the greatest anxiety,
the very high price of grain ; and that anxiety is increased by
the apprehension that the produce of the wheat harvest, in the
present year, may not have been such as effectually to relieve
my people from the difficulties with which ihey have had to con-
tend."
And concluded with an assurance of his Majesty's
hearty concurrence in whatever regidations the
wisdom of Parliament might adopt.
Animated discussions took place on the nature
and causes, and extent of the dearth, and on the
remedies to be applied for the alleviation of its
effects. On the 3d November, the Chancellor of
the Exchequer moved, that a select committee
be appointed, for mquiring into the circumstances
of the present scarcity, and the best means of re-
medying it. As usual on such occasions, there
was a disposition to account for the high price of
provisions by the assignment of any but the simple,
sufficient, and true cause, casual deficiency of sup-
ply from the visitation of two very unproductive
crops. Monopoly *, forestalling t, andregrating were
* The following extract from among the speeches in the
House of Commons may serve as a specimen to this effect: —
Debate 3d November, 1795, Mr. Lechmere said, " We had
perhaps had as plentiful a harvest as the great Author of all bless-
ings ever gave us." " One of the great causes of the present
distress he took to be the monopoly of farms."
t The charge of Lord Kenyon, at the Assizes for Salop,
in 1795, will afford a specimen of the prejudices which exten-
sively prevailed at that period as to the influence of unfair prac-
tices in raising the prices of provisions : —
" Here, gentlemen, since I have been in this place, a report
has been handed to me (without foundation I sincerely hope),
that a set of private individuals are plundering at the expense
of public happiness, by endeavouring, in this county, in this
most abundant county, to purchase the grain now growing upon
N 4
184< PRICES AND CIRCULATION,
among the causes assigned. The war, howevei',
was very generally considered as having had great
influence in the rise of prices.*
With regard to the extent of the deficiency.
Lord Sheffield, in the House of Commons, Decem-
ber, 1795, stated it to be from y to ^ without any
old stock, and without any prospect of adequate
supply from abroad. Various remedies were pro-
posed ; that which was mainly relied upon and
finally adopted, was an act, granting a bounty
of from l6s. to QOs. the quarter, according to the
quality, on wheat, and ()s. the cvvt. on flour from
the south of Europe, till the quantity should
amount to four hundred thousand quarters ; and
the soil. For the sake of common Immanity I trust it is untrue.
Gentlemen, you ought to be tlie champions against this hydra-
headed monster. 'Tis your duty as justices to see justice done
to the country. In your respective districts, as watchmen, be on
your guard. 1 am convinced, from my knowledge of you, that I
have no need to point out your duty in this case ; and though the
act of Edw. VI. be repealed (whether wisely or unwisely I
take not upon me to say), yet it still exists an offence at com-
mon law, coeval with the constitution ; and be assured, gentle-
men, whoever is convicted before me (and I believe I may answer
for the rest of my brethren), when the sword of justice is drawn, it
shall not be sheathed until the full vengeance of the law is in-
flicted on them ; neither purse nor person shall prevent it." —
Annals of Agriculture for 1795, vol. xxv. p. 111.
* Mr. Fox said, " The war certainly has had a most decided
effect, so far as it has tended to increase the consumption, to
diminish the production, and to preclude the possibility of ob-
taining supplies, which might have been drawn from other
quarters." — Parliamentary Debates, vol. xxxiii. p. 239.
It was with reference to this opinion that Mr. Burke observed,
" As to the operation of the war in causing the scarcity of
provisions, I understand that Mr. Pitt has given a particular
answer to it ; but I do not think it worth powder and shot."
( Thoughts and Details on Scarcity, p. 33.) As the seasons of
1791< and 1795 form so important a feature in the general
impression of the high prices ascribed to the war and the
restriction, and as those seasons were in every way remarkable,
an extract, descriptive of them, from the publication by Mr.
Burke here quoted, will be found inserted in the Appendix.
1793—1798. 185
from America, till it should amount to five hundred
thousand quarters ; and 12.y. to 15,s. from any other
part of Europe, till it should amount to five hun-
dred thousand quarters ; and 8.9. to 10*. after it
exceeded that quantity, to continue till the 30th
September, 179t).
Among the minor measures was a sort of self-
denying ordinance*, by which the members of both
houses of parliament bound themselves to reduce
the consumption of bread in their households by
one third, and to recommend, among those whom
they could influence, a similar reduction. t
The prices of all other provisions having risen in
a greater or less proportion to wheat, and there
being a very general apprehension of a continuance
of the scarcity, it had become manifestly impossible
for the working classes to subsist on their ordinary
wages. It was partly from a conviction to this
effect, and partly in consequence of the tendency
to disturbance and riots among the agricultural
labourers, that the allowance system was at this
time introduced. There was at the same time a
general acquiescence on the part of employers in
the necessity of some advance of wages, which,
however, when conceded, bore still a very inade-
quate proportion to the increased price of the
* " Engagement by such members as may choose to sign the
same : —
" To reduce tlie consumption of wheat in the famihes sub-
scribing such engagement by at least one third of the usual
quantity consumed in ordinary times, and to recommend the
same in their neighbourhoods. Agreement to be in force till
fourteen days after the commencement of next session of Par-
liament, unless the average price of wheat should, in the mean
time, be reduced to 8*. per bushel." — ParliamentarT/ History,
Dec. 11. 1795.
f It was as one of the means of diminishing the consumption
of wheat on the occasion of this scarcity, that the notable hair-
powder tax was imposed — a measure which hastened the dis-
continuance of that strange fashion.
186 PRICES AND CIRCULATION,
necessaries of life. The distress *, accordingly, of
the working and poorer classes was very severe,
and tlie privations of the classes immediately above
them, and generally of all classes depending on
limited money incomes, were great. The whole
period, indeed, of this memorable dearth, was one
of much suffering to the bulk of the community.
But it was a time of great prosperity to the landed
interests, that is, to the landlords who were raising,
or had the prospect of soon raising, their rents ; and
to the farmers, who were realising enormous gains
pending the currency of their leases. The follow-
ing extract from an article by Arthur Young, in the
Annals of Agriculture, for 1796, will serve as a
practical illustration of the principle which I have
had occasion to notice ; viz., of the effect of a defi-
ciency in raising the price greatly beyond the ratio
of the defect, and of the consequent larger sum
distributed among the growers than could be de-
rived from medium or abundant crops.
" The average price of wheat for the twelve months, from
May 1795 to ApriJ 1796, has been, on an average, in England
and Wales, 10*. 7c?. per bushel, and that of barley 4^. 9d. Now
the price for twelve years, ending 1791', was for wheat 5s. lOd.,
and for barley 3*. 3d. For the year above described, therefore,
the price has exceeded that average 4*. 9d. per bushel for wheat,
and Is. 6d. for barley. Let us suppose the annual consumption
of wheat to be 8,701,875 quarters, and that of barley 10,545,000
quarters ; and, further, that the deficiency of the crop on the
average, of the two years, so far as they affect the period in
question, has amounted, in wheat, to one fifth ; and that the
barley has, on an average of the two crops, been a medium : in
this case there would have been consumed —
Of wheat 6,961,500 qrs. the extra price on which
at 4*. 9d. the bushel, or 38*. the quarter, is 13,226,849/.
Of barley. 10,545,000 qrs. at 1*. 6d. per bushel,
or 12*. the quarter - - - 6,327,000/.
19,553,849/.
* In a reference to this period, in the Annual Register for
1796, it is observed that " the scarcity was wofully felt by the
poorer sort, several of whom perished for want." p. 9.
1793—1798. 187
If, therefore, these data are just, and they are ventured merely
as calculation on uncertain foundations, the farmers have received
in these two articles only near 20,000,000/. sterling beyond the
deficiency of the crop, supposing the deficiency to be one fifth,
which is a very great one, and without adding a word on the
price of meat or any other article." — Vol. xxvi. p. 469.
The dearth of provisions, and the apprehensions
of further scarcity, reached tlieir height in the
spring of 1796, the av^erage price of wheat having
advanced to 100^. When, however, the influence
of the Bounty, in addition to the encouragement
of the markets in this country, was ascertained to
be effectual in preparations for a large importation,
the prices of corn began to give way, and the fldl
was hastened by the mildness of the season, the
winter of 179-5-96 having been one of the warmest,
as that of 1794--95 had been one of the coldest
upon record.
The harvest of 1796 was abundant, and toler-
ably well secured. This, with the addition of an
importation of upwards of 800,000 quarters, re-
duced the average price of wheat before the close
of the year, to 5'^s. 3d. ; and the fall continued,
progressively, till the summer of 1797> when the
average ranged between 49."^. and 50.s-.
In 1797> the spring was backward, the summer
variable, and rather cold, and the harvest wet and
stormy, and the general reports of the crops unfa-
vourable, both as to quality and quantity. In con-
sequence of the apprehensions entertained of injury
from the weather, the prices of wheat advanced
from an average of 50^. in June, to 60s, in Octo-
ber. But, notwithstanding that all that could be
ascertained of the crops proved the existence of
some deficiency of quantity, as well as inferiority
of quality, the price declined again by the close of
the year to an average of 52.s'. 9d., and in February,
179s, to 49.S". lOd. This decline was apparently
occasioned by the surplus of the former year, com-
188 PRICES AND CIRCULATION,
bined with a further importation of 407,242 quar-
ters of wheat, in 1797- It is consequently clear,
that if this year's crops had been abundant, tlie fall
of price would have been more considerable.
The season of 1798 proved to be moderately
productive. The summer was dry and warm, the
harvest forward, and the crops secured in good
order. The spring crops had suffered from the
heat and drought. The wheat crop was the best,
although not considered to be large ; but coming
early to market, the average price which in August
had been 5ls. 3d., fell in November of that year
to a fraction below 48s.
The following statement of the average prices
will show the subsidence of the prices of corn at
the close of 1798, to nearly the level of what they
had been at the close of 1792 —
Years.
Wheat.
Barley.
Oats.
1792.
Dec. 47*. Qd.
29.5. 10^.
18.S. 6d.
1798.
Nov. 47^.10^.
29s. Od.
I9s. lOd.
So that after six years of war, involving a greatly
increasing expenditure, defrayed by loans, much
larger towards the later than at the earlier period,
we see the prices of corn, after having been ele-
vated by scarcity, obviously arising from the sea-
sons, falling, upon the return of only moderate
abundance, to the level whence they had risen.
Section 2. — On the Prices of Coynmodi ties from
1793 to 1798.
While the prices of provisions had been under-
going such great variations from the vicissitudes of
the seasons, the prices of other articles experienced
also an extraordinary fluctuation.
There had been, as has been noticed, a general
1793—1798. 189
fall of prices at the commencement of the war, and
they continued at a comparatively low range
through the greater part of 1794. In 1795, se-
veral circumstances combined to occasion a range
of high prices, besides those of provisions. Two
successive bad seasons on the Continent of Europe
as well as in this country had rendered all Euro-
pean agricultural produce scarce and dear, such as
linseed and rapeseed, olive oil, and tallow. Silk in
Italy and the vintages in France had suffered from
the inclemency of the season. There was an ex-
traordinary competition between our government
and that of France in the purchase of naval stores
in the north of Europe, thus greatly raising the
prices of hemp, flax, iron, and timber. The prospect
of a war with Spain, which broke out in the year
following, affected several descriptions of Spanish
produce. Colonial produce, of which a scarcity
consequent on the failure of the supplies from St.
Domingo was now generally felt throughout Eu-
rope, experienced a fresh rise. All these classes of
commodities continued to rise through 1795 and
part of 1796. Those which were affected by the
seasons in Europe, fell in the latter part of 1796,
and in 1797> although from the increased cost of pro-
duction, and in the case of naval and military stores
from the increasing demand, not to their former
level.
The following are specimens of the fluctuation
of this class of articles : —
155.
179:1-4
17
95-6
17
96-7
Ashes, per cwt.-
245. to 3 1 5.
605.
to 705.
395.
to 55s.
Flax, per ton
28/. - 32/.
54/.
- 57/.
44/.
- 45/.
Hemp, do.
22/. - 23/.
58/.
- 59/.
32/.
~ 34/.
Foreign iron, do.
12/.
22/.
5s.
19/.
Linseed, per qr. -
355. - 405.
6O5.
- 635.
305.
- 355.
Oil, Gallipoli, pe
r
ton
42/. - 46/.
70/.
- 71/.
, 60/.
- 63/.
Rice, per cwt. -
155. - 165.
4l5.
- 435.
155.
to I65.
Tallow, do.
385. - 395.
785.
- 8O5.
465.
- 475.
Timber, per load
435. - —
8O5.
- —
505.
- 555.
190 PRICES AND CIRCULATION,
But a very important class of articles, viz.,
coffee, sugar, indigo, pepper, cotton, cochineal,
and other articles of colonial produce, which had
begun to rise in 1795, continued to advance till the
close of 1798, insomuch that, at the end of the
latter year (and in the first two or three months of
1799) tliey attained a greater height than at any
subsequent period between that and 1814, when
the great speculative exports to the Continent took
place. The following are some of the instances of
the rise of prices which the leading articles of co-
lonial produce experienced from different periods
in 1793 and 1794 to the close of 1798, and the
three months following : —
Coffee, Jamaica, per cwt.
Sugar, Muscovado, do. -
, East India, white
Cotton, bowed Georgia,
per lb.
Cochineal
Indigo, E. I. superior -
Pepper, black, per lb. -
Logwood, per ton
Tobacco, per lb.
This enormous advance of prices of a class of
articles involving a vast amount of capital, had its
origin, or at least received its main impulse, in
1796. And the rise continued almost uninter-
rupted through 1797 and 1798, notwithstanding
a progressive coincident rise of the exchanges which
in the latter year attained an unprecedented height,
that on Hamburg having reached 38s. The de-
mand was chiefly for export to the Continent of
Europe, and the principal channel was Hamburg.
It is further to be observed, that this large class of
articles was rising while corn was falling ; and that
they attained at the close of 1798, some a little less,
and some a great deal more than 100 per cent,
above their previous rate, while corn had fallen
50 per cent, below the rate which it had attained
in 1795-6.
1793-4
1798-9
775. to 955.
1855. to 1965.
325. - 585.
625. - 875,
60s. - 70s.
965. - 1155.
Is. Id. - Is. 4^.
3s. 6d. - 45.6
- 125. - 125. 3d.
545.
7s. 6d. - 95. 6d.
11 5. - 135.
13d.
22^.
61. . 81.
48/. - 50/.
3d. - 5d.
Uhd.- I6d.
1793—1798. 191
I have been the more disposed to dwell upon
this remarkable feature of the state of prices in
tlie interval under consideration; because I am
quite satisfied that, among those who recollect or
have heard of those enormous prices of colonial
produce, there is a vague impression that, as they
occurred two years after the Bank restriction, and
in the height of the war, they were the conse-
quence of one or the other.
That these high prices were not tlie conse-
quence of any enlargement, but were in spite of
a great contraction of the basis of the currency,
will be seen presently; and it is quite clear that
they were not caused by a demand arising out of
the expenditure of our government, seeing that
the demand was chiefly from abroad, and they
were not connected with war on the Continent,
seeing that tlie powers of the Continent were at
peace from the spring of 1797 till 1799. The
negative of the influence of war applies, however,
only to the supposition of any extra consumption
or demand thence arising to account for the high
prices. That the effect of the war was to obstruct
supplies and to increase the cost of production, if it
were only by the difference of freight and in-
surance, has been already stated, and is in this, and
all other instances, to be considered as being im-
plied. But this is not the sense to which the sup-
posed influence of war on prices divested of tax-
ation is commonly confined.
Thus, we have seen that at the close of 1798
(and this is the reason for having extended the
epoch to six instead of five years), while corn
and provisions generally, and some other arti-
cles of European produce, had, as a consequence
of two remarkably unproductive seasons, risen
upwards of 100 per cent, in 1795 and 1796,
and had subsided at the termination of the in-
terval to the level from whence they had risen.
192 PRICES AND CIRCULATION,
another and a most important class of com-
modities reached, by the end of 1798, to an enor-
mous and unprecedented height, and were then
much higher than during any subsequent period of
the war.
Section 3. — Bank Circulation^ 1793 to 1798.
In the preceding sketch of prices they have been
considered without reference to the state of the
circulation.
To what extent, if at all, the great fluctuations
were influenced by the currency, will appear in a
clearer point of view by taking a survey of the state
of the circulation during the whole of the interval
which has been under consideration, than if de-
tached references had been made to it in the pro-
gress of the examination of the circumstances
which immediately affected the prices through the
medium of supply and demand ; and this mode of
examining, at the close of each interval or epoch,
the regulation of the Bank issues, and the general
state of the circulation, during such interval, will
be adopted in the succeeding epochs.
There has before been occasion to observe, that at
the commencement of 1793, the general circulation
was greatly deranged by the failures of many of the
country banks, and of many considerable mercantile
establishments. The commercial discredit and dis-
tress thence arising, surpassed in degree and extent
of suffering any of which there had been any pre-
vious example. The causes of the mercantile failures
and consequent commercial discredit, have been
before noticed. They were not confined to this
country ; but were connected with a very general
excess of the circulation of mercantile paper, and
1793—1798. 193
a great prevalence of the spirit of speculation
in the principal trading towns of the continent
of Europe, and in America. But the peculiar fea-
ture, as related to this country, was in the failure
of an extraordinary nimiber of country banks*:
the more extraordinary, as the previous existence
of such numbers of them, and such an extent of
circulation, seems hardly to have attracted notice,
or to have come in any way within the knowledge
of the public. In this, as in subsequent instances,
the growth of the country circulation followed the
extension of agriculture, and trade, and manufac-
tures. It is observed by Mr. Henry Thornton,
in his work, published in 1802, on Paper Credit,
that "a great increase of country banks took place
during the time which intervened between the
American war and that of the French revolution,
and chiefly in the latter part of it ; a period during
which the population, the agriculture, and the
trade of the country had advanced very consider-
ably."
The circumstances of the period following the
termination of the American war were, doubtless,
very favourable to the extension of that descrip-
tion of circulation.
After the forcible and extraordinary contraction
which the Bank of England had resorted to in 1783
and 1784, with a view, in which it succeeded, to
stop the drain of its treasure, which had been
reduced to the lowest ebb, there was a steady
and uninterrupted influx of gold into its coffers
* The following is an extract from the list of Bankruptcies : —
Total number Against country
of commissions. bankers.
1791 - - - 769 1
1792 - ... 934 1
1793 - - - 1956 26
Appendix to the Report of the Lords' Committee on the
Resumption of Cash Payments, 1819.
o
194i PRICES AND CIRCULATION,
during the five following years ; and the basis
of the currency was necessarily increased by the
issue of bank notes in payment for the gold. The
circulation, accordingly, of the Bank, which had
ranged at a little more than 6,000,000/. between
1788 and 1785, had in 3789 reached 11,121,800/.,
and its bullion amounted to 8,645,860/.* This
influx of bullion, and the consequent increase of
the Bank issues, had the natural effect, as it was in
a period of confidence, of reducing the rate of
interest ; and the fall of the market rate of interest,
while the Bank did not lower its rate of discount,
enabled the country banks to extend their issues
in advances and discounts, which, if the current
market rate of interest had been higher, would
have been, in part at least, applied for at the Bank.
The discounts at the Bank, which in 1785 had been
4,973,926/., were reduced in 1789 to 2,035,901/.
There was another circumstance which had,
probably, more than any other single cause, con-
tributed to the growth of the country circulation.
It is well known that rising prices of corn and
farming stock, and the consequently improved
state and credit of the farmers, have been among
the principal occasions of an increased issue and
circulation by the country banks : and this was a
state of things which prevailed between I787 and
1791. During that interval, after a low range of
prices preceding the harvest of 1787> there was,
without any extraordinary scarcity, such a degree
of comparative deficiency of produce as raised and
maintained a relatively high range of prices till the
harvest of 1791, the abundance of which occasioned
a temporary considerable fall of prices. It might
be thought by those who consider every increase
of the circulation as a cause, of a rise of prices, that
those of agricultural produce from I787 to 1792
* Being one half of its liabilities, which were 17,524,250/.
1793—1798. 195
had been raised by tliat increased circulation. But
as a proof that the rise was. not the effect of any
increase of currency, pecuHar to this country, it
is requisite to advert to the fact, that the ad-
vance of prices had been greater on the conti-
nent of Europe, and especially in France, than
here ; and that in order to prevent the effect of
that higher state of prices abroad from drawing
supplies from this country, our own crops of I788
and 1789 having been considered rather deficient,
the exportation from this country was prohibited
by proclamation ; and if the prices of corn had been
raised by the amount of the circulation between
1788 and 1790, the still increased amount ought
to have prevented the fall which occurred at the
close of 1791 and the beginning of 1792.
It is not improbable, indeed, that the fall of prices
of agricultural produce, which occurred in the early
part of 1792, as a consequence of the abundant
harvest of 1791 > had the eflect of impairing the
securities of the country banks, through that me-
dium of issue, and may thus, concurrently with
the recoil from overtrading in other branches, have
occasioned the extensive failures and discredit that
marked the close of 1792 and 1793. Of that ca-
lamitous time, some contemporary accounts will be
found in the Appendix.
This somewhat detailed explanation of the cir-
cumstances connected with the country circulation,
which experienced so great a derangement, has ap-
peared to me to be desirable, as affording means
for the better judging of the position of the Bank
of England in 1793, and of the influence of the
regulation of its issues in the eventful period now
under consideration.
The treasure of the Bank, which had been
8,055,510/., in August, 1791, was reduced in Feb-
ruary, 1793, to 4,010,680/., while its circulation was
maintained at nearly the same amount of between
o 2
196 PRICES AND CIRCULATION,
eleven and twelve millions. There had been a
decline of the foreign exchanges m 1792, which
may account, in some degree, for the drain ; the
greater part however of the drain seems to have
been occasioned by a demand from the coun-
try bankers, for the purpose of enabling them to
meet the run which they experienced. But al-
though the Bank fully kept up the amount of its
issues, while it had supplied a large amount of gold
to the country, the total of the circulating me-
dium at the beginning of 1793 was in a very con-
tracted state, or, in other words, the pressure
on the money market was very severe ; and this,
notwithstanding that the Bank was liberal in its
discounts*, which had increased from 1,898,640/.,
in August, 1791, to 6,456,041/., in February, 1793.
It has been already observed, that prices of almost
all commodities, with the exception of corn, were
lower in 1793 than they had been in the two years
preceding ; and the price of wheat was below
the average of the three years previous to the
harvest of 1791. Tiie price of 3 per cent, con-
sols had fallen from 96, in 1792, to 72, in 1793, at
which price the first loan in preparation for the
war, amounting to 4,500,000/., was contracted.t
* It may here be observed, that a demand for increased dis-
counts at the Bank of England is rarely, if ever, felt in the early
stages of a speculative tendency, or as a means of making
purchases, with a view to a further advance. It is chiefly when
a pause takes place in the expected advance, and still more
after the commencement of a fall, that the applications for
discount become urgent, for the purpose of enabling the parties
to meet engagements entered into some time before, and for
which they may be supposed to have reckoned on funds to have
been realised by advantageous sales.
+ " It was originally intended to have raised this loan on a 4 or
5 per cent, stock ; but the embarrassed state of commercial
credit having caused a scarcity of money, the minister only
received offers from one set of subscribers ; and as they preferred
3 per cents., it was judged expedient to conclude the bargain
in that stock at the above price, which was between 4 and 5
1793—1798. 197
This general depression of credit and of prices
was the main cause of the contraction of the cir-
culation, and not the contraction of the circu-
lation a cause of the depression. A grant had
been made by parliament of exchequer bills to be
advanced on loan in aid of commercial credit.
But this measure appears to have had no influence
on the circulation, or on the state of prices. And
in point of fact the pressure and discredit and
stagnation had ceased before the proposed advance
of exchequer bills came into operation.
The bullion in the Bank in August*, 179 1^
amounted to considerably more than one third of
its liabilities, and the exchanges till the autumn of
that year maintained a high range ; but they after-
wards gave way, that on Hamburg having fallen
from 3(5-7, in May, to 31-5, in November, in
consequence of the large foreign payments whicli
were then to be made. This decline of the
exchanges, with the knowledge or intimation of
the foreign expenditure in progress, should, ac-
cording to a correct system of management, have
operated as a warning and inducement to con-
tract the circulation. But as under circum-
stances, in some respects, analogous, in 178-> and
again in more recent instances, when the critical
moment arrived, upon the turn of which de-
per cent, under the current price. Mr. Pitt admitted that the
terms were much more disadvantageous to the pubHc than
might have been expected; but having done every thing in his
power to excite a competition without effect, they were the best
he could procure." — Terms of Loans, by J. J. Grellier, 1802.
* Circulation - 10,286,780 Securities - 12,446,460
Deposits - 5,935,710 15ullion - 6,770,110
Liabilities 16,222,490 19,216,573
In 1794 the Bank first issued notes under 10/.
O 3
198 PRICES AND CIRCULATION,
pended the preservation of the value of the
paper, the regulation of the issues proved to be
the reverse of what it ought to have been. In-
stead of a contraction there was an enlargement.
And although the increased issue was of very short
duration, it could hardly fail, while it lasted, of
giving additional force to tlie causes operating to
a depression of the exchanges, and to a consequent
increased tendency to an efflux of the metals, and
greatly increasing the difficulty of counteracting
a further pressure on the exchanges. If the dif-
ference of the issues on particular days be taken,
the increase will be very striking : — Thus, on the
SOth Aug. 1791^ the amount was, 10,286,780/.
28th February, 1795 - 14,017,510/.
a difference accounted for by the well known
circumstance of the bills drawn for account of the
Austrian government on the treasury of this country,
and accepted by the treasury, payable at the Bank.
But this comparison of particular days, although
they are those on which the usual returns are made,
gives an exaggerated view of the case, and it is
more fair to take the average issues for the quarter,
thus : — Quarter ending
30th September, 1794 - 10,422,900/.
Slst December - - - 10,964,980/.
31st March, 1795 - - 12,421,260/.
Here in the last quarter of 1794, there was an
increase of 5 00, 000/., and in the first quarter of 1795
an increase of 2,000,000/. But it is not a little
singular, and the fact may serve as a proof of the
anomalies which perplex the question of the regu-
lation of the bank issues, that, coincidently with
this increased issue, the exchanges actually expe-
rienced some improvement. The quotations were.
1793—1798. 199
On Hamburgh, Dec. 1794 - 34-9 to 34-6.
Jan. 1795 - 34^*6 to 35*6.
„ Feb. ,, - S5'6 to 36'6.
March „ - 35-8 to 365.
And in order to prove that this rise of tlie ex-
changes was not partial or artificial, it may be ob-
served that the price of standard silver fell from
5*. 2^d. per oz. in December, 1794, to 5s. Id.
in the first three months of 1795, the price of gold
continuing at 31. IJs. 6d. per oz. ; the Lisbon
exchange improved in the same proportion ; and
the whole of the reduction of the treasure of
the Bank, between August, 1794, and February,
1795, had been only 650,000/., leaving still a
stock of 0,127,720/., against liabilities amounting
to 19,990,530/.
It must be added, in justice to the Bank
Directors of that time, that they thenceforth re-
traced their steps, and resolutely contracted their
issues, which in the quarter ending June 30. 1795,
were lower by one million and a half than they
had been in the preceding quarter, and lower tlian
they had been on the average of the preceding
three years. And if a specimen of the degree of
reduction be taken on particular days, as the pre-
vious increase has been, it would stand thus in
juxtaposition with the exchange: —
Exchange.
28th February, 1795 - 14,017,510/. - 36'0
31st August, „ - 10,862,200/. - 32'6
the Bank treasure having been reduced in the
interval from 6,127,720/. to 5,136,350/. But, not-
withstanding this reduction of issue, and a dimi-
nution of a million of the stock of bullion, such
was the overpowering pressure of foreign payment,
now increased by the necessity for an import of
foreign grain, and by the enormous prices to which
the competition of the French government had
o 4
200 PRICES AND CIRCULATION,
raised the prices of naval stores in the Baltic, that
the exchanges gave way rapidly, as is seen by the
above quotation, and the drain on the treasure of
the Bank, chiefly, if not exclusively, for export,
continued through the remainder of 179«5, and the
greater part of 1796.
At the close of 179<5, a notice was exhibited
at the doors of the Bank, announcing that, in
future, only a certain proportion of the applications
for discount would be complied with, however high
might be the credit of the parties.* This an-
nouncement, combined with the actual contraction
of the issues, occasioned a very severe pressure on
the money market ; and in the spring of 1796
there were great complaints of an insufficiency of
circulating medium for the trade in the metro-
polis. As a specimen of the feehng of the time,
it may be worth while to notice the heads of some
resolutions passed at a meeting of merchants and
bankers, held at the London Tavern, on the 2d
April, 1796.
" At a select meeting of gentlemen interested
in and acquainted with the principles of internal
circulation, held at the London Tavern, on Satur-
day, the 2d April, 1796, Sir Stephen Lushington,
Bart., in the chair : — Resolved,
1. That it is the opinion of this meeting that
there has existed, for a considerable time past, and
does exist at present, an alarming scarcity of money
in the city of London.
2. That this scarcity proceeds chiefly, if not en-
tirely, from an increase of the commerce of the
* The notice was to the following effect : —
"31. Dec. 1795.
" That in future, whenever bills sent in for discount shall in
any day amount to a larger sum than it shall be resolved to dis-
count on that day, a pro rata proportion of such bills in each
parcel as are not otherwise objectionable, will be returned to the
person sending in the same, without regard to the respectability
of the party sending in the bills, or the solidity of the bills them-
selves.''
1793—1798. 201
country, and from the great diminution of mer-
cantile discounts which the Bank of England has
thought proper to introduce in the conduct of that
establishment during the last three months."
After some other resolutions to the same effect,
a committee was appointed, consisting of the Chair-
man, Walter Boyd, Esq., Sir James Sanderson,
Bart., Mr. Alderman Anderson, Mr. Alderman
Lushington, Joini Inglis, Esq., J. J. Angerstein,
Esq., for the purpose of digesting the outlines of a
plan for augmenting the circulating medium of the
country.
A plan was afterwards drawn up by Mr. Boyd,
for a board to be constituted by act of Parliament,
for the support of credit. They were to issue pro-
missory notes, payable six months after date, bear-
ing interest at the rate of l^d. per 100/., or 1/. 18*.
per cent, per annum, upon receiving the value in
gold and silver, Bank of England notes, or in bills
of Exchange not having more than three months
to run.
The details of the plan were given in a report
drawn up by Mr. Boyd. These were laid before the
chancellor of the exchequer, with w^hom the com-
mittee had an interview. They there learned that
it had been proposed by the Bank directors, as the
best remedy for the scarcity of money, that the
floating debt should be funded. The minister said,
that he would first try what this would do towards
removing the scarcity of money, and if it should
answer the purpose, the estabHshment of aboard for
the support of credit would be unnecessary.
Mr. Boyd, in his pamphlet from which these ex-
tracts are made, adds : —
" The floating debt was funded by means of the loan of
7,500,000/., which was contracted on veiy Hberal terms, upon the
prospect held out to the contractors of a total change of system
on the part of the Bank. How this prospect was realised, the
distresses of the city in the end of May, 1796; can testify."
202 PRICES AND CIRCULATION,
The pressure on the money market liere re-
corded, is particularly deserving of notice, as show-
ing that the high price of provisions, in the spring
of 1796, was not in any degree owing to an en-
larged circulation. And Mr. Henry Thornton
appears to have been struck by the same circum-
stance, as he observes, —
" The following facts furnish a convincing proof that the late
high prices of corn have not been owing to the enlargement of
Bank of England paper. By the account which the Bank ren-
dered to Parliament, it appears that the amount of Bank of
England notes, was, on the 25th February, 1795*, 13,539,160/.
In the three months immediately following, the average price of
wheat in the London market was about 57*. per quarter.
By the same account it appears that the amount of Bank of
England notes was, on the 25th February, 1796, 1 1,030, II 6/. In
the three months immediately following, the average price of
wheat in the London corn market was about 94*. per quarter."
p. 314.
In point of fact, with the single exception of
the increase which took place in the first months of
1795 J and which was withdrawn before the expir-
ation of the quarter, the Bank circulation was
lower, on the average, during the prevalence of
the highest prices in the interval under consider-
ation, than it had been, on the average, in 1791
and 1792. This contraction of the Bank of En-
gland circulation, coincidently with so great an
advance of the prices of provisions, and of a large
proportion of commodities, as had taken place in
the spring of 179^, seems to have been counter-
vailed in some degree by an expansion of country
bank and private credit circulation ; that expan-
sion being usually, if not inevitably, the conse-
quence of a tendency, from causes real or imagined,
to an advance of prices.
* The difference between this amount and that which has
just before been quoted as the amount on the 28th February,
1795, arises from the amount of Bank post bills being included
in the latter and not in the former.
1793—1798. 203
The very circumstance of the derangement of
the country bank circulation at the close of 1790,
supposes a previous enlargement of it. It is pro-
bable that the great fall of the prices of corn and
cattle, after the spring of 1796, was among the
causes tending to produce the derangement of the
country circulation.
But low as the amount of the circulation had
been, on the average of the last nine months of
1795, and the early part of 1796, it was still fur-
ther reduced in the last six months of 1796, as will
be seen by the following return of the quarterly
averages : —
January to March - - 10,824,150^.
April to June - - 10,770,200/.
July to September - 9,720,440/.
October to December - 9,645,710/.
It might have been imagined that the contrac-
tion had thus been pushed far enough, inasmuch as
the exchanges had improved, and were evidently
improving, so as almost to ensure a return of the
bullion that had been exported. But a fresh cause
of drain supervened. This cause is thus explained
in the report of the Lords' Committee of Secrecy
in 1797: —
" The alarm of invasion which, when an immediate attack
was first appi'ehended in Ireland, had occasioned some extraor-
dinary demand for cash on the Bank of England, in the months
of December and January last, began in February to produce
similar effects in the North of England. Your Committee find,
that, in consequence of this apprehension, the farmers suddenly
brought the produce of their lands to sale, and carried the notes
of the country banks, which they had collected by these and other
means, into those banks for payment ; that this unusual and sudden
demand for cash reduced the several banks at Newcastle to the
necessity of suspending their payments in specie, and of availing
themselves of all the means in their power of procuring a speedy
supply of cash from the metropolis ; that the effects of this de-
mand on the Newcastle Banks, and of their suspension of pay-
ments in cash, soon spread over various parts of the country,
from whence similar applications were consequently made to
20i PRICES AND CIRCULATION,
the metropolis for cash ; that the alarm thus diffused, not only
occasioned an increased demand for cash in the country, but
probably a disposition in many to hoard what was thus obtained :
that this call on the metropolis, through whatever channels,
directly affected the Bank of England as the great repository of
cash, and was in the course of still further operation upon it when
stopped by the minute of council of the 26th February."
The landing of some troops from a French fii-
gate which had accidentally got into the port of
Fishgard, in Wales, tended to increase the prevail-
ing alarm.
The contraction of the circulation, immediately
previous to the issuing of the order in council, had
been carried to an extreme degree, the issues
on the 25th February liaving been reduced to
8,640,250/. *
* The policy, on the part of the Bank, of this extreme con-
traction was questioned by Mr. Henry Thornton, in his evidence
before the committees in 1797, as also in his publication on paper
credit in 1802. The rationale of the objections that have been
urged against that degree of reduction of the circulation is, that
having carried it to a degree that was effectual in restoring the
exchanges, and thus securing the return from abroad of the gold
that had been exported, the expedient course, on the part of
the Bank, when the demand for gold became confined to the
interior, and evidently arose from the discredit of the country
circulation, was to enlarge its issues, instead of further contract-
ing them, as the Bank did ; for, by such further contraction, the
difficulties and discredit of the country banks were aggravated,
and the demands upon them, and by them upon the Bank, for
gold became more urgent. And the success of an opposite
course in a memorable instance of more recent date has given
considerable force to the reasoning upon which that objection
proceeds. But the doctrine is to be received with great caution,
as it may easily be perverted into a justification of a very lax
and improvident management.
The directors, in 1797, pursued a clear and steady course in
the reduction of the amount of their paper, in order to coun-
teract the drain on their treasure; and tliere is reason to believe,
that if, instead of applying to the government with a statement
of their apprehensions, which led to an interference by the
order of council of the 26th of February, they had, as the di-
rectors in 1783 did, gone on with the intention of paying to
their last guinea (when at worst they could but have stopped),
they would have surmounted the run. The reason for this
1793—1798. '205
The effect of this extreme contraction was felt
chiefly, as may be supposed, in the money market.
Exchequer bills, bearing 3\(L per day, were sold
at Si. and 31. 10s. per cent, discount, and it was
said, that in some instances sales were made at 5l.
])er cent, discount. Navy and victualling bills
were also at an enormous discount, and the 3 per
cent, consols fell below 50. Mercantile bills, ex-
cepting such as came within Bank time and regu-
lations, were hardly negotiable at all, or were sub-
ject to heavy commissions, by way of evading the
operation of the usury law.
But while in the rate of interest, and in the
price of public securities, the effect was naturally
very great, it was hardly perceptible in the markets
for goods. The price of corn * had previously
been falling from restored abundance, while from
the opposite cause, scarcity, actual or apprehended,
colonial produce continued to rise, notwithstand-
ing not only the pressure on the money market,
opinion is, that the circulation was ah-eady so contracted that
the reduced number of notes then out-standing were become so
much wanted for immediate payments, as to be less and less
likely to be returned to the Bank for gold ; while, on the other
hand, the tide of the metals was setting in so strongly from
abroad as almost to insure a sufficient supply to meet the inter-
nal demand. A strong corroborative ground for such a suppo-
sition is, that before the order in council for the restriction had
reached Dublin, the run on the Bank of Ireland had altogether
ceased, and the directors of that establishment expressed great
reluctance at being prevented from continuing to pay in specie,
which they considered themselves well able to do. And it is a
fair presumption that as a demand for gold, under the alarm of
invasion in Ireland, had been one of the predisposing causes of
the run in this country, the same general circumstances which
restored confidence in the circulation there would quickly operate
in arresting the progress of discredit here.
* So buoyant were the corn markets, notwithstanding the
contracted state of the currency, that, in consequence of bad
weather at the harvest of 1797, the price rose in September of
that year 10*. the quarter, and afterwards fell again slowly when
the sufficiency of the supply was ascertained.
206 PRICES AND CIRCULATION,
but notwithstanding also the great advance of the
exchanges.*
On the day following the order in council, the
Bank increased its issues, and on the 28th of Feb-
ruary t the amount stood at one million higher
than it had done on the 25th. The average for
the whole year was somewhat higher than it had
been in 1796, although lower than in 1795. But
in the amount of the Bank circulation in 1797
are included notes under 5/., amounting to
somewhat under a million, which must be con-
sidered as wholly in the place of so much gold,
which would otherwise have circulated. Indeed
the increase of Bank notes was in a small propor-
tion only to the increase of bullion, which was
between three and four millions.
The exchanges, which had given way a little
on the post day following the order in council,
* It is not possible to adduce an instance more striking than
that which is here adverted to, of the inefficacy of a contraction
of the circulation in counteracting the tendency to an advance
of prices under the influence of actual scarcity, or of the force
of opinion of prospective scarcity, relatively to the estimated
rate of consumption. For in the present instance, instead of a
rise of prices of exportable commodities having been caused by
an exchange adverse to this country, and therefore holding out
a compensation to the foreign buyer for a higher price, the
prices of such commodities advanced 50 to 100 per cent., while
the exchanges likewise advanced 10 to 20 per cent.
f The position of the Bank on the 28th of February, 1797,
being the day following the restriction, was : —
£ £
Circulation -9,674,780 Securities, public -]1,714,4'31
Deposits - - 4,891,530 private - 5,123,319
Liabilities - - 14,566,310 16,837,750
Bullion * - 1,086,170
17,923,920
The above amount of liabilities is lower than it had been since
1787.
