/>. ^ ^. '^ ^' nrrAllFO/?^ .-;;OfCAllFO/?^ aweuniver% ^ "^ § 1 1 ^i|I m :5? :^FCAIIFO% ^ ^ Aavauiri^~ A\\EUNIVER5'//i O ^lOSANCElfj> o ^OFCA1IFO% %a9AiNn-3ftv >&AavaaiH^ >j^lOSANCElfj]> ^lllBRARYQr ^^tllBRARYOr ,^WEUNIVER% o > \r v^ ^\[i: < ° " ■ '■ ' JSv I i(j)J^i i -n l-J O Li_ ^>^ILIBRARYQ^ ^^IIIBRARYQ^ ^\\l['m.PS;.-. A 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 : I'riiited by A. Spottiswood£, New- Street- Square. 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; 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 GG9490 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. Lojidon, 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. Effects of quantity on price - - - - 10 CHAPTER III. On the cliaracter of the seasons and the state of prices, and the condition of the agricultural interests previous to 1793 - - - - - - - 21 Sect. 1. Period ending in 1C92 - - - - - 21 Sect. 2. 1693 to 1714 - - - - - - 30 Sect. 3. 1715 to 1765 - - - - - - 38 Sect. 4. 1765 to 1775 - ... - - 62 Sect. 5. 1775 to 1793 - - - - - . - 75 VI CONTENTS. PART ir. ON THE EFFECT OF WAR. CHAPTER I. Page General view of tlic subject - - - - 86 CHAPTER n. Effects of taxation on the fluctuation of general prices - 87 CHAPTER HI. 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 ._.-.._ 100 Sect. S. 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 - - - - - -ll^ 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 cf money - 144 Sect. 3. Effect ascribed to the Bank restriction of the substitution of credit for currency, and of the excessive issues of country paper - 146 CONTENTS. Vll Page Sect. 4. On the alleged constant excess of issue by the Bank of Eng- land, and thence of the whole of the circulating medium - - 153 Sect. 5. On tlie regulation of the Bank issues during the restriction - 163 Sect. 6. 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 n. On the state of prices, and of the circulation, 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 - . I88 Sect. 3. Bank circulation, 1793 to 1798 - - - - 192 Sect. 4. Summary of the preceding survey - - - _ 2I0 CHAPTER HI. 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 1804 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 VIU CONTENTS. Page Sect. 3. Instances of some of the most prominent of tlie variations of the prices of commodities besides tliosc 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 the prices of agricultural produce, and high range of them, between the harvest of 1811 and the harvest of 1813 - -319 S"ect. 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 tlie preceding survey - - - - 373 INTRODUCTION. liiE high range of prices which prevailed in the closing years of the past, and in the earlier 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 i)henomena 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 })roofs 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 v/ar 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 dovvu to the summer of 18^2; and as the fall of prices of ar- ticles divested of duty, that of provisions especially, 13 2 INTRODUCTION. liad then been as great, and to as low a point of depression as lias, with trifling exceptions, been since witnessed ; and moreover, as the very great reduction of duties of customs and excise, which has taken place since 1822, 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 the 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 the government ex- penditure 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 w^ar-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 I8I9, and of the comparative low prices since 1819, to alterations in the 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. Ci can be attended with any practical evil. The association of war with high prices, 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 the legislature 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, that 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 which are always afloat. The claims for revision, and the plans for alter- ation, all proceed on the 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 fall of prices. The persons maintaining tliis 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, were manifestly in error when they contended that the utmost effect of that measure upon prices would not exceed 4 or 5 per cent., that being 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 otent of 30 and 40 per cent., and, according to some, even to the extent of 50 per cent. 13 2 4 INTRODUCTION. Granting, for the sake of argument, that Mr. Ilicardo and the 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 corue- 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 could not, cause the fall of prices beyond the difference between paper and gold, there would cease to be even the r^hadow 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 w^ork. 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 priceSj 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 impro\'ements in agriculture and ma- nufactures. But as these circumstances have been uniform and progressive in their operation, althougli in opposite directions, they do not form any promi- nent part of the grounds on which the great Jiuctuations 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 ])roduction 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, w^ere 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 6 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 w^ith prices, will afford 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 with 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 a pj^i'ori from a reference to the mode and degree of influence of those general causes, and from ex- perience of what has been their operation during 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 proceed, 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. -Nothing 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 has 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 weight prepon- derating over every other. The farmer naturally, and almost instinctively, watches, with painful anxiety, the several critical periods in the growth B 4 8 EFFECT OF THE SEASONS. of the different descriptions of produce, and infers, according as appearances are decidedly unfavour- able or propitious, and as tliey 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 j)ropitious, all parties interested in the price immediately anticipate a fall, without re- fining upon the supposed 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 praLfctical men / * The exception here ailuded to, is, that of my evidence before the Agricultural Committee of the House of Commons in 1821. EFFECT OF THE SEASONS. Q and speculative writers, that altliougli 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 t]ie 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 tlie 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 explanation of high prices to ISII-, while those of the currency extend theirs to 1819. 10 ErrECT OE TIIK SEASON'S. 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 the currency, the object of which is to account for all the phenomena 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. Tooke has (he says at page 66., referring to a former work of mhie,) laid too much stress upon this argument: the cheapness that would follow from increased production would come gradually upon the public ; 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, does 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 ot" 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 have 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 distinguished of the French writers on Political Economy, expressed a most exaggerated opinion of the depreciation of the currency of this country ; while, curiously enough, Mr. Say had occasion at the same time to notice variations of prices as great in France, which he accounted 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 Agricultural 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 difference of quan- tity, and that on every occasion of marked tran- 12 EFFECT OF THE SEASONS. sition, from dearth to abundance there have been com})laints of agricultural distress. The flict 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 wheat, 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. 3 tenths 8 tenths 1 tenth 2 tenths 3 tenths J- raises the price 4 tenths 5 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'Avenant, 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 reUeved by foreign supphes. 