1793—1798. 207
under an impression that there was likely to be
an excessive issue of paper, rallied immediately
after, upon its being found that there was no
tendency to such excess. And as a great part of
our government expenditure abroad had ceased,
in consequence of the peace between Austria and
France, by the treaty of Leoben, they continued
to rise till they got considerably above par.
The Hamburgh exchange attained, before the
close of that year, a quotation which it had never
before reached, viz. 38 ; and it ranged at about
that high rate through the whole of 1798. This
extraordinarily high state of the exchange was
attended with a great influx of bullion, the stock
of which in tlie Bank, by the end of August,
amounted to six million five hundred thousand
pounds *; and at the end of that year, was above
seven millions, being in the proportion of more
than one third of its liabilities. The Bank was, in
consequence, in a condition to resume its pay-
ments in specie, and an announcement was made
by the directors to government to that effect.
The government, however, from a consideration
of the political state of the country, deemed it
expedient to continue the restriction.
But the great rise of the exchanges, and the
rapid influx of bullion, and a great fall in the prices
* The position of the Bank in August 1798 was : —
Circulation, Bank Securities, public 10,930,038
notes of 51. and private 6,419,602
upwards, and post .
bills - - - 10,649,550 17,349,640
under 5/. - 1,531,060 Bullion - - 6,546,100
12,180,610 23,895,740
Deposits - - 8,300,720 *.
Liabilities 20,481,330
208 PRICES AND CIRCULATION,
of provisions, were coincident with an increased
issue of Bank paper ; thus proving that the inter-
mediate depression of the exclianges, and the con-
sequent great efflux of bullion, were not caused
by an increased amount, and consequent dimin-
ished value of the currency of this country, but
by a great and sudden emergency, which occa-
sioned an extraordinary demand for, and conse-
quent temporarily increased value of foreign
currencies, as measured in our currency ; for
immediately upon the cessation of that demand,
the value of those currencies fell even below their
usual level as compared with ours.
Of the magnitude of the extra demand for
means of making immediate payments abroad,
some idea may be formed from the following state-
ment of the foreign expenditure of government,
extracted from an account inserted in the Ajjpen-
dix to the Report of the Lords' Committee of Se-
crecy in 1797 * •• —
^ s. d.
1794 . - 8,335,592 5 5
1795 - - 11,040,236 13 0
1796 - - - 10,649,916 0 8
To the above sums is to be added 4,702,818/.
18*. 8G?.t, as excess of payments abroad for naval
stores imported in those years. And the value of
grain imported was in t —
1794 - - - 1,983,856/.
1795 ' - - 1,535,672/.
1796 - - - 3,926,484/.
making an aggregate of extra foreign expenditure
* Appendix to Lords' Report, No. 23. In these sums are
inckided the loan and advances to the Emperor of Austria,
5,570,000/.
f Appendix to Lords' Reports, No. 27. -
j Appendix to Lords' Reports, 1797, No. 31.
1793—1798. 209
of no less than 42,174,675/., in those three years
of which the largest proportion fell upon the two
last.
It is quite clear that, practically, no conceivable
increase of exports in the way of trade could be im-
mediately brought into operation, so as to obviate
the pressure on tlie exchanges of so enormous and so
sudden an increase of the balance of payments to be
made abroad. And it was only, as has been seen, by
an extraordinary contraction of the circulating me-
dium, and by the transmission of all the bullion
that could be collected, whether from the coffers
of the Bank, or from the channels of circulation,
that the pressure could be at all met, consistently
with the maintenance of the convertibility of the
paper. But the contraction of the issues of the
Bank, combined with the export of bullion, did
prove efficacious in restoring the value of the cur-
rency of this country, as compared with the cur-
rencies of other countries ; and it was only an
accidentally supervening cause of drain for internal
circulation, that endangered the convertibility
which was inematurely suspended by an inter-
ference of government. Prematurely, inasmuch
as the stock of bullion had not, on the 26th of
February, 1797* been reduced below a million,
while the circulation had been contracted to the
very low amount of 8,640,250/. ; this proportion
of the circulation to the treasure of the Bank
being lower than it had been in 1783, or again in
1825, in each of which instances the run had
been surmounted. Whatever, therefore, might be
the motives of policy which dictated the suspension,
it was clearly not justified at that precise time as
a measure of necessity.
210 PRICES AND CIRCULATION.
Section 4. — Summarif of the 'preceding Survey.
From the preceding view of the state of the
circulation and of prices, from 1793 to 1798, it
appears,
1. 'Ihat it was tlie extraordinary adverse ba-
lance of foreign payments, and not an increased
circulation or quantity of money, that caused the
depression of the exchanges, and the efflux of bul-
lion in 1795 and 1796, inasmuch as the exchanges
rose and bullion flowed rapidly back coincidently
with an increase of the Bank circulation, when the
foreign payments ceased.
2. That the Bank directors of that time acted
upon the principle, and found it efficacious, of con-
trolling the exchanges by a contraction of their
issues.
3. That in consequence of the two very defi-
cient harvests of 179^- and 1795, a great rise of
the prices of provisions took place in 1795 and
I79G, coincidently with a remarkable contraction
of the Bank circulation ; and that there was, coin-
cidently with an enlargement of the circulation,
a rapid fall of the prices of provisions, and a com-
plete subsidence of them at the close of 1798, to
the level of what they had been at the commence-
ment of 1793.
4. That while, from 1796 to the close of
1798, the prices of provisions and of European
produce generally were falling, the prices of all
transatlantic produce were rapidly rising, coinci-
dently with a great rise of the exchanges, and
reached a greater height than they ever after-
wards attained, until the commencement of 1814.
.5. That the great fall of the prices of corn,
and of European produce generally, from 1796 to
1793—1798. ^11
the close of 1798, took place coincidently with a
progressively increasing government expenditure,
defrayed chiefly by loans.
6. That there is as little ground, therefore, for
the hypothesis of the influence of war demand
(except in the case of articles constituting naval
and military stores), as there is for that of the
circulation, in accounting for the very extraordi-
nary, and thus far unprecedented, fluctuations of
prices which characterised the interval that has
passed under review.
p 9,
212 PRICES AND CIRCULATION,
CHAP. III.
ON THE STATE OF PRICES, AND OF THE CIRCULA-
TION, FROM 1799 TO 1803.
At the commencement of the period now com-
mg under consideration, while the prices of coffee,
sugar, cotton, and generally of all transatlantic
produce were, in consequence of a continued spe-
culative demand for export, immoderately high ;
and while various other articles were in consequence
of increased cost of production, arising out of the
circumstances of the war, at a greater or less ad-
vance upon what had been their ordinary level
before the war, the prices of provisions were mo-
derate ; or rather if the increased cost of production
of a foreign supply, of which it was supposed that
we then stood habitually in need, be taken into
account, might be considered extremely low.
Of corn, the Gazette averages for England and
Wales were, in January, 1799, —
For Wheat - 49*. 6d.
Barley - 29*. 4d.
Oats - 19.?. lOd.
And the following were the prices of meat : —
Beef, in Smithfield, - 36-. to 3s. 4d. per st.
Mutton - - 3s. to 4*. Qd
Pork - - - 2.9. 8d. to 36-. 8^.
Hay, aver. St. James's mar. 45*. 6d. per Id.
Straw, - ditto, - 31.9.
Prices, as low as they had been on an average
of several years before 1793. And the ex-
changes were at so high a rate as indicated a
greater value of the currency relatively to the
currencies of other countries, than had existed
1799—1803. 213
with a trifling exception dining tlie preceding part
of the century. But a great cliange was about
to take place ; the prices of provisions, and of
other P^uropean produce, rising to an enormous
height, while transatlantic produce experienced a
very great fill, at the same time that the exchanges
underwent extraordinary fluctuations.
Section 1. — Rise of the Prices of Provisions and
other Articles of European Produce from the
Spring of 1799 to the Spring o/^1801.
The winter of 1798-99 was extremely rigor-
ous, and had set in very early. The autumn
of 1798 had been very unfavourable for wheat
sowing (which, partly perhaps from this cause, was
said to be to a smaller extent than usual), and the
subsequent weather was throughout adverse to
vegetation.* Severe frosts setting in early, and
alternating with rapid thaws, and heavy falls of
snow occurring into an advanced period of the
spring, gave a general character of untowardness
to the season of 1799, which the subsequent pro-
gress of it more than realised.
Under this unpromising aspect of the season,
the prices of grain advanced, slowly however at
first, the averages for March having risen in a very
* The severity of the frosts and the suddenness of the thaws
during this month have, in many respects, been unfavourable to
the young wheats, especially those which were sown early.
These causes have likewise prevented the operations of the
plough in preparing turnip and other grounds for wheat, rye,
Sec, as well as for the making of summer fallows. In the more
western parts of the island our reporters also observe that less
wheat than usual has been sown on account of the frosts, and
some other impediments. — Monthly Agricultural Report for
January, 1799.
p 3
214 PRICES AND CIRCULATION,
trifling degree. But the spring proving to be ex-
cessively cold and ungenial, and the appearance of
the growing crops very unpromising a rapid rise
took place in May, when the averages for grain
were,
Wheat - - 61*. 8^.
Barley - - 35*.
Oats - - 27*. 4c?.
Beef, in Smithfield - 3.9. 8^?. to 5s. per st.
Mutton - - 4.9. 4fd. to 5s. 4<d.
Hay - - - 70.9.
Straw - - - 59,s.
To this dry, harsh, and ungenial spring suc-
ceeded a cold and almost uninterruptedly wet sum-
mer and autumn. The consequence was, great
injury to all, and destruction to some, of the crops ;
and henceforth the prices of grain rose without
intermission. At the close of the year the averages
of corn were.
Wheat - - 94.9. <2d.
Barley - - 45*. 5d.*
Oats - - SSs.Sd.
Although parliament had met in September 1799,
there do not appear to have been any discussions
in it on the high price of provisions till the 18th
of February, 1800, when the House of Commons
resolved itself into a committee on the report re-
specting the assize of bread, and the deficiency of
the last crop of grain. Lord Hawkesbury then took
occasion to make some statements which it may be
worth while to record.
" As to the quantity of wheat consumed," he said, " a quar-
ter of wheat in the year for each nian was the general calcula-
* The crops of barley and oats had not suffered in the same
degree as wheat, and the prices, it may be observed, are below
their ordinary relative rate.
1799—1803. Q15
tion. This allowance would require between eight and nine
millions of quarters to supply this country for a year. The
produce of the country varied in different years ; but the aver-
age computation between very high and very low seasons might
come nearest tlie truth. This average did not feed the country ;
for tlie average importation for several years back might be
estimated at one twentieth of the consumption. The deficiency
of the late crop might be estimated at one third of the usual
crop, which must be added to the one twentieth usually imported,
in order to estimate what importation would be necessary this
season. It must, liowever, be considered that there was in the
country a stock in hand from the preceding harvest sufficient to
supply one month. But if we also take the foreign supply in
the country at the same period, there was certainly much more
than would be consumed in a month. Considering all these
circumstances, the probable amount of importation necessary
this season would be about 600,000 quarters of wheat, whereas,
in 1796, the importation was more than 800,000 quarters. The
millers and others skilled in the subject had recommended some
regulations as to the use of new bread, and had computed that
by such regulations there might be a saving of one fortnight of
the whole consumption. It had also been stated that millers,
when the price of grain was high, and, consequently, when bread
was dear, extracted from the grain a greater quantity of flour
than they did at other times. This would afford a second
saving. A third would arise from the use of substitutes for
bread. As the price of grain, even in those countries from
which we could receive a supply, was high, it was to be feared
that the high price of grain in this country was inevitable ; but
from a review of all the circumstances, it might be collected
that there was no real danger of scarcity." *
If this very statement was not descriptive of
real scarcity, it is difficult to say to what degree of
deficiency the term could with propriety be applied.
So formidable were the appearances at that time of
increasing deartli, that, in pursuance of the recom-
mendation of the committee, recourse w^as again
had to a bounty, and an act was accordingly passed,
'^ Lord Ilawkesbury conch;dcd by moving " That leave be
given to bring in a bill to prohibit an}^ person or persons from
selling or offering for sale any bread which has not been baked
for a certain number of hours." Leave was given. The blank
for specifying the number of hours was filled up with " twenty-
four." The bill went through all its stages on the following
day. Various other regulations were afterwards proposed, and
some of them adopted.
P 4
216 PRICES AND CIRCULATION,
guaranteeing to the importer the difference between
the average price of English wheat in the second
week after importation and 90.9. on wheat from
the south of Europe, Africa, and America ; 85*.
from the Baltic and Germany ; and 90s. from Arch-
angel, if imported before the 1st of October, 1800.
Notwithstanding the reasonable probability from
the encouragement thus held out of a large forth-
coming importation, such was the scantiness of
the supply in the markets, and such the apprehen-
sion excited by the unfavourable appearance of the
growing crops in the spring of 1800*, that the
prices of provisions continued to advance until
June, 1800, when they had reached the following
quotations : —
Wlieat, Gazette average, 134.y. 5d.
Barley - - 69s. Id.
Oats - - 51*. Id.
In Smithfield market.
Beef sold for 4,s-. 6d. to 6s. 4r/. per stone.
Mutton and Pork 5s. 4d. to 6s. 8d.
In Newgate and Leadenhall markets.
Beef - - 9d.tols.2d.iper\h.
Mutton - - 8(7. to lOd.
Veal - - - 9^. to 1*.
Pork in St. James's market, 9^. to lOd.
Hay, - - - 64.9. to 122.9. per Id.
Straw - - 54<s. to 63s.
The summer of 1800 was hot and dry, and as
the harvest approached, the crops assumed a more
promising appearance. The weather, till the third
week of August, was favourable for securing the
* The autumn of 1799 had again been unfavourable for sow-
ing wheat ; the winter had been somewhat hke the preceding,
marked by early severity of frost, with alternations of rapid
thaws; and the spring of 1800 was exceedingly wet.
1799—1803. 217
corn in the more forward districts, and some quan-
tity was well got in.
At the same tune a considerable importation was
in progress. There was, in consequence a sudden
and great fall in all the principal markets, and the
averages in August, 1800, declined to
96a-. 9.d. for Wheat.
,54^. Sd. - Barley.
35^.9^. - Oats.
The promising appearances of restored abundance
were, however, soon changed into the sad reality
of renewed and aggravated dearth.
A portion, not exceeding, according to the re-
ports, one half of the crops, was secured in good
order before the 19th of August, when heavy and
almost incessant rains set in, accompanied by a
high temperature and a close atmosphere, in con-
sequence of which a great deal of the wheat was
sprouted, and otherwise injured. The portion that
had been secured in the southern division of the
kingdom, before the rains set in, and therefore good
as to mere condition, and greatly superior to that
of 1799, proved to be coarse and shrivelled and
light, and consequently greatly deficient in yield.
Tiiis description applied to the quality of the grain
generally. But the rains, which came on in August,
caught a considerable proportion of the wheat still
in the fields, even in the home and some of the
southern districts, and injured the whole of the
crops in tlie northern parts of the island. Accord-
ingly, bad as the crops were in England, they were
still worse in Scotland, and considerable purchases
were in consequence made in Mark Lane for ship-
ment thither. Under these circumstances, notwith-
standing an importation of foreign corn to a very
large amount, that of wheat alone being 1,242,507
quarters, prices rose as rapidly as they had just
before fallen.
218 PRICES AND CIRCULATION,
The rise, in the present instance, had been acceler-
ated by the circumstance of the Russian government
having, in tlie autumn of 1800, laid an embargo
on British shipping. This act was considered, as
it proved to be, equivalent to a declaration of war;
and as the Danish government was known to be
unfriendly to ours, apprehensions were naturally en-
tertained, as they were eventually realised, that in
the ensuing season the Baltic might be closed
against us. The Prussian government, moreover,
had a few months before, viz. in July, imposed a
duty of lOs. per quarter on the exportation of
wheat. It can hardly therefore be a matter of
wonder that a renewed range of high prices should
be the consequence, and accordingly the averages
in December 1800 were.
For Wheat .. 133.9.
Barley - 76*. 7d.
Oats - 41*. 8f/.
The sufferings of the bulk of the community,
under this severe visitation of dearth, were very
great. The expression of them broke out in tu-
multuous meetings and riotous proceedings in dif-
ferent parts of the kingdom, in the autumn of
1800, and the peace of the metropolis was with
difficulty preserved.
Parliament met on the 11th November, 1800; and
the speech from the throne stated, that the meet-
ing of it was called at an earlier period than had
otherwise been intended, for the purpose of taking
into consideration the measures proper to be adopted
with a view to alleviate the severe pressure of dis-
tress, which was felt in consequence of the high
price of provisions. The speech also alluded to
the supposition * of combination and fraudulent
* Tlie Committee of the House of Lords, in their report on
the high price of provisions, referred to their examination of
1799—1803. 219
practices, for the purpose of raising the price of
grain, and expressed concern with reference to the
disturbances which had broken out in some parts
of the kingdom.
In the discussions in both Houses, to which the
speech and the motions for the address gave rise,
several members denied the existence of scarcity,
or admitted it only in a quaUfied degree, and
ascribed the high prices, some to war and taxation,
and excess of paper circulation ; while others laid
most stress on monopoly and improper practices
on the part of farmers and dealers.
Mr, Pitt, with reference to the allegation of
improper practices, deprecated, only in general
terms, any such regulations as might interfere with
the freedom of trade, and of the application of in-
dustry and capital. Bat he more particularly
applied himself to answer the arguments of those
who ascribed the high price of provisions chiefly,
if not exclusively, to war and taxation.
" Since tills question has been started," he said, " I beg leave
to hint a few general observations, which seem completely to
overthrow the argument of those who impute the dearness of
provisions to the war. In a more detailed discussion, I shall be
ready to examine separately the effect of every tax which has
been imposed since the year 1793; to state the utmost effect
which it could be supposed to have produced directly or in-
directly on the price of grain ; and to prove that these tfxes
could form, even on the most exaggerated computation, a very
inconsiderable part of the increased price of provisions. To
witnesses on the alleged malpractices, and stated as the result,
" That after having inquired extensively as to the existence of
the supposed combination and fraudulent practices of unfair
dealers, they have not been able to trace, in any one instance,
any thing more than such suspicious and vulgar reports as usually
prevail in times of scarcity ; and that they are of opinion that
what have been represented as deep schemes and fraudulent
practices to raise the market, have been only the common and
usual proceedings of dealers in all articles of commerce, where
there is a great demand, and where great capital and great
activity are employed."
220 PRICES AND CIRCULATION,
show that the war has not any general effect to raise the price
of grain, consider only the price of grain at different periods
of the present war, though the argument would be strengthened
by a review of former wars. Three or four years have been
years of comparatively high price. In 1794< and 1795, the price
was high ; but in the interval of nearly three years that suc-
ceeded, that is, from about Michaelmas 1796 to Midsummer
1799, the price sunk perhaps too low for the fair profit of the
farmer. The general price then in England was from 4-8*. to
49*. a quarter. From Michaelmas 1798 to Lady-day 1799, it
was not above 48*. How then, if the war was the cause of
the dearness, did it happen that the effect, which on the hypo-
thesis should have been increasing, was suspended during an
interval of nearly three years ; and when likewise some of the
taxes to which the effect is chiefly ascribed had been imposed ?
Previous to the last-mentioned period (one of great cheapness)
the triple assessment had existed a twelvemonth, and must have
produced its full effect. This plain fact is alone worth a thou-
sand instances deduced by circuitous reasonings. I shall not
enter into a comparative statement of the prices in former wars,
nor insist on the ingenious arguments that have been adduced
to show, that war is favourable to lowness of price. It is
deserving of remark, however, that this country, which, from
the period of the revolution, for a great part of the present cen-
tury, had been used to export great quantities of grain, ceased
to export and began to import in the middle of that peace which
succeeded the most successful war in which this country was
ever engaged. Thus it is clear, from a deduction of facts, that
war of itself has no evident and necessary connection with the
dearness of provisions."
He added,
" As to the extent of the deficiency of the late harvest (1800),
it would be no less rash than unnecessary to give any opinion.
For the practical remedies proposed, a knowledge of the precise
deficit is not required. This, however, we know, that notwith-
standing the clamour about, monopoly, previous to the harvest,
it is now universally admitted, that the old stock was very nearly
exhausted. An early harvest, therefore, found us with less
stock than usual ; of course, that stock, unless aided by im-
portation from abroad and economy of our own resources,
must be appUcable to the consumption of a shorter period than
usual."
Of the assignment of the Bank circulation as
a cause of the high price, Mr. Pitt seems to have
taken no notice in that day's debate ; but in a
debate a few days after, on a motion of Mr.
1799—1803. 221
Tierney's, on the state of tlie nation, he observed
shortly, —
' " As to the stoppage of the Bank, that stoppage has taken
place for some time, and the difference between the paper cir-
culating medium of that time and the present, is very incon-
siderable."— Parliamentary History, vol. xxxv.
On the 24th of November, Mr. Ryder pre-
sented the first report from the Commons' com-
mittee on the high price of provisions, from which
the following are extracts : —
" There appears upon the whole of this Information, reason
to believe, that the general deficiency of the crop of wheat in
England and Whales does not amount to quite so much as one
fourth."
*' The accounts of the stock on hand, furnished by these
returns, are necessarily more uncertain ; they are in some de-
gree various ; but they do not on the whole furnish any ground
for doubting the prevailing opinion, confirmed by the general
information of the members who have attended your committee,
that the stock of British corn at the harvest was reduced far
below its usual amount, and was in most places nearly, in many
absolutely, exhausted,"
" In addition to what has been stated respecting the produce
of the crop and the stock in hand, it is to be observed, with a
view to the state of the markets, in the time which has elapsed
since the harvest, that the farmers, during that period, have
had a double demand for the new crop for consumption and
for seed."
" It appears to your committee, that these circumstances
might be expected to have produced a very high price at this
season, even if the late harvest had been abundant ; that the
degree in which it has been deficient must naturally have added
to such prices, whether with or without the concurrence of any
other causes, the existence and effects of which your com-
mittee propose to investigate."
The committee then state their expectation,
that the deficiency will be remedied by the double
operation of importation and economy. With re-
spect to importation the committee state that,
" Within twelve months from the 26th of September, 1799,
to the 27th of September, 1800, there have been imported into
Great Britain no less than 1,261,932 quarters of wheat and
flour, 67,988 of barley, 479,320 of oats, and 300,6931b. of rice.
This happened under the unfavourable circumstances of a harvest
222 PRICES AND CIRCULATION,
abroad uncommonly deficient in quality, and not abundant in
quantity, and of tbe late period of the season, when the bounty
was granted by parliament." *
The committee proceed to offer various sugges-
tions ; the encouragement of the fisheries, the
stoppage of the distilleries, a bounty on import-
ation, a recommendation from the highest autho-
rity, pointing out the advantages which would be
derived from the general practice of economy and
frugality in articles of food. And with reference
to this last suggestion, the committee observes : —
" In order to give the greatest weight and solemnity to such
a recommendation, your committee submit to the House, whe-
ther it may not be proper to desire the concurrence of the other
House of parliament, in a humble address to his Majesty, re-
questing that his Majesty would be graciously pleased to issue
a proclamation for this purpose."
A royal proclamation was issued accordingly, and
circulated by the magistrates and the clergy through-
out the kingdom. An act was passed, granting a
bounty which guaranteed the difference between*
the average price of foreign wheat in the third
week after importation, and 100^. to the importer
* In a sixth report, presented in December, 1800, are the
following computations of the estimated consumption, and of
the resources to meet the supposed deficiency : —
The usual consumption of wheat cannot be supposed to ex-
ceed 7,000,000 quarters per annum.
Amount of resources to meet the deficiency : —
Importation of wheat since the beginning of
October above - - . - 170,000 qrs.
Importation of flour from the United States,
equal to - - - - 580,000
Importation of wheat from Canada - - 30,000
Rice, equivalent to - - - 630,000
Stoppage of starch manufactory - - 40,000
Stoppage of distilleries - - . 360,000
Use of coarse meal ... - 400,000
Retrenchment ... - 300,000
2,510,000
1799—1803. ■ 223
of all wheat weighing 53 lb. per bushel, if im-
ported within the time limited by the Act.*
These proceedings, while on the one hand they
had the effect of giving the assurance, that mea-
sures were in progress calculated to diminish the
consumption and to increase the supply, and thus
eventually to reduce prices ; yet, on the other
hand, they naturally conveyed a strong impression
of alarm. An official letter from the Duke of
Portland, then Secretary of State for the Home
Department, to tlie Lord Lieutenant of the county
of Oxford, strongly dwelling on the deficiency of
grain, and recommending economy in the use of
it, was animadverted upon at the time, as being
calculated to increase the general feeling of alarm.
There was, doubtless, sufficient cause for ap-
prehension; because although there were reason-
able grounds for supposing, that the measures in
progress would be effectual in ultimately re-
ducing prices, yet various contingencies of the
season, and of obstructions arising out of the war,
might frustrate the expectations of relief; and
althouo'h the occurrence in immediate succession
of a third year of deficient produce was not within
moderate probability, it was not to be considered
as out of calculation, there having been instances
of such a succession of unproductive seasons.
Under these circumstances of actual and appre-
* On the policy of this measure it is, perhaps, scarcely neces-
sary to remark, as it is not probable (although our subsequent
policy in legislation about corn, in the opposite direction, is
hardly less absurd, and certainly more injurious, as it is more
permanent), that any such gross error in legislation will be
repeated. It ought, indeed, to have been quite evident, that
the enormously high prices then prevailing, and the further rise
anticipated, would have the effect of inducing preparations, on
the part of the merchants, to bring forward all tlie corn that
could be collected, and to hasten the importation as much as
possible. The very extravagance of the measure, however,
proves the magnitude of the apprehensions, which were then
entertained of the further progress of the dearth.
224< PRICES AND CIRCULATION,
h ended deficiency, the prices of provisions con-
tinued to advance. The averages of grain in
December, 1800, have already been given. They
advanced progressively till March, 1801, when
they were —
For Wheat - 156*. 2d
Barley - 906-. qd.
Oats - 47*. 2rf.
And the following were the prices of meat : —
Beef, in Smithfield, 5.9. to 6.9. 6f/.
Mutton, - - 6.9. 6g?. to 8.9.
Veal, - - 6.9. to 8*. 6r/.
Pork, - - 6.9. M. to 7^.
In retail,
Beef - - lOd to \^\d.
Mutton - - llr/. to 12f/.
Veal - - 12d to 14d
A rise in the price of dairy produce would na-
turally follow from the same general causes.
And not only had there been this enormous rise
in the prices of provisions, between the close of
1798 and the spring of 1801, but many other articles
of European raw produce had experienced a simul-
taneous advance, partly as the consequence of the
same inclemency of the seasons as had prevailed
in this country, and partly from the extraordinary
obstructions to importation from political causes.
Thus wool and tallow rose from the twofold cause
of the seasons in diminishing both the home and
foreign produce, and flax, hemp, timber, foreign
iron, linseed, in short, all articles for our supply
of which we depended wholly, or in part, on im-
portation from the Baltic, experienced a very con-
siderable rise, not only in consequence of the
embargo in Russia, in the autumn of 1800, but
also in consequence of the threatened hostility of
1799—1803. 225
Denmark, whicli was likely to close against us the
passage of the Sound. In addition to this exten-
sive dearth of raw produce was the dearness of
many articles of general consumption, occasioned
by the progress of taxation, such as the heavy duties
of excise on salt, soap, candles, and leather, which
may be considered as necessaries, and on malt
and beer, sugar, tea, and tobacco and spirits, which
are secondary necessaries, or, perhaps, more cor-
rectly speaking, necessaries to all the classes above
the very poorest. Fuel of every description had
risen considerably from the same general causes.
Section 2. — Rise of Wages from 1799 to 1801.
Such and so great being the rise of prices of pro-
visions, and of nearly all consumable commodities,
it was quite impossible that the lowest of the
working classes could, upon their wages, at the
rate of what they were before 1795, obtain a sub-
sistence for themselves and their families, on the
lowest scale requisite to sustain human existence;
and the classes above the lowest, including some
portion of skilled labourers, could do little, if at all,
more than provide themselves with food, clothing,
and shelter, without any of the indulgences which
habit had rendered necessaries. If under these
circumstances there had been no rise of wages,
no contributions by parishes and by individuals,
in aid of wages, great numbers of the people must
have actually perished, and the classes immediately
above the lowest would with difficulty have pre-
served themselves from the same fate. In such
case the suffering from dearth would have been
correctly designated as a famine, a term whicli has
been somewhat loosely applied to the period under
consideration. For, severe and intense as were
Q
226
TRICES AND CIRCULATION,
the sufferings and privations of the people of this
country, in the dearths of 1795 and 1796, and of
1800 and 1801, there were few recorded instances
of death from actual destitution.
A rise of wages was imperatively called for by
the urgency of the case, and was complied with to
some extent in most of the branches of industry,
the claims for increase being aided by the resource
which workmen and labourers had of enlisting in
the army and navy. There had already been an
advance of wages in 1795 and 1796, and the allow-
ance system had been begun and carried to some
extent in those years. A further advance of
wages took place in 1800 and 1801 *j but still so
* Arthur Young (Annals of Agriculture, vol. 37. p. 265.,
1801,) says, " a person is now living in the vicinity of Bury (Suf-
folk) who, when he laboured for 5S' a week, could purchase with
that 5s.
While in 1801 the
same articles cost
A bushel of wheat
A ditto of Malt -
A pound of Butter
A pound of Cheese
One pennyworth of Tobacco _
5s.
^ s.
0 16
0 9
1 6
0 15
5
0
0 11
5
Suppose in 1801 his wages produced him - 9s. \
Suppose as a pauper from the parish rates - 6s. J
" So that to enable him to purchase the same quantities he
procured when his week's wages were 5s., would now require
lis. 5d. more than his wages and the parish allowance together.
The comparison is," says Mr. Young, " fair as flir as it goes, be-
cause the extreme in both cases, the very lowest in the first,
and the very highest in the last."
There was a rise also in artisan and manufacturing labour, be-
tween 1792 and 1801 ; but in a smaU proportion only to the rise
in the prices of necessaries. Various statements were put forth
by different classes of artisans, setting forth the inadequateness
of the rise of wages, including the most recent advance in 1801.
Among other statements was one from the journeymen tailors,
1799—1803. 227
inadequate, compared with the prices of provisions,
as even with parish allowances and private contri-
butions, to leave a vast mass of privation and
misery. Mr. Whitbread had, in 1795, and again
in 1800, proposed bills in the House of Commons
for regulating the wages of labour by the price of
provisions, and prescribing a minimum of wages.
There was enough of good sense to cause the
rejection of such a measure. If it had been
adopted, high as the prices of provisions were,
they would have been still higher ; as on the
other hand, if wages had not risen, and if there
had not been the supplementary aids to wages, the
prices would not have risen so much as they did ;
for it must be evident tliat there could not in that
case have been so large a sum devoted to the pur-
chase of necessaries. The rise in the wages of
labour, therefore, with the parish allowances, may
be considered as having been, in the first instance,
a consequence of the high prices of provisions, and
subsequently a cause of the prices reaching a
higher level than they could otherwise have at-
tained.
by which it appeared that their wages, from 1777 to 1795, had
been 1/. 1*. 9d. per week, which, at the price of 7^^/. for tlie
quartern loaf, would purchase thirty-six loaves ; while the utmost
advance of wages, which, in 1795, was to 25s., and, in 1801, to
27s. per week, would purchase only eighteen loaves and a half
in the latter year. A statement from printers' compositors,
whose weekly wages were advanced fi-om 2-is. to 27^. in 1795,
and to 30s. in 1801, gives a similar result in the disproportion
of the advance of wages to the rise of necessaries.
By the Greenwich Hospital table, the wages of carpenters,
bricklayers, masons, and plumbers appear to have experienced
very little advance, according to the quotations of 1800, as com-
pared with the twenty yeai-s preceding, viz. —
s. d. s. d. s. d.
Carpenters - - - from 2 6 and 2 8 to 3 2 per day.
Bricklayers - - --24 to 30
Masons - - --28 to 210
Plumbers - - - - 3 0 to 3 3
Q 2
228
PRICES AND CIRCULATION,
Section 3. — Statement of the general Causes of
the Rise of the Prices of Commodities and La-
hour from 1799 ^0 1801.
If the circumstances, such as they have been
here imperfectly described, leading to the great
elevation of the prices of provisions, and of raw
materials, and of articles subject to the duties
of excise, and the consequent necessary rise of
the wages of labour from 1799 to 1801 be carefully
examined, they will be found to resolve themselves
into the agency of the following causes, namely,
two seasons in succession of extraordinary dearth,
— taxation, — and impediments arising out of the
war to importation of articles which, whether as
food or as raw materials, for our manufactures
were of indispensable necessity. *
* The great rise of the price of provisions and other neces-
saries, combined with the progress of taxation consequent on the
war, occasioned an enormous increase of the rate of hving, as is
instanced in the following : —
" Estimate of the Expenses of House-keeping, between 1773
and 1800, by an inhabitant of Bury St. Edmunds, extracted
from the Appendix to the Report of a Committee of the
House of Commons in the year 1800.
1773.
1793.
1799.
1800.
^
s.
d.
£ s.
d.
£ S. d.
£
s. d.
Coomb of Malt - -
0
12
0
1 3
0
1 3 0
2
0 0
Chaldron of Coals -
1
11
6
2 0
6
2 6 0
2
11 0
Coomb of Oats - -
0
5
0
0 13
0
0 16 0
1
1 0
Load of Hay - -
2
2
0
4 10
0
5 5 0
7
0 0
Meat - - . -
0
0
4
0 0
5
0 0 7
0
0 9
Butter - - . -
0
0
6
0 0
11
0 0 11
0
1 4
Sugar (Loaf)
0
0
8
0 1
0
0 1 3
0
1 4
Soap - - - -
0
0
6
0 0
8
0 0 9^
0
0 10
Window Lights (30
winds. ) - - -
3
10
0
7 10
0
12 12 0
12
12 0
Candles - - - -
0
0
6
0 0
8
0 0 9^
0
0 10^
Poor Rates per Qr. -
0
1
0
0 2
6
0 3 0
0
5 0
8
4
0
16 2
8
22 9 4
25
14 \\
As far as the items included in this estimate are concerned,
and they appear to be correctly stated, they exhibit an increase
1799— 1S03. 229
But simple and obvdoLis as were the causes of
the great advance of prices, there were persons
who then denied, or professed to doubt the exist-
ence of scarcity to account for the high prices, as
there have been persons who, in more recent times,
have denied the existence of abundance as ac-
counting for a fall of prices. And a complete pa-
rallel may be found, mutatis mutandis, in the argu-
ments against the belief in scarcity at that time,
to tiiose which more recently have been lu'ged
against the belief in abundance.
The following extracts from a pamphlet, pub-
lished by Mr. Boyd, in the form of a letter to
Mr. Pitt, in the autumn of 1800, which attracted
considerable attention at the time, may serve as
specimens of ingenious arguments, brought forward
to disprove the most palpable facts, and to substi-
tute for til em a perfectly unfounded hypothesis.
Nearly at the outset (page 3.) the writer states
his suspicion "that the increase of prices of almost
all articles of necessity, convenience, and luxury,
and, indeed, of almost every species of exchangeable
value, which had been gradually* taking place dur-
ing the last two years, and which had recently arrived
at so great a height, proceeded chiefly from the addi-
tion to the circulating medium, which he conceived
to have been made by the issue of bank notes, un-
controlled by the obligation of paying them on de-
mand," He then proceeds, in terms which have
been almost verbally repeated, in recent times, by
persons who apply the doctrine of depreciation to
the state of prices throughout the whole period of
the suspension of cash payments: —
of about 200 per cent, in 1800, compared with 1773, and this
was before any material difference between paper and gold had
become observable.
* A rise of 100 to 200 per cent,, in two years, can hardly
be called gradual.
Q 3
230 PRICES AND CIRCULATION,
" Can you, sir, or any man, assign any cause sufficiently ge-
neral in its effects and powerful in its operation, to account for
a change so general in the prices of all, or very nearly all,
articles of necessity, convenience, and luxury, as well as of
every species of property or exchangeable value, within so short
a space of time, except the one to which I attribute it? I by
no means pretend that the high price of grain (which the ge-
neral voice seems to attribute to the effect of an unfavourable
season) is solely occasioned by the general cause of excess of
paper circulation, not founded as all paper circulation ought to
be, in the precious metals. I only contend, that if there be
(as is alleged) a real scarcity of grain, the effects of this scarcity
must be very much increased by the general cause which I con-
ceive to have produced the general rise of the price of every
thing. Your mind must look down with scorn upon the stale
and inadequate causes of the high price of provisions which have
been assigned for it by some men, more distinguished by their
station than their acquirements. You well know that partial
causes never can produce general effects. You cannot fail to
have sought for a great and general cause for the solution of the
phenomenon which excites the general wonder. That pheno-
menon, I again assert, in all probability, arises from an increase of
the representative signs of money totally disproportioned to the
time in which it has been effected, and to any progress Avhich
the industry of the country can possibly have made within that
time ; and such an increase never could have existed but for the
rash attempt to extend the empire of credit beyond those limits
which the eternal laws of nature had marked out for it.
A great rise has taken place in every species of exchangeable
value during the short period of two years. The public mind
is on the rack to discover the cause of this rise, of which the
most alarming effects are manifested in the article of bread.
One says that there is a real scarcity of grain, owing to an un-
commonly bad season last year, and a scanty crop this year.
How this knowledge was acquired, I am utterly ignorant ; but
as it comes from a noble duke, (alluding to a letter addressed by
the Duke of Portland to the lord lieutenant of the county of
Oxford,) high in the administration of the internal affairs of this
country, it is to be presumed that it was not promulgated on
slight or doubtful grounds. This, however, I must be permitted
to say, that if there did exist sufficient reason to believe the
scarcity to be real, the influence of that cause cannot have lost
any of its force by the extraordinary publicity given to it.
Another says, there is no scarcity; but a set of forestallers
and regraters have monopolised the grain of the country, and
sell it out at such prices as they think proper to fix from time
to time."
The writer very justly ridicules and reprobates
1799—1803. 231
tliis absurd and unjust clamour, but at greater
length than the topic is worth, and then con-
tinues : —
" The opinion of a third person is, that tlie scarcity and high
price of bread corn proceed from a great addition made to the
popuhition of the country. How such a cause should so sud-
denly produce an effect of such magnitude does, I own, exceed
m}' comprehension. At what period the seeds of this extra-
ordinary increase were sown I cannot even guess ; but it is
necessary to suppose that there must have been some one or
two years of uncommon fecundity, in order to account for the
extraordinary addition to our population which, in this parti-
cular year, has so greatly enhanced the price of corn. The pro-
gress of population, like the growth of an individual, is so gradual
and imperceptible as to escape the notice of the most vigilant ob-
server, otherwise than in its eff'ects ; and, as in the growth of an
individual it can never happen to any parent to be surprised with
a child of two years old starting into the dimensions of one of
twelve, so, in my humble opinion, it is not probable that it
should happen to any country to find its population, in one or
two years, made such an extraordinary shoot as only could
have been expected in half a century; and yet such a shoot it
must have made, if an increased population be admitted as the
cause of the very high price of provisions in this particular j'ear.
By a fourth, the high price of provisions is placed to the
account of the war. This is a good general head for carr3'ing
all doubtful points to, — all unappropriated disasters, all stray
calamities and incidental disappointments of every description.
I shall not touch upon this extensive subject further than to say,
that I see nothing in the mode of conducting this ivar, during
the last two or three years, which ought to occasion any result
aff"ecting provisions, different from what all other Avars, and this
very war during the first four years of its duration, have gener-
ally produced. Whether the mode by which the means of car-
rying on the war have been raised, have or have not contributed
to the high price of corn, as well as of every other necessarj' of
life, is quite another consideration, and belongs to the general
object of this inquiry, which is, to consider the influence of the
present paper currency on the prices of commodities in general.
It is sufficient for the present purpose of estimating the credit
due to the assertion, that the high price of grain is occasioned
hi/ the ivar, to say, that no such conclusion is warranted by what
has happened in other wars.
It has been reserved for me to assign, as the cause of tlie
general rise which almost all things have experienced within
the last two or three years (and which grain, as the article that
comes most frequently in contact with money, feels the soonest
and the most), the existence of a great bank, invested with the
Q 4
232 PRICES AND CIRCULATION,
power of issuing paper, professing to be payable on demand, but
which, in fact, the bank which issues it is not obhged to pay."
These are the very arguments conveyed in the
lanffuaa^e almost verbatim et literatim^ of the more
modern partisans of the doctrine of indefinite de-
preciation of the currency during the Bank restric-
tion. There is the same disposition to profess to
doubt, or utterly to deny, the existence of the fact
of scarcity arising from political and physical
causes, in spite of evidence the most conclusive in
the case of every description of produce, that ex-
hibited so great an advance of price, in the period
under consideration.
The writer of the letter, here quoted, is a
striking instance of the degree in which the de-
sire to maintain a tenet hastily adopted is apt
to render a person, otherwise well informed, blind
or averse to see the most palpable facts passing
around him, which, if seen or known at all, must
be conclusive against him. Else how could it be
possible, that, whether as an extensive merchant,
and much in society, and still more as a member
of the very parliament which was then sitting,
and engaged in collecting the most extensive
information from all parts of the kingdom, on the
state of the crops, and the stock of provisions,
he could seriously entertain a doubt of the exist-
ence of great scarcity, arising from two conse-
cutive remarkably deficient harvests, is wholly
inconceivable. But what would be still more mar-
vellous, if it had not also its parallel among other-
wise well-informed persons at a later period is, that
neither in Mr. Boyd's letter, nor in the publica-
tions in answer to him, is the slightest notice taken
of the important fact, that, coincidently with the
rising prices of provisions, and of other Euro-
pean produce, all Colonial and American produce
(rice excepted), which during the three preceding
years had been rising, wdiile corn was falling, de-
1799—1803. QS3
clined rapidly in 1799 and 1800, while com was
rapidly rising ; and all transatlantic produce was,
at the date of that letter, in a state of great depres-
sion.
Section 4. — Great Fall of the Prices of Trans-
atlantic Produce from the Spring o/'1799 to the
Spring of ISOl.
In the examination of prices, in the interval end-
ing in 1798, we have seen that colonial produce
had begun to rise in 1796, in consequence of a
demand from Germany, and that the demand which
had become extremely speculative, continuing on
an increasing scale, the prices had reached an un-
precedented height at the close of 1798. In a
few instances, the rise was continued through the
first three months of 1799. As usual, in such
cases, the consumption of the commodities, which
liad been the objects of speculation, was reduced
by the advanced cost, and consequently proved to
be much less than had been anticipated, while the
supplies were much larger.
The prices thenceforward began to fall ; and, as the
circulation by bills of exchange and other forms of
credit had expanded with and promoted the rise of
prices, so it was contracted by, and in its turn acce-
lerated the fall of prices until the final adjustment to
the metallic standard. This process was attended
with very disastrous results in the great commercial
towns of Germany and Holland. The number
of houses that failed at Hamburg, between August
and November, 1799, was eighty-two, and the
amount of their engagements upwards of twenty-
nine million five hundred thousand banco marks, or
about two million five hundred thousand pounds.
The rate of discount at Hamburg rose during that
interval to 1.5 per cent, per annum.
234 PRICES AND CIRCULATION,
Tlie fall of prices and the commercial failures
in Germany entailed a corresponding fall of prices
in this country, and discredit and failures to a con-
siderable extent, not only among the houses im-
mediately embarked in the trade with that part of
the Continent, but also of some eminent houses in
the West India trade. The following extracts, from
printed commercial reports of that period, convey a
description of the circumstances attending the fall
of prices of colonial produce : —
"1st October, 1799 The trade of this country with the
principal part of Europe having of late been confined almost
wholly to one channel, the unusual flow of business it produced
to those places through which it was carried on, led many
persons to extend their concerns in a degree to which their
capital was inadequate, and encouraged a spirit of adventure
and speculation, particularly in the chief articles of sugar and
other West India produce, which at length has been carried too
far ; the consequence of which has been the failure of some
considerable houses at Hamburgh and other places, which has
affected their connections in this country, so far as to cause
the stoppage of several houses which had hitherto maintained
no small degree of commercial reputation."
" IstNovember, 1799. — The embarrassments of the merchants
at Hamburgh have increased to an alarming degree ; and during
the whole month of October every mail that has arrived has added
several names to the unfortunate list of houses which have stopped
payment in that city, where there are scarcely any persons in the
mercantile line^ whatever may be their wealth and connexions,
who have not experienced considerable difficulties, while the ef-
fects there of have extended to Bremen, Frankfort, Amsterdam, and
many other of the principal trading towns on the Continent. The
general and extensive connexion which has of late subsisted be-
tween the greater part of our merchants and those of Hamburgh,
naturally excited apprehensi-ons of the most serious consequences
in this countiy, which have been in part too justly verified by
the failure of several commercial houses, in addition to those
alluded to in our last report. The loss of the Lutine frigate,
which had on board 600,000 dollars, destined for Hamburgh,
has been a very unfortunate circumstance, both in itself, and,
with respect to the object in view, as it must occasion a great
disappointment, and delay the intended relief considerably."
The losses connected with the Hamburg failures,
and the great fall of prices of West India produce,
1799—1803. 235
seem to have been felt with peculiar severity in
Liverpool. Mention is made in the Annual Re-
gister of
" An act passed in the parliament which met in the autumn
of 1799, granting a loan of 500,000/. in exchequer bills to the
West India merchants in Liverpool, in order to avert the evils
which hung over their heads from very heavy failures in Ham-
burgh. Security was given for this loan, in property in their
warehouses amounting to upwards of two millions."
The subjoined statement will show the extent
of the depression of transatlantic produce, which
took place between the spring of 1799 and the
spring of 1801, being the interval during wliich
all European produce had been rising, and had
reached an unprecedented height : —
Coffee, Jam. Sup., per cwt.
Sugar, Muscov. Jam., do. •
, East India, white, do.
Saltpetre, do.
Cochineal per lb.
Cotton, Bowed Georgia -
Indigo, East India, superior
Spices, Cinnamon
5 Pepper
Tobacco, Virginia
Logwood, per ton
Rum, per gallon
Tlie prices of most of our manufactured articles
likewise experienced a considerable fall in the in-
terval from 1799 to 1801. The following is from
a Monthly Commercial Report, dated 1st April,
1801: —
" The trade of Birmingham is in a very distressed situation.
A large proportion of the workmen are entirely out of employ ;
and those who still have work have the utmost difficulty to
gain a subsistence, from the exorbitant price of all kinds of
provisions. The ribbon trade of Coventry is in a most deplor-
able state ; and the woollen trade of Yorkshire, if possible, still
worse." *
* So much for the assertion so confidently made in Mr, Boyd's
letter, that " a great rise had taken place in the price of every
17J
)8-9.
1800-1.
185*.
to 1965.
116*. to 130s.
- 693.
- 87*.
28*. - 50*.
96s.
- 115*.
50*. - 70*.
UOs.
- U5*.
60*. - 61*.
52s.
- 54-*.
14*. - 19*.
3s. 6d.
- 4*. 6d.
1*. 5d. - 2s. 8d.
lis.
- 13s. 9d.
8s. - 9*. 6c?.
8s.
- 10*.
4*. - 5*.
_
- '22d.
ISd.
1 1 kd.
- \6d.
id. - 5d.
48/.
- 501.
121. - 151.
7*. 2d.
- 8s.
3s. - 5s. 6d,
236 TRICES AND CIRCULATION,
But it is not this great fall only of prices of so
many, and so important, articles of consumption,
that affords a negative of the presumption of the
agency ofso general a cause, as that of the currency
or war-demand, — in the rise which took place from
the spring of 1799 to the spring of 1801, in the
prices of provisions, and of other articles of Eu-
ropean produce; for it will now be seen, that, upon
the cessation or abatement of the operation of the
seasons, and of obstructions to importation, the
prices of provisions, and of other objects of ex-
change (labour alone excepted) which had so risen,
fell, and continued to fall till they subsided to the
level from which they had been raised.
Section 5. — Fall of the Prices of Provisions from
the Spring of 1801 to the Close of 1803.
As the several steps of the rise in the prices of
provisions to so extraordinary an elevation have
been noticed, it may not be uninteresting to trace
the circumstances leading to the fall.
After the great elevation of prices had been
species of exchangeable value, during the short period of two
years." I am at the same time incHned to beheve, that tlie writer
expressed what was really the impression on his mind ; for I find
that even among men of business there is a very great vagueness
of recollection within even moderately short periods, of the order
of time, within which large classes of produce have fluctuated rela-
tively, each to the other; and a preponderating impression, pro-
duced by the attention having been at the time drawn more to one
than the other, is applied to the whole mass, although it maybe,
as it was in the case here alluded to, and again in more recent
periods, that while the prices of one great class of commo-
dities has been rising, another has been falling in nearly the
same ratio. The simple fact of the opposite tendencies, more
especially where in each case the tendency may be explained,
"* by distinct circumstances producing it, destroys the conclu-
sion derived exclusively from one only of those tendencies, as
to the universality of the operation of a given cause."
1799—1803. 237
reached in Marcli, 1801, the aspect of thmgs,
both as to the influence of the seasons and the
state of jDohtics, experienced a marked change for
the better.
The winter had been less rigorous than the two
preceding. The seed time, both for wheat and
spring corn, had been favourable, and an increased
breadth of cultivation was in progress. The spring
of 1801 was genial, and the crops were forward
and promising. The death of the emperor Paul
of Russia, and the peace with Denmark, which
followed the battle of Copenhagen, had re-opened
the navigation of the Baltic to British shipping, thus
removing the obstruction which had been appre-
hended to supplies from thence ; and the bounty,
therefore, with the high prices, insured a large
importation of corn.
Under these improved prospects of future sup-
ply, the markets gave way rapidly. The averages
of corn in England and Wales, on the 30th of
June, 1801, were, —
For Wheat - - 129*. 8^.
Barley - - 69*. Id,
Oats - - 37*. 2f/.
The harvest proving to be of moderate abundance
had, with the large importation*, the effect of re-
ducing the averages by the end of 1801 1, to
7.5*. 6(/. for wheat ;
44.9. for barley ; and
23*. A>d. for oats ;
* The importations in 1801 were, of
Wheat - 1,424,766 quarters.
Barley - 113,966
Oats - - 583,043
•j- The preliminaries of peace with France, which were signed
in October, 1801, do not appear to have had any material in-
fluence in accelerating the fall, the greater part of which had,
indeed, taken place before that event, which, however, was
calculated to extend the sources of supply, and to diminish the
cost of importation.
238 PRICES AND CIRCULATION,
being a fall of upwards of 50 per cent, since the
month of March preceding. Beans and peas fell
in the like proportion ; but meat continued to be
dear, because tlie stock of cattle and sheep, which
had been reduced by the previous scarcities, had
not time to be restored.
It may here be observed, as an instance of the
imperfect information, and the fallacy as to any cor-
rect conclusion, to be derived from a mere refer-
ence to annual averages, that, although the year
1801 saw the termination of the great dearth,
that it was in fact a comparatively abundant sea-
son, and that it was signalised by a fall of upwards
of 50 per cent, in prices, it yet passes, according
to the yearly averages of the price of wheat, for the
dearest of the whole series ; while 1799? which
was the most disastrously sterile, might from sucli
reference be inferred to have been but slightly
deficient. Thus,
1799, yearly average - - 67.^. Qd.
1800, - - - - llSs. 7^.
1801, - - - - 118*. Sd.
The seasons of 1802 and 1803 were considered to
be of ordinary, and certainly not of superabundant,
produce ; but they had the effect of progressively
depressing the prices of grain. The averages at
the close of 1802 were, —
For Wheat - - 57.9. Id.
Barley - - 25*. 7^.
Oats - - 20.9.
And notwithstanding the renewal of the war
with France early in 1803, the fall of prices con-
tinued, with only trifling oscillations, to the close
of that year, when the averages were, —
For Wheat - - - 52*. Sd.
Barley - - - 23*. 11^.
Oats - - - 21*. Id.
1799—1803. 239
In the course of the three first months of 1804,
the price of wheat experienced a further decHne to
49.V. Qd. But the foregoing quotations sufficiently
estabUsh the fact, that by the end of 1803 a com-
plete subsidence had taken place in the prices of
grain, to the level from which they had been dis-
turbed ; and if the very low prices at which barley
and oats ranged in 1803 be taken into the account,
it is manifest that grain generally was then as
cheap as, with the exception of a few months, it
has been in the whole period following the peace,
and since the resumption of cash payments.*
Section 6. — On the State of the Circulation from
1799 to 1803.
We have now to see how far the state of the cir-
culation, during this interval, differed from what it
might be supposed to have been, if the paper had
been convertible under the usual system pursued
by the Bank ; and how far there exist any grounds
for thinking that the rise of prices was caused by
an increase and the subsequent fliU by a diminu-
tion of the quantity of money.
The currency, at the outset of 1799, may be con-
sidered as having been at its strict bullion level with
the rest of the commercial world, or, if any thing,
at a somewhat higher value, inasmuch as the ex-
change on Hamburg, from January to March of
* The prices of meat declined slowly. The extreme dryness
of the summer of 1803 had made turnips and cattle food gene-
rally scarce and dear. The quotations at the close of that
year were,
Beef, in Smithfield, - - - 4*. to 5s. 4o^
Mutton, - - - 45. to 45. 6d.
But it will be seen, that the prices continued to fall in the in-
terval, which is to come next under consideration.
The prices of commodities, exclusive of provisions, were not
marked in 1 803 by any such variations as to require particular
notice.
240
PRICES AND CIRCULATION,
that year was 37s. 7f^M being higher than it had
been for any length of time before the restriction.
And it may be instanced, as a proof that the
directors considered the position of the Bank to
be such as, but for the restriction, which from
poHtical considerations the government were in-
duced to continue, would admit of their paying in
specie, that on the 3d of January, 1799, the fol-
lowing notice was given : —
" That on and after the l^th instant, the Bank will pay in
cash all fractional sums under five pounds; and that on and after
the 1st of February next, the Bank will pay cash for all notes of
one and two pounds value, that are dated prior to 1st July,
1798, or exchange them for new notes, at the option of the
holder."
The position of the Bank on the 28th of Feb-
ruary, 1799, being two full years after the restric-
tion, was as follows : —
Circulation of Bank notes
of 51. and upwards, and Securities.
Bank post bills - - 11,494,150 Public - 11,510,677
Under 5/. - - 1,465,650 Private - 5,528,353
Deposits
Liabilities
12,959,800
8,131,820 Bullion
17,039,030
7,563,900
21,091,620 Assets - 24,602,930
The stock of bullion was thus in the proportion
of more than one third of the liabilities, and was,
in fact, larger than the Bank had ever before (with
the exception of two years, from August, 1789, to
August, 1791) possessed.
After this period there arose a combination of cir-
cumstances, which entailed the necessity for the pay-
ment of unusually large sums abroad. The violent
commercial revulsion, which took place at Hamburg
in the autumn of 1799, 1'equired, on the part of the
merchants here, an immediate transmission of funds
to a very large amoimt. Good bills to a sufficient
extent (many of the German houses here being in
1799—1803. 241
a state of discredit) could not be procured, and
would not, if obtained, have been negotiable at
Hamburgh, at the moment of such a suspension of
credit, the rate of discount there having risen to
15 per cent, per annum, at which only the best
bills, and to a limited amount, could be made
available. The only alternative was to send bul-
lion, which was accordingly exported (chiefly
silver) in large quantities.
The harvest in this country had, as has been
seen, failed to such an extent, as to require an
unusually large importation of corn, which, as it
was scarce on the Continent of Europe and in Ame-
rica, could only be obtained at very high prices.
The war on the Continent, by the second coalition
against France, had been resumed on so large a
scale, in the summer of 1799, as of itself to create
a great absorption of gold and silver for the mili-
tary chests ; and it was, moreover, accompanied
by subsidies to Russia and Austria. The celebrated
expedition, too, under the Duke of York, to the
Helder, in the autumn of 1799, contributed to
swell the amount of foreign payments.
Under this combination of extraordinary cir-
cumstances requiring an immediate transmission of
such enormous sums abroad, while the currencies
of the principal commercial cities of the Continent
of Europe luere greatlij contracted by the state of
mercantile discredit, and by the demand for specie
for the purposes of the war, the exchanges fell,
without any previous enlargement of the Bank
issues worth mentioning, and with an actual
amount of circulation below what, with reference
to the state of its treasure, the Bank would have
been justified in issuing, previous to these occur-
rences.
The following are the quarterly average amounts
of the Bank of England notes of five pounds and
upwards, for 1799, with the exchanges, and the
II
242 PRICES AND CIRCULATION,
prices of gold and wheat at the close of each quar-
ter : —
Ex. on Hainb. Gold. Wheat.
March 25. 11,585,210 37*. 5d. 31. 17s. 9d. 52s. 6d.
June 25. 12,118,690 36*. — 3/. 175. 9^. 64*. 4d.
Sept. 25.12,155,360 325.9c?. No price. 8O5. 8^.
Dec. 25. 12,335,920 325. 6c?. to 31 5. 6c?. - 92*. 7d.
It will here be observed, that a great fall of the
exchange (and a great rise in the price of wheat)
took place by the end of September, although the in-
crease of bank notes, as compared with the preceding
quarter, is not worth notice, and that the circulation
in the last quarter exceeded that of the two preced-
ing quarters, by only the insignificant amount of
180,000/., while the exchange was lOper cent, lower,
and the price of wheat nearly 50 per cent, higher
in December than in June. But considering the
state of commercial discredit, and the high rate of
interest which prevailed at the close of 1799> the
presumption is, that the circulating medium was
virtually contracted, and that the value of money
was increased.
It is true, that supposing the regulation of the
issues to have been under a very vigilant and
correct system of management, with a view to
preserve the value of the paper on a level with
its standard, the Directors would, in consequence
of the great fall in the exchanges, and the con-
sequent drain of their treasure, have reduced
their circulation at the close of 1799, and at any
rate they would not have extended it as they
did then, and further under a still increasing
pressure of foreign payments in 1800. But in the
first place, the exchanges would not have fallen so
much if the Bank had then been paying in specie,
inasmuch as the gold drawn from it for export-
ation, would in so far have diminished the demand
for bills. And, in the next place, judging by the
conduct of the Bank in 178^, and again in 1795,
when in the face of a similar fall of the exchange,
the issues were extended instead of being con-
1799—1803. 243
tracted, the probability is, that the amount of the
circulation would equally have been extended in
1800. As in point of fact they were extended by
about a million of notes of 51. and upwards, as
compared with 1799, or by a million and a half, as
compared with the three years ending in 1795, the
average amount, in 1800, having been 13,421,920.*
* It was upon the extension of the issues of the Bank, in 1800,
that the first important controversy respecting their influence
on prices arose. The letter of Mr. Boyd on the subject has
ah-eady been noticed, as far as relates to the rise of prices. In
a postcript dated 31st December, 1800, he adds : —
" By the return to an order of the House of Commons, it appears
that the amount of Bank notes in circulation was 15,450,970/.,
which exceeds the sum in circulation on the the 26th February,
1797, (viz., 8,640,250, by nearly four fifths of that circulation).
Compared with the average circulation of three years, ending
December, 1795; viz., 11,975,573, the circulation on the 6th of
December, 1800, exceeds that average circulation by nearly
three tenths of its amount." "The exchange with Hamburgh,
which, when this letter was written, was S\s. \0d., is now
29*. \0d., by which means the difference which then existed
of nearly 9 per cent, against our currency is now increased to
upwards of l^ per cent. If, therefoi'C, a person residing on the
Continent remit funds to this country to be invested in the
3 per cents, at the price of 62. it is evident that by purchasing
the money so remitted at 14 per cent, discount the real price of
his 3 per cents, will be B^t^'^^ or nearly 53^. The price of gold
has fortunately not advanced in the same proportion within the
same period. The price which, on the 11th Nov. was 4/. 5s. per
ounce, is now 4/. 6s., which is little more than \l per cent.,
thus making the whole premium upon gold 10/. Ss. 8d. for every
100/. or something more than 10 j% per cent."
This letter of Mi*. Boyd's elicited, among other answers, one
from Sir Francis Baring, in which, after observing upon the in-
consistency of Mr. Boyd, who had been at the head of those
persons that had remonstrated on the insufficiency of the circu-
lation in 1796, in now attributing such vast effects to the in-
creased amount of the Bank issues, has the following apt remark :
" Perhaps Mr. Boyd is not aware in what manner his own
quotations and his own arguments, may return against him,
by the delay of a few days. In the postcript, dated the 31st
December, 1800, he observes, that since his letter was writ-
ten, the exchange on Hamburgh had fallen from 3\s. lOd. to
29s. lOd., which he considers as an additional proof of what
he has advanced. In that case, he must admit that when the
exchange rises, it must produce a comparatively favourable
R 2
244 PRICES AND CIRCULATION,
But admitting that there liad been the increase
of issues, by the Bank of England, to the utmost
effect. On the 2d of January, 1801, the course of Hamburgh is
printed 29^. 8^/., and on the SOth of January it is printed 31^. 8d.
— a difference of very near 7 per cent. ; and yet we do not
perceive the slightest effect it has produced in lowering the
price of provisions or other commodities grown and consumed in
Great Britain, and affords a most unequivocal correct answer to
the whole of his argument with regard to the foreign exchanges."
Mr. Henry Thornton, in his work on Paper Credit, makes the
following remarks, suggested by Mr. Boyd's publication : —
After observing that the two millions of notes under 51. issued
by the Bank of England should be considered as mere sub-
stitutes for the guineas which they displaced, and should there-
fore be deducted from the total amount of the Bank issues, in
any reasoning upon the effect produced by these on the cir-
culating medium, he proceeds to say, " I have to consider how
far, allowing for that difference of two millions of which men-
tion has been made, the circulating quantity of Bank of Eng-
land paper has lately corresponded with that of antecedent
periods. The average amount of Bank of England notes in
circulation during three j'cars ending in 1795, appears to have
been 11,975,573. The amount in circulation on the 20th of Feb-
ruary, 1797, the day antecedent to the suspension of the cash
payments of the Bank, has been already stated to have been
about 8,600,000, this being that very low sum to which they
vv^ere then reduced. By a statement of their amount on the 6th
of December, 1800, laid before the House of Commons, they ap-
pear to have been then 15,450,970. This last mentioned sum in-
cludes * the two millions of one and two-pound notes. If these two
millions are deducted, the amount, on the 6th of December, 1800,
will exceed the average amount in three years antecedent to the
suspension of the cash payments of the Bank, by 1,4'75,397/.
It remains, however, to be observed, that the notes of the Bank
of England were stated to the House of Commons by the gover-
nor of that company in the spring of 1 801, to have been then
reduced to a sum less by about a million and a half than their
amount on the 6th of December, ] 800. The total quantity, there-
fore, of the Bank of England notes in circulation in one part of
the spring of 1801, if the two millions be deducted, almost exactly
agrees with their average amount during the three years ending
December, 1795."
* By a return to Parliament from the Bank, dated 6th Feb-
ruary 1801, the amount of notes under 51. in circulation
From 25 November to 25 December 1800, was 2,148,700
And from 25 December to 25 January 1801 - 2,519,400
1799—1803. 245
extent of Mr. Boyd's exaggerated view of it, and
allowing also for an increase of the country circu-
lation, it can hardly be considered as compensating
for the chasm which must have been caused in the
metallic circulation by the clandestine export of
guineas, which the low exchange must have forced
abroad.
The amount of gold in circulation, before the
restriction, was by a moderate computation, twenty-
two millions five hundred thousand pounds (by
some it was estimated at forty millions). Sup-
posing, therefore, eight millions to have remained
in circulation in 1800 (an outside supposition),
there would be fourteen millions and a half, at
least, to be replaced by Bank of England and
country bank notes. Now the increase of the
Bank of England issues, including the small notes
in 1800, as compared with the three years ending
in 1795, was somewhat under three millions five
hundred thousand pounds, and it would be a most
extravagant estimate, which would assume an in-
crease in that interval of country bank notes to
the extent of eleven millions, which would be
requisite to make up the difference. Indeed, the
increase to that extent, if it took place at all, must
have been effected in a wonderfully short space of
time, because, as has been seen, there had been a
great reduction of the country circulation in 1796,
and from that time till after the commencement of
1799 there was not much facility or inducement
for its increase. The subsequent rise of prices, no
doubt, favoured the extension of the country bank
issues *, but it is utterly improbable, or rather abso-
lutely absurd, to suppose that it can have been toany-
* With reference to the country bank circulation at this pe-
riod, the following further extract from Sir Francis Baring's
answer to Mr. Boyd may not be without interest. " An alarm
has been raised against country banks, which have been accused
of enabling the farmers to hoard their corn by making them ad-
R 3
2i6 PRICES AND CIRCULATION,
thing like the above amount. The fair conclusion,
therefore is, that the quantity of money, during
the range of high prices in 1799 and 1800, although
greater than could be maintained, under the pres-
sure of demand for foreign payments, was not only
not increased, but was probably less than it had
been in the three years ending in 1795, without
taking into account the great increase of trans-
actions, and consequently of the functions of
money that must have taken place since that time.
But, whether less or greater, it was the duty of the
Directors of the Bank to preserve the value of
their paper on a level with gold, and this they
could not have done without contracting their
issues, or, at least, without limiting the amount in
1800 to what it had been in 1799. It is very
possible, that the simple limitation to that amount
might have effected a restoration of the exchanges
and the price of gold, because, notwithstanding
the enlargement of between a million and a million
and a half of notes of 5l. and upwards in 1800,
the exchanges w^ere not materially lower than they
had been a,t the close of 1799 ; whence it should
seem that an increase of our commercial exports
varices of money : but tlie inhabitants of this metropolis are not
aware of the total change in the situation of the country banks,
in consequence of the war. Those who are established in sea-
ports and great manufacturing towns may still be considered as
having commercial deposits with which they must, in preference,
accommodate their commercial friends ; but the general mass
of banks through the country look to the farmers for deposits
and support, as the only persons who have money to employ.
It is very rare that a farmer wants to borrow ; but the instances
are not rare when he is able to accommodate even his landlord
with a loan."
In truth, such were the enormous gains of the farmers at this
time, that, while their credit must have been so high as would
have enabled them to borrow to any amount they might desire,
it is not conceivable that they could have had sufficient motive
for borrowing on an extensive scale. It is much more probable,
and Sir F. Baring mentions it as a fact, that they were rather
lenders than borrowers.
1799—1803. 247
was in progress to accommodate itself to the in-
creased and increasing foreign payments, which
were going forward nnder the two important heads
of government expenditure abroad, and of imports *
of grain.
The question here occurs, what would have been
the effects on commercial credit and prices, and on
the rate of interest, if the issues of the Bank had
been so limited at the close of 1799, and through
1800, as to have preserved the value of the paper on
a level with gold ?
All hypothetical reasoning, as to what might
have been, instead of what ivas, admits of wide
difference of conclusion, and is at best unsatis-
factory. According to the best of my concep-
tion of the state of things, under the supposed
forcible contraction by the Bank of its issues, it
would have been this. There would have been a
greatly increased pressure on the money market,
severe as it already was. The public funds
would have been lower, and the financial opera-
tions of government would have been on terms
more disadvantageous to the public. The com-
mercial discredit and failures which occurred at
the close of 1799, and the commencement of
1800, in consequence of the revulsion of credit at
Hamburgh and other continental towns, would
probably have been aggravated, and the fall of
prices of colonial produce, and of all other com-
modities that were in full supply, or were held on
credit, or depended for purchase on the usual
credit, would, great as it was, have been more
rapid. But the prices of corn, and of other pro-
visions, and of articles generally, the supply of
which was below the ordinary rate of consumption,
would in all probability have been full as high.
The prices of provisions were determined by the
* The computed value of grain imported, in ISOO, was
8,755,995/., in 1801, 10,149,098/.
R 4
248 PRICES AND CIRCULATION,
highest sum which the wages of the lowest classes,
aided by contributions from parishes and indi-
viduals, would afford for food, and the rate of
wages would not be affected, or in the most trifling
degree only, by the casual expansion or contraction
of the Bank issues, and certainly not within so
short a period as a twelvemonth. There appears,
moreover, in the rise of prices of provisions follow-
ing the harvest of 1799 to have been little of
either buying or holding on credit, for there is, as
we have seen, according to the best evidence of
which the subject is susceptible, the strongest proof
or reason for supposing that the stock of corn was
exhausted, and that the dearth, great as it was,
would have been more severely felt, had it not
been for the earliness of the harvest of 1800.
The renewed rise of the prices of provisions
after the harvest of 1800, took place without
any increase of the amount of Bank notes of
5l. and upwards, which for the last six months
of that year was rather less than in the first
six months. And the avei'age amount for the
whole of the year 1801 was 13,454,370, being, as
nearly as might be, the same as in 1800. Now
this amount upon the grounds already stated, with
the addition of about 2,700,000/. of notes under
dl.f and with the utmost probable extension of the
country paper, and with the progressively dimi-
nishing number of guineas, did not probably make
up an aggregate nearly equal to that which con-
stituted the currency in the three years ending in
1795. There is accordingly the strongest possible
reason to believe, that the quantity of money was
not increased, and could not, therefore, be the
cause of the rise in the price of provisions between
the summer of 1799 and that of 1801, indepen-
dently of the incongruity which attaches to the
supposition of its having caused the rise of one
class of commodities, at the same tune that another
1799—1803. 2i9
great class of commodities was falling in nearly
an equal proportion to the rise of the former,
while it has been in evidence, that there was a
great scarcity of the commodities which did rise.
Tlie argument, therefore, is sufficiently made out,
that it was a case of dearth and not of depreci-
ation.
If any doubt, however, should still remain on
that score, a fact decisive against the suppostion,
that an increase of the quantity of money, or of
the circulating medium, as indicated by the Bank
issues, had been the cause of the rise is, that co-
incidently with an increase of the circulation of
tlie Bank of England notes, prices subsided upon
the cessation of the scarcity to the level from which
they had advanced. For if it was the amount of
Bank notes that raised prices in 1800 and 1801,
how happened it that an increased amount in 1802
did not sustain the prices, and much more prevent
a fall of above 50 per cent. ? And if the exchanges
had been depressed, and the price of bullion raised
by the amount of the circulation, how happened it
that they tended upon the abatement of foreign
payments to their par level coincidently with an
increased issue, as will appear by the following
statement. The average circulation of —
Ex. Dec. 31. Foieiirn Gold. Silver Dllrs. Wheat.
£
s. d.
/. s. d.
s. d.
s. d.
1800 was 13,421,920
30 0
4 6 0
5 9
133 0
1801 — 13,454,370
31 11
4 3 6
5 lOi
75 6
1802 — 13,917,980
34 0
4 0 0
5 4|
57 1
In as far, therefore, as a negative admits of being
established, it is clearly so in favour of the conclu-
sion, that the Bank restriction had not the effect
of depreciating the currency beyond the degree
indicated by the difference between paper and
gold, in the period now under consideration, and
the presumption is the strongest possible that the
250 PRICES AND CIRCULATION,
prices of provisions, and of other produce, which
attained their greatest elevation in tlie spring of
1801, would have reached the same height under
a convertible state of the currency ; and that, there-
fore, as regards tliese, it is doubtful whether any
allowance for the difference between paper and
gold ought to be made.
But although in a convertible state of the cur-
rency, the articles which were oi first necessity,
and which existed in an extraordinary degree of
scarcity, would, in all probability, have been as
high as they were, all articles not so circum-
stanced would have been lower in consequence of
the forcible contraction of the circulation, which
would have been necessary to counteract the
pressure on the exchanges, of the unusually large
foreign expenditure. And it is probable, that after
the spring of 1801, when scarcity, and the appre-
hension of it, had ceased, the fall of the prices of
necessaries would have been more rapid than it
was. At the same time there is no reason to be-
lieve that the subsidence would have been to a
lower level than that to which prices did eventually
fall under the actual system. If prices had fallen
more rapidly, the importations of 1801 and 1802
would have been less and the exportations greater,
and the prices of 1803 would have been probably
liigher, instead of continuing to fall as they did.
Among the grounds of presumption in favour of
this view is the fact, that the prices of corn and of
meat were in 1802 higher in France, and some of
the other countries of the Continent of Europe,
than in this country.*
* In truth the rise and high range of prices, with short inter-
vals only of subsidence, which have been noticed in the review
of this and of the preceding epochs, have their parallel in the
state of prices on the Continent of Europe during the corre-
sponding period. Thus Mr. Jacob, in his report of March,
1826, states the manner in which the competition of France for
1799—1803. 251
The circulation of the Bank in 1803 was —
Of 51. notes and upwards, including
bank post bills - - - 12,983,477^.
And of notes under 5/. - - 3,864,045^.
Together, 16,847,522/.
being nearly one million of the former, but only-
two hundred thousand of the total less than in
1802.
The comparative diminution, however, was in
the first six months of 1803. In the last six months
of that year there was an increase, as compared
with the last six months of 1802, and the prices
of corn were lower at the close of 1803 than they
had been at the close of 1802 : —
Dec. 1802. Dec. 1803.
Wheat - - 57.9. Id. - 52s. 3d.
Barley - - 25*. Jd- - 23.9. Ud.
Oats - - 20^. Od. - 2U. Id.
The great fliU of prices between 1801 and 1803
was followed, as might be supposed, by extensive
foreign corn tended to raise the price in the markets of the rest
of Europe.
" During the ten years from 1791 to 1801, there was a con-
stant demand in France for foreign corn ; several deficient har-
vests had been experienced at the beginning of the Revolution.
The agents of France were employed both in Europe and
America in purchasing corn, and hiring neutral vessels to con-
vey it to France, paying little regard to the price they paid for
it, or the rate of freight at which it could be transported. Hol-
land, which scarcely has ever grown corn sufficient for its own
consumption, felt a great want, owing to its internal sources of
suppl}^ from Germany and Flanders being diverted from the
usual channels by the circumstances of the war." (P. 51.)
At the same time, it is to be observed, that France either
was not visited by such great dearths in 1799 and 1800 as pre-
vailed in this country and in the north of Europe, or that the go-
vernment, by operating On the averages, endeavoured to conceal
the fact.
252 PRICES AND CIRCULATION,
failures. A comparison of the number of bank-
ruptcies stands thus : —
1798 - 911
1799 - 717
1800 - 951
1801 .
• 1199
1802 .
. 1090
1803 .
. 1214
2579 3.503
being an increase of more than one-third.
It is probable that the excess of fiilures in the
latter period would have been still greater, if, in
consequence of the peculiar nature of the bounty
on importation of corn, which ensured a minimum
price till the 1st of October, 1801, the importers
had not been preserved from the full effect of the
decline of the markets between the spring and
autumn of that year. There does not, at the same
time, appear to have been so great an extension
and abuse of credit during the rise of prices, be-
tween 1799 and 1801, as on some former and sub-
sequent occasions, nor, consequently, so great a
derangement of the circulation in consequence of
the fall ; nor in point of fact were there any failures
of consequence among the country bankers.
Section 7* — Summarij of the preceding
Survey.
On a review, then, of the whole period from the
commencement of 1799 to the close of 1803, it
appears —
1. That the prices of provisions, which, at the
beginning of 1799 were as low as they had been
on an average of some years anterior to 1793,
advanced, in common with other articles of Euro-
pean produce, to an unprecedented height, as a
1799—1803. 253
necessary consequence of the two very deficient
harvests of 1799 and 1800, combined with actual
and apprehended obstructions to importation.
2. That upon the recurrence of moderately
productive harvests in 1801, 1802, and 1803, com-
bined with a removal of some of the impediments
to a foreign supply, tlie prices of corn and other
European produce at the close of 1803, subsided
to the level from which they had been raised by
the before-mentioned scarcities from seasons and
political obstructions.
3. That coincidently with the great rise in the
prices of provisions and of European produce
in 1799 and 1800, a very great fall took place in
all trans- Atlantic produce ; thus negativing the
inference of the operation of a common cause,
such as that of mere increase of money.
4. That tlie rise in the prices of provisions,
and of European produce generally, in 1799 and
J 800, was attended with an increase of the Bank
circulation, and with a rise in the price of gold,
and a fall of the exchanges.
5. That the fliU in the prices of grain, and of
all European produce, subsequent to the spring
of 1801, and a fall in the price of gold and a rise
of the exchanges, were attended with a further
increase of the circulation of bank notes ; thus
affording a negative of any inference that the
increase of bank notes had been the cause of the
previous alteration of prices and exchanges, be-
cause if it had been so, the further increase of
bank notes should have prevented the subsidence
of prices, and the restoration of the exchanges.
6. That the prices of provisions, and of many
other leading articles of consumption, were lower
in 1803, a period of war on a most extensive scale,
and of very large loans raised by government to-
wards defraying the expenses of it, than they had
been in 1802, a year of peace.
254 PRICES AND CIRCULATION,
And, finally, that with the exception of the
prices of naval and military stores, not a trace can be
found in the state of prices, in the interval that has
passed under review, of war-demand, and as little
of depreciation of the value of the currency, under-
standing by that term a rise of prices caused by
an increase of money, and not by a relative scarcity
of commodities.
1804—1808. ^55
CHAP. IV.
STATE OF PRICES AND OF THE CIRCULATION FROM
THE COMMENCEMENT OF 1804 TO THE CLOSE
OF 1808.
The state of stagnation and declining markets
wliich has been noticed as prevailing from the time
of the renewal in the spring of 1803, of the war
with France, in agriculture and trade, but more
especially in the former, continued through the
early part of 1804.
The prices of corn by the gazette averages for
England and Wales, were, —
March, 1804, Wheat - - 49.9. Qd,
Barley - - 225. 9^.
Oats - - - 19*. 9d.
No instance in the whole period under discus-
sion from 1793 to the present time, nor indeed
any in the whole course of last century exhibits so
great a fall of the price of wheat within the same
space of time, as that which occurred between
March 1801 and March 1804, namely from an
average of 155.^. to 49*. Qd.*
* Thus, after twelve years of war, and eight years of sus-
pension of cash payments, we find that the prices of corn sub-
sided a second time to the level from which tJiey had been, in
two memorable instances, so violently disturbed by the causes
which have been described. And as this renewed subsidence
forms a most important feature in the discussion, it may here
be desirable to exemplify it by the following comparative state-
ment : —
Wheat. Barlej'. Oats.
s. d. s. d. s. d.
1792, December - - 47 2 29 10 18 6
1798, November - - 47 10 29 0 19 10
1804, March - . - 49 6 22 9 19 9
The higher price of wheat in 1804 is compensated by the
lower price of barley, and with this allowance the subsidence is
complete.
Q56 PRICES AND CIRCULATION,
This fall and low range of prices is the more ob-
servable, because the cost of production had been
considerably increased. The wages of labour had
as has been seen, risen considerably in consequence
of a recurrence of periods of great dearth ;
and all the implements of husbandry had expe-
rienced a very great advance in price. The rate
of interest too was much higher in consequence of
the absorption by the government expenditure of
a large part of the savings of individuals. More-
over some, although, perhaps, an inconsiderable
proportion, of the progressive taxation attached to
agricultural production ; and while the cost in
labour, in capital, and taxation, applicable to native
production was thus raised, the cost of a foreign
supply of which we were then supposed to stand
habitually in need, was also raised by the increased
charges of freight and insurance incidental to the
state of war.*
These considerations render the real fall of the
price still greater than the apparent one, and this,
notwithstanding the continuance of the war on an
enlarged scale of expenditure, and notwithstanding
an amount of inconvertible Bank of England notes
greater in the first six months of 1804 than it had
been in the first six months of 1801, when the
price was 200 per cent, higher.
It might naturally be expected that a fall so
tremendous of the markets for grain and for agri-
cultural produce in general, by the transition from
scarcity to abundance, would be severely felt by
the agricultural interests, always excepting the la-
bourer. Accordingly there were meetings held in
* The extra charge of freight and insurance cannot be taken
at less than from 5s. to 10s. per quarter on wheat from abroad,
in the interval from the breaking out of the war till 1806, when,
in consequence of the introduction of the continental system, the
risks, and consequent charges attending commercial intercourse
with the Continent, were greatly increased.