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- wholesom.e diet. And the increased competition of purchasers being thus limited to the classes above tlie 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 price 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 tliat 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. 1.5 It is clearly through the medium of prices raised beyond the ratio of deficiency, that farmers gained such great profits pending the 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 j)ro- 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.s*., but, in a bad season, produced only two thirds of a crop, or 22 bushels, which sold for 9*. the bushel, or 9/. I85., 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 quahty 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 ^rop, a bushel of wheat might rise to 18^. and upwards.* Now, 22 bushels, at I8s. per bushel, would be worth 19/. l6>., whereas, the 33 bushels at Gs.y 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 reahty 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, wit/iout foii/ surplus from a former year, and witJiout 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 afl'ect 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.?. 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*., there would then be 28 millions of quarters at 60s., 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 (piarter, 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 that, in such a state of things, the agricultural interest would enjoy, not only the appearance, but tlie 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 41 millions exclusive of seed, and 52 millions including seed. — See article, Corn Laws and Corn Trade, in his Commercial Dictionary. EFFECT OF THE SEASONS. 17 SLimers, be at the expense of the other orders of the community. Tlie 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 m 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. AVhile 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 the 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 : — '' The cause which produces this greater susceptibility 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 com, 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 the workmg 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 milUons 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 difference 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 retrenchmejit, 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-i proves, in a striking manner, the insignificant effect of extra consumption upon a productive harvest. c a 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, therefore, 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 will 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 lo9^. 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 17th 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 1 1*. 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 IHE SEASONS. lower than it was In the first half of the reign of Edward III. In the first twenty-three years it was 5s. Id,, and in the last eleven years Qs. 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 powerful operation of seasons. " In Hi^, 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. 8c?., 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 IM^ to the end of the reign of Henry VIII. in 1509, re- turned to about 6s., while the pound of silver being coined into 1/. 17^. 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 21. 10s. — 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. 23 and Lancaster, and subsequently, corn was remarkably cheap ; during the civil wars under Charles I., and some time 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 43*. 3d. the quarter, of 8 bushels, to 275. * : — " 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. 8d. and 2s. 6d. the bushel, ordinary 2^. ; barley and rye, Is. Sd. " The farmers murmured ; the poorer sort traversed the mar- kets to find out the finest wheats, for none else would 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 1 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 1673, 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 not 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 liarvest of I673 having proved defective, the price on the Lady-day 1674 had risen to 64^. And the two years I674 and I675 are re- ferred to as a period of great dearth. * The harvests of 1677 and 1678 appear, by inference from the prices, Ukewise to have been defective.! At Lady- day 1677, the price had been 30s. 3d.: and at Michaelmas, I678, 56s. lid. On the average of seven years the price was from I666 to I672, both years included, 36s.; and from 1673 to 1679, 466'. 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. -|- 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 Ladyday 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 tlic 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. years, 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. TJie 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. 27*. Id., 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 1691, to 22*. : and, applying the same de- duction to the lowest quotation by the Eton Tables of that period, viz. at Michaelmas I688, 21*. 4g^., the price in silver coin of standard weight would be reduced to I7*. ^d. for the Winchester quarter * Silvei" 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. 27 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. Qls. lld.t 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 had 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. ^Js. Jd- ; or, allowing for the deterior- ation of the coin, 22.9. Id., 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 48s. 2s. 6d. per quarter on barley and malt, when not ex- ceeding 245. ; and 3*. 6d. per quarter on rj'c, when not exceeding 32.>\ 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. tlic low prices of com 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 everi- tualhj 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 I68S 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 Q5s. 6d. And at the end of two years after the revolution, viz. at Lady-day 1691, wheat in the Windsor market was only 9,9s. — 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 referred to the state of politics 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 improving 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; 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. Of the 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 of the 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 reraedied by the new coin coming out.* " 1698. A very 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 Provisions, 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. IVIay 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 10^. 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- coimted 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 the course of the years 1694 and 1695, mea- sures liad 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 l69<5 a proclamation was issued, prohibiting the currency of the clipped money. In the early part of 1696, 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 22s., 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 INIr. Western's motion, quoted from Archdeacon C'oxe'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 34 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 1G9(J 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 - - - 56 6 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 33s. 9d., 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 25 s. 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 the 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 spring, 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^. lOd., 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 236-. Id. to 27*. Sd. 