1801—1808, %51[
Essex and otlier counties for the purpose of peti-
tioning parliament for additional protection as a
remedy for the prevailing agricultural distress.
The committee of the House of Commons, to
whom the petitions were referred, not having any
theory of " preparations for cash payments," or of
" transition from war to peace," by which to ac-
count for the recent fall of prices, or for their
former elevation, give the following very rational
explanation of the causes of the rise and fall be-
tween 1791 and 1804: —
" It appears to your Committee, that the price of corn, from
1791 to the harvest of 1803, has been very irregular; but, upon
an average, increased in a great degree by the years of scarcity,
has, in general, yielded a fair profit to the grower. The casual
high prices, however, have had the effect of stimulating industry,
and bringing into cultivation large tracts of waste land*, which,
combined with the two last productive seasons, and other causes,
have occasioned such a depression in the value of grain, as, it is
feared, will greatly tend to the discouragement of agriculture,
unless maintained by the support of parliament.
A bill was in consequence brought in by Mr
Western, and an act passed by which a duty was
imposed of 24<5. Sd. per quarter, when the price
should be under QSs. ; and Q,s. 6d. per quarter, when
at or above that rate and under 66s. j and 6d., when
above 66s. It would be foreign to the purpose of
this work to enter into a consideration of the jus-
tice or policy of this measure, which proved to be
* The number of inclosure bills had been : —
1795
.
- 39
1796
.
- 75
1797
.
- 86
1798
-
- 52
1799
_
- 65
1800
-
- 63
1801
.
-
- 80
1802
-
.
- 122
1803
-
.
- 96
1804.
-
-
- 104.
258 TRICES AND CIllCUJ^ATION,
inoperative. It is only here mentioned for the
purpose of showing that, neither the state of tlie
currency under the Bank restriction, nor the con-
tinued and increasing consumption arising out of
the war, were at that time rehed upon for the re-
covery, or even for the maintenance, of prices by
those persons who, having since lost sight both of
the facts and of their own contemporaneous ex-
planation of them, now adopt a purely fanciful
theory on the subject. . If the Bank restriction, or
war-demand, had been the cause of the rise, how
happened it that they did not prevent the fall, or,
to repeat the words of Mr. Pitt, applied to a similar
state of things three years before, " How happens
it that the effect which, on the hypotliesis, should
have been increasing, was suspended during an
interval of nearly three years ? "
There were then no preparations for cash pay-
ments, and the loans to defray the expenses of the
war were on a larger scale than ever. So hopeless,
indeed, would be the task of endeavouring to re-
concile the state of prices at the close of 1803,
and. in the first half year of 1804, witli either of the
two^theories of modern times, that I have met with
no ifi'stance of any reference to, or attempt at an ex-
planation of, this period of cheapness consistently
with those theories.
It could not, however, have been so slurred over
liad it not been for the shortness of its duration.
An early recurrence of scarcities occasioned a fresh
disturbance of prices, and buried the instance of
cheapness here referred to in a heap of high ave-
rages.
Section 1. — Deficiency of the Harvest of 1804.
If the harvest of 1804 had proved only mo-
derately productive, and still more if it had been
1804^—1808. 259
abundant, a continuance of low averages would
very materially have modified the character of all
the reasonings on the effects of the Bank restric-
tion on the price of corn. But the crops, more
especially that of wheat, contrary to the expect-
ations entertained in the earlier part of the season,
turned out to be very deficient.
The occurrence of this year of deficiency, be-
tween two periods of only three seasons each, of
moderate produce, immediately preceding and
succeeding, is an essential consideration in ac-
counting for the high average price of corn during
the war and the restriction ; for it hence ap-
pears that there were not Jour seasons in suc-
cession without the occurrence of one harvest or
lyiore of decided and acknowledged deficiency. So
that no sooner had the influence of the preced-
ing deficiency ceased to operate, and the price
consequently subsided to the level from which it
had been greatly raised by the accidents of the
season, combined with political obstructions to im-
portation, than a fresh disturbing cause came im-
mediately into operation. In pro])ortion to the
importance in this point of view of the result of
the harvest of 1804, is the anxiety on the part of
those who refer all the phenomena of high prices
to the Bank restriction, to represent the produce
as having been sufficient, if not abundant. In
several publications, having that object in view,
the produce of that harvest is represented as h:^'ing
been abundant.
Sir James Graham, in a tract entitled "Corn and
Currency," which when it appeared (1826) attracted
considerable notice, after giving a table containing
the amount of Bank of England notes, in juxta-
position with the average prices of wheat for each
year, adds,
" From the comparison of the issues of the Bank with the
correspondent average of the price of wheat throughout this
s 2
260 PRICES AND CIRCULATION,
long series, it will appeav that an increase of issues has, with
wonderful precision, created a rise of price, not always in the
same year, but more generally in the one immediately succeed-
ing ; and a decrease of the issue has produced in a like manner
a correlative decline. The effect of increase * is illustrated by
the years 1803, 1804-, and 1805, in which the harvests were
good and the produce abundant ; vide Joplin on Currency, Ap-
pendix, No. 14., and in which the rise of price cannot therefore
be attributed to a deficiency of supply."
Curiously enough, the authority quoted in the
above extract gives a directly opposite and a true
statement of the fact, the following being the descrip-
tion in Joplin, on the currency, Appendix, No. 14.
(extracted from the Farmer's Magazine), "1804. In
* Even if the harvest of 1804 had been as abundant as it
was indisputably deficient, according to the very authority quoted
for the strange assertion of the reverse, the state of the Bank
circulation would most assuredly not account for the rise of
price. The following is a comparison of the annual average cir-
culation of bank notes with the average prices of wheat at the
end of each year, 1803, 1804, and 1805 : —
Bank Notes
Prices of Wheat
of 51. and upwards. f
in December.
1803,
^12,983,477
51*.
1804,
12,621,348
86*.
1805,
12,697,352
76*.
And the discrepancy between the state of the circulation and
the price of wheat will be still more striking, if we compare
them in the first and last half years of 1804 respectively, there
having been an actual diminution in the last six months of that
year coincidently with a great advance in the price of wheat.
But what, if there were no other ground, is decisive against the
hypothesis of an excess of bank notes having produced this
rise of prices is, that coincidently with such rise, the bullion in
the coffers of the Bank was experiencing a progressive increase ;
for instance,
Bullion.
February, 1804 -e^3,372,140
August - 5,879,190
February, 1805 - 5,883,800
August - 7,624,50
f In this and all the other references to the position of the
Bank the amount of the circulation of notes of 5/. and upwards
includes Bank post bills.
1804—1808. 261
Scotland, wheat an average crop, but of inferior
quality ; in England, a very short crop, and the
quality very inferior." It happens, whimsically too,
that Mr. JopHn (in order to prove his theory, tliat
the variations in the price of corn are owing more
to variations of demand than of supply), in the
text of the pamphlet, from the appendix to which
the above quotation is made, has the following
passage : — "In the years 1804 and 1805, wheat
rose from 50*. to 100*. without any scarcity at all."
The assertion of abundance is repeated in a publi-
cation entitled, " A Letter to Lord Archibald
Hamilton, 1823, page 15," in which the writer,
in contradiction of a statement of mine, expressly
says, " 1804 was not a year in which the harvest
was deficient, it was rather a year of plenty."
It has been requisite to notice these unfoimded
assertions, although made so long ago, because the
state of the corn trade, at this most important
period, has not, as far as I am aware, been since dis-
tinctly adverted to, or attempted to be explained
consistently with either of the two theories. And
such assertions, so confidently made as those here
referred to, have served to confirm the impression,
so universally prevalent, that there was nothing in
the seasons, excepting the notorious scarcities of
1795-6 and 1800-1, to justify the high prices
during the remainder of the war and the restric-
tion.
The fact of the deficiency of the harvest of 1804
is attested by evidence which leaves no room for
doubt.
The forty-third volume of the Annals of Agri-
culture, edited by Arthur Young, is nearly filled
with answers from persons in different parts of the
country, to whom circulars had been addressed by
order of the Board of Agriculture, containing in-
quiries as to the nature and causes of the failure of
the wheat crop of 1801, and as to the extent of the
s .3
26^ PRICES AND CIRCULATION,
deficiency. The cause of failure seems to have been
an extensive prevalence of blight and mildew ; and
nearly all the answers concur in stating a deficiency
or from one fourth to one third in England and
Wales ; while in Scotland, to which the cause of
injury had extended only partially, there was an
average produce. The Farmer's Magazine, vols.
V. and vi., contains statements in great detail relative
to that harvest, and the effect of it on prices. The
following is an extract from that work of a corn-
factor's circular : —
" London, Oct. 30. 1804.
^' From the general bad quality of the new wheat presented
-at Mark Lane, I am sorry to say that the injury from blight
appears to have been more extensive than was supposed when I
wrote you last. The best samples are inferior to last year's ;
and the great bulk of what has been yet produced will not yield
more than two thirds of the fine flour which the average of last
year produced. In consequence of this, the price of wheat has
very considerably advanced, notwithstanding the considerable
isupply of foreign wheat which has been quickly brought to
^market."
The average prices accordingly which had been,
Wheat. Barley. Oats.
March 1804, 49*. 6d. 22s. 8d. 19*. 9^.
>were, Dec. 1804, *S6s. 2d. 43*. lOd. 26*. lid.
This sudden and great rise of prices having im-
* The quality of the wheat being very inferior, the average
price gives an inadequate idea of the extent of the rise, which
>vill be best shown by the quotations of wheat in Mark Lane.
April 23. 1804. 30.s. 45^. 52s. per quarter.
Essex and Kent, 56s. 57s.
Foreign Red, 35^. 48*.
W^hite Dantzic, 50*. 54*. 58*.
(Oct. 29. 1804. New 48*. 63*. 72*. 78*. 84*.
Old 52*. 76*. 88*.
Fine White, 90*. to 92*.
Foreign Red, 52*. 78*. 82*.
White Dantzic 75*. 85*.
Fine 90*.
Jan. 28. 1805. New 65*. to 100*.
Old 79*. 105*. 116*.
Foreign Red, 80*. 95*. 105*.
White Dantzic, 100*. 120*. 126*.
1804—1808. 263
mediately followed the passing of the Corn Bill in
1804, considerable dissatisfaction prevailed, and
petitions were presented to parliament, in the spring
of 1805, against the bill, alleging, among other
things, that it had been the cause of the rise of the
price of corn. In the opinion of some of the wit-
nesses examined, the first tendency to an advance
of prices, in the summer of 1804, was in conse-
quence of the new corn bill ; but they all agree
that the subsequent rise was in consequence of the
great failure of the wheat crop.*
* The following are extracts from some of the evidence,
May, 1805 : —
Mr. John Dixon, cornfactor (who had stated his opinion that
the first rise had been caused by the corn bill), was asked,
" Do you know of no other causes of the rise ? " — Answer, " I
know of no other causes, except in allusion to the general blight,
which was not known till a few weeks before harvest." And
when further asked, " Would not the price have risen, although
the act had not passed?" — answered, " I do not ascribe the
high prices which we have vvitnessed since harvest to the effect
of the bill, but to the general failure of the last year s crop.''
Mr. Joseph Stonard, cornfactor, said, " I do apprehend that
the advances from the 2d July to the 6th August were in con-
sequence of the bill then before the house ; that the subsequent
advances arose from the unfavourable weather, and the appre-
hensions of a defective harvest." " Did you hear of any blight
in June to the wheat ? — No. — Did you hear in the first week of
July of the wheat harvest being likely to be defective ? — I
recollect on the second Tuesday in July, from the excessive
cold rain, and from what I heard afterwards of its being pretty
general through England, I believed that to be the cause of the
great defect in the crop of wheat." t
Mr. Peter Giles, cornfactor, said, " I think wheat and oats
advanced in July from 8^. to IO5. 'per quarter; but not wholly
occasioned by the agitation of the bill." " What other causes ?
— ^ The appearance of the crops on the ground not being very
favourable. When did you apprehend that the last crop might
t The following is an extract from a Meteorological Journal
for July, 1801: — "A considerable quantity of rain fell on the
7th ; on the 8th some heavy showers, with thunder and light-
ning. The mercury in the barometer rose rapidly till the next
morning, when it fell, preparatory to that heavy rain, which, on
account of its long continuance, was remarked l)y every body."
3 4
SGi PRICES AND CIRCULATION,
The acknowledged failure of the crop was quite
a sufficient cause of the rise of price, without the
aid of the corn bill, which, in point of fact, be-
came wholly inoperative. * But, if the corn bill
had been operative, so much of the rise as might
be clearly attributable to that cause would obviously
be distinct from the supposed agency of war-
demand, or of the currency.
be defective? — The report of the blight and mildew com-
menced the first week in August. When did that apprehension
affect the price of grain ? — It began the first week in August,
and continued to advance till the last week. Do you attribute
the second rise entirely to the apprehension of a defective crop ?
Entirely."
Mr. Samuel Scott (now Sir Samuel Scott, Bart.), a member
of the house, being examined, chiefly upon some of the details
of the bill, was asked, " Do you consider any material rise in
price to have taken place in the market previous to the know-
ledge of the blight ? " — Answered, " No material advance had
taken place previous to the first rumour of an injury to the crop."
* On the continent of Europe the prices of corn rose con-
siderably between 1802 and 1805. It appears that the seasons
of 1802 and 1803, which were of fair average produce in this
country, had been unfavourable in the south of Europe. So
great was the scarcity in Spain during those two years, that
the price of wheat rose in the spring of 1804 to nearly six times
what it had been in 1800.
" The medium price of the load of four funegas of wheat at
the market of Medina di Rio Seco in Leon, which was in May,
1800, at 115 reals vellon, rose as follows: —
May, 1801, 172 reals vellon.
1802, 263 —
1803, 247^ —
1804, 620" —
{Appendix to Bullion Report., 1810, page 185.)
The Monthly Magazine, in its commercial report for July,
1805, has the following passage : —
" In the late general rise of the price of grain in Germany,
the bushel of wheat, that had been usually sold in Saxony for
a dollar and a half, rose to ten dollars. In Lausitz, the price
rose as high as fifteen dollars a bushel. \\\ Brunswick, rye had
advanced to between two and three dollars a bushel. Owing
to the scarcity and dearness of provisions, the last great fair at
Vienna was ill attended. Goods either went at very low prices,
or remained unsold."
1 80 i— 1808. 265
There has been the more reason for dwelling
uj3on the fact of the great rise of the price of corn
following the harvest of 1804, and upon the causes
of that rise, not only because it negatives the theo-
ries of the currency and war-demand, as applicable
to this period, but because this renewed dearth,
so quickly following that from which there had
been just before a transition to plenty, is important
in other points of view. It was calculated to main-
tain an elevation of the average price thrown over
a series of years, and it was the specific occasion
of renewed demands by the working classes for
advanced wages ; claims which were rendered the
more effectual by the resource which the increasing
employment in the army and navy held out to the
workmen who engaged in the numerous strikes of
that time. It was on this occasion that the price of
artisan labour especially experienced a considerable
advance.
It will be seen that the following harvests, com-
bined with the state of politics, were not of a
character calculated to restore abundance, nor con-
sequently to allow of a subsidence of the prices of
corn to the level from which they had been dis-
turbed by the failure of the crops of 1804.*
Section 2. — Seasons of 1805 to 1808, hotli
included.
The winter of 1804-5 was mild; but the spring
was ungenial ; the summer cold and unsettled ;
the harvest backward ; and the appearance of
* The harvest to which, as far as I can judge, it bears the
nearest resemblance, is that of 1828, the effect of which was to
raise the average price of wheat from 50*. in January to 76*. in
November, and this, be it observed, when we found in the south
of Europe, and in Spain especially, a source of very considerable
supply, instead of competition, as in 1804—5, for sharing with
us in supplies from the north of Europe. If in 18^8 our exter-
nal relations had been as they were in 1801, the average price
of wheat would inevitably have reached upwards of lOOs.
q66 prices and circulation,
the crops at the approach of harvest unfavour-
able ; the consequence was, that the average price
of wheat, after an intermediate fall, reached {)8s. 4<d.
in August. But the weather then taking up, and
continuing propitious for securing the crops, and
these turning out better than had been expected,
although far from being considered generally
abundant, the price of wheat fell more than 20a\
per quarter before the close of the year, and con-
tinued to decline till the spring following, when
the Gazette average was 74.?. 5d., or a fall of about
246-., since the preceding harvest.
The winter of 1805-6 was attended with more
frost and snow than the preceding season, but
was not a very rigorous one. The spring, like the
preceding one, was backward ; and the appear-
ance of the crops was unpromising. This circum-
stance, combined with political events, namely,
the hostile proceedings of Prussia* against this
country, under the dictation of France, which
threatened in their consequences to cut off our sup-
plies of corn from the Baltic, and which had the im-
mediate effect of raising greatly the rates of freight
and insurance, occasioned a rally in the average
price of wheat to 84.9. in June ; but thenceforward,
notwithstanding that the weather was variable, and
rather wet during the harvest, and notwithstanding
the apprehension of increased political obstructions,
in consequence of the overthrow and final subju-
gation of Prussia by the battle of Jena, followed
by the Berlin decree, in the autumn of 1806, prices
declined slowly, but progressively, to 73.9. 5d.
before the next harvest. The quality of the wheat
was considered to be inferior to that of the preceding
year, and the quantity a bare average, which was not
then computed^o be sufficient for the consumption.
* The Prussian government issued a proclamation, dated in
March, 1S06, ])r()hihiting the enti'ance of British ships into any
of its ports or rivers.
1804—1808. 267
The winter of 180G-7 presented nothing re-
markable of mildness or severity. The spring of
1807 was rather forward, and the summer fine and
dry, to nearly the completion of the harvest in the
southern division of the kingdom. In England
and Wales, the wheat crop, although thin on the
ground, was considered an average in point of
yield. But in Scotland, where the weather was
extremely unfavourable for the operations of the
harvest, the wheat crop proved to be very deficient.
Thus, in the Farmer's Magazine, —
1807. "The crops generally of little bulk. Wheat,
in some districts, equal to an average, but in others
suffered from bad weather."
The spring crops were throughout scanty, and
the potato crops in Ireland had failed to a consi-
derable extent. Still, as the wheat in England
had been got in mostly in good order before the
bad weather set in, and was brought early to market,
prices declined to 66s. in November, being a fall
of upwards of 30s. per quarter since August 1305.
This fall, be it observed, took place notwithstanding
the increasing gloom of the political horizon, w^hich
led to the apprehension, well founded as the events
proved, of great, and at one time nearly insiumount-
able, impediments to importation.
The orders in council issued by ourgovernment, in
retaliation of the French decrees, formed the grounds
for the non-intercourse act of America, the year
following. And the bombardment of Copenhagen
in the autinrm of 1807, was followed on the part
of Denmark by a closing of the passage of the
Sound, and on the part of Russia by an embargo
on British shipping. While the Prussian ports of
the Baltic had, under the dictation of France, been
for some time before shut against the commerce of
this country. Under these circumstances, the
farmers were naturally induced, as by their increased
capital from their great gains of late years they
268 PRICES AND CIRCULATION,
were enabled, to hold larger stocks. There is, there-
fore, every reason to suppose that if political ap-
pearances had been less threatening, and the crops
less scanty, the subsidence in I8O7, to the level
from whence the rise in 1804 took place, would
have been complete.
But in 1808, and at the very commencement of
it, the grain markets began to recover. The scan-
tiness of the preceding crop w^as beginning to be
felt, and at the same time the apprehensions which
had been entertained of the exclusion of the
British flag from trade in the Baltic were realised.
Thus we were threatened with an almost total
cutting oft' of a foreign supply, if we should have
occasion for it, as it was thought inevitable that
we should ; it being considered as a settled point
that this country did not produce corn enough for
its own consumption.
The winter of I8O7-8 set in very early, which
of course increased the consumption of all kinds of
grain, more especially as hay was scarce and dear..
The appearances that a serious scarcity of food
was likely to be felt before the coming harvest,^
induced parliament, on a report of a committee of
the House of Commons, to prohibit the distillation
from grain.* The same prospect had a natural
effect on the corn market, and prices advanced
accordingly in the spring of 1808.
The crops of 1808 proved more deficient than
those of the preceding year. The memorably hot
days in the early part of July t were considered
* One of the motives which induced the legislature to pro-
hibit the distillation from grain was, doubtless, to afford some
relief to the West India planters, by the substitution of sugar
in the distilleries ; but the immediate occasion and the professed
object of the measure were distinctly stated to be the actual
and apprended deficiency of grain and of potatoes.
-f- The temperature on the 13th and 14th of July, 1808, was
higher than it has ever since been, and I am not aware that
there is any authentic record of any former instance of so high
1804—1808. 26'9
to have clone great injury to the wlieat, and they
were followed by a great deal of wet and stormy
weather, from that tmie till the getting in of the
harvest. Some of the other crops suffered, although
not in the same degree with wheat, and the aggre-
gate produce was estimated to be below an average.
a temperature in this climate. Of the season of 1808, the
following extracts from the Farmer's Magazine convey the
general character : —
" The first four months of the year were singularly stormy
and cold, displaying all the horrors of winter, even till the last
day of April. The month of May was ushered in with the
most promising appearances ; and vegetation, from that time,
proceeded with a rapidity rarely witnessed in this country. The
last two weeks of June, and the first three weeks of July, fur-
nished warmer weather than had been remembered by the oldest
man living * ; and this unprecedented warmness was followed by
dreadful thunder storms in every quarter of the island, accom-
panied with heavy rains, more resembling those of the torrid
zone than what are usually experienced in the temperate climate
of Great Britain. The loss and damage sustained by such heavy
rains, can only be correctly ascertained at an after period. It
is enough, in this place, to say, that, in consequence of them,
the wheats have been mildewed considerably ; a great part of
the hay crop absolutely rotted ; whilst field labour hath been
thrown out of shape, and placed in a condition not to be reme-
died at this advanced period of the season." — September, 1808.
vol. ix. p. 375.
" The failure of the wheat crop, noticed in our last, proves
greater than at first imagined, and appears to have taken place
in almost every district, though in different degrees, according
to the nature of the soil, the stage of growth at which plants
had arrived when adverse weather set in, and the situation of
fields occupied with that grain." — December, 1808.
* Extract from a Meteorological Journal, two miles north-ivest
of London : —
" July 1. 1808. — The leading feature of this month has been
the extreme heat of the 12th, 13th, and 14th days. We have
paid much attention to the state of the atmosphere, as the reports
in this work will show, since January, 1802; and remember
nothing approaching to the heat of the days referred to.
" We have used the same thermometer through the whole
period, nor has the plan been changed ; it hangs on the outside
of a window frame looking n. e. In this situation on the 12th,
270 inXICES AND CIRCULATION,
This was the period, too, when our communication
with the Continent had become very much ob-
structed, so as to preclude the expectation of any
considerable relief from foreign supply. In point
of fact, there was an excess of export of about
15,000 quarters of wheat, occasioned by the wants
of Spain and Portugal. The high price, therefore,
(wheat having advanced by July to an average of
Sis. Id. per quarter, and by January following to
90s. 4fd.) was a necessary condition for eking out
a reduced supply of our own growth, when the
obstructions to importation had become great, and
were thought in that year to be insurmountable.
Nothing, indeed, can better prove the magnitude
of those obstructions, than the circumstance that
an average price of upwards of 80*-. when the ex-
change and the price of gold were nearly at par,
was insufficient to bring forward any foreign supply
worth mentioning. But such was the spirit of
caution then prevailing in the corn trade which had
been suffering from a slow but long-continued fall
of prices, that the advance, although under cir-
cumstances so favourable to it, was very gradual.
Tiius it was not till May, 1808, that the average
got up to 72s. 6d. for wheat. But thenceforward
a backwardness of the crops, and unfavourable ap-
it was as high as 881° ; on the 13th, 91° ; and, on the l^th, it
was at the astonishing height of 93°, at which it continued
nearly an hour. At the timber yard near Westminster Bridge,
Ave were informed, it was at the same height. In a shop in
Holborn, on the 13th, we saw the thermometer at 89°, at a
time that the shop appeared to the feehngs very cool in com-
parison of the external air.
" Mr. Capel Lofft of Troston, writes, that on the 12th and
13th, his thermometer stood both days at 91°, and his observ-
ations were confirmed by those of a neighbour; and at Bury St.
Edmunds, the thermometer was 93° on the 12th, and at 95°
on the 13th. Mr. Lofft observes, that ' twenty-seven years'
observation, very little interrupted, has never given me an equal
result in two days, or even in a single day.' "
1«C)1< — 1808. ^i71
pearances of them, and very stormy weather during
a great part of the liarvest, which was considered
to be deficient, occasioned a more decided rise,
viz., to 9^*., at the close of the year.
Under tliese circumstances, instead of having re-
course to the Bank restriction and to war consump-
tion, for the purpose of accounting for the rise in
price, it should be rather a matter of wonder that it
did notgo much higher; and it is a tribute to the pru-
denceof thetrade at that time, that there was somuch
less speculation in it than, as will be seen, prevailed
contemporaneously in other branches of trade, in
consequence of an actual or apprehended cessation
of all foreign supply. It is at the same time worthy
of remark, that while in the interval under consi-
deration, viz. from the commencement of 1801 to
the end of 1808, so great a rise had taken place in
the prices of corn there was a considerable fall in
the prices of meat to the close of 1808, and first
quarter of 1809.
In Smithfield Market
Beef. Mutton.
1 804^, 4.S. 6d. to 5s. 8d. 5s, to 6s.
1808, 3s. to 5s. 3s. 4r/. to 5s. 4d.
The contract by the Victualling Board for the
supply of fresh beef, was
* Dec. 1803, at 55s. 6d. per cwt.
Dec. 1808, 50.9.
And Irish provisions, which might be considered
to be directly acted upon by government demand,
were,
Dec. 1803, Mess Beef, 152^. to 1 60s.
Mess Pork, 105.9. to 115.9.
1808, Mess Beef, 120^. to 125^.
Mess Pork, 65s. to 92*.
■* In November, 1801, after preliminaries of peace with France,
the contract was at 69^. Id. per cwt. This is the first date
quoted at Deptford -, but there is a quotation for PI )» mouth yard
in March, 1801, as high as 80*.
272 PRICES AND CIRCULATION,
It is not easy to find a more striking instance than
this of the little influence of government demand on
the general prices of provisions, seeing that in that
interval the demands for victualling the navy and
army, were on an enormous scale, and progressively
increasing, more especially at the close of 1808,
when fleets and armies were despatched for the war
in the Peninsula, which had just then commenced.
If the rise in the prices of corn is to be explained
by the supposed operation of the Bank restriction,
or government demand, how is the fall in the price
of meat to be accounted for? Leaving the sup-
porters of either, or of both of the two theories,
to offer a consistent explanation of the opposite
tendencies of those two great classes of human
food, I have now to call the attention of the reader to
some most extraordinary variations, in this interval,
of the prices of other descriptions of produce.
Section 3. — Instances of some of the most promi-
nent of the Variations of the Prices of Commo-
dities besides those of Corn.
It would be irksome to the general reader to
trace with much minuteness the changes and the
causes of those changes in the great number of
articles which underwent those fluctuations (which
any person wishing to follow them more in detail
may do by reference to the list of prices in the
Appendix), I shall therefore confine myself to a
view of some of the most prominent of them, for
the purpose of seeing how far they are calculated
to countenance the theories in question.
Sugar and coffee, and some other articles of Co-
lonial produce, which had reached an extreme point
of depression at the close of 1801, advanced from
that time till 1805. The Berlin and Milan decrees,
1804—1808. 273
by narrowing the channels for export, depressed
these articles in 1806 and 1807, and subsequently
after experiencing a short-lived speculative im-
provement between 1807 and 1810, they were, till
the opening of the ports on the Continent, some
years later, viz. in 1813 and 1814, at a ruinously
low range of prices.
Copper, in consequence of a greatly increased
demand, not only for the sheathing of ships,
but for an extensive coinage which was then in
progress, attained, in 1805, to 200/. per ton, a
price which it never afterwards exceeded, and be-
low which it has constantly ranged, subsequently
to 1808, when, for a short time, it was, after inter-
mediate fluctuations, again at that price. Lead,
which had ranged at about 20/. per fodder, pre-
vious to 1800, rose to 41/. in 1805, and after declin-
ing again to 28/., rose in the autumn of 1808 to
43/., a price which it never afterwards reached.
British iron attained, in 1803, as high a price as it
ever subsequently reached till 1818 and 1819.
Foreign iron had been at its maximum in 1800
and 1801.
The close of the year 1807* found us, by the
events of the war, excluded from direct commer-
cial intercourse with every country in Europe,
Sweden excepted ; and there was consequently,
besides in many instances a short actual supply,
a prospect of scarcity of every article of European
produce, required as raw materials for our ma-
nufactures, or as naval stores. About the same
time, too, began our disputes with the United
States of America, which produced first a non-
intercourse act, and eventually a war. The pro-
spect of scarcity thus held out, naturally excited
a spirit of speculation ; and in proportion as that
prospect became realised, was the speculative de-
* The celebrated Milan decree was issued about this time.
T
274- PRICES AND CIRCULATION,
mand extended through different periods in 1808,
and the early part of 1809, when the obstructions
to importation, from poHtical causes, nearly reached
their height. After the attack on Copenhagen, and
the final withdrawing of our naval and military forces
from thence, Russia and Denmark joined in the war
against this country.* The Baltic being thus shut
against any direct commercial intercourse with this
country, it was not clear that any part of our usual
supplies of necessary articles from thence could be
obtained by any channel, however circuitous, or at
any expense, however great. It was naturally
supposed that Russia might, whether compelled
by France, or of her own accord, make a point of
depriving this country of some of the materials
essential to the maintenance of our navy, and of
these the foremost was hemp. This article, in
consequence of such apprehensions, in aggravation
of actual deficiency of supply, advanced from 58/.
in the summer of 1807 to 118/. per ton in the
course of 1808. Flax, on nearly the same grounds,
rose from 68/. to 142/. per ton. Memel timber
reached 17/. per load, having varied during 180(3
and 1807 from 3/. 13.v. to 8/. 10s. Deals and other
descriptions of wood rose in proportion. Baltic
linseed rose from 43*. to 150.9. per quarter ; Russia
tallow, from 53.9. to 112.9. per cwt.
In consequence of the occupation of Spain by
the French, it was imagined that the exportation
of wool from thence would be rendered imprac-
ticable, or that, at any rate, the unsettled state of
that kingdom would materially diminish the pro-
duce. Under this impression, a very great specu-
lation was entered into, and the price rose from
6.9. Jd. and 6s. 9^. to 22.9. and 26*. per lb. for the
Leonessa, and from 2*. 6d. and 56-. to 13.9. and 18.9.
for Seville wools.
* A Revolution in Sweden in Marcli, 1809, ])]aced that
country also in hostility against us.
1804^—1808.
275
Our principal dependence for a supply of silk
was, at that time, on Italy; and there was a double
ground on which the French, who then exercised
dominion over that country, might be expected to
do then' utmost to prevent our obtainmg any from
thence. One motive would be, that of distressmg
us, and another would be, that of giving a more
decided superiority to their own manufactures. It
is not to be wondered at, therefore, that this article
advanced considerably, — viz. Piedmont thrown silk
from 30.9. and 47*'. in 1807, to 9Gs. and 112.v. in
1808 ; China raw silk, from Ids- and 22^. to 33s.
and 45*. •, and Bengal, from 25s. and 33*. to 52*.
and 85*.
The orders in council, on our part, and the
non-intercourse act and various embargoes, on
the part of the United States of America, were
calculated to favour speculation in the produce of
that country ; and, accordingly, Georgia cotton
advanced from 9^/- and l.v. to 2*. and 2*. Gd.
per lb. ; and Virginia tobacco from 4c?. and 8^. to
1*. 4fd. and 2*. per lb.*
Under an impression of the permanence of the
causes of dearth of provisions and of other neces-
saries, increased as these were by the effects of
progressive taxation, the rate of wages, particu-
larly of artizan labour, experienced in the interval
between 1803 and 1808, a further advance, and
* Of the falling off of supply, which gave occasion to this
great advance of prices, take the following instances. Many-
others might be brought forward, which it would be tedious to
enumerate.
Imports into Great Britain.
Sheep and
Lambs' Wool.
Raw and
Thrown Silk.
Cotton.
Tallow.
Hemp.
1806
1807
1808
lbs.
7,333.993
11,768,926
2,353,725
tbs.
1,317,841
1,123,943
776,414
lbs.
58,176,283
74,925,306
43,605,982
cwts.
536,652
367,398
148,282
cwts.
729,786
756,824
259,687
T 2
^76 PRICES AND CIRCULATION,
in 1808 and 1809 attained, in many branches of
industry, its greatest height.
Section 4. — New JieUh of enferprize opeiied for
Exports.
There was, coincidently with the great advance
in imported commodities, a new and very exten-
sive field opened for our exports.
The transfer of the seat of government from Por-
tugal to the Brazils, and the virtual emancipation of
the colonies of Spain from the control of the mother
country, opened the trade of a great part of South
America in 1808* ; and as by the course of the war
we possessed the entire dominion of the seas, it was,
in fact, to this country, exclusively of the rest of
Europe, that this opening was presented. So vast
and comparatively untried a field was not held out
in vain to the merchants and manufacturers of this
country ; and, accordingly, the spirit of speculation
was on the alert to export every article, not only
that might probably, but that could possibly, come
into demand.
Mr. M'Cullocli, in illustrating the effects of
ignorance and miscalculation in the overstocking
of such new markets as are occasionally opened, and
in filling them with articles totally unsuited to the
wants and habits of the people, gives the follow-
ing graphic description of the shipments to South
America in 1808 : —
" The exportations consequent on the first opening of the
trade to Buenos Ayres, Brazil, and the Cai'accas were most
* There had been in 1806, a considerable excitement in the
export trade, in consequence of the expedition of Sir Home
Popham to Buenos Ayres. But both the expedition and the
commercial speculations founded upon it ended disastrously.
1804—1808. 277
extraordinary. Speculation was then carried beyond the
boundaries within which even gambling is usually confined, and
was pushed to an extent and into channels that could hardly
have been deemed practicable. We are informed by Mr.
Mawe, an intelligent traveller, resident at Rio Janeiro, at the
period in question, that more Manchester goods were sent
out in the course of a few weeks, than had been consumed in
the twenty years preceding; and the quantity of English goods of
all sorts poured into the city was so very great, that warehouses
could not be provided sufficient to contain them ; and that the
most valuable merchandise was actually exposed for weeks on
the beach to the weather, and to every sort of depredation.
Elegant services of cut-glass and china were offered to persons
whose most splendid drinking-vessels consisted of a horn, or the
shell of a cocoa nut ; tools were sent out, having a hammer on
the one side and a hatchet on the other, as if the inhabitants had
had nothing more to do than to break the first stone that they
met with, and then cut the gold and diamonds from it ; and
some speculators actually went so far as to send out skates to
Rio Janeiro." — Pri?iciples of Political Economy, 2d ed. p. 329.
This description of the exports in 1808 is the
more especially to be borne in mind, as, in con-
jtmction with the speculations in imports, and
with the general excitement wliich is about to be
noticed, it affords reasonable grounds for anticipa-
tion of the great reaction, and the ruinous results
which are to be recorded, as having occurred in
the two following years.
Section .5. — General Excitement and Specula-
tions in Shares in 1807 d'^^d 1808.
The encouragement thus offered for speculative
exports cohiciding with the inducements held out
by actual, and still more by prospective scarcity,
to speculation in so many articles of general con-
sumption, combined, in 1807 and 1808, to produce
an almost universal excitement, leading, as usual on
such occasions, to hazardous adventure, and ex-
tending itself to nev/ projects of various kinds,
T 3
278 PRICES AND CIRCULATION,
such as canals, bridges, fire offices, breweries, dis-
tilleries, and many other descriptions of joint-stock
companies.
The speculations in shares had already pro-
ceeded to a considerable extent in I8O7.* In many
of the instances these speculations as well as those
in goods reached the utmost height in the beginning
of 1808, and the greater part before the close of
that year.
* This will appear by the following extract from one of the
contemporary periodical publications : —
" To the Editor of the Monthly Magazine.
" Sir,
" Several of your correspondents have noticed the prevailing
disposition for the establishment of joint-stock companies for
almost every branch of trade, but none of them have attempted
to show the progress we had made towards reviving the infatu-
ation of the celebrated year 1720. These stock-jobbing specu-
lations have received a check, which will probably prevent
their increase for the present ; but in order to convey to future
readers of your Magazine some idea of our commercial inge-
nuity and enterprising spirit, you probably will find room for
the enclosed list. All the projects it comprehends have been
laid before the public in the course of the last year, and the
greater part of them will cease to be publicly known before
the end of the present year. Yours, &c.
" January 12. 1808. G.
" List of Public Companies proposed to be established by Sub-
scription in the Year 1807.
" 1. Hope Fire and Life Insurance Company; capital
2,000,000/.
" 2. County Fire Office, Southampton Street ; capital
350,000/.
" 3. Eagle Fire and Life Insurance Company ; capital
2,000,000/., in shares of 50/. each.
" 4. Rainbow Fire and Life Office, Commercial Road.
" 5. Atlas Insurance Company, for Fire, Lives, and Annuities.
" 6. Golden Lane Bi'ewery, Brown and Parry's ; capital
300,000/., in shares of 50/. each.
" 7- The Old English Ale Brewery, for brewing Ale, Amber,
and Table Beer, from Malt and Hops only ; capital 75,000/., in
shares of 25/. each.
" 8. Maiden Lane Brewery.
" 9. Weston Street Brewery.
" 10. United Public Brewery, Bankside ; shares 52/. 10*. each.
1804^—1808. 279
The Strand Bridge (now Waterloo Bridge) and
Vauxhall Bridge were projected, and the subscrip-
tions for them raised in 1808.
"11. British Ale Brewery, Lambeth — Mainwaring's.
" 12. PubUc Bre«-ery, Deptford.
" 1 3. The London Genuine Malt Distillery, and Rectifying
Company, at Vauxhall ; capital 140,000/., in shares of 50/. each.
" 14. The Public Distillery for making and rectifj'ing Ge-
nuine British Spirits, Cordials, and Compounds; capital 200,000/.,
in shares of 50/. each.
" 15. Another rectifying Distillery, on a smaller scale.
" 16. Another making and rectifying Distillery, on a large
scale ; capital 300,000/.
" 17. London Genuine Wine Company, for importing and
supplying Vintners and the Public in general with Port, Ma-
deira, and Sherry Wines, free from adulteration ; capital
500,000/., in shares of 50/. each.
" 18. Britannic and India Wine Company; capital from
250,000/. to 500,000/., in shares of 100/. each.
" 19. Genuine Wine Company; capital 50,000/.
" 20. London Subscription Wine Company, for supplying the
Public with Foreign Wines of the first quality, for ready money ;
capital 50,000/. in shares of 50/.
'< 21. Genuine Wine and Foreign Spirit Company.
" 22. The London British Vinegar Company; capital 100,000/.,
in shares of 50/. each, with power to the Committee to increase
the capital by the sale of additional shares.
"23. Vinegar Manufactory Company; capital 50,000/., in
shares of 25/. each.
" 24. Corn, Flour, and Provision Companj^, upon a very large
scale, with the view of supplying Government, tvc.
" 25. United Public Dairy, for the sale of milk.
" 26. New Medical Laboratory, for the preparation and sale
of Genuine Medicines ; capital 50,000/., in shares of 50/. each.
" 27. British Coal Company ; capital 300,000/., in shares of
50/. each, with power to the Committee to increase the capital
by the sale of additional shares.
" 28. Newcastle and Sunderland Coal Company ; capital
100,000/., in shares of 50/. each.
" 29. Shields Coal Company.
" SO. National Light and Heat Company, by F. A. Windsor,
97. Pall Mall ; capital 1,000,000/., in shares of 50/. each.
"31. London Clothing Company, for supplying the Army,
Navy, and Public with Clothes; capital 100,000/., in shares of
25/. each.
" 32. United Woollen Company.
T 4
280 PRICES AND CIRCULATION,
Section 6. — On the State of the Circulation from
1804 to 1808.
All the excitement which has just been de-
scribed, the enormous advance of prices, extending
to so many of the most considerable articles of con-
sumption, and the speculations in shares which
then prevailed, and a further advance in the wages
of labour, occurred during a singularly equable
state and moderate amount of the circulation, in
as far as depended upon the issues of the Bank of
England. This will appear by the following state-
ment. The years 1802 and 1803 are included, for
the purpose of showing, that in those two years of
low prices, the average circulation of notes of 5l.
an-d upwards*, was larger than on the average of the
subsequent five years, and the prices of wheat are
placed in juxtaposition for the purpose of showing
their want of connection with the amount of the
circulation : —
" 33. Linen Company for Commission Sales; capital 500,000/.,
in shares of 100/. each.
" ?>^. London Commission Sale Company, for making ad-
vances on Produce and manufactured Goods, and selling them
to advantage ; capital 1,000,000/., in shares of 50/. each.
" 35. British Commission Company ; capital 1,000,000/., in
shares of 100/. each.
" 36. Albion London Information Office, for Sale or Exchange
of Estates, Manors, Livings, &c., the disposal of appointments
and practice in the liberal professions, 8zc.
" 37. Company for purchasing Canal Shares, and lending
Money for completing Canals; shares of 10/. each.
*' 38. British Copper Company ; J. Jones, Lambeth.
" 39. Cambrian Copper Company; capital 100,000/.
" 40. Paper Manufacturing Company, by R. Dodd.
" 41. The London Bank, by Mr. Brown of the Golden Lane
Brewery ; capital 5,000,000/., in shares of 100/. each ; 51. to be
paid on subscribing.
" 42. National Deposit, Interest, and Credit Bank, by F. A.
Windsor ; capital 5,000,000/., in 50/. shares ; to commence busi-
ness on the 1st of January, 1808."
* The view would not be much varied, nor the conclusion
materially impaired, the notes under 51. were taken into the
account.
1804—1808. 281
Average Price of Bank notes of 51.
Wheat 31st Dec. and upwards.
Average of two years,
13,450,727/.
57*. 1802, 13,917,977
51*. 1803, 12,983,477
86*. 1804, 12,621,3481
76*. 1805*, 12,697,352 Average of five vears
76*. 1806, 12,844,170 } ^^^'^^^Jlr^lllf'''
66*. 1807, 13,221,988 | i^,^oi,^v-ti.
90s. 1808, 13,402, 160 J
And for the purpose of comparison with the cir-
culation anterior to the Bank restriction, it may
be worth while here to recall to the reader's recol-
lection, that the average amount of the three years
ending in December 1795, was 11,975,573/. Thus
the average amount of the Bank circulation of notes
of 5l. and upwards, in the five years ending in
December 1808, exceeded by less than one million
the average amount of the three years ending in
1795!
The position of the Bank, moreover, while all
this great disturbance of prices was in progress,
and attained nearly its greatest height, was such
as it might, and probably would have been, if it
had then been paying in cash ; for, on the 28th
February, 1808, it stood thus:^ —
Circulation — £ Securities — £
Notes of 5/.and upwards, 14,093,690 Public 14,149,501
Notes under 51. 4,095,170 Private 13,234,579
18,188,860 27,384,080
Deposits - 11,961,960 Bullion f 7,855,470
Liabilities 30,150,820 Assets 35,239,550
* There was a fall of the exchange, and an efflux of bullion
for a few months in 1805, in consequence of subsidies to Aus-
tria and Russia ; but after the battle of Austerlitz, which led
to a peace between Austria and France, the exchanges rallied,
and there was a renewed influx of bullion.
t There cannot be a stronger presumption than is afforded
by this amount of bullion, that the Bank haol, up to this time,
at least, in view, the eventual resumption of cash payments ;
else, why have bought gold, paying, absurdly enough, 4/. the
ounce for all that was broui^ht to them ?
Q8'2 PRICES AND CIRCULATION,
The stock of bullion was larger than it had been
during the twenty years preceding the Bank re-
striction, with the exception of the short interval
from 1789 to I79I. And, if the Bank had not
fixed the price of gold at 4/., by buying at that
rate whatever quantity was offered to them, there
can be no reasonable doubt, but that the market
price would have subsided to the Mint price.*
On the 31st Auj^ust 1808, the circulation was
reduced by somewhat more than a million, and the
stock of bullion by about a million and a half.
31st August, 1808.
Circulation £ Securities — £
Notes of 5/. and upwards 12,993,020 Public 14,956,394
Notes under 5/. - 4,118,270 Private 14,287,696
17,111,290 29,244,090
Deposits - 13,012,510 Bullion 6,015,940
Liabilities 30,123,800 Assets 35,260,030
The exchange on Hamburgh, in the mean time,
had risen from SU. 4t/., in February, to 35s. Qd.
in August. In this state of the exchange, of the
stock of bullion, and of the circulation, there was
assuredly nothing that could lead to the supposi-
tion of any influence by the Bank restriction, in
raising general prices, and in favouring the specu-
lations in that period, or to the inference, that the
depreciation of the currency caused hy that mea-
sure, was greater than the difference between paper
and gold.
The very moderate amount, but more especially
the equableness of the annual average circulation
of the six years from 1803 to 1808, both years
included, embracing an interval in which there
were such extraordinary fluctuations, and so high
* The price of silver in 1808, although a little above the
Mint price, was loiver than it had been during the greater part
of last century^ and loiver than it ivas ^>^ 1 792.
1804^—1808. 283
a range of prices, and during which such large finan-
cial operations were taking place, and such great
political changes occurred, are curious facts in the
history of our currency.
How happened it that the Bank, having such
powerful motives of interest, with a view to its
dividends, to extend its issues, being no longer
under the check of convertibility, the directors
having avowed, moreover, that in the regulation
of the amount, they disregarded the exchanges,
^vhich they held to be uninfluenced by the quan-
tity of Bank paper, and that their only guide was,
the demand for discount of good bills at 5 per
cent.? — How happened it, that wdth such motives
to excess, and under the guidance of opinions so
unsound, there was so trifling an increase, com-
pared with the amount before the restriction, and
so small a variation in the yearly average of the
issues ?
The bullion committee of 1810, from whose re-
port the foregoing amounts of the annual circula-
tion are extracted, do not advert to this remarkable
fact, and much less do they attempt to explain it.
They notice only the marked increase, which took
place in 1809 and 1810 (and which I shall have
occasion to remark upon hereafter), observing,
however, as an important principle, that the mere
numerical return of the amount of Bank notes in
circulation cannot be considered as at all decid-
ing the question, whether such paper is or is not
excessive.
This is very true, and accounts for some of the
phaenomen-a observed in former periods, as also
in subsequent ones, of great alterations in the
amount of Bank notes, consistently with a state of
the exchanges at variance with the indications.
But it does not explain how, under the varying
but progressive increase of our trade, and under the
very extraordinary circumstances of the political
and financial state of the countiy, so equable and
284 PRICES AND CIRCULATION,
SO moderate an amount of the Bank circulation
could be preserved ; and how, above all, it could
be consistent with so enormous an advance of
prices. In order, however, to account in some
degree for the comparative smallness of the amount,
the committee add,
" But, above all, the same amount of currency will be more
or less adequate, in proportion to the skill which the great
money dealers possess in managing and economising the use of
the circulating medium."
They then refer to the increased use of bankers*
drafts, and to the practice of the clearing-house
among the London bankers, as among the expe-
dients by which the currency is economised, and
the same sum rendered adequate to a much greater
amount of trade and payments than formerly. But,
as we have had before occasion to observe, the im-
provements in economising the use of the currency
have been progressive ; and yet, a very greatly
enlarged circulation of Bank notes has been found
necessary for carrying on the transactions of the
metropolis and the country, consistently with the
maintenance of the ftjll value of tJie paper. Tliis
circumstance will, therefore, not go far to account
for the very small increase between 1803 and
1808, compared with the amount between 1792
and 1795 ; and still less to explain the smallness
of the variations of the annual amount.
An explanation has already been suggested, with
a view to accounting for the general moderation of
the issues of the Bank, during the whole period of the
restriction ; and the solution of tlie difficulty was
stated to be in the circumstance, that the coin-
cidence between the Bank rate of discount and the
market rate of interest for such bills as came
within the Bank rules operated in the main, in
conjunction with the financial system of the govern-
ment, as a principle of limitation.
That coincidence seems to have been more uni-
form in the interval between 1803 and 1808, than
180i— 1808. 285
in equal periods preceding or subsequent, as may
be inferred from the comparatively small variation
in the total amount of the securities held by the
Bank, which did not during the whole of that in-
terval vary by more than three milUons. The
most material variation that occurred may here be
instanced, as showing the manner in which the
two descriptions of securities held by tlie Bank
acted upon each other. In February, 1805, the
securities were : —
Public - - ^16,889,501
Private - - - 11,771,889
Together - - 28,661,390
The government advances, as above, being be-
yond their usual amount, were soon after reduced
by about five miUionsj and in August, 1805, the
securities were : —
Public - - ^11,413,266*
Private - - - 16,359,564
Together - - 27,772,850
And it may be observed generally, that there lias
been a tendency to compensation or adjustment be-
tween the private and the public securities held by
the Bank. It appears, likewise, to have been the
policy of the government, not to allow an accumu-
lation of the unfunded debt, as long as the state of
the money market admitted of funding without ob-
vious disadvantage.
The amount of discounts, too, bore a nearer and
more uniform proportion to the advances to govern-
ment during this period than before or subse-
quently.
* And during this reduced and low state of the advances to
government, the average price of wheat in August, 1805, rose
to 1005. per quarter.
286 PRICES AND CIRCULATION,
Section 7. — Advances by the Bank to Govern-
ment.
With reference to the advances by the Bank to
government on land and malt, Exchequer bills
and other securities, the bullion committee of
1810 remark, —
" That the yearly advances have, upon an average, since
the suspension, been considerably lower in amount than the
average amount of advances prior to that event ; and the
amount of those advances in the two last years, though greater
in amount than those of some years immediately preceding, is
less than it was for any of the six years preceding the restric-
tion of cash payments."
This, of itself, is an important admission, and if
the attention of the committee had been suffi-
ciently directed to the inference from the fact, it
might have led them to hesitate more than they
did, in making the charge of depreciation hy exces-
sive issue.
But there is one point of view in which the mo-
deration of the advances of the Bank to govern-
ment may be exhibited in a still more striking
manner.
From the documents laid before parliament, in
consequence of the attention called to the subject
by the repeated motions in parliament of Mr.
Grenfell, to whose persevering exertions the public
are indebted for a considerable abatement, which
about that time was made in the charge of the Bank,
for the management of the public debt ; it appears
that the average of the government deposits in the
hands of the Bank, in I8O6, was 12,197,303/., and
that the amount fluctuated for some years after be-
tween eleven and twelve millions. Now, the average
of the advances by the Bank to government, was
in those 3^ears somewhat under fourteen million five
hundred thousand pounds. So that the real cash
advance^ or the medium for the issue of Sank notes
1804—1808. 287
through the government^ as also the real amount
available to the government beyond its own cash
balance in the hands of the Bank, did not, in the
interval now under consideration , much exceed
three millions !
This comparative smallness of the advances
to government negatives the supposition so com-
monly entertained and reasoned upon, as a point
beyond doubt, that the Bank was rendered by
the restriction, a mere engine in the hands of
government for facilitating its financial operations,
and that the war could not have been carried
on without the restriction. In fact, the whole
charge of an undue proportion of the issues
of the Bank in advances to government, will be
found to have been confined to the two last years
of the war, and the Jive years following the peace.
But the comparative smallness of the advances
to government, during the period now under con-
sideration, is material in another point of view; for
it will be seen hereafter, that the partisans of the
doctrine of the paramount influence of the cur-
rency upon prices, lay great stress upon the cliannel
through which the Bank notes are issued, imput-
ing a great superiority of effect to the same amount
if issued or withdrawn through the medium of
advances to government.
Section 8. — General Remarks on the State of
Prices, and of the Circulation at the Close of
1808.
It is of importance to remark, that this was the
state of things after an interval of twelve years
from the Bank restriction, during which interval
there was only one period of a few months in 1801
and 1802, in which tlie price of gold was above
288 PRICES AND CIRCULATION,
4/. per ounce, or the price of silver higher than it
had been during the greater part of last century.
And yet at different times in this interval of twelve
years, nearly every article of consumption experi-
enced a rise of price fully equal to, if not surpassing,
any that it subsequently attained, with the exception
of a few articles of colonial produce, which were ex-
travagantly raised, by ill-judged speculations, on the
peace in 1814. The price of labour, too, had, by the
close of 1808, attained nearly its maximum height,
more especially artizan labour.
It has been shown in the case of corn more espe-
cially, and of many other articles, and it might be
equally shown of the rest of those that had risen, that
in every individual instance scarcity, real or appre-
hended, was the occasion of the advance. It may be
true, that in all, or in the greater part, the rise proved
tobebeyond the occasion And itis probable, thatthe
rise could not have proceeded to the height which
it attained in some of the articles, had it not been
for an extension of the country bank issues, and
an extension generally of the circulating medium,
by bills of exchange, and other forms of credit.
But such has been the case, under circumstances
favourable to speculation, both before the restric-
tion and since the resumption of cash payments ;
and it will be seen that the restriction did not
exempt over trading in the present instance from
its ordinary results.
The question, however, is not, whether the rise
was beyond the occasion, but whether it was the
scarcity, real or apprehended, of the commodities,
or the abundance of money, that was the cause of
the advance of prices ; and it may be put to any
one, who has been at the trouble of examining the
facts referred to in the view which has been taken
of the period from the restriction to the close of
1808, whether there is the slightest ground to
ascribe the rise to an abundance of money, and
1804—1808. 289
not to the scarcity, real or apprehended, of the
commodities. So palpable, indeed, so clear is the
negative of any thing like depreciation, as contra-
distinguishing abundance of money from scarcity
of commodities, that a reference is seldom made
by the supporters of the doctrine of depreciation,
as arising out of the Bank restriction, to the period
anterior to 1809. And yet, the mass of high
prices of commodities, arising from the circum-
stances described, have constantly been included in
the general impression which the public entertain of
great depreciation, caused by excess of money, as
characterising the whole period of the Bank restric-
tion.
It may be right, however, here to add, that it
was only down to the autumn, and not quite to
the close, of 1808, that the position of the Bank,
and the quotations of the foreign exchanges, w^ere
in a satisfactory and sound state. In the last
three months of 1808, although no increase worth
mentioning had taken place in the circulation of
the Bank, the exchanges fell rapidly, and there
was a considerable reduction of its stock of bul-
lion. But this alteration may be considered as
more properly belonging to the next epoch ; while,
on the other hand, the impulse given to the great
advance of prices in 1808, and the anterior period,
had not, in some instances, operated to its full ex-
tent till the beginning of 1809- The alteration of
the exchanges, and of the position of the Bank, in
the last quarter of 1808, therefore, will be con-
sidered as belonging to the next epoch ; while the
completion of the rise of prices, originating in, and
anterior to, 1808, may be included in the interval
which has just been reviewed.
iT
290 PRICES AND CIRCULATION,
Section 9. — Summary of the preceding Survey.
As the results of the survey of the period, which
has passed under review, it appears —
1. That, during the first year after the renewal
of the war with France, the prices of corn were
falhng, and w^ere, in the early part of 1804, as low
as they had been, on an average, in ten years
before the war or the Bank restriction.
2. That the harvest of ISOi proved greatly defi-
cient, and was the cause of a great rise of the prices
of provisions, and the occasion of a fresh rise of
wages.
3. That the harvests of 1807 and 1808, although
not of so marked a degree of deficiency, were con-
sidered to have yielded only scanty crops, which,
seeing the increasing^ and, in the last of tliose years,
the insurmountable^ difficulty of obtaining a foreign
supply, rendered a high price the necessary con-
dition, with the aid of the ^ prohibition of distilla-
tion from grain, of limiting the consumption to
the reduced sources of supply.
4. That the progress of the power of France on
the Continent of Europe in 1807 and 1808, and the
consequent enforcement of the Berlin and Milan
decrees, coincidently with the non-intercourse acts
of the United States of America, rendered our
actual importations of the most important raw ma-
terials for our manufactures deficient in an extra-
ordinary degree, and threatened to cut off all
future supply ; thus justifying a great rise of prices,
on the ground, not only of actual, but of prospective,
scarcity.
5. That, while all importable commodities were
thus naturally the subject of a great speculative
rise, the opening of the trade with the Brazils
and Spanish America afforded great inducements
to speculations in exportable commodities.
6. That the state of excitement, usually attendant
1804—1808. 291
upon apparently successful speculations, commu-
nicated itself to various other objects of enter-
prise, and occasioned the projection of numerous
joint-stock companies, and other manifestations of
the spirit of adventure.
7. That the great rise of the prices of corn,
and of other leading articles of consumption, some
of them to a height beyond any which they ever
afterwards attained, and the great attendant spirit
of speculation and general excitement in 1807 and
1809, took place under a remarkahly restricted and
equahle state of the Bank circulation^ and in a state
of the currency which, judging by the exchanges,
and the price of bullion, and the position of the
Bank, as to its treasure, compared with its liabil-
ities, was such as it might have been in a convertible
state of the paper.
8. That this was the state of things, as regarded
the position of the Bank, and the value of the cur-
rency, after sixteen 2/ears of the war and twelve years
of the Bank restriction.
u €
292 PRICES AND CIRCULATION,
CHAP. V.
STATE OF PRICES AND OF THE CIRCULATION, FROM
1809 TO 1813.
The epoch which we are now entering upon, viz.,
from the close of 1808 to the commencement of
1814, embraces the precise interval which has
commonly been fixed upon in proof, as it is alleged,
of depreciation of the currency by the Bank re-
striction, greatly beyond the degree indicated by
the difference between paper and gold. And
what, in a historical point of view, as relates to
the commerce of this country, is of much more
importance, the interval between the commence-
ment of 1809 and the close of 1813, besides the
astounding changes which were wrought in the
political condition of the principal states of Europe,
embraces events which caused greater revolutions
in the principal channels of our foreign trade, and
more signal vicissitudes in the fortunes of indi-
viduals, than can be found in any other equal por-
tion of our commercial history.
We have seen that, towards the conclusion of
the last epoch, the course of political events had
been such as tended to the exclusion of this coun-
try from commercial intercourse with the Conti-
nent of Europe, and with the United States of
America. The consequence had been a great fall-
ing off of the importation of all European and
American produce, and an enormous advance of
prices, upon the speculation of continued and in-
1809—1813. 293
creasing obstacles to our receiving further supplies.
The corn trade, however, as was before observed,
had not participated to the full extent of that
speculation ; for, high as the price was, it does not
appear to have been high enough, although the
ports were open, to induce adequate efforts to over-
come the impediments which then existed to a
foreign supply.*
In the examination of the causes of the great
variations of prices observable in the epoch now
coming under review, those of corn and other
agricultural produce are first to be considered.
And, for reasons which will be obvious, the exam-
ination will be found to be more conveniently
conducted by a subdivision of the epoch into two
periods, viz., from the commencement of 1809 to
the summer of 1811, and thence to the commence-
ment of 1814.
Section 1. — Prices: of Agricultural Produce, from
the Commencement of 1809 to the Smmner of
1811.
The strong impression which had prevailed of
the insufficiency of the crop of 1808 to meet the
consumption till another harvest, without the aid
of a foreign supply, which was not fortJicoming,
preserved a high range of the price of wheat through
the early part of 1809, and the averages reached 9-5.^.
in March of that year. But it then became apparent
that the stock on hand was not so much reduced
as had been apprehended, and that it was likely to
suffice for the consumption, restricted as that was
* The whole importation of wheat from abroad in 1808 had
been 81,466 qrs., while our exports to the Peninsula were 77,567.
u 3
g94i PRICES AND CIRCULATION,
by the high price, and by the prohibition of dis-
tillation from grain. As, therefore, the harvest
approached, and appearances became favourable of
the growing crops, the markets gradually gave
way, the average price of wheat having, in the
course of July, got down to 86s. 6d. : and there is
every reason to believe that, if the crop of 1809 had
turned out to be productive, and well got in, a
great fall of prices would have been the conse-
quence. But the harvest weather proved very
adverse. Heavy rains set in in July, and from
thenceforward, till the middle of October, the sea-
son was exceedingly wet.* Scarcely any part of
the crops was secured in good order ; and a very
large portion of the wheat suffered from mildew,
and from sprouting.
The injury from these causes was more extensive
than in any seasons here recorded, excepting only
1799 and I8I6. All the crops, including hay, were
very much damaged ; and the wheat and barley
proved to be deficient in quantity, as well as inferior
in quality and condition. Prices rose in conse-
quence ; and the average for December 1809 were,
Wheat - - 102*. 6d.f
Barley - - 50*. 6d.
Oats - - 30*. 3d.
Previously to any decided indication of mischief
to the crops of 1809? the government seems to
* It may be sufficient to bring it to the recollection of some
readers, if they be reminded, that it was the season in which
the ill-fated expedition to Walcheren took place; for it must
be still remembered how much the calamitous sickness which
attended it was aggravated by the rains which prevailed,
almost incessantly, from its embarkation to its return.
-j- The very indifferent quality and condition of the wheat of
the crop of 1809 kept down the average price : the best samples
in Mark-lane were, in December 1809, worth 1255. The price
of oats was comparatively low because the quality had been
more injured than the quantity ; besides that there had been
an importation in 1808 of about 500,000 quarters.
1809—1813. 295
have been alive to the deficiency of the growth of
the preceding year, which had left very little stock
on hand, and to have adopted measures for facili-
tating importation. It appears to have suited the
views of the French government, at the same time,
to promote an exportation of corn, which happened
then (as one of the exceptions to the observation
of a general similarity of seasons) to be unusually
abundant and cheap in France and the Netherlands.
Licenses were accordingly obtained from both go-
vernments ; and, as a consequence of these mea-
sures, about 400,000 quarters of wheat, besides
other grain, were imported before the close of 1809.
Tiie spring of 1810 was singularly cold and un-
genial : a series of dry east winds prevailed for many
weeks together. The hay crops w^ere remark-
ably deficient. * The wheats, at the same time,
were generally thin on the ground. This un-
favourable appearance of the coming crops, and
their general backwardness, combined with the
known deficiency of the existing stock, raised the
averages in June for wheat to 113.^. 5d.f ; and
the weatlier having become wet and stormy in
July, and the first fortnight of August, prices ex-
perienced some further advance, viz., to an average
of 116.V. for wheat.
These high prices, and the speculation on the pro-
spect of a further advance, had stimulated extraor-
dinary efforts to obtain a foreign supply; so that,
notwithstanding the enormous expenses of freight,
insurance, and licenses, amounting collectively to
from 30s. to 50s. per quarter on wheat, and in
proportion for other grain, the importation in 1810
* The price of hay rose, in the winter following, to 11/, per
load.
-f- Barley and oats did not participate in the advance ; the
averages at the close of June, 1810, being 4-9s. 9d. and 30*. 6d.
The prohibition of the distillation from grain might contribute
to keep down the price of barley.
U "4
296 PRICES AND CIRCULATION,
amounted to about 1,500,000 quarters of wheat
and flour, and about 600,000 quarters of other
gram and meal.
Of the deficiency of the wheat crop of 1809)
and of the degree in which we were dependent on a
foreign supply for keeping down the prices between
that and the harvest of 1810, the following extracts
from the Farmer's Magazine will furnish some in-
teresting details : —
" Grain markets, taking all circumstances into consideration,
have seldom been worse than for several months past. Three
causes may be assigned for the uncommon dulness of the markets
from one end of the island to the other. First, the bad wea-
ther before and during harvest last year, whereby a large
proportion of grain, wheat especially, was in some degree ren-
dered useless as an article to be manufactured into bread.
Secondly, the very large, and, for the time, uncommon import-
ation of wheat and oats from France and Holland, and the
partial arrivals of wheat from America, — all tended to make
a considerable part of British grain absolutely unsaleable, —
that imported being in fact generally of superior value, har-
vested in a better climate, and free of the diseases and acci-
dents which almost ruined the last crop in this country. Thirdly,
the prohibition against the use of grain in the distilleries ;
whereby seven or eight hundred thousand quarters were de-
prived of a market, at a time when a considerable part of
British grain was fit for no other purpose than distillation." —
Farm. Mag. vol. xi. p. 100. March, 1810.
" Letter from London, Mark-lane, 5th March, 1810.
" The character of the cropof 1809 was represented, by the most
intelligent agriculturists in every part of Great Britain, as being
unproductive, especially in the article of bread corn. The de-
ficient qualities and diminished quantities, and consequent high
prices, of wheat which appeared at this market after harvest,
attracted the attention of the foreign merchants, and they soon
devised means of obtaining supplies from the enemy's coasts.
Their activity has already had the effect to introduce into this
port, since the date of our last, in the end of November, no
less than 220,348 quarters of wheat, chiefly from the ports of
France, Holland, and Flanders ; a quantity within 8785 quarters
of the whole arrivals of British w/ieat at this market in the year
1809, and equal to more than a half of both the English and
foreign wheats entered inwards during the above period.
" These large foreign supplies have certainly checked the
tendency to higher prices during winter; and have drawn hither
1809—1813. 297
buyers from all parts of the island, as well as coasting counties,
who require superior qualities to work off their otvn inferior
and damp descriptions of wheat.
" State of London markets, Monday, 5th March.
Wheat, English white 105*. WQs. 115*. per qr,
Ditto, red 94*. 96*. 102*.
Dantzic, &c. 108*. 115*. Wjs.
Brabant and French 92*. 98*. 105*.
Farm. Mag. vol. xi. p. 133. March, 1810."
" The value of grain has, in some respects, increased, chiefly
owing to the advanced rate of freight, and the high price given
for wheat at foreign markets. Grain of home produce, except
such as is sound and of fine quality, meets, however, with a
dull sale, as formerl3\ The lamentable deficiency of last year's
wheat crop, as often mentioned in this work, is now completely
ascertained, by the immense importations of the last six
months, — importations greatly exceeding those of 1800 or
1801, and by far the largest that ever took place in Britain
during such a short period. Without them, it is almost certain
that a kind of dearth would have happened." — Farm. Mag.
vol. xi. p. 253. June, 1810.
" Letter from London, 2d June, 1810.
" The arrivals of wheat from our own coasts, between 3d
March last and this day, amount only to about 36,000 quarters,
while those of foreign growth are 280,000 quarters, forming an
aggregate of 316,000 quarters. The sales, during the same
period, are within 1000 or 2000 quarters of this vast quantity.
Both accounts are returned to the lord mayor's offices ; but, as
those of the present week will not be made up till Monday, the
exact figures cannot be given. The quantity imported and
sold, in these three months, is greater than the total sales of
either of the two preceding years, which in 1808 were 276,077
quarters, and, in 1809, 292,205 quarters. The quantity of
flour imported has also been extensive." — Farm. Mag. vol. xi.
p. 277."
" Letter from London, 3d August, 1810.
" The quantity of English wheat which has appeared at
market is quite trifling, not equal in some weeks to one eighth of
the consumption; but we continue to receive a full supply of
foreign grain, whereby the great deficiency of home produce is
amply made up. The arrivals this week, from foreign ports,
exceed 25,000 quarters ; whereas no more than 980 quarters
have been imported coastwise. Good qualities are worth 122*.
and 128*. per quarter; but the average price does not exceed
101*. 6f/. ; whence it will appear that a large partis of inferior
quality." — Farm. Mag. vol. xi. p. 416.
298 PRICES AND CIRCULATION,
A great turn, however, took place in prices after
the middle of August, 1810. The weather, thence-
forward, cleared up, and continued uninterruptedly
propitious to the progress of the harvest till its
completion, insomuch that the whole of the crops
was secured in good order. The wheats, although
considered to be deficient in quantity*, were, by
their good condition, all available for early use ;
and from this circumstance, combined with the very
large foreign supply, the markets declined thence-
forth, the prices by the end of the year being
upwards of 20^. lower than in August preceding.
The averages at the close of 1810 being for
Wheat - - 94.S-. 'Jd.
Barley - - 41. v. 7^.
Oats - - 26.V. Sd.
The corn-dealers, w^ho had speculated on the
bad weather at the commencement of tlie harvest,
were severe sufferers, and many were ruined ; thus
swelling the list of bankruptcies, the great extent of
which will be noticed more particularly hereafter.
The prices slowly, but progressively, declined
till the summer following ; the averages for June,
1811, being, for
Wheat - - 86^. l\d.
Barley - - 38.y. (jd.
Oats - . 9^8. 5d.
It is not a little remarkable, that in the discus-
sions in the House of Commons, in May, 1811, on
the bullion report, hardly any reference was made
to deficiency of the crops, arising from the sea-
sons, as accounting for the high price of corn,
and the large importations in 1809 and 1810. It
should seem that the disputants on both sides,
with the exception of Mr. George Rose, had no
* Farmer's Magazine, 1810. " Wheat, in almost every case,
excellent in grain, but in many districts thin, and by no means
an average."
1809—1813. 299
notion of deficiency of crops, as justifying or ex-
plaining high prices, except in the peculiar in-
stances of 1794 and 1795, and 1799 and 1800.
Mr. Horner must have been under an inexplicable
misconception of the facts of tlie case, if the report
of his speech, when bringing forward his resolutions
on the 6th May, 1811, be correct. According to
that report, page 812. vol. xix. Parliamentary
Debates, he is stated to have said, —
" It is allowed, that the principal article of import in the last
year was grain, and that import was enormous. Now it ap-
pears to me, that the House should most seriously consider
what could be the reason that produced a necessity for about
2,000,000 of quarters in one year, which was not a year of
famine. When we consider the great part of our population
which is employed in manufactures, and the great and increas-
ing portion of that population which is on the list of paupers,
no man can look to the possibility of another year of dearth,
without feeling the most painful and serious alarm. I look
upon this increase of the price of corn as a very strong argu-
ment in support of the opinions which I have taken the liberty
to state to the committee."
It is here perfectly clear, that Mr. Horner either
denied the scarcity as the cause of the high price,
or that he confounded dearth with depreciation.
Now dearth means dearness, arising from scarcity
of the commodity, while depreciation supposes no
scarcity of the commodity, but simply an increase
of money raising prices.
Mr. George Rose replied,
" The honourable gentleman complains of the large import-
ation of corn lately as a great evil, and threatens inquiry
respecting it. My defence will be short, but, I hope, satis-
factory, — had the importation not been permitted, the distress
for bread would have been extreme. With the aid of two mil-
lions of quarters of foreign corn, the quartern loaf was at fifteen
pence, and, without such aid, it would probably have been at
half-a-crown. The consequences which must arise, from paying
foreigners for so large a quantity of corn as would probably be
imported, were too obvious not to have been foreseen ; but in
such a dilemma there was no hesitation between submitting to
the inconvenience of the nature apprehended, and to the want
of bread to the necessitous part of our population."
300 PRICES AND CIRCULATION,
The retort v;as complete, but produced no im-
pression. The attention of the house and of the
pubUc was absorbed in the question of principle;
and the utter untenableness in argument of the
principles for which Mr. Rose and his colleagues in
the ministry, with the Bank directors, contended,
cast into the shade, as irrelevant and inconclusive,
all mere matter of fact. The truth is, that if it had
not been for the very large importations of corn
between the harvests of 1809 and 1810, the scarcity
would have been most severely felt ; and when Mr.
Horner asked, what could be the reason that pro-
duced a necessity for about two millions of quarters
of corn in one year, which was not a year of famine,
the simple answer was, that, hut for that importation^
it ivould have been a year of famine.
Section 2. — Fall of Prices of Commodities, and
Commercial Distress, from 1809 to 1811.
But while the price of corn had undergone this
fluctuation of a rise of nearly 30^. the quarter,
and again a fall to the same extent, between the
summer of 1809 and that of 1811, and while
some descriptions of agricultural produce, such as
hay, for instance, and other provender, were still
scarce and dear, all other productions, whe-
ther raw materials or manufactured articles, ex-
perienced a very great fall of price, between the
commencement of 1809, and different periods
in 1810 and 1811.
The great advance, and the enormously high
range, of prices in this country, in 1808, while
on the Continent they were low, (by the operation
of the same causes as made them high here), in-
duced the merchants on both sides to make great
efforts to overcome or elude the obstacles to
1809—1813.
301
importation, opposed by our own orders in council,
as well as by the continental system. Accordingly,
measures were taken, by means of licenses from the
government of this country, and of simulated papers,
which were calculated to lull the vigilance, or
satisfy the scruples, of those foreign governments
which were the unwilling tools of the overbearing
power of France at that period, for the purpose
of importing, on a large scale, the commodities
which had experienced so great a rise.
The measures so taken were effectual ; and the
importations, accordingly, in 1809 and 1810, were,
independently of corn, which has already been
noticed, of overwhelming magnitude, as will ap-
pear by the following comparison with the imports
of the preceding year : —
Years. Wool.
Silk.
Tallow.
Hemp.
Flax. Linseed.
Raw.
Thrown.
lbs.
1808 2,353,725
1809 6,845,933
1810 10,936,224
fts.
637,102
698,189
1,311,475
lbs.
139,312
501,746
450,731
cwts.
148,282
353,177
479,440
cwts.
259,687
858,875
955,799
cwts. Bush.
257,722 506,332
533,367 11,119,763
511,970 1,645,598
But not only was there this enormous increase
of importations of raw materials from the Conti-
nent of Europe. Of Cotton the imports w ere, in
1808 - - i3,605,982 lbs.
1809 - - 92,812/282
1810 - - 136,488,935
Even of West India produce, the prices of which
had not presented so great an inducement, there
was a considerable increase, thus Sugar, ^imported in
1808 - - - 3,753,485 cwts.
1809 - - - 4,001,198
1810 - " - 4,808,663
And of Coffee, the quantity imported in 1810
was double of \vhat it had been in 1807, viz.,
1807 - - - 417,642 cwts.
1810 - - - 828,683
802
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1809—1813. 303
As in the short importations in 1808, combined
with the apprehension of failure of future supply,
there was substantial cause for a great advance of
price, so, in the superabundant supplies of the two
following years, there was a sufficient cause for the
great fall which, in many instances, left to the
importer, after paying for the enormous charges of
importation, ?iothing whatever for the iwime cost.
While this great fall was taking place in the price
of the bulk of imported commodities, a total stop
was put to our exports to the Baltic, by the exten-
sive confiscations which had occurred in the sum-
mer of 1810 in the ports of Germany, and Prussia.
The 'returns, too, from South America were now
coming round ; and these left a ruinous loss to
the exporters, many of whom had bought the
goods on credits maintained by the circulation of
accommodation paper.
From the close, therefore, of 1809, through
1810, there was a complete exemplification of the
circumstances which are conducive to a reduction
of private paper, and to a diminution of transactions
on credit, viz., stagnation and despondency, as suc-
ceeding to a state of speculation and over-trading.
And so many circumstances, on so large a scale,
combining in the same direction, the fall of prices,
the reduction of private paper, and the destruc-
tion of credit, were greater and more rapid than
were ever before, or have since, been known to
have occurred within so short a space of time. A
general dismay prevailed throughout nearly all
branches of trade, during the last six months of
1810, and the first few months of the following
year, when the depressing causes had produced
their greatest effect. The following extracts, from
the commercial reports inserted at the end of each
number of the Monthly Magazine, convey the best
and, according to my recollection, the most accu-
rate description that I have met with of the state
of distress which then prevailed : —
304 PRICES AND CIRCULATION,
" Monthly Commercial Report, 1st August, 1810.
" The failures of several houses of the very first respectability,
both at London and in different provincial towns of Great Bri-
tain, have, within the last month, been unprecedented in number
and importance. A West India broker, who has long been con-
sidered the first in his line, was, we are told, the prime cause of
the stoppage of a banking- house, whose credit was previously un-
impeached. The several banks in the country, connected with
the London house, of course shared its fate ; and ft-om them the
evil spread to merchants, manufacturers, traders, and, in short, to
the very servants and dependents of these, numbers of whom are
thrown out of employment, and their families deprived of bread.
Speculations in Spanish wool, an article which has fallen about
fifty per cent., are considered as the origin of those unlooked-for
disasters. Five Manchester houses have stopped payment in the
city, and, we are sorry to add, have involved numerous industri-
ous persons, both in town and country, in their ruin. The de-
mands upon the five houses are said to amount to two millions ;
but it is supposed that their real property will ultimately cover
all deficiencies. Speculative exports to South America are the
rock upon which these houses have split. In consequence of
these unexpected events, public credit is at the present moment
as low as ever it has been in the memory of man : the fluctuation
of prices in the money-market is unpi-ecedented, and the depres-
sion so considerable, that omnium is fallen to two and a half per
cent, discount. We understand that some respectable merchants
have waited upon the Bank directors, in order to solicit their aid
towards the alleviation of the burdens with which our internal
commerce is at present borne down. The result of this applica-
tion is not as yet publicly known ; we trust it will prove favour-
able. The renewal of our intercourse with the United States
of America has, in some sort, benefited the manufacturing in-
terest ; but this felicitous effect is almost swallowed up in the
vortex of those calamities, which it has been our painful duty
to record.
" Holland. — All trade between Great Britain and this de-
voted country is completely put a stop to by the rigorous exe-
cution of the French emperor's anti-commercial decrees. It is
even reported that the captains and part of the crews of two
vessels were shot for violating the prohibition.
" Prussia. — Money is so extremely scarce in the Prussian
ports, that the merchants can with difficulty collect sufficient to
defray the import duties; and interest is represented to be at
the extravagant rate of two and a half per cent, per month."
" 1st December, 1810.
" A numerical evidence of the present state of trade may be
deduced from the number of bankruptcies in the London Ga-
zette, inserted in this magazine: —
1809—1813. 305
They amounted this month, in 1810, to 273
The same month, — 1809, — 130
Ditto -
. _ 1808, — 100
Ditto -
. _ 1807, — 97
Ditto
, _ 1806, — 65
Ditto -
. _ 1805, — 87
Ditto
. _ 1804-, — 60
Besides stoppages and compositions, eijual in number to half the
traders in the kingdom ! These faiku-es throughout tlie kingdom
have wonderfully affected the manufacture of every description
of goods ; and a general want of confidence exists between the
manufacturer and the export merchant. The speculators at
Liverpool have completly overstocked the different markets of
South America, where, at present, English manufactured articles
can be purchased at a loss of twenty per cent, to the exporter,
with the exception of a few articles, on which little or no credit
could be obtained here."
1st January, 1811.
" In our last Report we stated the vast increase of bankrupt-
cies within the last month, compared with similar months for
seven years back ; and we regret to say that they still continue
to increase in number, and that confidence in the mercantile
world seems nearly at an end.
" Discount, unless bills, &c., of a few of the first houses in the
city, can only be done through the medium of bill-brokers, at an
extra commission, exclusive of the regular interest.
" In Lancashire the cotton manufacturers appear, by the late
Gazettes, as well as by private information, to be greatly dis-
tressed, and business quite at a stand. In Manchester, and
other places, houses stop not only every day, but every hour.
Cotton wool is in no demand at any price, and no export of the
manufactured goods, except a few fine sorts to Rio, &c. The
trade of Birmingham, Sheffield, &c. quite at a stand, and no
orders for execution there, except a few for our home-consump-
tion. At London, Liverpool, and Bristol, the king's stores are
full of all kinds of colonial produce, as coffee, sugar, rum, Szc,
for security of their duties, and the proprietors in the greatest
possible distress, not being able to force sales of these articles."
To prove that these are not exaggerated descrip-
tions of the commercial distress which prevailed in
this country at that period, I need only refer to
the parliamentary debates in the spring of 1811,
from wliich I have made as many extracts as my
limits will permit.
X
306 PRICES AND CIRCULATION,
Extracts from the Report of the Select Committee of the House
of Commons on the State of Commercial Credit, 7th March,
1811.