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 36 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 effect of this variation of the seasons on prices is strikingly exempUfied in the following quotations : — .9. d. 1708. Lady, day - 27 3 Michaelmas - - 46 S 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 similar 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 1712» to 33s. Qd. Nay, even further to prove how mdependent of the war the fluctuation was, the price liaving continued at about 30.9. the quarter till the peace of Utrecht, in I7IS, immediately after that event, rose (at Michaehnas, 171-3,) to 56s. lid. or 70 per 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 aflect 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 difl^erence 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 TPIE 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 the 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 supply during the latter period of last war, the average of those seven years would be mucli higher relatively to the interval of seven years ending in 1692, than the average from I8O7 to 1814, relatively to the seven years ending in 1792. Sectio7i 3. — 1715 to 1765. But if the period of twenty-three years, ending in 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 I715. EFFECT OF THE SEASONS. 39 The average of 23 years, ending in 1715, is, by the Eton tables, 45^:. 8d. ; while of the 50 years following 1715, it is 34s. 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 testimony to the accuracy of the Windsor prices. Referring to a speech addressed by the Procureur-general to the parliament of 13ritany 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, 4rf. below the general market of Europe : whereas before for 91 )'ears it was 38s. %d. that is, 4*. Qd. 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 inquir}', 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 325. 6.W., 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 Windsor 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 dilTerence of quality above middling wheat. D 1. 40 EFFECT OF THE SEASONS. could be considered as of a marked deficiency of produce, or in any way approaching to what could he designated as seasons of scarcity. These were 1727 and 1728 ; 1740 ; 17-56 and I757. It may be a question whether the year 17^5 should not be included among the seasons of marked deficiency inasmuch as the Michaelmas price rose nearly V2s.^ namely, from 3J,s\ to 49.^-, 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 l7-<5 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 17'^7- 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 1729 of 21,322 quarters. The price of wheat which had been at Lady-day, 1727, 32.9. lid. rose at Michaelmas to 4.ds. QcL, and at Lady-day, 1728, to 49*. 2g?. 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 fallen that year, and that the months of March, April, May, June, and part of August of the following year, were also rainy. This occasioned wheat to rise EFFECT OF THE SEASONS. 41 from 4*. per bushel to 85. But the spring and summer of 1729 behig remarkably dry, the harvest was abundant, and the prices of next year were only 28*. 'id." Low as the prices had been in the absence of seasons of scarcity from 1715 to 17^7, they were still lower in the twelve following years, from 1729 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 225., 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 I72.7 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 declining 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 mucli dearer now. Wheat this ycur 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 2*. 6d., peas, 2s. 3d., and oats Is. 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, ITS-i.) 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 Ljttleton, " 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 tlie court can scarce support their families." 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 1708-9, and 1794-5. A great number of interesting details of the phenomena attending it are recorded in contemporary publi- cations. As in the 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, 3ls. 5d., rose at Lady-day following, 1740, to 41.S-. 9d., and at Michaelmas to 56.v.* 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 thefollowino; year, had the effect of reducing the price at Michael- mas, 1741, to 3'2s. The dearth in this instance, ac- cordingly, was confined to a single year ; and it was followed by an uninterrupted^uccession of ten good and abundant seasons j namely, from 1741 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 facts 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 Michaehnas, 1710, was 59s.; at Michaehnas, 1738, it had been '20s. Id. ; the rise, tliere- fore, upon the latter price was nearly 200 per cent. t These (of which the first edition appeared in 1758) were published anonymously, but have been generally ascribed to Mr. Charles Smith. \ In a i)aper presented to the Royal Society in 1786, on the variations of the seasons, by Mr. Barker of Lyndon, referring to 44' EFFECT OF THE SEASONS. In addition to this testimony as to the general character attaching to the term from 1741 to 17*5 1, I have met with casual descriptions of particular years ; and the following extracts from the letters of Mr. Peter Collinson*, 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 delighted 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, lauristinus, 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 forwarder than now." " London, Oct. 26. 1747, 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 Linnteus and other Naturalists, by Sir Jas. Edw. Smith, M. D., F. R. S., hlets, to which the dearths of 1756 and 17<57j 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. 174.8 543,387 530,830 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 ot)- 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/. \7s. 4^f/. In 1749, Mr. Pelham, at that time prime minister, observed to the House of Commons, that for the three years preceding, a very extraordi- nary sum had been paid as bounty ibr the exportation of corn. He had good reason to make this observation ; and in the following year he might have had still better. Li that single year the bounty paid amounted to no less than 324,176/. 10*. 6c/. It is unnecessary to observe how much this forced exportation must 46 EFFECT OF THE SEASONS. From what the author of the Corn Tracts states, the seasons from 1752 to 1755 seem to have been of doubtful produce ; for his words are, after men- tioning the ten good years in succession, " Nay, if the common opinion is right, we have had six- teen." But we may conclude, 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 ahove what it otherwise would have been in the home market." — 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 1748 - 325. lO^d. per quarter. 1749 - 32*. 10|rf. do. 1750 - 28s. lO^d. do. 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 have raised the price. The utmost that can be said by the objectors to the bounty, of its operation in this instance isj 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, «iul thus have raised the price. In truth, the operation of the bounty appears to have been during this interval 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. EFFECT OF THE SEASONS. 47 ventioii 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 effect 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 INIorton Eden's work (page 80.). Years. Wheat. B alley. Oats. s. 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 9d. 1 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 Wnr X^'-''^^ 24 26 12 14 10 13 war. < 1756 22 26 14 15 12 13 48 EFFECT OF THE SEASONS. And tlic average price by the Eton tables for wlieat of better than average quahty, for the ten years from I712 to 1751, was 2[)s. '2^. 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 whicli 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 effect 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 QQs. to Q6s. In January, 1757, the price rose to - 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, 1767, 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 duty free, to the 1st IMay, 1773. In 1773, the city of London offered a bounty of 4.9. 