" Your committee found that memorials had been presented
to his Majesty's treasury, towards the latter end of the last and
the beginning of the present year, stating the great embarrass-
ments and distress which were felt amongst the manufacturers
in the cotton trade in Glasgow and Paisley, and their vicinity,
and praying for public assistance ; that the same were confirmed
by the representation of a meeting held in the city of London
on the 12th of February, which sent a deputation to wait upon
the Chancellor of the Exchequer with a copy of the resolutions
adopted at that meeting. These resolutions your committee
have inserted in the appendix to this report.
" Your committee found, by the evidence of the witnesses
they examined, that those statements and representations were
founded on fact.
" It appeared to your committee that the principal part of the
distress which was complained of had arisen out of great and
extensive speculations, which commenced upon the opening of
the South American markets in the Brazils, and elsewhere, to the
adventures of British merchants.
" Your committee also found that great distress was felt in a
quarter which was much connected with this trade, namely,
amongst the importers of produce from the foreign West India
islands, and from South America.
" That great part of the returns for the manufactures which
were exported to those parts of the world came home in sugars
and coffee, which, not being entitled to sale in the home market,
there were no immediate means of realizing their value.
" These representations of the distress experienced in the
trade of the cotton manufacturer and exporter, and from the
want of market for foreign colonial produce, were also con-
firmed by respectable merchants and traders in London ; who
also stated that the embarrassments were felt in other branches
of trade, not connected with foreign commerce or colonial
produce."
Extract from the Speech of the Chancellor of the Exchequer, in
the Debate on the Commercial Credit Bill.
" The consideration of this important subject, he observed,
divided itself into three heads : — first, the nature and extent of
the evils which the manufactures and commerce of the country
were enduring ; — secondly, what were the causes of those evils ;
— and, thirdly, the measures by which the evils might, with the
greatest probability, be removed. With respect to the first of
these considerations, he apprehended there could be no differ-
ence of opinion whatever ; but that the nature and extent of the
1809—1813. 307
distress, described in the report of the select committee, ren-
dered it advisable that parliament should, if possible, adopt some
measure by which that evil might at least be diminished. It ap-
peared distinctly by the report, that the distress, originating with
the merchant, and disabling him from paying the manufac-
turer, was felt most severely by the manufacturer and those
employed by him. All the principal manufacturers had been
compelled to contract, and some wholly to suspend, their works.
It appeared by the report that there was scarcely a cotton ma-
nufacturer in the kingdom who had not diminished, by one half,
the number of persons employed in his mills; and that many of
the smaller manufacturers had discharged their people altogether.
It appeared, also, that those who were retained by the first
description of manufacturers were retained at a reduced rate
of wages. The consequences must necessarily be, as they were
represented to be in the report of the select committee, that
the most calamitous distress prevailed throughout many of the
manufacturing districts. The report also stated that the mer-
chants who traded with the western world, not being able to
find an adequate market for their produce, this circumstance
aggravated the distress of the manufacturers ; and the whole
operating upon the other branches of trade, although not im-
mediately connected with those to which he had referred, pro-
duced a general want of confidence, and suspension of credit,
which required the prompt and effectual application of some
adequate remedy,"
The commercial distress of that period was not
confined to the United Kingdom. It prevailed on
the Continent of Europe, as may be observed by
the foregoing extracts : and that the same descrip-
tion of distress appUed to the commerce of the
United States will appear from the following ex-
tract of a letter from New York, dated 11th of
February, 1811, communicated to me by a friend,
largely interested at that time, as well as at the
present, in the trade with that country.
" Such times for money were never known, and all confidence
among merchants is totally, and, indeed, very justly, destroyed.
Since the middle of December we have had between sixty and
seventy failures in this city, and many more are expected to fail
in the course of this and the following month."
I am indebted to the same friend for the follow-
ing extract of a letter from his Liverpool house,
to a mercantile correspondent.
x 2
308 PRICES AND CIRCULATION,
" Liverpool, Nov. 22. 1810.
" The effects of a vast import of colonial and American pro-
duce, far above the scale of our consumption at the most pros-
perous periods of our commerce, and attaining a magnitude
hitherto unknown to us, have, in the present cramped state of
our intercourse with the Continent, developed themselves in
numerous bankruptcies, widely spreading in their influence, and
unprecedented in extent of embarrassment. It is but fair, how-
ever, to ascribe a portion of these evils to the consequences of
a sanguine indulgence of enterprise, in extensive shipments of
our manufactures to South America, which so confidently fol-
lowed the expedition to La Plata, and the removal of the go-
vernment of Portugal to Brazil : they are further aided by the
speculations which prevailed during the various stages of the
American non-intercourse, and which, unfortunately, were not
confined to the duration of the circumstances which excited
them. In the struggle to support themselves, the sjieculators
have had recourse to new and extensive engagements, in the
face of probabilities and facts too incontrovertible to have been
slighted, until the united action of the accumulating imports,
and the want of an adequate vent, have overwhelmed them.
The event only can enable us fully to appreciate the effects of
this imprudence, which, more than any preceding defalcations,
have involved the mercantile character of our country, and de-
stroyed confidence in a degree that will require a long period
of prosperous circumstances to retrieve."
Great as was the fall of prices, and severe as
was the commercial distress, which prevailed in the
early part of 1811, these circumstances, calculated
as they were to modify the practical application of
the principles, for the most part correctly laid down,
by the Bullion report of 1810, were not at all ad-
verted to in that report, nor were suffered to oc-
cupy any prominent part in the discussions in the
House of Commons, to which that report gave oc-
casion, in May, 1811. Indeed, the Buhion Com-
mittee, in their report, and their supporters in the
House of Commons, seem equally to have pro-
ceeded on the assumption that all commodities had
risen ; and the inference held out was that they
had risen in consequence of the increase of bank-
notes, and in common with the rise in the price
of gold. No evidence whatever had been taken
1809—1813. 309
by the Bullion Committee respecting the prices of
commodities ; and the only allusion to these is in
the passage wherein it is said, " the prices of all
commodities have risen, and gold appears to have
risen in price only in common with them. If this
common effect is to be 'ascribed to one and the
same cause, that cause can only be found in the
state of the currency of tiiis country." This ob-
servation was made at a time w^lien all commodities,
provisions alone excepted, which were scarce, from
the season, were falling rapidly in price^ and had
been falling when gold was rising. But at the
time when the discussions in parliament took place,
namely, in May 1811, even corn had fallen con-
siderably in price, as we have seen ; and nearly all
other commodities were at a ruinously low rate,
compared with the cost of production, which had
been so greatly increased by the extravagantly
high freights and premiums of insurance to which
the importations were then subject.*
* The following are specimens of the charges of importation,
to which commodities that we stood most in need of were sub-
ject, between 1809 and 1812, compared with the charges of im-
portation in 1837, and the reader will thence judge whether the
high prices of those articles are attributable to war, as increasing
the demand, or to war, as obstructing the supply.
The freight and premium of insurance t from the Baltic to
London, on the average of the seasons, were as follows : —
1809-12. 1837.
^ s. d. £ s. d.
On Hemp - - per ton 30 0 0 2 10 0
Tallow - - — 20 0 0 1 10 0
Wheat - - per quarter 2 10 0 0 4 6
Timber - - per load 10 0 0 1 0 0
The charges of importation in those two years on all other
commodities from the Baltic were in the same proportion.
-j- In 1809 there were instances when 30/. per ton was paid
for i\\e freight cdone of hemp ; and the insurance varied from 20
to 40 per cent. ; making these two items of charge amount to
between 40/. and 50/. per ton on hemp, and in a similar pro-
portion on other articles of importation from the Baltic. But 1
X 3
310 PRICES AND CIRCULATION,
Tlie strange misconception under which Mr. Horner
laboured, as to the facts of the case in regard to corn,
The expenses attending the importation of silk, which was
brought by a circuitous route * from Italy? through the north of
Europe, were enormous. Some came likewise through France ;
and the charges of conveyance from Italy to Havre and duty of
transit, amounted to nearly 100/. per bale of 2401b., net weight,
exclusive of freight and insurance from Havre hither. The
whole expense of freight and insurance from Italy does not at
present amount to more than 61. per bale.
But, while the cost of articles imported from the Continent
of Europe was thus enhanced by the difficulty of communication,
the same cause raised the price of colonial produce, and of some
kinds of British manufactures, to a still greater proportionate
height on the Continent, inasmuch as the vigilance and severity
of the decrees of the enemy were exercised more directly against
imports from, than against exports to, this country. One or
two instances may serve to show the degree in which these ob-
structions were calculated to raise the prices of such commodi-
ties abroad.
The charges of freight and French license, on a vessel of little
more than 100 tons burden, have been known to amount to
50,000/. for the voyage merely from Calais to London and back :
this made the proportion of freight on indigo amount to 4*. 6d.
per pound : the freight at present is about Id. per pound !
A ship, of which the whole cost and outfit did not amount
to ^OOO/, earned a gross freight of 80,000/. on a voyage from
Bourdeaux to London and back.
Among the means devised by the ingenuity and enterprise of
adventurers to elude or overcome the obstacles presented by
the decrees of the enemy, one in particular, which was resorted
to on an extensive scale, deserves mention, as illustrating, in a
striking manner, the degree in which those obstacles were cal-
culated to increase the cost to the consumer. Several vessels
laden with sugar, coffee, tobacco, cotton-twist, and other valuable
commodities, were despatched -f- from hence at very high rates
have rather taken the medium rate which prevailed through the
season. There was no very material reduction in those charges
till 181. '5.
* On one occasion, two parcels of silk were despatched from
Bergamo to this country at the same time, one hy the xoay of
Smyrna and the other hy the loay of Archangel : the former was
a twelvemonth and the latter two years, on its passage.
t The refined sugar was packed here in small boxes, made at
a considerable additional expense, for the express purpose, to
1809—1813. 311
has already been noticed; and Mr. Henry Thornton,
following on the same side, seems to have been
under an equally erroneous impression as to facts
relating to commodities generally ; for, in the debate
of the 6th May, 1811, he is reported to have said,
"It was material to observe, that there had, since the be-
ginning of the war, been a continual fall in the value of money ;
he meant of money commonly so called, whether consisting of
cash or paper. This had by some been estimated at 60 or 70 per
cent., and certainly was not less than 40 or 50 per cent. ; which
was, on the average, 2 or 3 per cent, per annum : it followed
from hence, that if, for example, a man borrowed of the Bank
1000/. in 1800, and paid it back in 1810, having detained it, by
means of successive loans, through that period, he paid back
that which had become worth less by 20 or SO per cent, than it
was worth when he first received it. He would have paid an
interest of 50/. per annum for the use of this money ; but, if
from this interest were deducted the 20/. or 30/. per annum
of freight and insurance to Salonica, where the goods were
landed, and thence conveyed on horses and mules through Servia
and Hungary to Vienna, for the purpose of being distributed
over Germany, and, possibly, into France. Thus it might happen,
that the inhabitants of that part of the Continent of Europe
most contiguous to this country could not receive their supplies
from hence, without an expense of conveyance equivalent to
what it would be if they were removed to a distance of a sea-
voyage twice round the globe, but not subject to fiscal and po-
litical obstructions. It is not to be wondered at that the articles
subject to such expenses should be sold at enormously high
prices, viz., 5s. and 6s. per lb. for sugar, 7*. per lb. for coffee,
18*. for indigo, and 7.?. and 8s. for cotton ; for these prices were
the condition requisite to overcome the obstacles to supply.
With just as much reason might the high prices on tlie Con-
tinent, of articles subject to such obstructions, be resorted to
in proof of the effects of war-demand, or of the state of their
currency, as the high prices in this country, of timber, hemp,
flax, silk, &c., and of the manufactured articles into the compo-
sition of which these raw materials entered, be considered to
prove the extra-demand and consumption arising out of the war,
or to indicate the depreciation of paper beyond the difference
between the market price and the mint price of gold.
contain not more than about2cwt. each, so as to admit of being
slung one on each side of a horse or mule for conveyance over-
land.
X 4
312 PRICES AND CIRCULATION,
which he had gained by the fall in the value of the money, he
would find that he had borrowed at 2 or 3 per cent., and not at
5 per cent, as he appeared to do. By investing his money either
in land or in successive commercial undertakings, in the year
1800, and then finally selling his land or his commodities in the
year 1810, he would find the produce amount to 200^. or 300/.
above the 1000/. which he had borrowed ; which 200/. or 300/.,
being deducted from the 500/. interest which he had paid, would
make the neat sum paid by him to be only 200/. or 300/." *
It is clear that the meaning of the speaker is
that the rise of prices here supposed was caused
by the Bank restriction ; and the date assigned to
the first operation of this cause is the year 1800,
being that in which there first occurred any dif-
ference between paper and gokl. Viewing it in
this hght, the hypothetical case here put involves
a total misconception of the state of facts ; for
there were very few commodities in which, if
1000/. had been laid out in 1800, a loss would
not have been sustained of 20 and 30 per cent,
and upwards, in addition to the interest upon
finally selling the commodities in 1810. The
money, indeed, if laid out in land, or in houses,
or in shipping, in 1800, would have produced a
profit upon selling in 1810 and 1811. But this
exception is easily accounted for. The frequent
recurrence of deficient harvests, when, by the ob-
stacles to importation, the rise of the prices of
agricultural produce was in a greatly increased ratio
to the deficiency, had given a character of per-
manence to the range of high prices, which enabled
the landlords to obtain increased rents upon every
termination of a lease. In several instances the
* I have been induced to notice and comment upon this
opinion of Mr. Henry Thornton, not only because of his de-
servedly high authority on the subject of the currency, but be-
cause the particular opinion here quoted was referred to by
Lord Ashburton, in his evidence before the Agricultural Com-
mittee of the House of Commons in 1836, as confirmatory of
his belief that the depreciation of the currency at that time was
greatly beyond the difference between paper and gold.
1809—1813. 313
rents were raised to treble of what they had been
in 1792, and speculations in purchases of land
were almost certain to render a profit. In the case
of houses, the increasing taxes upon building-ma-
terials, and the great rise in the price of timber, in
consequence, not only of the heavy duty, but of the
high freight and charges on importation, when
combined with an increasing population, operated
as a premium on all existing buildings, and neces-
sarily caused a great rise in that description of pro-
perty. And as to shipping, there was not only
the increased and increasing cost of the materials,
which raised the building price, but the employ-
ment was extended by the demands for the transport
service, which required tonnage on a greatly en-
larged scale for the war in the Peninsula. These
descriptions of property were doubtless higher in 1 8 1 0
than in 1800 ; and the price of labour having been
slowly but progressively advanced, in consequence
of the frequent recurrence of periods of dearth,
the increased wages had acquired the character of
permanence. But with these exceptions, which, so
explained, afford no ground for ascribing their
comparatively high price to depreciation of money,
nearly all other objects of exchange were lower in
price in 1810 and 1811 than in 1800 ; in few in-
stances less than 20 per cent., and, in some instances,
upwards of 50 per cent., as ^neasured in paper,
ivhile gold had risen ^Z5 per cent. It may be matter
of surprise that Mr. Henry Thornton, who, in his
excellent work on paper credit, in 1 802, had so well
exposed the hasty conclusions of Mr. Boyd, as to
the influence of the bank issues in causing the
high prices of corn in 1799 and 1800, should, in
1811, have laboured under such a misconception of
the actual state of markets as to be led into an
error, so similar to that which he had some time
before animadverted upon. The fact is, that Mr.
Thornton, who was profoLuidly and acciu'ately
314 PRICES AND CIRCULATION,
acquainted with the principles and details of bank-
ing, had not necessarily, from his occupation as a
banker, any knowledge of markets ; and nothing
can more strongly prove how little aware he was
of the actual state of them, and of the fluctuations
to which they had been subject, or of the causes
of those fluctuations, than the passage here quoted
from his speech. His exposition, at the same
time, of the general principles of currency was full
and clear, and, indeed, the best that had then been
given ; and his exposure of the inconsistencies
and fallacies involved in the maxims avowed by
the Bank directors, and supported by the govern-
ment, was unanswered and unanswerable.
Mr. Vansittart, in his speech on the same occa-
sion, presents a curious and somewhat amusing
contrast. While his arguments in support of the
views of the government, and of the doctrine of the
Bank directors, and of the proposition embodied
in his unfortunate resolution, form a model of in-
geniously perplexed, and elaborately unintelligible,
general reasoning, his statements of facts indicate
extensive and accurate information as to the nature
and extent of the disturbing causes which were
operating upon the exchanges and upon prices,
and which accounted for them independently of
any supposed influence upon them by the state of
the circulation.
" The general scale of prices, he observed, had been pro-
gressively but slowly advancing for many years previous to the
Bank restriction, and does not appear to have been affected by
that event. But the scarcity in 1800 and 1801 produced a
great and permanent eifect, particularly on the price of labour ;
and it has been so far from being remarkable in the two last
years, that though the price of provisions has been high, from
causes sufficiently notorious, that of most articles of merchandize
is considerably reduced. The last period of three or four years
is, indeed, remarkable for great and sudden fluctuations of the
prices of merchandize, corresponding with the extraordinary
and violent changes which have taken place in commercial policy ;
but the present state of prices is so far from justifying the opi-
1 809— 1813. 315
nion of a currency depreciated from its excess, that it would
rather lead to a contrary inference, if it were not easy to be
accounted for by obvious causes."
In a subsequent speech, on tlie 13th May, 1811,
Mr. Vansittart pointed out how, in some instances,
taxation perpetuated prices which, in their origin,
and temporarily, had been those of dearth.
" But the principal reason," he said, " which produced that
remarkable increase of prices, which has subsisted from that
time without any extraordinary variation, was the great addi-
tional mass of taxes imposed, while the effects of the scarcity
were passing away, and prices returning to their former level.
It may serve by way of illustration to mention a particular instance.
The price of beer had, among other articles, been considerably
advanced during the scarcity. In the spring of 1802, the price
of malt having fallen that of beer was reduced ; but a tax was
soon after imposed by parliament to the exact amount of the
reduction. The price was, accordingly, raised again, and remained
the same to the consumer as during the scarcity."
Lord Castlereagh, who equally failed in render-
ing his general principles intelligible, observed,
however, justly enough, " that, if the Bullion Com-
mittee could have traced any advance of price in
the leading articles of consumption, which could
be fairly shown to connect itself with the alleged
excess of notes, they would have annexed to their
report tables of the prices current during the period
which has elapsed since the restriction bill took
place. So far from prices having advanced in the
two or three last years, since exchanges became
unfavourable, and bank-notes are assumed to be
depreciated, he believed the fact to be the reverse."
And in the House of Lords, in the course of
the debates on that most anomalous measure, lord
Stanhope's gold coin bill, lord Bathurst, in his
reply to lord King, asked, " Was there a general
advance in the price of commodities ? Let the
noble lord compare the current prices at present
with those in 1808, and he would find that a large
proportion of commodities, and those by no means
316 PRICES AND CIRCULATION,
inconsiderable commodities, had fallen in price.
He would find that iron and wool, unfortunately
for the noble lord adduced as instances of a rise
in price, tallow, cotton, and a great number of
other commodities, had experienced a great fall.
When there was a depreciation in the currency,
there would be a general advance in the price of
commodities ; but, if there was a general advance,
it did not follow that there was depreciation.'*
In neither of the two houses, however, did the
principal speakers on the side of the Bullion Commit-
tee seem to think it incumbent upon them to explain
this anomaly of prices according to their doctrine.
They were intent only on exposing the outrageous
absurdity and inconsistency of the proposition in-
volved in Mr. Vansittart's third resolution.* In
that object they so far succeeded, that, although
the resolution was carried by a large majority of
the House of Commons, the public has assented
to the general principles for which the Committee
and its supporters contended.
Section 3. — Revival of Credit^ and improved
Prospects of Trade, in the Summer o/'1811.
The suffering state of commerce, which has
been described as the consequence of the great
fall of prices in 1809 and 1810, and of the dis-
astrous result of the speculative exports, did not
continue, however, in the same degree of intensity
beyond the spring of 1811, when it seems to have
reached its height.
At that time, as we have seen, it attracted the
notice and interference of Parliament. An act
* Mr. Vansittart had said, " I wish the house to pledge itself
to the belief that bank-notes still are, as they have always been,
equivalent to legal coin, for the internal purposes of the country,
the only purposes to which they ever have been applicable."
1809—1813. 317
was passed, in April, 1811, granting a sum, not
exceeding six millions of Exchequer bills, to be
advanced by commissioners to the distressed mer-
chants and manufacturers, by way of loan on ade-
quate security. This measure, in consequence of
which, however, not more than two millions were
eventually advanced, was then, as it probably is
still, supposed to have arrested the tendency to
depression, and to have contributed to the subse-
quent revival of trade. In that opinion I did not
and do not participate. If the causes of abundance
of commodities at home, and our exclusion from
foreign ports, had continued, there would have been
no ground for a rise of prices : and, if prices had
not risen, the parties who borrowed the Exchequer
bills would have been injured instead of benefited
by the facility of holding their goods so much
longer ; as they would thereby have incurred loss
of interest, warehouse-rent, and other expenses,
and must at last have submitted to the same, if not
to lower, prices than they might originally have
obtained. But whether the measure was or was
not calculated to do the good intended, there is
reason to believe that it did not come into opera-
tion at all till circumstances had occurred favour-
able to a reviv-al of the activity of trade, and,
consequently, to a removal of the causes of the
then existing distress.
Those circumstances were, the complete expul-
sion of the French from Portugal, and the progress
of the British army in Spain, which opened nearly
the whole Peninsula to a commercial intercourse
with this country. The glut of our exports to South
America and the West Indies had been carried off
by low prices, and a brisk demand iiad succeeded.
The intention of Russia to resist the French was
becoming manifest ; and an anticipation was confi-
dently entertained of a relaxation of the prohibi-
tions against imports into the Russian ports.
318 PRICES AND CIRCULATION,
Tlie progress of improvement is described in the
following extracts from the periodical work which
I have before quoted : —
Monthly Commercial Report, 1st June, 1811.
" The expulsion of the French out of Portugal has once more
opened a trade with that country, and, in consequence of it,
vast quantities of goods of the manufacture of Great Britain
are now shipping for Lisbon and Oporto ; among which the ma-
nufactures of Manchester, &c., will not be the least in quan-
tity. Linens, calicos, and woollen cloths are in great demand
in Portugal.
" South America. — In our last we stated the trade of this
country to be rather brisk, and have the pleasure now to say
that every mail from the Brazils confirms it."
1st July, 1811.
" Since our last report, the manufactories have revived in a
great degree, chiefly owing to large orders for all kinds of woollen,
linen, and cotton goods having arrived here for the markets of
Portugal and of South America. The goods of Birmingham and
Sheffield are also in great demand at these markets. Credit and
confidence, we are happy to say, revive, and the towns of Man-
chester, Nottingham, &c. feel vast benefit from the happy change
that has taken place.
" The West Lidia Islands are now in want of all kinds of Bri-
tish manufactured goods, as the stock in hand in these islands
has been purchased up with avidity for the Spanish settlements.
Irish linen, sheeting, &c., render a full profit of twenty per cent,
more than the usual profit attached to such speculations."
This improvement, however, as it so immedi-
ately succeeded to a period of great distress, was
not yet marked by such eagerness of speculative
shipment as had distinguished 1808 and 1809-
While our export trade was slowly recovering,
there appeared, towards the autumn of that year, a
more marked tendency to a general advance in the
prices of agricultural produce, and of imported raw
materials.
1809—1813. 319
Section 4. — Rise of the Prices of Agricultural
Produce, and high Range of them, Jjetween the
Harvest 0/I8II and the Harvest of\S\S.
The scanty crops of corn of 1810 had been
eked out by the aid of the large foreign supply, at
rather decHnmg prices, till the approach of the
harvest of 1811, when, in consequence of the
bareness of the stock on hand, and the unfavour-
able appearance of the crops, combined with un-
settled weather, prices began to rise in August,
and thenceforward advanced steadily and consi-
derably till the eve of the following harvest, when,
as will be seen, they attained their greatest height.
As it was the deficiency of the crops of the
harvest of 1811 whicli, with little stock remain-
ing from the preceding year, and without the means
of obtaining a foreign supply, occasioned the high
prices of 1812, and as those high prices form the
standard a decline from which has been ascribed
to the operation of Peel's bill, it is necessary to
notice in some detail the circumstances connected
with it. The more especially because the fact
itself of any deficiency at all, as resulting from that
year's crops, appears not to have been contemplated,
or, at any rate, has not been admitted, or even ad-
verted to, by the supporters of the several theories
of depreciation or of war-demand. The further
presumptive proofs of the negative of those theories
will be pointed out hereafter. In the mean time,
the following extracts from contemporaneous publi-
cations must be considered as forming a mass of
the best evidence, of which the nature of the sub-
ject is susceptible, of the deficiency of the crops
of corn in this country. A deficiency quite suffi-
cient, when considered with its attendant circum-
stances, to account for the high prices which have
been so gratuitously ascribed to the currency or to
320 PRICES AND CIRCULATION,
war-demand. The following is an account of it,
from one of the circular monthly reports of that
period (Oct. 1811).
" The state of the wheat crops seems now to be ascertained
with probable accuracy throughout the island, as somewhat below
an average quantity, and far inferior to that of last year in point
of quality. Reckoning both quantity and quality, persons of
the most general information decide upon a deficiency of a full
third. There will be a considerable quantity of black wheat, and
in many parts of the north the barley is strongly smutted."
This estimate was fully confirmed ; for, in another
monthly report, in December, 1811, it is said,
" The former statements respecting the defects of the crops
of wheat, both in quantity and quality, are fully and unfortu-
nately confirmed. The autumnal price of wheat, is indeed, at an
enormous height, although the farmers have been universally
liberal in supplying the markets, considering the season ; and, as
there are various impediments to foreign supplies in times like
the present, the real state of things cannot be too widely pro-
mulgated, with a view to timely economy in expenditure."
A corroboration of the general estimate of the
defective state of the crops of that year will be
found in the following extract from the Farmer's
Magazine, more minutely descriptive of the de-
ficiency : —
" December, 1811. — The wheat crop is less or more a de-
fective one in every district, but more so in some districts than
in others. According to our accounts it can rarely be estimated
above five eighths of an average crop, though, what is surprising,
the quality of the grain is generally good, a circumstance which
seldom happens when the crop is a failing one. Indeed, as the
failure this season was not, in many instances, occasioned by
mildew (at least in Scotland), the grain that was in the ear
arrived at complete maturity, without being stinted of nourish-
ment. The deficiency evidently proceeded from wetness in
May — from cold frosty nights in June — from boisterous winds
when the plant was under the blossom process — and from want
of sun and heat when the grain was formed in the ear of the
plant. Wheat is a grain always comparatively unproductive in
a cold season such, as the last one, and the same remark is ap-
plicable to barley, the crop of which, generally speaking, is
below an average. Oats, and peas, and beans, may, however, be
considered as fair crops, though, according to our accounts.
1809—1813. 321
many of these grains, upon thin soils, suffered so much from
the wetness in May and June as not to prosper afterwards.
" From all these circumstances a rise of corn markets was the
necessary consequence, though at this time it would be rather
rash to speculate or prognosticate upon their state at a more
advanced period of the season, when prices may be supposed to
have gained their proper level. The present rate of markets
will be seen from the accounts which follow. Hitherto there
has been little or no importation from ibreign countries, and it
is understood that the crops upon the Continent are scantier
this season than usual."
And the following copy of a petition from Li-
verpool will place beyond a doubt the fact of the
general impression of the great deficiency of the
crop of 1811.
" At a public meeting of the inhabitants of Liverpool, held
on the 4th of November, 1811, John Bourne, Esq. Mayor, in
the chair, it was unanimously resolved, upon the motion of John
Gladstone, Esq., seconded by Thomas llodie, Esq., that a pe-
tition should be presented to the Prince Regent, praying that
he would suspend the further distillation of spirits from grain
until the meeting of Parliament.
" The Humble Petition, <i-c. &c.
" Showeth,
" That your petitioners being deeply interested in the welfare
of this populous town, and this great manufacturing county,
cannot but view with great anxiety the progressive and alarming
advance in the prices of corn, in connection with the fact now
ascertained, that the produce of the late harvest is very deficient,
and that the weather for gathering it in, in the northern parts
of Great Britain, and for preparing the wheat lands generally
for the next crops, has been extremely unfavourable.
" That your petitioners are well informed the potato crop in
Ireland has so materially failed, that this important necessary
of life now sells in the Dublin market at the excessive price of
6*. per cwt., from which circumstance your petitioners appre-
hend that the usual supplies of corn from Ireland, upon which
the numerous population of this town and the county of Lan-
caster are known in a great degree to depend for subsistence,
are likely to be much curtailed.
" That, in times like the present, when no dependence can
be placed on receiving supplies of foreign corn, it becomes of
the first importance to husband to the utmost the crops of this
country.
*' That the average weekly prices of corn in England and
Wales, according to the returns received in the week ending the
Y
322
PRICES AND CIRCULATION,
26th of October, as published in the London Gazette of the 2d
of November, are as follows : —
s. d.
Wheat
101 6 per quarter.
Barley
47 4
Oats
29 10
Which equal, and, in several instances, exceed the prices at
the different periods when the legislature, in their wisdom,
thought fit to interpose to prevent the distillation of spirits from
grain (the year of extraordinary scarcity only excepted), as will
appear from the following comparative statement taken from the
official returns.
" Average price of wheat, barley, and oats, in England and
Whales, according to the weekly returns nearest to the following
periods.
Nearest Weekly Returns.
Date.
Distillation.
Wheat.
Bar
ey.
Oats.
5.
d.
s.
d.
s. d.
1795
Prohibited.
93
10
46
0
29 2
1797
Removed.
52
3
28
4
15 10
1800
Prohibition.
133
0
76
7
41 8
1802
Removed.
76
9
44
1
23 4
1808
Pj'ohibition.
81
6
44
3
38 10
1808
Continued.
92
7
45
10
33 8
1809
Prohibition.
95
7
46
6
34 4
1809
Prohibition.
101
9
50
7
31 11
1810
Prohibition.
101
7
46
5
27 5
1811
The last return.
101
6
47
4
29 10
" That on these grounds your petitioners humbly conceive
there exists an urgent necessity for the interposition of the royal
prerogative before the meeting of Parliament, more especially
as, should the measure be deferred till that period, the distillers
will have laid in their stocks of grain for the season, a large
proportion of which will either be distilled or converted into a
state vmfitting it for the food of man."
In the spring of 1812, the general impression
was, tliat the stock in hand was very defective.
The following is an extract from a printed report,
dated in May, 1812: —
" The stock of wheat on hand in the most productive eastern
counties, is alarmingly deficient according to the best accounts
that can be obtained."
1809—1813. SrS
Whether that impression, which was very general,
had been well or ill founded, it was equally calcu-
lated to affect prices. This deficiency, real or
supposed, of the stock of grain in the country,
and the absence of any prospect of effectual relief
by importation, became more alarming as the sum-
mer advanced, in consequence of apprehensions
which were entertained of the result of the ap-
proaching harvest.
The whole of July, and part of August, 1812,
proved cold and wet, and the harvest commenced
under very unfavourable appearances. From a
combination of these circumstances, there was a
great excitement and spirit of speculation among
all persons in the corn trade ; and as the range
of high prices (with an interval of depression
between the harvests of 1810 and 1811, so short
as not to have been felt at all by the landlord,
and very little by tlie farmer,) had been of an
unusually long continuance, it was hastily con-
cluded, as it unfortunately but too often is upon
such occasions, that the causes of that high range
were permanent. This accordingly was the period
in which rents experienced their greatest rise, and
speculations in land became most general. And
there is reason to believe that, under these circum-
stances, the country circulation must have recovered
from its shock of 1810, and have acquired a renewed
extension.
In August, 1812, the average prices were, for
England and Wales, per Gazette average —
s.
d.
Wheat,
155
0
Barley,
79
10
Oats,
56
2
In Mark Lane, the finest Danzig Wheat fetched
180*., and Oats, in one or two instances, were sold
at the enormous price of 84*.
Y 2
324 PRICES AND CIRCULATION,
The corn markets have on no occasion since at-
tained the same elevation.
Meat in Smithfield reached the following quo
tations : —
s.
d.
s. d.
Beef,
5
2
to
6 2
Mutton,
5
2
6 4
Veal,
5
6
—
7 6
Pork,
5
4
6 10
The weather during the harvest of 1812 was
unsettled, but not so decidedly wet as materially to
injure the crops. There were conflicting opinions
as to the yield. The following are extracts from
some of the reports of the time ; making all due
allowance, the crops of grain generally, and of
potatoes in that year, appear to have been under an
average.
Farmer's Magazine, August, 1812.
" There has seldom, or perhaps never, been a period when
the new crop was a subject of greater and more general interest
than the present ; and it was our particular wish to obtain the
best and fullest information of its appearance. We feel very
grateful to our correspondents who have enabled us to present
reports of it, and of the condition of the industrious poor for
the last quarter ; and their communications will certainly be per-
used with that attention which their peculiar importance must
command.
" Though appearances are different, as might be expected,
from the diversity of soil and culture, the general character of
the ensuing crop, as far as an opinion can be formed of it at
this period of the season, must be represented, we fear, as rather
unfavourable. The impression, after a very careful examina-
tion of the reports, is, that unless we have two months at least
of singularly warm, clear, and dry weather, the grain crops
will not reach an average ; that common oats, particularly in
many situations, and" peas and beans generally, must be very
late indeed. From recent and afflicting experience of partial
failure in the crops of wheat, it is not a matter of surprise if
a few of the intelligent writers are a little alarmed at the in-
dications of disease which that crop already exhibits in some
districts, and which there was but too much reason to expect
from the late cold, humid, and ungenial state of the atmosphere."
Agricultural Report, Monthly Magazine,
" Wheat harvest has been protracted and extremely tedious
1809—1813. S<25
in the distant counties ; the farmers being obliged to wait an
unusual length of time for the grain to ripen, which, in the in-
terval, has taken considerable damage from wet. This unfa-
vourable circumstance will add to the stock of unsound and light
corn. The last year's stock is literally exhausted in all quarters,
and markets in consequence have continued to rise for several
weeks. The early speculators, who hurried their wheat to
market, to the great deterioration of its quality, have failed
generally in their object, as the subsequent rise in prices has
proved. The favourable opinion of the potato crop has not been
realised ; they yield but indifferently ; probably in the propor-
tion of a defect of one fourth of the variable quantity of last
year. In the mean time, certain ill informed newspapers teem
with the usual deplorable nonsense about monopoly, forestalling,
and hoarding farmers and dealers !" — 3Iiddlesex, October 27. 1812.
There was still no prospect of a foreign supply,
for, high as the price here was, it was insufficient
to cover the great expenses of importation, added
to a relatively high price at the shipping ports.
The deficiency of our own crops in 1811 and 1812
does not appear to have been so great as it had been
in 1794 and 1795 ; or, again in 1799 and 1800. It
is clear, therefore, that the prices of 1811 and 1812
would not have been so high if there had not been
a virtual exclusion of foreign supply, which ren-
dered it necessary to eke out our own produce by
economy ; and this could only be effected through
the medium of a relatively high range of prices.
It must be obvious that, the effect of a succession
of crops, such as have been described, more or less
deficient, in raising prices so much beyond the
degree of defect, must have been to aflbrd a great
amount of gain to be distributed among the agri-
cultural classes. Independently of the encourage-
ment arising from these profits, continued through
so great a length of time, there w^as now^ a con-
fidence, which had not before existed, in the pro-
spect of the continuance of them. The average
produce of five seasons was supposed to represent
what would be the utmost that any five succeeding
seasons were likely to yield ; and as there was not,
Y 3
326 PRICES AND CIRCULATION,
till the close of 1812, any appearance of a relax-
ation of the continental system of exclusion di-
rected against the trade of this country, a con-
tinued absence of foreign competition was fully
anticipated.
Under these circumstances, rents, upon the
expiration of leases, were advanced in full propor-
tion to the high range of the prices of produce ;
and, in several instances, they were raised threefold
or upwards of what they had been in 1792. Every
purchase of land previous to 1811, whether made
with or without judgment, turned out favourably
according to the then market rates, and it was sup-
posed, in consequence, that money could in no way
be so profitably employed as in buying land. Spe-
culations, therefore, in land, or, as it is termed,
land-jobbing, became general, and credit came in
aid of capital for that purpose. A striking, but
not, I believe, a singular instance of that descrip-
tion of speculation, was exhibited in the case of a
petition presented to parliament some years after,
representing that the petitioner had, in the years
1811 and 1812. laid out 150,000/. partly his own
and partly borrowed, in the purchase of land, which
had since fallen so much in value, that he was
ruined by the loss ; praying, therefore, to be re-
lieved, by what it has been the fashion to term an
equitable adjustment of contracts, but which means,
in reality, an indemnification for bad speculations.
The extension of tillage, and the application of
fresh capital to land already in cultivation, pro-
ceeded in full proportion to the great gains derived
from the produce at such high prices. The number
of inclosure bills was —
1 805 *
71
1809
122
1806
76
1810
107
1807
91
1811
133
1808
92
1812
119
* The number in the ten years preceding 1805 has aheady
been given at p. 257.
1809—1813. 327
It is not easy to imagine, that any person, not
biassed by a preconceived theory, who will have
been at the trouble of going through the evidence
which has been here adduced, can resist the con-
clusion, that the produce of the seasons from 1808
to 181^2, both years included, was more or less de-
ficient. And seeing, according to that evidence,
that of the five seasons embraced in that interval,
the first was partially deficient, and the four follow-
ing decidedly so ; seeing, moreover, that relief by
importation was attainable only in two of them, viz.
1809 and 1810, and then only on the condition of
being subject to expenses of licence from our own
and from the foreign hostile governments, and of
freight and insurance amounting collectively to, at
least, 30,9., and in many instances to 50.9. the quar-
ter on wheat; while in 1811 and 1812*, hardly
any foreign supply at all could be obtained, there
* The only instance that I have met with in the evidence,
appended to the several parliamentary agricultural reports, of
any witness Avho appears to have had a distinct recollection of
the state of things connected with the corn markets at this
period, is Mr. Joseph Sandars of Liverpool. In his evidence
before the committee of 1833, he observed, page 218: —
" I have never known any but one year, in which there was
any prospect whatever of famine, of the people not being able
to get sufficient, and that was in the year 1812, resulting from
the crop of 1811, when we were shut out from the rest of
the world ; wheat gradually advanced from 10*. a bushel, to 24s.
or 25s. That year we were on the very verge of famine, and
I can give a remarkable proof of it ; in ten days after the
crop of oats had begun to be cut in Lancashire, the price of
oatmeal, notwithstanding it was at three times its present price,
that is, at 31, a load ; notwithstanding the crop was within
the reach of consumption, in one week it advanced 11. from
absolute scarcity. That year, I recollect, at the termination of
it, we never showed a sample of corn at all ; it was always be-
spoken."
And yet it is with reference to this period of severe dearth
that it has been said by one of the principal authorities for the
doctrine of depreciation, " Those were not the prices of dear
corn, but of cheap money ; not of scarcity, but abundance."
Letter to Lord Archibald Hamilton.
Y 4
328 PRICES AND CIRCULATION,
being an equal dearth on the Continent of Eu-
rope, and especially in France, the wonder is
rather, not that prices were so high, but that they
were not higher. Of this, at least, I feel per-
suaded, that were a succession of five such seasons
to occur again, .subject to an equal difficultly and
expense of obtaining a foreign supply, or to a
duty on importation equivalent to the difference of
freight and insurance at that time compared with
the present, and if, moreover, an alarm were su-
peradded, by the prospect of not getting any aid
at all by importation, we should witness, a range of
prices, at least, as high as then prevailed.
Section 5. ■ — On JVages and Salar^ies as con-
nected with the Prices of Necessaries.
It may be, as indeed it has been, observed as a
ground for questioning, whether there was a scar-
city in these seasons justifying the high prices,
that although the prices of corn were as high as
they had been in 1795, and 1796, and in 1800, and
1801, there was nothing like the same importance
attached to them. No committees of parliament
to inquire into the causes of the deficiency and
to suggest remedies. * The answer is that the
* In the Letter to Lord Archibald Hamilton before referred
to, the writer, after adverting to the years 1795 and 1800, and
admitting them to have been years of real scarcity, goes on
to say, page 29., " shortly afterwards ensued years not of
scarcity but abundance; years of increasing revenue, and
increasing prosperity among the poor ; whilst the}' paid year
after year prices for wheat of 87*. 9</., 95*. Id., 106*. 2(/., 94-*.
Qd., 125*. 5d., and lOS*. 9d., which last five prices quoted are
the average prices of five successive years, ending with 1813.
No committees sat in these years to consider of the high price
of corn, and of distress arising therefrom." It is hardly possible
to imagine a more egregious misapprehension of facts, than is
contained in the above passage. Upon the perversion of years-
of scarcity into years of abundance I have already remarked.
With regard to the assertion of an increasing revenue, the fact,
1809—1813. 329
high prices of 17'95, and 179^, and of 1800, and
1801, came abruptly, combining dearth from
failure of produce with the effects of heavy tax-
ation, which fell directly or indirectly on consum-
able commodities, wiiile wages and salaries had
been adjusted to the scale of prices resulting from
a state of peace and plenty. It has already been
observed, in treating of those earlier periods of
dearth, that they presented the alternative of the
actual starvation of considerable numbers of the
working population, or of a rise of wages, whether
permanent, or temporary and variable. A great
rise of wages, but still far short of the rise in the
price of necessaries did take place, partly perma-
nent, and partly temporary and variable, including
under the latter description parish allowances and
individual contributions. And not only did a rise
of wages take place on the occasion of those me-
morable scarcities, but there was a further rise
when, after a short intermediate subsidence of the
price of provisions, between 1801 and 1808, a
recurrence of defective crops and increasing tax-
ation, and consequent high prices of food and
other necessaries, gave occasion to further claims
for advance of wages : in most occupations these
had reached their maximum before 1812.
The wages of agicultural labourers and artisans
had been doubled, or nearly so. Salaries from
the lowest clerks up to the highest functionaries,
as well as professional fees, had been considerably
raised on the plea of the greatly increased expenses
of living ; the expense of living having been
increased, not only by the increased price of neces-
on the contrary, is, that the produce of the permanent taxes
fell off in each of tlie years 1811 and 1812. And it is well
known that this circumstance, indicating an approach to the
limits of the power of further taxation, induced the resort in
1813 to an appropriation of the nominal sinking fund for the
interest on tiie further loans.
330 PRICES AND CIRCULATION,
saries, but by a higher scale of general expenditure,
or style of living, incidental to the progress of wealth
and civilisation Thus, upon the recurrence of the
seasons of dearth between 1808 and 1812, there was
more of an adjustment, although still inadequate, of
the pecuniary means of a large part of the different
classes, which prevented so great a degree of
the pressure of distress as had been observable in
the previous scarcity.
But while the wages of agricultural labourers
and of artisans had been raised in a considerable,
although still inadequate proportion to the in-
creased price of necessaries, this was not the case,
or only partially so, as regarded the wages of the
working people in manufactories. Considerable
numbers of these had no advance of wages ; or if
they had, the advance was more than compensated
by reduced hours of work. In the branches of
trade which were affected by the state of stagnation
and discredit in 1810 and 1811, and in those which
depended upon a demand for export, many work-
men were thrown wholly out of employ. The dis-
tress accordingly among these classes was very
severe, and was the cause of considerable disturb-
ances in the manufacturing districts.*
* The Prince Regent, in a message to the House of Com-
mons, in June 1812, referred to the violent and dangerous pro-
ceedings carried on in several counties of England. In further
proof of the distressed state of the working classes at that
time, it may be observed, that the poor rates, vi'hich in 1803,
a period of low prices and agricultural distress, had amounted
to 5,348,201/., rose in 1812 and 1813 to 8,640,84-2/. And it
was stated in the House of Commons (Parliamentary Debates,
vol. xxi. p. 1004.), that a committee, appointed at Liverpool,
to examine into the condition of the poor, reported that, there
had been in one month, namel}^, January, 1812, an increase of
numbers from 8000 to 15,350.
Never was there a greater delusion than that which prevails
under the influence of the currency theory, representing this
period as one of great and increasing prosperity. It was indeed
a period of agricultural prosperity, but of great privation and
suffering to tlie bulk of the community.
1809—1813. 331
Section 6. — Advance of Prices on the Continent
of Europe in 1811 and 1812.
It may be objected by persons who may still
profess to be sceptical, as to the fact of scarcity, in
explaining the advance of prices of provisions" and
of labour in the period referred to, that these
prices were purely artificial ; and were the result,
according to the theory; of one set of reasoners, ofthe
alteration ofthe system of our currency, and accord-
ing to another, ofthe influence of war-demand, aris-
ing out of our large expenditure defrayed by loans.
Upon either hypothesis the rise of prices and of
wages is supposed to be from a cause operating
locally, either by an increase of paper money, or
by the large loans raised, in this country.
It so happens, however, that a similar rise of the
prices of provisions and of other necessaries, and
of labour, took place in 1811 and 1812 on the
Continent of Europe generally as well as in this
country, during the })eriod referred to, witli only
an allowance for the difference of the ordinary
level of their prices, compared with ours.
It has before been observed, that some similarity
of seasons, in point of marked preponderance of
drought or wetness, and of inclemency or propitious-
ness, and consequent prodiictiv-eness or otherwise,
has been found to apply generally to parts of tiie
Continent of Europe, but more especially to the
principal parts of France and Germany. This
observation, however, is subject to considerable
exceptions ; for instance, the seasons of 1808 and
1809 appear to have been more productive on the
Continent of Europe, and in France especially,
than in this country ; the prices there were con-
sequently low, and induced the large exports to
this country, notwithstanding the enormous ex-
penses of freight, insurance, and licences in 1809
332 PRICES AND CIRCULATION,
and 1810. But 1810, 1811, and 1812, on the
Continent of Europe, participated of the character
of the seasons in this country, and the rise of
prices there was fully in the same proportion as
took place here in those years. That the scarcity
in France, consequent upon the unproductiveness
of those seasons, was great and real, admits of
being proved by irrefragable evidence. The fact
is alluded to by all the writers of authority on the
subject of the corn trade and of the corn laws of
that country, and is described as entailing a state
bordering on famine. Mons. J. B. Say, the justly
celebrated writer on political economy *, so cha-
racterises those seasons, and gives the following
quotations, as those of the important market of
Roye in Picardy, for the measure equal to fifty-two
litres two centimes : —
liv. so. der.
1808
-
5 18 0
1809
-
6 16 3
1810
-
9 4 3
1811
-
16 5 6
1812
-
13 9 9
3 average
prices
in all France were : • —
Per Hectol.
Per Winchester qr.
fr. cut.
s. d.
1809
-
14 90
38 Oh
1810
-
19 63
49 7i
1811
.-
26 17
67 1^
1812
-
31. 33
87 IH
Retui'7is from Consuls abroad, 1th December, ] 826.
But these averages give no adequate idea of
the extent of the real rise of prices in an exten-
sive portion of that country, as independently
* In a letter addressed to Mr. James, which appeared in the
Morning Chronicle on the 21st of August, 1822.
1809—1813. 333
of the imperfect mode in which they are taken,
having reference only to the prices, and not to tlie
quantities in the districts making the returns ; and
their embracing districts which might casually
have been better provided, but could not by rea-
son of the intercourse by sea between their distant
maritime provinces being intercepted by our fleets,
equalise their produce Avith those most deficient;
the government made great sacrifices of money to
keep down prices, by importing from abroad and
selling at prices below the cost. From the consu-
lar returns of prices in some of the departments in
France the rise appears to have been greater ; thus,
at Nantes, the quotations were, in
fr. cnt.
1809 - 12 4 per hectol.
1812 - 37 72
And at Bourdeaux 14 85 in 1809,
38 65 in 1812.*
In an elaborate work on the corn trade and corn
laws in France, published at Paris by P. Labou-
liniere, entitled " De la Disette et de la Surabon-
dance," vol. ii. p. 417., is the following passage :
referring to the year 1812, he says —
* " In Germany and in Italy, Spain and Portugal, nearly
a corresponding rise of prices occurred. The following are
among other numerous instances of the great rise of the prices
of wheat : —
1808-9.
Louvain - SU. Id. to
Rotterdam - 44*. 4f/. —
Christiania - 24-5. 5d. —
Alicante - 61s. Sd. —
Bilboa - 535. Od. —
Lisbon - 96s. 3d. —
Tables by the Statistical Department of the Board of Trade.
Vol. V. p. 450.
Of none of these places can it be said, that the rise was pro-
duced by a demand from this country; for, in point of fact, we
imported next to none from the North of Europe in 1811 and
1812, while shipments were actually made from this country to
the South of Europe.
1811
-12.
685.
8^.
81s.
9c?.
73s.
6d.
141s.
lOd.
98s.
6d.
152s.
6d.
334f PRICES AND CIRCULATION,
" La recolte fut mauvaise, la cherte devint excessive ; le
septier de ble fut vendu dans plusieurs provinces jusqu'a 100
francs (1505. the quarter), et la misere fut tres grande. Les
sacrifices faits par le gouvernement Imperial pour ies subsistences
peuvent etre evalues a 80 millions (upwards of three millions
sterling). Les mers a cette epoque n'etoient pas libres ; il
fallut done etablir par terre le transport des grains depuis
Hambourg jusqu'a Paris ; quand momentanement on put profiter
des rivieres, il y eut des frais de chargement considerables."
Here most assuredly there is nothing of paper
circulation or of war-demand defrayed by loans, to
account for the rise of prices : credit was nearly
annihilated in France in those times ; and it is
well known, that the expenses of the war were not
defrayed by loans. As little can the scarcity in
France be accounted for by extra consumption
occasioned by the war. The armies of France, at
that time, were far beyond lier own territories. The
greater part were in tlie North of Europe, among
the cheapest of the corn-growing comitries ; and,
most assuredly, in the supphes sent from France for
the troops, there would hardly be included any large
proportion of mere articles of food ; nor at any rate
of the more cumbersome ones, such as corn.
In 1809> when the war in Germany was carried
on upon a very large scale, the prices of provisions
were comparatively low both in Germany and in
France. This low price on the Continent in 1809
negatives not only the hypothesis of extra war con-
sumption, but it negatives also the opinion of tlie
influence on continental prices of the addition to
the stock of the precious metals abroad, by the
disengagment of them from this country ; for,
in 1809, all the bullion that could be spared
from hence was sent for the purpose of defraying
our then immense foreign expenditure. And
with reference to this supposed operation of
the Bank restriction in depreciating the precious
metals, how would it account for the circumstance
1809—1813. 335
that France exported corn in 1809, and imported
largely^ and at an enormous expense to tlie govern-
ment, in 1811 and 1812. The export of wheat
from France, in 1809 and 1810, was 637,273 quar-
ters ; while the imports, in 1811 and 1812, and the
early part of 1813, amounted to 1,337,219 quar-
ters.
The fact of tlie scarcity and high prices of corn
in France in 1811 and 1812 is important in a
twofold point of view.
1st. It favours the presumption of a cause com-
mon to the two countries, of which none more
probable than the influence of the seasons ; inas-
much as these, in the majority of instances, are
known to have some similarity of character, at the
same time that there is direct evidence of dearth
from those two seasons in the present instance.
2dly. It accounts for our prices having risen
higher than with a similar dehciency of our own
produce they would have done, by the circum-
stance, that the purchases of corn in Germany by
the French government, combined with the enor-
mous charges of freight and insurance, to this
country, prevented our getting a foreign supply,
of which we stood in need in those years.
It is not, however, the price of corn only in
France at the period here referred to, that affords
the strongest presumption, if not an irresistible
proof, in the negative of the theories of currency
and war-demand. A rise of prices of other com-
modities and of labour took place in France, and
generally in other countries, from a period anterior
to the Bank restriction till 1811 and 1812, nearly
corresponding with that which occurred in this
country.
The corresponding rise of prices, and the rate
of living abroad, was referred to by Mr. Rose in
the course of the discussions, in 1811, on the Bul-
lion Report.
336 PRICES AND CIRCULATION,
" Let it not (he said) be imagined that a rise in the articles
of life has been confined to this kingdom alone. A most at-
tentive inquiry has satisfied me, that the expense of living has
gone on in a ratio of increase throughout various parts of the
Continent, as well when the precious metals have been the sole
circulation, as when paper has been abundant ; and all this with-
out any connection with the price of gold. In France, where
no paper circulates except in tlie capital, and there onl^' a very
limited amount, we have the following evidence to that effect.
In a report to the Agricultural Society at Paris, in 1805, M.
Silvestre observes, that ' in most of the departments the price
of labour is increased since 17S9, by one third at least, and in
some by one half; in a faw it is doubled : and this rise is more
general with respect to workmen than to servants at yearly
wages. The society has ascertained that all the instruments of
cultivation are raised in price in a proportion nearly similar ;
that building materials have also risen from a third to a fourth ;
beasts of burden about one half; and all other articles requisite
for the maintenance of a farmer's family in the same proportion.'
In a speech of Mons. Daru to the legislative body in 1810, he
observed that the revenue which was appointed for Louis the
XVIth, in 1791, and continued to Napoleon, was no doubt
considerable, but if attention be paid to the difference between
the real value of money at that time and at present, it will not
be thought an extravagant assertion, that the same income
does not now represent more than two thirds of what it did
then."
The following statement, however, extracted
from M. J. B. Say's work, entitled, " Coin's complet
d'Economie politique," (tom. 3. pp. ^J, ^8. 7iote\
will exhibit more in detail the great rise of prices in
France of labour, and of implements of husbandry,
and of several other articles in 1811, as compared
with 1789.
" I extract" (he observes) " the following document from an
official paper : — ' Comparative prices of objects for the use of
a farmer in the township (Arrondissement) of Saint Denis,
before 1789, and under Napoleon.'
" (From a report made to Napoleon by the Minister of the
Interior, in 1811.)
" N. B. Wages by the year, and task work are reduced into
wages for a day."
(French money reduced into Sterling, at the exchange of
25 f.)
1809—1813.
337
Before the
Revolution.
Under
Napoleon.
Observations.
£
s.
d.
i*
s.
d.
Journeyman cartwright -
0
0
5'^
0
0
^H
"J
farrier -
0
0
5:1
0
0
9i
■ Besides board.
harness-maker
0
0
H
0
0
7f
' Including board, but not
mason
0
]
H
0
2
H
his labourer or assist-
ant.
locksmith
0
1
H
0
2
4|
carpenter
0
1
H
0
3
2i
Including board, and
tiler, slater, "1
or thatclier J
0
2
43
0
4
9^
they find their tools.
Head carter - _ -
Under ditto
0
0
0
0
4?
0
0
0
0
7|
6i
■ Besides board.
Head shepherd
0
1
2
0
2
H
Under ditto
0
0
7^
0
I
4
Farm-yard boy
Poultry-yard maid
0
0
0
0
3
0
0
0
0
75
3
|- Besides board.
Thresher _ . .
0
1
03
0
2
0
■Is paid by measure.
Reaper and mower
0
2
0
0
4
9§
Day labourer (man)
(woman)
0
0
0
0
5^
0
0
1
0
y In summer.
A plough - _ _
A cart
2
9
8
0
0
0
4
17
0
0
0
0
With its iron work.
A cart harness
2
8
0
5
12
0
For the shaft horse .
Ropes (the quintal 108tb. "1
2
8
0
4
0
0
avoirdupois - - J
A spade or a hoe -
0
2
43
0
4
0
A horse shoe
0
0
H
0
0
n
Nailed on.
Rough building stones -
1
2
n
1
12
0
r The cubic toise (about
1^ 261 cubic feet Eng.).
Plaster (of Paris) -
0
12
9i
0
17
n
f The tmiid of 36 sacks
\ (about 22 bushels).
Lime _ . .
2
1
n
3
1
H
f The setier (about 4g old
|_ bushels).
Tiles (the 100)
0
12
0
1
4
0
r Made in the neighbour-
ly hood.
The cent.
Bar iron - -
0
14
4?
0
17
7-1
A plough horse
13
8
0
24
0
0
A fat pig - -
3
4
0
C
0
0
f Weighing about 216 lbs.
\ avoirdupois.
A sheep (of that country)
0
9
H
0
14
4^
Chickens (the pair)
0
1
0
0
1
5k
A cloth coat - - -
2
12
0
4
0
0
A pair of leather breeches
0
19
n
2
8
0
A pair of shoes
0
3
n
0
5
n
A hat
0
9
n
0
14
4f
("The double Here ow voie
Fire-wood _ . _
0
16
H
1
8
H
-| (2 cubic metres, about
|_ 66 cubic feet English).
Charcoal - - -
0
2
9i
0
5
n
The sac of Paris.
" Napoleon had re-established and increased all the taxes of
the ancien regime. It may be supposed that the farmers who
were consulted as to the above prices, may, from discontent, have
Z
338 PRICES AND CIRCULATION,
slightly exaggerated the difference; for it does not appear that
prices have increased since."
It is probable that there may be inaccuracies in
the reduction into Enghsh measure, in the fore-
going translation ; but they do not affect the main
fact of the proportionate advance of prices.
The rise of the prices of provisions and labour
(and of most other objects of exchange) abroad,
corresponding so nearly during the period of the
restriction with those in this country, has always
been a point of difficulty with the partisans of
the doctrine of depreciation, by increase of
money, as resulting distinctly from that measure.
Accordingly, in the debates in 1811, on the bul-
lion report, and again on the gold coin and bank
note bill, the topic was either wholly evaded, or
very slightly touched upon, by those who argued
from the high prices of commodities in this country,
the depreciating effect of the Bank restriction on
the value of the currency. A vague reference was
made in one or two instances to the operation of
the metals disengaged from this country, as tend-
ing to raise bullion prices, as if it were possible
for a rise of prices of from 50 to 100 per cent, to
have been produced by the addition of about 12 or
15 millions of gold and silver, to the circulation
previously existing in the commercial world.
In the course of those debates. Sir George Shuck-
burgh's table was adverted to, as showing that a
general cause of depreciation of the value of money
had been in steady progress from the time of the
Norman conquest. Mr. George Rose referred to that
table for the purpose of inferring that the rise of
prices was from a cause which had been in oper-
ation anterior to, and was in progress independently
of, the Bank restriction. And, so far as that in-
correct and absurdly constructed table * could be
* For an exposure of the incorrectness of the details, and
the absurdity of the principle upon which that table has been
1809—1813. 339
considered as an authority, it served to favour the
argument against the imputed effect of the restric-
tion. But it was likewise referred to by some of
those who were most strenuous in contending for
the depreciating effect of the restriction. Although
how it could strengthen their argument, it is not
easy to see. For surely the restriction act ought
in fairness to be absolved from so much of the rise
of prices as could be referred to a law which was
supposed to be in steady and progressive operation
independently of that measure.
The evidence which has thus been adduced of
the prevalence of scarcity of corn, not only in this
country but on the Continent of Europe, cannot,
if fairly followed out, fail of establishing the suf-
ficiency of that cause, combined as it was with
extraordinary, and as it proved, insurmountable
impediments to importation into this country, to
account for the great rise and high range of prices
which prevailed till the harvest of 1813. The
effects of that harvest, both in this country and
abroad, will be noticed presently ; in the mean
time a brief view may be taken of the coincident
state of prices of other articles.
Section 7. — Prices of Commodities from the
Summer oflSW to the Summer oflSlS.
During the same interval as that in which we
have had occasion to observe upon the rise of the
prices of provisions, viz. from the summer of 1811
to that of 1813, there occurred a renewed scarcity.
constructed, see Arthur Young " On the progressive Value of
Money," and the 3d volume of the Edinburgh Revieiv, in an
article headed " Wheatley on the Currency."
Z 2
340
PRICES AND CIRCULATION,
partly actual and partly apprehended, of many lead-
ing articles of importation.
In consequence of the discouragement arising
from the low prices in this country in 1810 and
the beginning of 1811, there was little inducement
to import in the face of enormous charges; freights
and insurances from the Continent of Europe con-
tinuing so high that, without an advance of prices
here, little or nothing would, in some instances,
have been left for prime cost. The stocks, there-
fore, of wool, silk, cotton *, hemp, flax, tallow,
timber, &c. became scanty towards the end of
1811 ; and there were grounds at the same time
for apprehending a further scarcity. The prepa-
rations by the French for the invasion of Russia
gave reason to fear that, however disastrous to the
former it might eventually prove, the intermediate
consequence would be a cutting off of the supplies
of naval stores and of other produce from thence ;
and as the French armies spread over Prussia, all
shipments from that country became more difficult
and hazardous. Our differences with America were
then rapidly tending to an open rupture, and the
produce of that country naturally participated in
the causes of advance.
Thus by far the majority, in point of importance,
of imported commodities, requisite as raw materials
for the supply of our manufactories, and essential
for the support of our navy, became, from real and
* This will appear from the following comparison of the im-
ports into Great Britain : —
Year.
Wool.
Silk.
Cotton.
Hemp.
Linseed.
1810
1811
lbs. I His.
10,9.'56,224 1,792,206
4,7,'39,972 022,383
tbs.
136,488,935
91,662,344
cwt.
479,440
292,530
cwt.
955,799
458,547
cwt.
511,970
243,899
bush.
1,6^5,998
594,016
And these articles, in consequence experienced a consider-
able rise, although not to the elevation which they had attained
in 1808 and 1809.
1809—1813. 341
anticipated scarcity, objects of speculation ; tliese
natmally gave rise to an extension of mercantile
transactions on credit, both with and without the
intervention of paper; and this state of actual and
anticipated scarcity, and consequent expectation
of higher prices, which formed the basis of the
extension of credit and of the circulation of pri-
vate paper, continued, with only a few variations
incidental to peculiarities of demand, till different
periods in 1812 and 1813.
Section 8. — Fall of the Prices of Corn, and of
other European Produce, in 1813.
The prices of provisions, and of European pro-
duce generally, having attained their greatest height
at different periods in 18r2, began thenceforward
to fall. The decline in the prices of corn com-
menced in the autumn of that year, and was at first
rapid, having been between August and November
1812, upwards of 40.9. ; viz. from \55.s. to 113*. 6g?.,
but thenceforward there was not much variation
till August, 1813.
The prices gave way, however, rapidly after the
harvest of 1 8 1 3 *, which proved to be very abundant.
* The fact of a great fall in the price of agricultural produce
having preceded both the termination of the war and any sup-
posed preparation for cash payments, resting as it does on most
incontrovertible evidence, it may appear strange that it should
not have been more generally adverted to in the discussions to
which the questions respecting the currency, and the transitions
from war to peace, have given rise. The wonder will cease,
however, when it is observed that the customary mode of refer-
ring to the prices of corn in treating of subjects connected with
them, has been to take tlie average of the year ending with
December. This mode involves the flillacy which has already
been pointed out, and is calculated to convey the impression that
the high price of corn continued till the return of peace, which
is supposed to have induced preparations for cash payments. By
the average for the whole of the year 1813, the price appears
to be 107*. 10^6?. which makes that year the highest with the
z 3
342 PRICES AND CIRCULATION,
It was this decidedly favourable season which de-
veloped the full effects of the encouragement that
had been held out by the long previous range of
high prices to the application of great additional
capital to the land. The extent to which that en-
couragement had operated is stated by the Com-
mittee on the Corn Laws, in 1814 (Report, p. 3.),
in the following terms : —
'• It appears to your committee to be established by all the
evidence, that, within the last twenty years, a very rapid and
extensive progress has been made in the agriculture of the United
Kingdom : that great additional capitals have been skilfully and
successfully applied, not only to the improved management of
lands already in tillage, but also to the converting of large tracts
of inferior pasture into productive arable, and the reclaiming
and inclosing of fens, commons, and wastes, which have been
brought into a state of regular cultivation."
There had not only thus been an increased
breadth of land in improved cultivation, but the
produce per acre was unusually large. The whole
fall, resulting from these causes, will clearly appear
by the following statement of the average prices : —
Wheat. Barley. Oats.
August, 1812, 155s. Od. 79s. lOd. 56s. Qd.
Dec. — 121. v. 0^. 64*. 0^^. 44,s>. Id.
August, 1813, 112.9. Od 55s. 7^ 40s. 4^d.
Dec. -— 73s. 6d. 42*. lid ^7s. 7d.*
Here is ajrdl exceeding ^f?/ per cent, within two
years, during which the price of gold had been
rising, and attained the greatest height that it ever
exception of two, viz. 1801 and 1812, of any that has occurred
in the annals of the corn trade : whereas the fact, as appears
in the text, is, that immediately after the harvest of 1813, the
price fell to less than one half of what it had been on the eve of
the harvest of 1812.
* The price of oats fluctuated in an extraordinary degree,
the average price had been, in
January, 1812, 3Lv. M.
June — 69s. Od.
Dec. 1813, 27s. 7d.
1809—1813. 343
reached, and was, on an average, liigher tlian at
any preceding or succeeding period. Moreover,
while the decline in corn was most rapid, the price
of gold xvas actually rising ; viz. from June 1813,
when gold was at 5l. Qs. 6d. to the close of that
year, when it got up to 51. lOs.
The fall in the prices of commodities imported
from the Continent of Europe was taking place
in proportion as the opening of the ports from
whence they were shipped diminished some of
the expenses of importation ; but the decline
of prices was at first slow, because the con-
tinued hostility of Denmark, and the war with
the United States of America, kept freights and
insurances at a high rate. Still it was actual or
prospective abundance that occasioned the tend-
ency to a fall at the close of 1813.
It appears, then, that the occurrence of a single
good harvest, and the removal of some part of the
political obstructions to a foreign supply, had the
effect of producing a great fall in the prices of corn,
and of other articles of European produce ; or, in
other words, that immediately upon the cessation
of what one might have thought had been obvi-
ously enough the cause of advance, prices tended
to a subsidence to the level from which they had
risen. And if abundant proof had not already
been adduced of the absence of the causes com-
monly assigned, viz. of the Bank restriction or war-
demand, it would be found in the fact, that the
Bank issues, and the war-demand continuing on as
large a scale as ever, or rather on a greatly increased
scale, prices of corn, and of all the other articles
that had risen with corn, were falling rapidly in
1813. But were it possible that the conclusion to
that effect could be made stronger, it would be so
by reference to the circumstance of an equal fall of
prices of corn in France, consequent upon the
harvest of 1813, and this while the war w^as still
z 4
344- PRICES AND CIRCULATION,
carried on on a gigantic scale, and nearer to her
own frontiers. In truth, the prices continued to
fall there while the war was waged within her own
territory. The fall in the price of wheat in France,
between 1812 and 1814, was from 34 fr. 33 cents,
the hectolitre, to 17 fr. 7^ cents. ; being nearly
50 per cent., or the same as occurred coinci-
dently in this country. Now, according to the
theory that the gold disengaged from this country
diminished the value of the precious metals on the
Continent, and was the sole or the main cause ot
the rise of prices there during the restriction, how
is this fall of the price between 1812 and 1814 in
France, and on the Continent of Europe generally,
to be accounted for consistently with such hypo-
thesis ; this fall of prices having occurred when
the stock of gold spared from this country, and
added to the circulation of the commercial world,
was precisely at its maximum ? This instance,
however, is only one among many, that not only
was the amount of the metals disengaged from this
country, totally inadequate to produce any per-
ceptible effect on prices, but that the facts are in
the order of time of their occurrence, at variance
with the hypothesis.
Section 9. — Rise of Prices of e.vporiahle Cofu-
modities in 1813.
As a still further illustration of the manner in
which the anti-commercial character of the war and
of the Continental system had operated on prices, it
maybe observed, that while cOrn and other European
raw produce were falling, all articles of export, viz.
West India, and generally all transatlantic, pro-
duce began to rise coincidently with the first tend-
ency of the former to fall. The lowest point of
depression of West India produce, and of other
commodities, including manufactures, calculated
for the markets of the Continent of Europe, and
1809-181.3. 34^5
the United States, occurred at the close of 1811,
and in the early part of 1812. All these articles ex-
perienced a moderate degree of improvement to-
wards the close of 1812, with the exception of such
descriptions as were exclusively or chiefly calculated
for export to the United States, and these of course
were much depressed by the war which then broke
out. By the retreat of the French from Moscow,
not only the ports of Russia were secured from
the danger of being again shut against us, but daily
tidings were received of other ports in the north of
Europe being opened to a trade with this country ;
and sanguine expectations were beginning to be
entertained that the ports of France itself would
at no remote period be open to us. The new mar-
kets— for such they might then be called — which
were thus presented, and the prospect of more,
gave rise to a speculative demand for all the articles
really wanted, and for many others which it was
anticipated would probably be wanted, by the
countries with which we had then suddenly come
into communication. Colonial produce, as it had
been most depressed by our previous exclusion
from those markets, experienced the greatest and
most rapid advance, but many other articles of ex-
port participated in the demand, which prevailed
thenceforward till the close of 1813, and the early
part of 1814, with greater or less intensity accord-
ing as the events of the war seemed to hasten or
retard a general peace. The conclusion of the war
was then hailed as holding out the prospect of an
unlimited demand on the part of the inhabitants of
the Continent, for the articles from the use of
which they had been so long debarred.
The earliest shipments of such exportable com-
modities as had been bought at the low prices
answered of course, and the profits thence arising
naturally encouraged the subsequent speculation.
This speculation, and the consequent over-trading,
346 PRICES AND CIRCULATION,
proceeded to a most extravagant length till the
spring of 1814. It began, as has already been
noticed, with the great reverses of the French in
1812, and went on, with fluctuations, according
to the vicissitudes of the subsequent military oper-
ations, till the peace of Paris, which was the con-
summation of the views of the speculators ; the
ports of France, as well as those of all the rest of
Europe, being then opened to a direct commercial
intercourse with this country.
It had been usual, in former periods, to con-
sider that colonial produce should rise in war and
fall in peace, in consequence of the difference of
the charges of importation ; but the period in ques-
tion was supposed to form an exception to this
general rule : it was calculated that the inhabitants
of the Continent, having been so long debarred
by the anti-commercial decrees of their govern-
ments from the enjoyment of sugar and coffee, and
of various other descriptions of commodities would,
now that commercial intercourse with this country
was restored, require a supply, at almost any price, of
most of the articles that had been accumulated here
during the absence of foreign demand. Proceeding
on this supposition, a great number of adventurers,
departing from their ordinary pursuits, entered
into speculations in exports with the greatest avidity.
Many retail tradesmen who failed in 1814 and 1815
were, upon a disclosure of their accounts, found to
have been concerned in shipments of sugar and coffee
to the Continent. The contagion spread to the
outports (of these, Leith and Hull were most pro-
minent) ; and it was said that a large proportion
of the shopkeepers residing in them, who failed at
that time, owed their ruin to having been tempted
into speculations of the kind which I have de-
scribed. In short, the spirit of overtrading in
that extensive class of commodities reached to
the most extravagant height, as may be judged
1811-12.
1813-14.
54*. 73^.
118*. 142*.
36*. 42*.
116*. 126*.
34*. lid.
97*. 2d.
30*. 46*.
110*. 134*.
7d. 9d.
2*. 4(/. 2*. 6d.
29*. 31*.
47*. .52*.
8*. 9*. 6f?.
12*. 16*;
7c?. 7ld.
20^. 21 d.
2d. Id.
Is. lOd. 5s. 6d.
1809—1813. 347
by a comparison of the prices of the following ar-
ticles in the years 1811-12, and 1813-14, exhi-
biting an extraordinary contrast of the extreme
depression in 1811 and the early part of 1812,
with the speculative elevation in the latter part of
1813 and the spring of 1814.
Coffee, Jamaica, per cwt. -
St. Domingo, — -
Sugar, Gazette average,
Havannah, white.
Cotton, bowed Georgia, per lb.
Cochineal, - - —
Indigo, E. I. superior, —
Pepper, black, - —
Tobacco, Virginia, - —
Logwood, per ton - - - 10/. toll/. 22/. to 23/.
This extraordinary rise of all exportable produce
which took place only in consequence of the ap-
proaching peace, and reached its greatest height
when the peace was concluded, and when, accord-
ing to the received doctrine, preparations were
begun by the Bank with a view to cash payments,
attended by a reduction of the quantity of money,
is commonly blended with the state of prices of
agricultural and generally of European produce,
which had begun to fall when exportable articles
had begun to rise, and which had fallen upwards
of 50 per cent, before 1814, which is the earliest
date assigned for the supposed preparations for cash
payments, and consequent reduction of the quan-
tity of money. And thus a mass of high prices
of all commodities is erroneously assumed to have
coincidently prevailed, until according to one theory
the war-demand had ceased, and according to the
other theory, until preparations for cash payments
had commenced, and the quantity of money had
been reduced. The facts already stated are obvi-
ously decisive as to the theory of war-demand ;
and if the circumstances which have been detailed
348 TRICES AND CIRCULATION,
in connection with the fluctuations of prices in the
whole interval between 1808 and 1814, should ap-
pear to be sufficient to account in every instance
for the most marked variations, it will follow that
alterations in the quantity of money cannot have
had any considerable share in producing those fluc-
tuations. Not to mention the incorrect use of the
term depreciation from excess of money to desig-
nate the rise of one great class of objects of ex-
change, when another equally important class is
undergoing a proportionate fall.
This is the argument a priori against the presump-
tion that the effect of the Bank restriction had been
that of raising prices by increasing the quantity of
money in the period now under consideration.
And a reference to the state of the circulation will
serve to show that there was no such increase of
the quantity of money arising out of the Bank
restriction as would account for those effects.
Section 10. — State of the Circalation from 1809
to 1813, both Years included.
It has been seen that in the earlier part of 1808,
the Bank was in such a position with respect to
the state of its treasure, compared w^ith its liabi-
lities, as would have been perfectly consistent with
a convertible state of its paper. It has further been
seen, that while such was the position of the Bank,
a spirit of speculation had arisen from a view of the
great falling off' of imported commodities, and that
an enormous rise of prices had been the conse-
quence, without any preceding increase of Bank
issues. That great rise of prices held out the
strongest inducement for efforts on the part of the
merchants to import largely in the coming season.
It was necessary for this purpose either to transmit
considerable funds abroad, or to lodge extensive
credits for drafts on this country. The war carried
1809—1813. 349
on by this country in the Peninsula against France,
liad commenced, and required large sums in specie
to be sent thither for the pay and subsistence of
the allied armies ; and treaties for a subsidy to
Austria were on foot, with a view to her declara-
tion of war with France, which took place in the
spring of 1809.
These circumstances were calculated to operate
powerfully on the exchanges, and a considerable
depression of them accordingly took place, without
being preceded by any increase of the circulation
of the Bank of England.* The average amount
of Bank notes of 51. and upwards had been for the
quarter ending
Exchange on
Hamburgh.
30 June, 1808, 5£'13,189,270 1 July, S5s. 3d.
30 Sept. ~ 13,060,650 30 Sept. 33s. 9d. \
31 Dec. — 13,259,780 30 Dec. 31^. 3d. '
And this fell of the exchanges had taken place,
notwithstanding that the Bank had in the mean
time parted with bullion to the amount of upwards
of three millions. There was no price of gold
quoted at the close of 1808 ; but, in proportion to
the exchanges, it should have been about 4*/. 7*'- 6o?.
Here then is a sudden divergence between the
value of the paper and that of gold, to the extent
of about 12 per cent, without any such increase of
the amount of the Bank issues as could by possi-
bility be assigned as the moving cause of that di-
vergence. Thus far, therefore, there can be no
difficulty in concluding that in this divergence it
* It is more fair, with a view to a practical conclusion, to
take the average amount for a quarter, than to take particular
days. But the same conclusion of the negative of any increase
of Bank notes, to account for the first great depression of the
exchanges, will be manifest, if we take, as points of comparison,
corresponding days, thus : —
Exchange on
Hamburgh.
29 Feb. 1808, ~ - ^14,093,690 345. 6d.
•28 Feb. 1809, - - 14,241,360 31 5. Od.
350 PRICES AND CIRCULATION,
was the gold that by an extraordinary and sudden
demand for it, for purposes of foreign payments,
had become of increased value, and not that the
paper (being stationary in amount), had become
of diminished value. And if the Bank had thence-
forth continued to keep down the amount of its
issues, although the probability is, that under
the increasing pressure of the great additional
expenditure which we shall have occasion to
notice, the exchanges might still have fallen, the
grounds of presumption that the depression of
the exchanges, and the high price of gold, were
not caused by the increase of Bank notes, would
have been irresistible. The inference too would
have been inevitable, that it was the gold that had
diverged from the paper, and not the paper from
the gold. Not but that the amount of the paper
might, consistently with the rule which ought to
govern the Bank issues, be considered to have been
excessive, inasmuch as it was the duty of the di-
rectors to have contracted their issues, in order to
have preserved the value of their paper on a level
with that of gold ; but the question immediately
under consideration is, whether there is presump-
tive evidence of an increase of money having been
the moving cause of the fall of the exchanges and
the rise of the price of gold. It is possible — so in-
creased, apparently, were the functions of Bank of
England notes — that if the amount had been merely
kept down in 1809, at what it had been in 1808,
the further depression of the exchanges might at
least have been stopped, and they might even have
rallied. But, notwithstanding the rapid fall of the
exchanges at the close of 1808, the Bank issues,
instead of being reduced or simply limited to what
they had been, were for some time thenceforward
increased in amount.
As it was at this period that the great divergence
between paper and gold occurred, and gave rise to
1809—1813. 351
the bullion controversy which has in vmions forms
ever since subsisted, it may be worth while, previ-
ously to examining the connection between the
Bank circulation, as it actually existed, with the
state of the exchanges, and of the price of gold
and of commodities, to consider hypothetically
what might have been the effect in a commercial
and financial point of view, if such a regulation of
the amount of Bank paper had been adopted, as
might have been effectual in preserving the value
of it on a level with that of gold.
In considering what might in this case have been
the state of things compared with what it was, we are
not to suppose such a system of management of the
Bank as prevailed before the restriction, and has pre-
vailed since the resumption of cash payments; be-
cause being, in 1808, fully in a position that would,
under ordinary circumstances, have admitted of pay-
ing in cash, the directors would, according to their
former, and according to their more recent practice,
have delayed taking the measures of precaution
which the extraordinary circumstances that then
arose imperiously prescribed. They would, as
they had formerly, and have since done, neglecting
the early indications by the fall of the Exchanges,
and the consequent drain on their coffers, of the
necessity of contracting, and at any rate of not
enlarging the circulation, have yielded to the in-
creased and urgent applications, whether of govern-
ment for advances, or of the mercantile commu-
nity for discounts, and so have allowed the further
pressure on the exchanges, and the drain on their
coffers, to acquire such force as no subsequent
effort would be sufficient to counteract. It is there-
fore perfectly clear that if the restriction had not
taken place in 1797» and if the convertibility had
proceeded as it might subsequently have done (sub-
ject to some effort under the pressure of 1800 and
1801), till the close of 1808, the Bank would,
under its ordinary mode of management, have in-
S52 PRICES AND CIRCULATION,
evitably been brought to a stand in 1809. For the
disturbing circumstances which have ah'eady been
noticed as coming into operation, in depressing the
exchanges, were acquiring an enormously increased
force ; and the amount of the payments abroad,
for which it had become necessary to provide, in
fulfilment of engagements already ente7^ed into,
had, in 1809, risen to an amount much beyond
that which could be met by exports of commodities
in sufficient time, or upon points directly applicable
for those payments, supposing even that there ex-
isted no political obstacles to exportation.
The government expenditure abroad amounted,
in 1808, 1809, and 1810, to upwards of thirty-two
millions, and the importations of grain to upwards of
ten millions*, making together, extra foreign pay-
ments, to the amount of forty-two millions. But, in
addition to these great payments to be made abroad,
there was, in the two latter years, an unusually
large importation of other goods besides corn ; and
these goods, as well as the grain, being imported
wholly in foreign ships, and being of a very bulky
description, the freights t, which were extrava-
* Government expenditure abroad : —
1808 - - - 9,552,000
1809 - - - 10,235,000
1810 - - - 12,372,000
Value of grain imported: —
1808 - - - 336,460
1809 - - - 2,705,496
1810 - . - 7,077,865
32,159,000
10,119,821
42,278,821
Appendix to Mr. Vansittart's Speech on the Bullion Ques-
tion, 1811.
f In the year 1809, when freights were at their highest, the
freight of a cargo of 300 tons of hemp from St. Petersburgh, at
30/. per ton, with primage of 10 per cent., and hat money, came
to upwards of 10,000/. The present freight by British ships, at
50*. per ton, is 750/.