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 1773, " 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 6f/. per quarter, when the price of wheat was at, or above, 48.V. per quarter, and the bounty and exportation together were to cease when the price was at, or above, 44.9. The importation and exportation, and boimty 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 Qd. per pound, lamb 8^/., veal Id., and butter lOd." * Comber, p. 168. F 3 70 EFFECT OF THE SEASONS. The year I774* was equally adverse with the preceding season. And indisputable proofs exist * In the Transactions of the Royal Society, vol. Ixxvi. p. 240,, Is a paper entitled " On the Variations of the Seasons, from Ob- servations at Lyndon by Mr. Barker." And as it refers to the period now vmder 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 diiference at different periods of time. If I had measured the rain at Lyndon only in the four years, IT^O, 1741, 1742, 1743, the mean would have been found to be only 16^ inches in the year, yet they vvere not at all complained of as dry summers. 1740 was cold and dry till July 30.; 1741 Mva?, 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 22^;. 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 vvas 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 - 5UMI 1,039,122 When tliese quantities, and the equally large importations of IjGj and I7G8, are considered with reference to the total estimated produce at that 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- lowance 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 s. Gd. ; and of ten years, from I7O5 to 177^, was 51.9. ; being a rise of upwards of 35 per cent. ; but the ten years ending in I764 comprise two seasons, viz., 1756 and 17575 of bad, and one, viz., 1664, of in- different produce. If we compare the ten years ending in 1774 with a series of ten good seasons, such as from 1742 to 1751, the difierence will be more striking : — s. d. 10 years, ending 1751, average 29 2 10 years, ending 1774' 51 successive periods of ten years, the quantity of rain has been increasing each time." (Philosophical Transactions, vol. Ixxv. p. 24-0.) And in another paper Mr. Barker writes : — " In four years, 1740, 174-1, 174-2, 174-3, there canie but 66-361 of rain. In the four years, 1772, 1773, 1774-, 1775, there was 124'"957, which is nearly twice as much." F 4 72 EFFECT OF THE SEASONS. The advance therefore in tlie 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 was 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 o^ Exjwrts. Years. Wheat. Grain of all Kinds. 1742 to 1751 - - 4,700,509 qrs. 8,8fi9,190 qrs. Balance of 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 in closure 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. The 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 which was introduced twenty years later, of making up for deficiency of wages by parish al- lowance, the prices would have been still higher. 1 EFFECT OF THE SEASONS, 7^ scarcity in tliis country, was marked by dearths of equal, if not greater severity, on the 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 witli 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 2ff. 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 mehincholy accounts are daily received of the misery and wretchedness occasioned by this dreadful calamity. "^ Frankfort, April ?. 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. " 177i5. 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 harvest removed the distresses of the people, both in France and most other parts of Europe." EFFECT OF THE SEASONS. 75 Section 5. — 177<5 to 1793. The seasons immediately following that of 1774^» and comprised within the interval terminating in 179*2, 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 iy65 and 177'i' The harvest of 177^5 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, 177-5, had been 59s. lid., fell to 435. Jd. at Michaelmas, and continued at about that rate till the harvest of 1777? when the price rose to 51 5. 7d. In the mean time there had been a balance of export in 177G of about 200,000 quarters of wheat; while in 1777 there was an im- portation of a like quantity. The seasons of 1778 and 1779 were favourable, and were followed by a considerable fall of prices, the decline having been from 51.s: 7d., the quo- tation of the Windsor market at Michaelmas 1777j to 35*. 7d. at Michaelmas 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, sucli 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 21.9. a tod, is for 1779 only 125., and was in 1778 but l^^. 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 dechne 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 I78O to I7S4, 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. d. 1779 - - - 36 3 1780 - - - 43 1^ 1781 - - - 52 5 Of the seasons of I78O and I78I, 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-daj^ 1781, to 56s. l\d. The price declined near IO5. the quarter after the harvest of 1781, which may therefore be presumed to have been considered as moderately good. 4 EFFECT OF THE SEASONS. 77 In Scotland the weather dining 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 the 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 178t3. 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€ s. d. s€ 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, of9Agallons, down to 2 9 per bushel, 75. to -0 7 2 Wheat, immediately af- Wheat of the best qua- ter the harvest, clean lity, same measure, for seed, the above per bushel, 10*. to 10 6 measure per bushel - .5 Spring Season, 1782. Spring, 178:1. 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. deliveredathome,per month in the wet, and bushel - - - 1 H so damaged in the stack by rain during making and carrying in bad order, that they moulded and grew to • gether, per bushel 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 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 cwt. - - - 5 12 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 winters ; and the spring and i 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 1,78 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 this strange document, but for the following information wliich the inquiry brought fortli. The magistrates of Sunderland, in answer to the inquiries, write — " For the last thi'ee years we have had two very dry summers, and three very severe winters, which 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 - - - 4-4 Now it is very well known that there was an amazing burst of prosperity in the three latter, as compared with the three former years, which liad 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 lO.y. 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 tlie theory of demand, have been ascribed to the de- clining, and the high ])rices of 1785, 178(), 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 1779 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 tliey 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 I789, 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 dutyfree 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.S. ; 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 60s. and 70.s'. 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 6cL 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'. lid., 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 where." This inferiority of the harvest, which raised the price at Mi- chaelmas to 53*. 4(1,, combined perhaps with 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 1781'? the seasons were irregular, and that a large proportion * By 31 G. 3. c. 30. from 15. November, the former laws were repealed, and a new one enacted, by which wheat was subject to a duty of 24^. 3cL if the price was under 50s. ; '2s. Gd. at or above 50*. and under 54s. ; 6f/. at or above 545. ; and a bounty of 5s. on exportation at a price under iis. The duty and bounty on other grain, in the usual proportion. 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 unfavourable seasons here described, between 177-5 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, I789, 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 should 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 i)5 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 wlieat in the two centuries is thus given by Ar- thur Youno: : — EFFECT OF THE SEASONS. 83 /. s. d. 17th century - - 1 18 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 15th century - 12 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 : — /. s. d. That of the 17th century was - - 1 18 2 18th century - - - 1 18 7 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 !/. 12^. If?., 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 2/. Ss. 3d. ; from 1767 to 1800, being 34< years, the price was 21. 10s. 6d. — Progressive Vahie of Money, p. 75. G 2 i 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 character have prevailed in a very different degree or frequency of occurrence in the respective series j 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 man}^ 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 which gold and silver appear to have been, however slowly, undergoing in the 18th 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 two 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, whether 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 general 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 (includuig food and ne- cessaries), independent of the degree in wliich 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 FLUCTUATION 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 sucli advance the 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 the 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, that in 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 by 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 Consumption 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 ascril3ed 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 demandj 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 su])j)osed, account for falling markets and consequent distress among the producing 92 EFFECT OF WAR. classes, and for reduced wages and diminished consumption ; tliese 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, relatively to each other, and relatively also to the price of labour. The articles wliich might suddenly be the objects of government de- mand would rise ; but, on tiie 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 fall ; 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 surface, 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 tlie 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, wliich can only be obtained by cheapness relativ'ely 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 througli 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 demam]. 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, tliat 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 fi'om 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 bj^ 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 this 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 aflect 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 ol' 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, waiting to be so called forth. And if, when 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 compari^son 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 W'ill appear by the following statement of the Windsor prices from the Eton Tables : — 1688 1698 1702 1713 1740 1749 1755 1763 1775 1783 to 1697 1701 1712 1739 1748 1754 1762 1774 1782 1792 10 years War £ s. 2 2 4 11 27 9 6 8 12 8 10 Peace War Peace War Peace War Peace War Peace d. 6^ 15 lOf 11 6i 13 Hi 17 6 2 10 If 9i 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 which 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 offer nearly the same result. Other articles might be enumerated, as affording 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.). Carpe nters Brick ayers Masons | Plumbers per Day, per Day. per Day. per Day. S. d. S. d. S. t?. s. d. Peace ri730 11735 2 6 2 6 2 6 3 2 6 2 6 2 6 3 War J 1740 11745 2 6 2 6 2 8 3 2 6 2 6 2 8 3 6 Peace 1750 2 6 2 6 2 8 2 6 War ri755 11760 2 6 2 6 2 8 2 6 2 6 2 6 2 8 2 6 Peace J 1765 11770 2 2 6 6 2 2 4 4 2 2 8 8 3 3 War J 1775 11780 2 6 2 4 2 10 3 2 6 2 4 2 10 3 Peace J 1785 11790 2 2 6 6 2 2 4 4 2 2 10 10 3 3 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 suhstitiition only for the demand which would othei'wise have existed by individual employers, but constituted a clear additional (\em2a\Ci 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- KFFEC'l' OF WAR. 99 other articles not taxed, or not the immediate objects of war consumption, should rise ; for in fact they were lower, 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 fact itself of the relative cheapness of periods of war in the 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 w^ars ; 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 mihtary 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, the}' will not thereby occasion a greater demand for labour than would have been occasioned by emplo3ing it to hire conmion 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 emph)yment for that afforded by in- dividuals." — Principles of Political Economi/, 2d edit. p. 498. II 2 100 EFFECT OF WAR. pendent of the degree in which they were taxed ; and wliat, 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 att7'iJ)uted specially to the last Tf^ar. So far as to the presumption of the effect 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 expenditure 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 IT^S inclusively, amount to 55,522,159/. 16s. 2)d. ; a sum that will appear incredible to future generations, and is so almost to the present." — Some Reflections on thtpresent State of the Nation, 1749, edit. 1773, vol.iv. p. 137. -^ 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 whicli is beyond what w^ould have been the consumption of the same individuals in their former occupa- tions*; but from this addition, small as it must * This additional consumption is hardly 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 ] 50,000 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 j^^iclded 1 6,000,000, there is a difference of supply of 7?000,000 quarters. And accordingly it is well known, by recent experience, that the most wasteful consum[)- tion produces very little impression on a superabundant crop. H S 102 IFFECT OF WAll. be, coni])arccl with the mass over wliich it is dis- tributed, is to be deducted that proportion wliich was supphed from tlie 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 with 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 oi* 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." — Oh- servations on the Effects j)rod need by the Expenditure of Govern- ment during the Restriction ef Cash Payments, hy William Blake, £sq. F.li.S. page 69. -f 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 wilhng 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., Sd edition, page 461. 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 apj)licd 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 w^as 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 pervades 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 if 104 EFFECT OE 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 less obstructions to supply. EFFECT OF WAR. 105 Section 3. — On the Effects of the Monopoli/ of Trade enjoyed hy this Country daring 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 wliole 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 supjily 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 lOf) EFFECT OF WAR. our sliipping and foreign commerce, liavc been greatly mistaken and overrated. On a reference to tlie parliamentary returns, of the 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 shipping 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 applicable to the purposes of trade during the war, compared with the subsequent years of peace. It is to be observed, 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 pur])oses, was EFFECT OF WAR. 107 compensated by a greater employment of foreign ships 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, tliat the resort of shipping to the port of London has been much greater since the peace. And if the building of ships in tlie 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. t 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 war, 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 w^ar as it has been since the peace ; and that the rate of increase was as great in the peace preceding 1793) ^s 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 arc, 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 greati}' to increase the proportion of that in- ferior, and in every way objectionable, class of shipping. 108 EFFECT OF WAR. (liiccthe amount of which must previously have swel- led tlie imports in a corresponding degree. In the interval, however, between I8O7 and 1814, there M^as 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 y 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 Frencli 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 by the Government Expenditure during the last JVar. The advocates of the theory which accounts for the high prices observable diu'ing the late war, by no EIFECT OF WAli. 