1809—1813. 353
gantly liigh, constituted a very important addition
to the other items of foreign payments. Mr.
George Rose stated, in his speech on the Bullion
Report, in 1811, that not less than five millions and
a half had been paid in the preceding year for
foreign freights, from the impracticability of em-
ploying British shipping to the ports in the North
of Europe. And while the payments to be made
by this country were swelled to this enormous
magnitude, the rigours of the Continental system,
aided in their operation by the effect of our own
orders in council, tended more and more to cir-
cumscribe the means of export of commodities to
meet those payments. So effectual was the system
of exclusion from the Continent of Europe, of the
principal articles of usual export from this coun-
try thither, that while coffee here was under 4}d.
the pound, it was worth in. to 5s. the pound in
France.
And it has been argued *, and justly argued, that
as the prices of our exportable commodities were
already so low here, and so high on the Continent
of Europe, as to hold out all possible inducement
to overcome the obstacles which then existed to
the introduction of them into the Continental
markets, no additional reduction of prices of those
articles in this country, that could have been
effected by the utmost contraction of the circu-
lation, would have forced the export of an addi-
tional cask of sugar or coffee, or an additional bale
* This point has been urged with remarkable force and
clearness by the writer of a series of letters under the signature
of H. B. T , which appeared in the Morning Chronicle in
December, 1833, and January, 1834', and have since been
published in a collected form. The same line of argument
against the received doctrine of depreciation from excess of
money consequent on the Bank restriction, has been followed,
and very clearly stated, in a publication, entitled, " Observations
on the Report of the Bullion Committee of 1810, in a Letter
addressed to the Members of the Political Economy Club, by
A, G. Stapleton, Esq." 1837-
A A
854 PRICES AND CIRCULATION,
of our manufactures. The vast accumulation of
colonial produce and of manufactured exportable
commodities which took place in this country in
1810 and 1811, and which contributed greatly to
the distress prevailing at that period, is referred to
in proof of the insurmountable impediments then
existing to exportation.*
This argument is correct as far as it goest, but
it takes in only one of the points of view in which
the influence of a different regulation of the Bank
issues is to be considered. It may be admitted,
that a contraction of the circulation would not, or
at least might not; have been effectual in inducing
any additional exports of commodities. But it
would, if timely applied, have had a very great
effect in reducing the amount of the imports, and
in reducing also the amount of the sums to be
transmitted abroad by a saving of the difference of
exchange. If, seeing the enormous speculations
which were on foot between the close of 1807 and
the summer of 1808, and becoming aware of the
political circumstances which inevitably led to a
very large government expenditure abroad; feeling,
indeed, the effect of those circumstances by the
demand for bullion J, of which the stock in the Bank
was rapidly decreasing ; and seeing, moreover, the
strong tendency which, early in the autumn of
* In the letters of H. T. B., already referred to, the writer
says, " If 60,000 tons of coftee, held here unsaleable at 6d. the
pound, while coffee was 45. or 5s. the pound on the Continent,
is not evidence that the impediment was more than all the
subtlety of mercantile men could overcome, it is in vain to look
for proof of such a fact."
t It applies, perhaps, more distinctly to 1810 and 1811, than
to 1808 and 1809; as it was not till the actual burning and
confiscation in the Prussian ports, in 1810, of goods shipped to
a vast amount from this country, that the system of exclusion
became so effectual.
J Not, indeed, on the part of the public, as the paper was not
convertible, but on the part of Government, which was the same
in effect, as regards the present argument.
1809—1813. 355
1808 was manifested to a fall of the exchanges, the
Bank had contracted its issues, it is fairly to be pre-
sumed that a contraction so timed wo[i\d, altliough
carried only to a moderate extent, have had a
considerable influence upon the amount of the
imports in the following season. If the merchants
had become apprized, by a notice similar to that
which the Bank had given in December, 1795, of
a limitation somewhat below the usual or the ex-
pected amount of accommodation by discount,
and by a generally diminished facility in the money
market, which would have followed from such a
limitation by the Bank, in the autumn of 1808,
that they were not to rely, in entering into further
engagements, upon the accustomed facilities, there
is every reason to believe that their orders would
have been under lower limits of price ; or, if they
sought consignments, they would not, indeed, they
could not, have oflTered such large advances upon
them. The consequence of such lower limits, or,
of lower offers of advance, or, in other words, of
greater prudence in mercantile engagements for
importation, would have been most important in its
influence on the exchanges. The whole of the im-
ports in 1809 and 1810* would have been less, and
the cost of the smaller quantity would have been
less, not only in the ratio of the lesser quantity, but
also of the lower price. But if the whole quantity
imported had been less, there would have been a
considerable reduction of the sums to be paid to
foreigners for freight, not only by the diminished
quantity, but by a lower rate, in consequence of
the less demand for foreign shiproom. From the
* The comparison of the official value of the total of im-
ports stands thus : —
£
1808 - - 29,629,353
1809 - - 33,772,409
1810 - - 41,136,135
AA 2
356 PRICES AND CIRCULATION,
difference under these two heads alone, there would
have been a great abatement of the pressure for
foreign payment ; and, considering the very circum-
scribed sphere of exchange operations which then
exibted, it can hardly be doubted that this saving
of tlie sums to be transmitted from hence or drawn
for from abroad, would have had a sensible effect
on the exchanges. And in whatever degree the
exchanges had been higlier, tlieir improved state
would have caused a further saving of the sums to
be transmitted for our government expenditure
abroad, inasmuch as it would have diminished the
amount to be paid by the government here for a
given amount of foreign currency required.
It is hazardous to form computations reduced to
precise figures, on data so vague, but, speaking in
general terms, it may be assumed to be highly pro-
bable that the saving in the balance of foreign
payments, which would have been effected by a
timely and systematic contraction by the Bank of
its issues in the autumn of 1808, would have been
sufficient to have prevented the exchanges from
falling so low as to have put it out of the power
of the Bank to continue to pay in specie, if it had
not been restricted from so doing.
It may be objected to this view, that although,
by an early and somewhat forcible contraction, the
value of the paper might have been preserved on
a level with that of gold, the object would have
been too dearly purchased by the inconvenience to
commercial interests, from a forced limitation of
discounts, and by the financial difficulty which it
would have occasioned. This was the ground
taken by ministers in defending the conduct of the
Bank. The answer is, that the inconveniences
which the merchants might have experienced from
disappointment as to the extent of discounts, and
from a diminution of the facilities, generally, on
which they may have relied, would, taking them
as a body, have been much more than compensated
1809—1813. 357
by a saving of a great j3art of the enormous losses
which the importations of those two years entailed
upon them, — losses which, in point of fall of markets
embracing such a variety and extent of articles, have
most assuredly no parallel, within the same period, in
our commercial history. The state of commercial
distress and discredit consequent upon these losses
has already been described ; the number of bank-
ruptcies in 1810, 1811, and 181^2, namely, 7042
in the three years, having been unparalleled be-
fore or since.* The system, therefore, upon which
the Bank acted, and which, upon principle, the
directors justified in their evidence before the Bul-
lion Committee, viz. that they could not issue too
much paper by the way of discount on good bills of
limited date, at 5 per cent, per annum, was, besides
the depreciation of Bank paper which it entailed,
productive of much more loss than benefit to the
mercantile interests. And as to the financial dif-
ficulty which a contraction of the circulation might
have entailed, it may be doubted whether the in-
creased rate of interest at which the loans would
have been raised, would not have been more than
compensated by the smaller amount which would
* With reference to the state of cornmercial distress and
discredit which prevailed in 1810, it may here be observed, that
Httle notice has ever been taken of it by the supporters of the
currency doctrine, and still less has any plausible reason been
given for it, consistently with that doctrine. The discredit and
distress were clearly the consequence of the great fall of prices.
Now if, as according to that theory is supposed, the rise of prices
had been caused by an increase of Bank of England paper, how
happened it, that, with a further increased issue, they should have
fallen ? and if that increased issue had not been enough, why
should there not have been a still further issue, for the express
purpose of supporting prices, and thus preventing the loss and
discredit attending the fall ? It may be said, that the increased
issue by the Bank in 1809 and 1810 was not more than suffi-
cient to compensate for the failures of the country banks.
True: but why did not the Bank, as by that theory it is supposed
that it could, make so much greater an issue as to prevent those
failures?
A A 3
358 PRICES AND CIRCULATION,
have been required, in consequence of the great
saving which an exchange at or near par would
have made, not only on the enormous sums which
the government had to transmit for payments
abroad, but also on all the contracts for naval and
military stores, the cost of which was increased by
the depression of the exchanges.
Upon the whole, if the grounds for computation
of the saving in the government expenditure on
the one hand, and the higher interest that might
have been payable by government on the other,
were carefully gone over, there would, perhaps, be
found reason to conclude that the one would have
gone a great way to balance the other. At any
rate, it may be of use to suggest this point of view
for consideration, so as to make it at least a question
whether, on the one hand, there is sufficient ground
for the opinion so generally and so implicitly re-
ceived, that the manner in which the Bank did
regulate its issues, afforded a facility uncompen-
sated by disadvantages at least equivalent, arising
out of the same system ; and whether, on the other
hand, the public did not, in the lower rate of in-
terest on the loans, receive a compensation for the
larger sums raised. So much, however, may with
confidence be asserted, that, according to any legi-
timate conclusion from fiicts that are generally ac-
cessible, the mercantile classes were great sufferers,
and the government were not gainers, by the devi-
ation on the part of the Bank, at the close of 1808
and throughout 1809, from the course which it would
have been compelled to pursue, if it had then been
under the obligation of paying in cash. Or, in other
words, the mercantile interests certainly, and the
public finances probably, would have been gainers,
if the Bank directors, disregarding the applications
for increased discounts or advances, had steadily ad-
hered to their duty of preserving their paper in a
sound state ; that is, of maintaining the equivalence
of their promise of payment to an actual payment.
1809—1813. 359
Anyone that would follow out step by step what they
did, and compare it with what it was their duty to
have attempted, must be satisfied that they might
have succeeded, with less advantage indeed to their
proprietors, but more creditably to themselves, and
more beneficially to the public. For this purpose,
however, it was requisite that they should have
been vigilantly alive to the premonitory symptoms,
which were observable for some time before the fall
of the exchanges in 1808, and then to have instantly
taken measures for contracting the circulation.
Instead, however, of attending to the premoni-
tory symptoms of the earlier part of 1808, or to
the more decisive indications at the close of that
year, which should have led them to reduce the
circulation, they extended it ; thus committing the
fault of which they had been guilty in 1782 and in
179.5, and which they repeated in 1824 ; and ren-
dering it more difficult, if not impracticable, to
restore the value of the paper to its standard as
long as the pressure of foreign payments continued.
The increased issues were as follows : —
Notes of 51. Under 51.
and upwards.
Lastquarter of 1808, ^13,259,780 ^4,163,380
1st — 1809, 13,504,510 4,335,880
2d — — 13,978,370 4,555,880
3d — — 14,144,960 5,195,830
4th — — 14,464,730 5,477,730
The circulation having been enlarged continu-
ously throughout 1809, while the exchanges were
falling, afforded a strong presumption of the rela-
tion of cause and effect between the increase and
the fall, and, at all events, removed all plea of attempt
on the part of the Bank to preserve the value of
its paper. It was this coincident increase of Bank
notes with the fall of the exchanges, and the rise
of the price of bullion, that gave occasion to Mr.
Ricardo's first pamphlet, entitled, *' The High
A A 4
S60 PRICES AND CIRCULATION,
Price of Bullion a Proof of the Depreciation of
Bank Notes," and, subsequently, to the appointment
of the Bullion Committee of the House of Com-
mons early in the session of 1810. And, doubtless,
there was a fair prima Jacie ground for the inference,
that the divergence, then so strikingly observable
between the gold and the paper, was caused by a
diminished value in consequence of an increased
quantity of the latter, and not by an increased
value of gold in consequence of the greater de-
mand for it for purposes abroad. But although it
was the duty of the Bank directors to contract,
and at any rate not to extend the circulation,
under the circumstances stated, there are very
strong grounds for believing that, increased as it
was in 1809, it did not exceed the amount that
would have been compatible, but for the extraor-
dinary state of things arising out of the war, with
a maintenance of the paper at its full value in gold.
The whole increase, it is to be observed, of notes
of 5L and upwards, in the first quarter of 1809,
was very trifling, and left the amount to be still
very much below the lowest point to which the
circulation has been at any subsequent time re-
duced ; while the increase of notes under 5l. can
hardly have been adequate to replace the progressive
disappearance of guineas, which must have been
hastened by the great and sudden fall of the
exchange. For that fall of the exchange, the
immense amount of our foreign payments fully
accounts ; and there were coincident with the de-
mand for bullion for that purpose, circumstances
in operation, which conferred a still further value
on the precious metals on the Continent of Europe.
In consequence of the cessation of all commercial
credit and confidence, and of security of property
throughout the extended seat of war, there was
necessarily a great absorption of the metals, not
only for the purposes of interchange, which would
n ordinary times have been performed by bills of
1809 — IS13. 361
exchange, or simple credit, but for the purposes
also of hoarding, which in times of such insecurity
must have been practised to a very great extent.
From these causes alone, gold and silver must have
acquired a greatly increased value. But if to these
causes be superadded the absorption of specie in
the military chests of the great contending powers,
both in the North of Europe and in the South, the
w^onder should rather be, that, without a greater
diminution of our circulating medium than had
then taken place, there was not a still stronger
manifestation of the increased value of the metals,
or rather of foreign currencies as measured in ours.
In truth, the circumstances here adverted to may
be considered as having operated in a great con-
traction, and consequently in an increased value, of
the currencies of the Continental States of Europe.
These causes of increased value of the metals were
in operation on an extending scale till nearly the
termination of the war. And the effect of them
would have been still more marked in the depression
of our exchanges, if it had not been that there was,
from 1809 to 1811, coincidently with that con-
traction of the Continental currencies, a great
diminution of the credit part of the circulation in
this country, as a consequence of the great fall of
prices. For, although the small mcrease of the
amount of the Bank circulation, in the early part
of 1809, might seem to afford a presumption of
an increase of the quantity of money ; that pre-
sumption is countervailed by the consideration,
that, notwithstanding a further increase of Bank
notes, tlie prices of nearli/ all commodities fell co-
incidently with such increase.
The greater part of the commodities which had
been the subject of speculation on the extraordinary
political events of 1 807 and 1 808, and the consequent
short importations, had reached their greatest height
before the closeof 1808 : but afterthe spring of 1809,
362 PRICES AND CIRCULATION,
the fall was general.* There can be no doubt that
the fall of prices, and the great revulsion of credit,
attested by the numerous failures between 1809 and
1812, had the effect of contracting the country
bank and credit circulation, and thus virtually re-
ducing the quantity of money in a greater degree
than could be compensated by the contemporaneous
increase of the Bank of England issues. As the
rise of prices in 1807 and 1808 had been accom-
panied by an increase of the country bank and
credit circulation, so the great fall of prices in
1809 and 1810 was attended with a great reduc-
tion of it : the increase and diminution being in
each case obvdously the effect, and not the cause,
of the alteration in prices.
The extensive failures of commercial and bank-
ing establishments in 1810 have already been
adverted to ; the commissions in that single year
were no fewer than 2314, of which 26 were against
bankers. And a strong presumption that the in-
creased issues of the Bank of England in 1810,
amounting to about 2,500,000/. in notes of 5l. and
upwards, and 2,000,000/. in notes under 5/., did
not fully supply the vacuum of the circulation so
created, is afforded by the circumstance, that the
foreign expenditure being on an increasing scale,
the exchanges rose, that on Hambiu'g from 28*. 4rf.
to S\s. 9d., and the price of gold fell from 4/. 11.9.
to 4/. 4.9. 6d. The rise of the exchange would
probably have been greater, if returns could have
been received for the large exports which were
made to the Baltic, and particularly to the Prussian
ports, in the summer of that year. The whole of
the goods so shipped, however, were seized,
* Wheat participated, as we have seen, in the general fall of
prices, viz. from 95s. in March, to 86^. 6d. in July following ;
and it was not till the bad harvest of 1809 that the prices of
corn rose again.
1809—1818. 363
burnt, or confiscated, in pursuance of the decrees
of the French government.
The enlargement of the Bank circulation in
1810 had been entirely the consequence of an
increase of discounts. And we may here notice
one of many misconceptions which prevail with
reference to the influence ascribed to the regulation
of the Bank issues during the restriction. It has
been supposed that the rule, as explained by the
directors, must have operated not only in a con-
stant tendency to excess, but that the readiness of a
resort to the Bank for discounts aiforded a con-
stant facility, and consequentinotive, for speculations.
But the fact is, that the variations in the amount
of the private securities held by the Bank,
were indicative only of variations in the market
rate of interest, as compared with the Bank rate.
And so far from the truth is the supposition, so
commonly entertained, that an increase of the
Bank issues, through the medium of discounts,
afforded not only a flicility, but an inducement,
to the speculations which occurred during the
restiiction ; that, on the contrary, while the
most memorable of the speculations took place
without any such increase, the most striking in-
stances of enlargement of the amount of discounts
followed a recoil from the great speculations, and
was coincident with the greatest depression of
markets, and with consequent commercial distress.
Thus, in 1808 *, when the utmost extravagance
of speculation prevailed, the amount of private
* It is not here meant to contend that it was not in the power
of the Bank, by a refusal of applications for discount, in 1808,
to have forcibly reduced the circulation, and thus to have re-
pressed much of the spirit of speculation, especially of that
which extended to prospective engagements. The observation
in the text simply applies to the fact, that no material increase
of discount at the Bank had preceded or accompanied the great
rise of prices, and the general spirit of speculation which pre-
vailed in 1807 and 1808, so as to admit of the assignment of
364 PRICES AND CIRCULATION,
securities held by the Bank ranged at between 13
and 14milhons, — being no perceptible increase upon
what it had been during the three or four years
preceding. But the fall of prices thenceforward,
was followed by a progressive increase of issues.
such Increase as an exciting cause ; this being the sense in
which the charge is commonly made. And the great enlarge-
ment of the issues through that medium in 1810 has not un-
frequently been referred to as being the supposed cause of
raising prices,— the hypothesis involving an error of fact as to
the time in which the rise and fall of prices took place.
There is one point of view in which there might be a question
whether, if the Bankhad, in 1808, forcibly limited its issues through
the medium of discounts, and not only not have enlarged, but con-
tracted, them in 1809 and 1810, the ultimate effect might not
have been a higher range of the prices of corn and of other
European produce in 1811 and 1812, than actually prevailed.
The immediate effect of such violent contraction would have
been a more rapid fall of prices in 1809, and there would thus
have been both diminished inducement and diminished means
for endeavouring to overcome the great obstacles which then
existed to obtaining supplies from the Continent of Europe.
Now, it was the magnitude of the importations in 1809 and
1810, which contributed to mitigate the scarcities in 1811 and
1812, of corn and other European produce. On the supposi-
tion, therefore, that the circulation had been forcibly contracted
at the close of 1808, and through 1809 and 1810, prices, low as
they were vi-ith reference to the cost of production, would have
been still lower in 1810 ; but they would, from increased scarcity,
have been higher in 1811 and 1812. Lord Castlereagh seems
to have had a glimpse of this view, when he said, in the course
of the debates in 1811, " But the effect of a full circulation
upon prices at home, I conceive to be the reverse of what is
supposed. I admit that the first effect of a reduction of the
circulating medium would be to lower prices, — the value of
the circulating medium itself being enhanced in proportion to
its scarcity : but it would soon operate in a corresponding de-
gree to check reproduction ; and although the produce on hand
would sell cheaper, less being produced, the prices must speedily
rise again, the demand continuing the same from the scarcity
of the article." This reasoning is admissible only under the
peculiar circumstances of those extraordinary times ; and if he
had used the term importation, instead of reproduction, the
expression would more clearly have designated the supposed
consequences.
1809—1813. 36.5
through the medium of discounts, which in August,
1810, reached the enormous and unprecedented
amount of 23,775,093/. This greatly increased
amount of discounts, and the consequent enlarge*
ment of the Bank circulation, were coincident, as
we have seen, with the most depressed state of
markets, and with the greatest commercial distress.
In proportion as markets and commercial credit
tended to a revival, the private securities held by
the Bank underwent a progressive diminution ; and
the amount in February 1813, — a period which was
precisely that in which the prices of both imported
and exportable commodities, and of labour, were
in the aggregate higher than in any former or sub-
sequent period, — was reduced to 12,894,321/., being
a reduction of upwards of 10 millions ; and the
amount of the Bank circulation, which in August,
1810, had been 17,570,780/. of 51. notes and up-
wards, was, in February, 1813, 15,497,320/., being
a reduction of upwards of 2 millions.
The diminution of discounts, and of the Bank
circulation, after August, 1810 *, till the com-
mencement of 1813, is still further remarkable, as
* Of the enlarged issues by the Bank in 1810, it appears
that a considerable part remained unemployed by the bankers,
and was returned by them to the Bank within six months after,
without having been in circulation.
Mr. Manning, a director of the Bank, and member of parlia-
ment, when replying to some observation in the House of Com-
mons, on the Bank circulation, 8th December, 1812, said, " In
July or August, 1810, it would be remembered that the number
of notes in circulation was about 25 millions ; but this
excess was occasioned by the failure of two large houses in
London, which produced a considerable sensation in the country.
Bankers in the various principal towns then made demands upon
the Bank, to insure themselves against a run upon their firms ;
but, within six months, the greater part of three millions was
returned to the Bank of England, without having been em-
ployed." The fact that so large a proportion of the increased
issues had been returned to the Bank unemployed, proves that
there Avas a principle of resistance in the channels of circulation
to receive bevond a limited amount ; or, in other words, that
366 PRICES AND CIRCULATION,
being illustrative of the principle of limitation,
which has been noticed as arising out of the rules,
or rather the routine, by which the Bank was guided
in its issues ; for it should seem that the Bank was
as passive in the reduction of its discounts and of
its issues between J 810 and 1813, as it had been in
the enlargement of them between 1808 and 1810.
The reduction between 1810 and 1813, more-
over, shows, accompanied as it was by a great fall
of the exchanges, and a rise in the price of gold,
how great and violent a contraction below that re-
duced amount would have been requisite to coun-
teract the increased pressure on the exchanges,
arising from the enormously increased, and progres-
sively increasing, foreign expenditure of the govern-
ment.
If the Bank directors had, at the close of 1808,
acted resolutely upon the principle of regulating
the issues by the exchanges, instead of being passive
under a demand for discounts, there is reason to
believe, as we have had occasion to observe, that,
by a systematic and sustained effort, they might
have succeeded in maintaining the value of their
paper on a level with that of the gold in which it
professed to be payable ; and that, by so regulating
their issues, the trade of the country would have
been preserved in a sounder state, while the go-
vernment, if liable to pay a higher interest on the
loans, would have had at least an equivalent, and
perhaps a greater saving in the exchange. This,
however, could only have been effected by early
and precautionary measures adopted upon the first
manifestation of the tendency to a great decline of
the exchanges : for when the fall of the exchanges
there was in the system, irregularly as it worked, and imper-
fectly as it was explained, a principle of limitation which
operated in counteraction of all the supposed motives and
tendencies to constant excess.
1809—1813. 367
had proceeded to the length which it had done be-
tween 1808 and 1811 ; and when, notwithstanding
the enlargement of the Bank issues, the revulsion of
prices and of credit had been so great as it was in
1810 and 1811 ; and when the foreign expenditure
was proceeding on an increasing scale ; an attempt
on the part of the Bank directors to retrace their
steps, with a view to raise the value of their paper
to that of the gold, for which there was an in-
creasing demand, would have entailed the neces-
sity of so violent a contraction, as, without insuring
its object, would have aggravated in an extra-
ordinary degree the commercial distress which then
prevailed.
But it is of importance to remark, that whereas,
during the very considerable enlargement of the
issues in 1810, when they reached an amount be-
yond the average of what they were subsequently
until 1813, prices generally fell, so, with diminished
c«>cw/o/?'o/i of Bank of England notes in 1811 and
1812, the prices of corn and other European pro-
duce rose considerably : and again, with an in-
creased circulation in 1813, those same articles
which had so risen, fell most rapidly. The negative
of the so often imputed connection between the
issues of the Bank and the prices of wheat, will
strikingly appear from the following comparison : —
Average Circulation of Bank Average Price of Wheat in the
Notes of 5/. and upwards in Weeks ending
the three Months ending s. d.
31 Dec. 1809 - 14-,464<,730 31 Dec. 1809 - 102 6
Do. 1810 - 16,873,760 Da. 1810 - 97 1
Do. 1811 - 15,4-13,310 Do. 1811 - 106 8
SO June 1812 - 15,458,660 30 June 1812 - 133 10
Qr\ C t 1010 1 r ooo ►T-ri f 31 Aug. 1812 - 155 0
SOSept.1812 - 15,833,7/0 1 30 Sepl. 1812 -131 0
31 Dec. 1812 - 15,64-7,350 31 Dec. 1812 - 121 0
Do. 1813 - 16,092,590 Do. 1813 - 73 0
The reduction of Bank issues between 1810
and 1813 is remarkable, not only as accompany-
368 PRICES AND CIRCULATION,
ing a rise, and an extraordinarily high range of
prices of European produce, but as being fol-
lowed by a renewed fall of the exchanges, and a
great rise in the price of gold. Thus, at the close
of 1811, the exchange on Hamburg, although
the circulation was less by near a million and a
half than at the close of 1810, fell from 31.9. ^d. to
24^., and the price of gold rose from 4/. 4.9. Qd. to
4/. 196'. 6f/.*
Notwithstanding this great fall of the exchanges,
and the rise of the price of gold, there is every
reason to believe that the quantity of money, re-
latively to the transactions of the country, was
less in 1811, than it had been before or has been
since. t The amount of the Bank circulation was
• In order to show how much of the fluctuation of the ex-
changes was dependent upon the greater or less obstruction of
the channels of intercourse, it may be observed, that the quot-
ation on Hamburgh, in the early part of 1813, rose to 30^. Qd.y
being an advance of near 25 per cent., while the price of gold
coincidently rose to 51. 5s., or upwards of 5 per cent.
-|- In an article of the Edinburgh Review for 1811, contain-
ing a critique on several publications of that period on the cur-
rency, the writer, while agreeing to consider the divergence
between the paper and its standard as constituting a depreci-
ation of the paper, calls in question the peremptoriness of the
conclusions of Mr. Ricardo and Mr. Huskisson, that the fall
of the exchanges necessarily implied an increase and excess
in the amount of the currency of this country, and illustrates
his own view by the following hypothetical cases, of which the
last represents the state of things as, it appears to me, it
actually existed, with reference to the currency, in 1811: —
" In the case of a diminished supply from the mines, or a greater
consumption of the precious metals in some of the principal
states of Europe, an immediate demand would be felt in the
rest for bullion to be exported ; the market price of bullion
would be raised for a time above the Mint price ; the notes of
the different banks would return upon them to be exchanged
for coin, which would be sent abroad. The consequence would
be, that the whole currency, consisting still of the same proportion
of paper to coin, would be diminished in quantity and raised in
value ; the market price of bullion would soon sink to the Mint
price ; the exchanges, which had been unusually unfavourable,
would be restored to their accustomed state ; and no other
1809—1813. 369
lower than it had been in the year preceding,
or has since been. And the country bank and
the general credit circulation must have been
greatly reduced by the extraordinary number of
failures, and the general state of discredit then
prevailing.
Mr. George Rose remarked, and dwelt at some
length, on the presumptive evidence of there being
a reduced amount of circulating medium in 1811,
as compared with the period anterior to the re-
striction. And if he was right in his computation,
by which he made out that the quantity of gold
in circulation had been, in 1798, forty millions, it
must have been beyond question, that the total
of the circulating medium, in 1811, must have
been less than in 1798. Mr. Rose, after stating
the grounds for his computation of the quantity of
gold, went on to say,
effect would be felt, than a general fall of prices throughout
the commercial world.
" Now if, in the case last supposed, the paper of one of these
countries were not convertible into coin, and very little specie
remained in circulation, it is quite clear that the currency
would not have the means of assimilating itself to the currencies
of the nations with which it was connected ; the market price
of bullion would rise very greatly above its mint price ; all the
gold which could readily be collected, would be exported ; but
as this would be inconsiderable, and as the great mass of paper
would remain undiminished, or perhaps slightly increased to
supply the vacancies occasioned by the gold exported, the
great excess of the market price of bullion above the mint
price, and the very unfavourable exchanges, would become
permanent, (subject, however, still to variations occasioned by
the balance of trade and payments,) and the currency of such
a country would be, to all intents and purposes, depreciated,
when compared with gold and silver and the currencies of
other countries, just as it would be from an original excess of
paper issues, although, on the whole, taking paper and guineas
together, the amount of the currency might not he ijicreased by a
single pound."
VOL. I. B B
370 PRICES AND CIRCULATION,
" If, then, in estimating the coin in 1798, wc rate it, instead of
40,000,000/., at - - ■ £ 35,000,000
The Bank of England notes then in circula-
tion were - .... 11,278,000
^' 46,278,000
Coin in circulation now (perhaps a high
estimate) - - - - 3,000,000
Bank of England notes in circulation 23,000,000
26,000,000
£ 20,278,000
*' Here, then, is a sum of 20,000,000/. in the whole less than in
1798, notwithstanding the immense increase of our revenue, com-
merce, and manufactures ; from which, however, should be taken
the amount in deposit in the Bank, whatever that may be."
There is no doubt that the amount of gold above
stated is an exaggerated estimate ; and the country
bank circulation is wholly omitted. At the same
tune it is doubtful whether the country circulation,
reduced as it had been by failures and general
discredit in 1811, was then, exce])t by the amount
of small notes, which may be taken to have been
at the utmost from four to five millions, larger
than it had been immediately previous to the com-
mercial revulsion in 1792-3.* While, on the other
* In the Report of the Lords* Committee on cash payments
in 1819, (p. 12.) a reference is made to the estimates formed of
the amount of the country bank circulation from the stamps
issued.
" From these materials" (the committee observe) " these calcu-
lations have been drawn. The committee are inclined to think,
that of these two approximating estimates, the second is best
adapted to their view of the subject ; but they submit them
both to the House, with a full sense of the imperfection to
which they are necessarily liable.
F 7. F 8.
21,374,000 - 1810 - 21,819,000
20,977,000 - 1811 - 21,453,000
20,047,000 - 1812 - 19,944,000
"22,342,000 - 1813 - 22,597,000"
The computations are then given for the five years following,
which will be noticed hereafter. And the committee very judi-
ciously add, " These estimates must not only be very far
1809—1813. 371
hand, it is hardly possible to conceive that the
enormously increased pecuniary transactions of the
country did not, notwithstanding the continued
improvements in economising the use of Bank
notes, require, in 1811, an increased circulating
medium, as compared with the period preceding
the restriction.
But although in tiie state of discredit and dis-
tress, which prevailed in 1811 any attempt at
forced contraction by the Bank of its issues, would
have been in the highest degree unadvisable, the
case was very different in 1813. Commercial
credit and general confidence had been restored.
The country circulation was evidently experienc-
ing a renewed extension. And although corn and
other European produce was falUng, a general
spirit of speculation was manifesting itself upon
the prospect of peace, in a great rise of prices of
all colonial produce, the eventual extravagance of
which has been described (p. 3i<7.).
Under these circumstances, combined with the
prospect then in view of an approaching termin-
ation of the war, an effort might and ought to
removed from accuracy, respecting any particular year, but
many causes of uncertainty attach to them, even if they
were considered merely as affording data for calculating the
relative circulation of different years." There is, indeed, every
reason to believe, that these estimates are veri/ fa?' removed
from accuracy respecting any particular year, the amount being
obviously overrated ; and if they were to be considered as
affording data for calculating the relative circulation of different
years, the inference to be drawn from them would be strangely
incongruous with the currency theory. According to one of
these estimates, the amount of country bank notes was less by
1,300,000/., and in the other, by nearly two millions, in 1812
than in 1810. And we have already had occasion to observe,
that the circulation of the Bank of England notes of 51. and
upwards was also less in 1812. How, then, consistently with
that theory, is a rise of 50 per cent, in the price of corn from
1810 to 1812 to be explained, siipjjosing these calculations of
the country bank issues to be correct ?
B B 2
372 PRICES AND CIRCULATION,
have been made by the Bank, to counteract the
increasing pressure of foreign payments, and the
increasing depreciation of its paper compared with
its standard, by a reduction of its circulation.
Such a measure would have involved a departure,
by the Bank, from the system which the directors
avowed and defended ; and it was, therefore, not to
be expected. But it would have been in every
point of view beneficial. It would have repressed,
in some degree, the extravagance of speculation,
on the prospect of a peace, in exportable commo-
dities, and thus have prevented some of the great
losses of the two following years. It would, in-
deed, at the same time, have accelerated the fall
of agricultural produce, which was already in pro-
gress ; but an accelerated fall, instead of being
injurious, would, in 1813, have been beneficial to
the agricultural interests. If, instead of tlie linger-
ing fall between the harvest of 1813 and the
close of 1815, the price of wheat had fallen, as, but
for the resistance of the farmers (aided by the
facility with which, being in good credit, they
could obtain advances), it ought, by at least 10.9.
per quarter more than it did in the autumn of
1813, the ports would have been shut, under the
corn law of 1804, and a great part, of the im-
portation of 1813, and the whole of that of 1814,
would have been kept out, and the markets would
not have been so much depressed as they were in
1815. The foreign payments would have been
diminished by that amount, and by a reduced
scale of importation of other European produce ;
but in a much more important degree would they
have been diminished by the less unfavourable ex-
changes which would have been the consequence
of a forcible contraction of the circulation.
But although the circulation was not contracted
in 1813, as it ought to have been, there was very
little extension of it — indeed, hardly any worth men-
tioning; the whole increase of that year, or of the
1809—1813. 873
last six months of it, being only from two to three
hundred thousand pounds, in notes of 5/., and
upwards, beyond what it had been in 1812 : and the
entire amount, namely, sixteen millions, was con-
siderably below that which was soon after found
to be compatible with a rise of the exchanges and
a fall of the price of gold to par : thus affording
the strongest possible presumption, that the quan-
tity of money was not greater in 1813, than might,
but for the great and increasing pressure of the
enormous foreign expenditure, have been main-
tained in a convertible state of the ciu'rency.
Section 11. — Summary of the preceding Survey.
As the result of the view thus presented of the
great variation of prices, in connection with the
state of the circulation, during the interval here
under consideration, it appears —
1. That there were four deficient harvests in
succession ; viz. 1809, 1810, 1811, and 1812. The
scarcity arising from the deficiency of the two first,
was relieved by a large importation, chiefly from
France, and from ports under the dominion of
France ; but in the two last years, there being a
severe dearth also in France, and the charges of
importation being nearly 50s, per quarter, the de-
ficiency of our own crops was unrelieved by any
foreign supplies worth mentioning.
2. That immediately after the harvest of 1813,
of which the crops were abundant, and after the
opening of the ports of the Continent, while tlie
charges of importation, although still high, were
greatly reduced, the prices of corn fell rapidly,
and before the end of that year were more than
50 per cent, lower than they had been in 1812.
3. That the great fall in the prices of corn, and
of all European produce, in the last six months of
1813, was preceded by an enlargement of the Bank
37-1' PRICES AND CIRCULATION,
circulation, and was coincident witli a great rise in
the price of gold : on the other hand, a rise of the
prices of corn and other European produce in
1811 and 1812, had been immediately preceded by
some reduction of the amount of Bank notes : thus
affording a conclusive negative of the imputed in-
fluence of the amount of the circulation, in having
produced the great rise and subsequent fall of those
descriptions of produce.
4. That in the great fluctuation of prices observ-
able in this interval, while corn and other European
produce, of which, from the seasons, combined
with obstructions to importation, there was a great
scarcity, rose very considerably, all other descrip-
tions of produce and manufactures (except in as
far as these were raised in value by the high price
of the raw materials) experienced a great fall of
prices, and were, in the great majority of cases,
lower in 1811 and 181'2, than they have been on
an average since 1819 : on the other hand, when
corn and other European produce began to fall,
all other produce, which had previously been low,
began to rise ; and the further progress of the fall
of the former, and of the rise of the latter, pro-
ceeded almost simultaneously, and with nearly
equal rapidity in opposite directions : thus proving
that they were under the influence of opposite
causes ; whereas it is the character of depreciation
arising from increased quantity of money, to raise
all prices, although some more and some less, ac-
cording to the nature of the articles.
5. That the great fall in the prices of corn and
other European produce, in 1813, occurred wliile
the expenditure of government in the prosecution
of the war, defrayed by loans, was proceeding on
a scale of greater magnitude than in any former
period of the war, or, indeed, than in any former
period of our history : thus negativing the theory
of war-demand in accounting for the previous rise
of prices ; because, if war-demand raised the prices.
1809—1813. 375
why did it, when on an increased scale of expend-
iture, suffer tlicm to fail ?
6. That the rise of prices on the Continent of
Europe, and in France esjiecially, between 1809
and 1812, had been as great, relatively to their usual
rate, as in this country ; and the rise was more
general, inasmuch as while sugar and coffee, and
all articles of transatlantic produce, were in this
country extremely low, they were on the Continent
extravagantly high. Thus, coffee and sugar in
bond, which would not fetch 6d. the pound in this
country, were worth from 5s. to 6s. the pound in
France ; and all other transatlantic produce was
high there in the same proportion.
7. That a fall in the prices of corn and other
European produce, took place in France, and on
the Continent of Europe, in 1813, fully equal to,
or rather exceeding, the fall in this country. And
as that fall was coincident with the lowest state, in
point of quantity, of the precious metals in this
country, and consequently with the largest addi-
tion that was at any time made from hence to the
stock of bullion on the Continent, a fresh proof is
afforded of the absence of the influence ascribed
to the disengagement from, and the reabsorption
by, this country, of the quantity of gold requisite
to sustain a convertible state of the paper.
8. That the unusually large government expend-
iture abroad, and the extraordinary siniis paid for
freights to foreigners, during the greater part of the
interval under consideration, while the Continent
was almost hermetically sealed against exports from
this country, (so that a vast amount of transatlantic
produce and manufactured goods, which would,
in an ordinary state of commercial intercourse, have
served to discharge the greater part or the whole
of those payments, were locked up and unavailable,)
account for the great pressure upon, and the low state
of, the exchanges, Vv'ithout the supposition that an
excess of paper (except by mere comparison with
376 PRICES AND CIRCULATION.
its standard), was the originating and determining
cause of that depression.
9. That, according to all the means accessible for
forming a computation of the amount of the cir-
culating medium, there was no such increase of it,
taking into consideration the greatly extended pe-
cuniary transactions of the country on the one
hand, and the tendency to an economised use of
the currency on the other, as would not have been
compatible with a maintenance of the value of the
paper on a level with that of gold, had it not been
for the enormous foreign expenditure, which, under
the extraordinary impediments that existed to the
export of commodities to the Continent of Europe,
operated as a violently depressing cause upon the
exchanges, and conferred a great temporary increase
of value on gold.
10. That there were causes in operation, arising
out of the circumstances affecting the cost of pro-
duction, and the supply of and demand for each
commodity, which account fully for the great
variations of prices during the period under con-
sideration, without having recourse to the sup-
position of alterations in the quantity of money as
having been calculated to produce those effects.
And that, as far as presumptive evidence goes,
there were no such alterations of the quantity of
money occurring in such order of time as to jus-
tify the assignment of them, in the relation of cause
and effect, with the great variations of prices which
are observable in the period that has passed under
consideration.
END OF THE FIRST VOLUME.
London :
Printed by A. Spottiswoode,
Ncw-Strect-Sqiiare.,
55 ^q 2^
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