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- tisually rapid increase of the population," &c. — Quarterly Review., No. 57. p. 222. " It may still most safely be said, that in no txventy-ttco years of our history, of ivhich we have authentic accounts, has there ever been so rapid an increase of production and consumption, both in respect of quantity and value, as i?i the tiocnty-two years ending loith 1 8 1 4." — Ibid. p. 229. " The jjopidation 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 war there were both greater production and greater consumption.''' — Ob- servations on ike Effects of the Expenditure of Government, p. 67. " There cannot be a doubt that during the ivar more j)roduce ivas raised, and more loork done." — 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 xvould grad^ially 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 mamfactures are less in quantity, and less in price also." — Ibid. p. 93. " The excitement 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 from 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 the 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- nuflictures, and that this was a cause of an increased demand for, and price of, 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 tliere 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 beiup- 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 witii the theory, the conclusion would be inevitable, 11^ EFFECT OF WAR. that the state of war was more favoural)le 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 beginning 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 Jail 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 war. 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 ? Aiid 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 efiect 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 kind operated in dimi- nishing and deteriorating the cultivation among some of the states of the continent of Europe, in EFFECT OF WAR. 11,5 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, operatmg 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, wliich 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 j^Tcat 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, tlie tend- ency in question : — 1. Increased activity, industry, and intelligence, 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 qftJte opposite tendenci/ 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 growth and of other native commodities, sufficiently to outweigli the circumstances favour- able to reproduction, it operated most pow^erfully 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, that the last war, as far as relates to prices, is to be distinguished from former w^ars — 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, that '* compared with that crisis, there was nothing similar, unless rt were that aera 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 had 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, which 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 ])erfectly illusory For tlic 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 difference be- tween paper and gold, it was confidently main- tained by the advocates 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 gokl. 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 conclusions, 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 in limine; and the foUow^ing explanations are offered accordingly : — Depreciation of money, in its most extensive sense, is to be considered as signifying a dimi- nished value, 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 i^rice 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 tlie 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 t'he currency. applied to tlie world at large, it is synonymous with a diminislied value of gold and silver among all countries, which are in communication by inter- national exchanges. This is the sense in which 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 state 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 seignorage 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.) " Seignorage 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 country 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, (Src, 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. 17*. lO^fZ. per ounce, it would, other things remaining the same, continue at that price ; or, in other words, 46/. 14s. Qd. in gold coin, weighing nineteen-twentieths 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 1/. \s. 9\d. ; or, in other words, 46/. 14.?. 6d. in coin would only purcliase nineteen-twentieths 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 than is commonly imagined. " But there is a difficulty in the application of the limiting principle to a seignorage on the coin, as in the case of our gold coin, where it circulates along with pa])er ; for, as has been justly remarked by Mr. Ricardo, on the supposition which lie makes of a seignorage 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. 10^ayments 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 siun in periods of dulness and absence of grounds for speculation : 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 s ate 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 tlie 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 that the 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, ilte exchanges upon every pause from the pressure of extraordinary 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. Thornton, in his work on Paper Credit, has 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, if it afterwards turns out that the exchange is able to recover itself without any material reduction of the quantity of paper." And at page 24-2., when referriirg 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 effect 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 Biitish 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 the 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 currency, because it appears to us a problem of which a satisfactory solution has not yet been offered. According to that view ol" the question indeed, which 158 THE CURRENCY. the pressure had entirely ceased, the exchanges and the price of gold were restored to par, wkiie the Bank circulation was larger in amount than at any preceding -period : thus affording the 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, m 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 ecovernors 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. 159 readjustment between the value of the gold and the paper should liave 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 which 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 })aper of imdoubted solidity, arising out of real commercial transactions, and payable at short and fixed periods." And tlie 160 THE CURRENCY. following are extracts of the evidence to that effect. Mr. Whitniore, 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 which 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 your 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, I 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 difference, if our practice remained the same as now, of not forcing a note into circu'ation." Mr. Pearse: " I concur in that answer." If the governor and deputy-governor had added the proviso, that the market rate of interest sliould be, in the cases supposed, viz. of discounting at four or three per cent., as near to the r)ank rate^r hills of the 2>rescn'hed description, as it then was I 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 bills as came within the Bank rules did not con- stantly nor materially exceed 5 per cent, j 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 off, com- pared with what they had been for some 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 I()'2 THE CUIUIKNCY. hand, during the war, Mdiile 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 gTowth 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 fioatuig capital, and, consequently, to oc- casion a temporary 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 Exchequer 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. l63 Section 5. — On the Regulation of the Bank Issues during 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 the 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 2 164< ']HE CURllENCY. 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 otherwise 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 Avere necessarily incidental to 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 financial, 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. lC)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 e.vti'a 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 9,160,000/., 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. approaching 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 particularly 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, witli 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. Asa 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 181 1 : — " 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^. Id. to 31s. 5d., being about 8 per cent., and the price of foreign gold rose from 2>I. lis. 6d. to 4/. 2*. 5d. per ounce ; and the price of dollars, from 5s. 4^c?. per ounce to 5s. ll^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 34s. 6d. ; and the price of gold fell to 3/. 17s. 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 restoration 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 limit 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, liis 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 tlie extraordinary circumstances, be maintained, consistently with the. par valuer but such an increase and excess as would, under ordinary circumstances^ have entailed depreciation. Section 6. — On the Effect of the Bank Restric- tio7i 171 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 circidation 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 ? The 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. 16 THE CURRENCY. 171 the termination of the restiiction, and, still more, the actual passing of Peel's bill, liad been the ori- ^-inating and the chief', if not onl^, 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 ])rincipal 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 tlie 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 coiuitry, arising from the restriction and the resumption of cash payments, to hav^ sensibly affected bullion prices is (independently of the inadequateness of the 17^ TllK 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 flict 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 undisturbed state of politics and trade, have been required to carry on the greatly ex- tended pecuniary transactions of the country at bulhon 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- i THE CURRENCY. 17.3 ation on tlie 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. 174 PART IV. HISTORICAL SKETCH OF PRICES, AND OF THE STATE OF THE CIRCULATION, FROM 1792 TO 1837. CHAPTER T. INTRODUCTION. The whole question of the degree in which the causes that have 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 1793 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. 175 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 v^^ould 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 here 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. IjC) TRICES 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 civilised 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 CIRCULATIOy, 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 lygh, 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, althougli the faihires 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 cx- N lyS PRICES AND CIRCULATION, Tliere is a very prevalent impression, tliat the origin of speculations and high prices is to be dated from the commencement of the war in 1793. The fiict, however, is, that there was a very gene- ral fall of prices, from the close of 179^ to the com- mencement of 1794^- 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 179'i, and at different periods in 1793 and 1794, than they had been at the commencement of 1792. And tlie real fall 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 subsequent!}' experienced the extreme of depreciation. 1793—1798. 179 rise proved to have been greater tlian 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 tlie 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 179<5 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 in 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 interv-al. The general character of the seasons, as to pro- ductiveness, will be noticed witli 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 ProvisionSy 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 tlie 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 54>s. Id., fell at Michaelmas following to 4.55. 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 179<5, 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 the 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 5\s. 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 correctness, 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. J 1793—1798. 181 and dry, of which I have been able to meet with any record : as, however, the degree of deficiency arising from the excessive drought and scanty crops of lyO-l^, and the want of a surplus from 1793, had not, in consequence of the harvest being unusually forward (the cutting of wheat having been begun in the south and midland dis- tricts, by the middle of July, and the crops mostly secured by the end of that month), and the wheat having been brought in tine 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, w^as discovered. The winter of 1794-5 had set in remarkably early, and proved to be of extraordinary severity and inclemency, 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. 7d 34.^. 2f/. 21.V. ilcL 1 July, do. 775. 2^/. 41.9. lOf/. 27,v. Sd. Government had, early in 179-5, and indeed, for some time before, taken the alarm at the indi- cations of impending dearth, and ado})ted some extraordinary measures of precaution. All neu- tral ships bound with corn to France Avere seized and brought into this country, and their cargoes paid for, with an ample jn'ofit 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 3 182 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 policy 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 I08s. 4r/. 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 whole of the crop in good order, the markets experienced a decline, the average price in October having got down to J6s. ^d. But the 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 tlic price of Hour 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 king 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 they have had to con- tend." And concluded with an assurance of his Majesty's hearty concurrence in whatever regulations 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 inquiring 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. Leclnnere 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 hai)piness, 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, however, 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 A to i 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 16s. to QOs. the quarter, according to the quality, on wheat, and ()s. the cwt. on flour from the south of Europe, till the quantity should amount to foiu" hundred thousand quarters ; and the soil. For the sake of common humanity I trust it is untrue. Gentlemen, you ought to be the champions against this hydra- headed monster, 'T is your duty as justices to see justice done to the country. In your respective districts, as watchmen, be on your guard. I 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." — A?t?ials of Agriculture for 1795, vol. xxv. p. 111. s-i * ]\jj.. 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 tliat 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 tliousand quarters ; and l^s. to 15s. from any other part of p]urope, till it should amount to five hun- dred thousand quarters ; and 8s. to 10^. after it exceeded that quantity, to continue till the 30th September, 179t). Among the minor measures was a sort of self- denying ordhiance*, 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 eflPect, and partly in consequence of the tendency to disturbance and riots among the agricultural labourers, that tlie 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 the consumption of v, heat 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 neighbourlioods. 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 85. per bushel." — Parliamentary History^ Dec. 11. 1795. -|- 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 the 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 mnch 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 April 1796, has been, on an average, in England and Wales, 10*. Id. per bushel, and that of barley 4.s. 9d. Now the price for twelve years, ending 1794', was for wheat 5s. \0d., and for barley 3*. id. 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 croji 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 3Ss. the quarter, is 13,226,849/. Of barley, 10,545,000 qrs. at 1*. 6d. per bushel, or 125. 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. i 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 average price of wheat having advanced to lOO.v. 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 tlie Ml was hastened by the mildness of the season, the winter of 1795-9^ having been one of the warmest, as that of 179^-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 S'Js. 3d. ; and the fall continued, progressively, till the summer of 1797j when the average ranged between l-9-^'- and 50s. 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 50s. in June, to 60.s', 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 o^ 52s. 9^/., and in February, 1798, to 49.*^. \0d. 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, the 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 48.9. 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.S-. 2f/. 29.5. lOd. 18*. 6d. 1798. Nov. 47*. lOcL Q9s, 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, falhng, upon the return of only moderate abundance, to the level whence they had risen. Section 2. — On the Prices of Commodities 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 aflected by the seasons in Europe, fell in the latter part of 179G, 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 : — 1793-4 1795-G 179fi-7 Ashes, per cwt.- 2is. to 3\s. 60s. to 705. 39*. to 55s. Flax, per ton - 28/. - 321. 5U. - 571. Ul. - ^51. Hemp, do. - 221. - 23/. 581. - 591. 32/. - 34/. Foreign iron, do. 12/. 22/. 5s. 19/. 15*. Linseed, per qr. - 35*. - 40*. GO*. - G3s. 30*. - 35*. Oil, Gallipoli, per ton - 42/. - 46/. 70/. - 71/. ; 60/. - 63/, Rice, per cwt. - 15*. - 16*. 41*. - 43*. 15*. to 16*. Tallow, do. - 38*. - 39*. 78*. - 80*. 46*. - 47*. Timber, per load 43*. - — 80*. - — 50*. - 55s. 190 PRICES AND CIRCULATION, But a very important class of articles, viz., coffee, sugar, indigo, pepper, cotton, cochineal, and other articles of colonial produce, whicli had begun to rise in 17{)5, continued to adv^ance till the close of 1798, insomuch that, at the end of the latter year (and in the first two or three months of 1799) they 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 diff^erent periods in 1793 and 1794 to the close of 1798, and the three months following : — 1793-4 1798-9 CoflPee, Jamaica, per cwt. 77*. to 955. ] 855. to 1965. Sugar, Muscovado, do. - 32s. - 58s. 62*. - 875. , East India, white 60s. - 705. 965. - 1155. Cotton, bowed Georgia, per lb. - - I5. Id. - I5. 4t?. 3s. 6d. - 4-s.6d. Cochineal - - -125.-125. 3d. 54«. IndigOj E. I. superior - 75. 6d. - 9s. 6d. l]s. - I3s. 9d, Pepper, black, per lb. - 13d. 22c?. Logwood, per ton - 61. - 8/. 48/. - 50/. Tobacco, per lb. - 3d. - 5d. 11 ^d. - 16d. 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 38.9. 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 I798, 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. 1793-1798. 191 I have been the more disposed to dwell upon this remarkable feature of the state of prices in the 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 the 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 the 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 tiience 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 179-5 and 179(3, 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 tlien much higher than during any subsequent period of the war. Section 3. — Bank Circulation, 1793 to 1798. In tlie 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, v;ill 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 number 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 I78I, 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 tlie Resumption of Cash Payments, 1819. o 191* PRICES AND CIRCULATION, during tlie 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 1789 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 that 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 effect of impairing the securities of the countrv banks, throuoh 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 liad been 8,055,510/., in August, 17'91, 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 bad been a decline of tbe foreign exchanges in 1792, which may account, in some degree, for the drain ; the greater part however pf tbe 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 179-'^ 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 6,456,04.1/., 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. The 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.! * 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. t " 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 i and 5 1793—1798. 197 This general depression of credit and of prices was the main cause of tlie 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 fiict 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^', 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 36-7, in May, to 31-5, in November, in consequence of the large foreign payments which 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 public tlian might have been expected; but having done every thing in his power to excite a competition without effect, they were the best lie could procure." — Terms of Loans, by J. J. Grellier, 1802. * Circulation - 10,286,780 Securities - 1 2, t IG, 160 Deposits - 5,935,710 Bullion - 6,770,110 Liabilities 16,222,490 19,216,573 In 1791< the Bank first issued notes under 10/. o 3 198 PRICES AND CIRCULATION, pcndcd tlie preservation of the value of tlie 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 the 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 30th 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, ffives an exasrgerated 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/. 31st December - - - 10,964,980/. 31st March, 1795 - - 12,421,260/. Here in the last quarter of 1794, there was an increase of 500,000/., 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. 179i - 34-9 to 34-6. „ " Jean. 1795 - 34<-6 to 35-6. Feb. „ - S5'6 to 36*6. March „ - 35*8 to 36-5. And in order to prove that this rise of the ex- changes was not partial or artificial, it may be ob- served that the price of standard silver fell from 5s. Q^d. per oz. in December, 1794, to 5s. Id. in the first three months of 179-5, 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 6,127,720/., 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 than 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/. - 3^'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 })rices to which the competition of" liie 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 tlie drain on the treasure of the Bank, chiefly, if not exclusively, for export, continued tln'ough the remainder of 1795, and the greater part of 1796. At the close of 1795, 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 tlie 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 tlie trade in the metro- polis. As a specimen of the feeling 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, John 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.y. 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 whom 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 estabUshmentof 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 verj' 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 here 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 57s. per quarter. By the same account it appears that the amount of Bank of England notes was, on the 25th February, 1796, 11,030,116/. In the three months immediately following, the average price of wheat in the London corn market was about 94-s. per quarter." p. 314. In point of fact, with the single exception of the increase which took place in the first months of 1795, 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 1796, 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 1796, 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 apprehended 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 rillCES AND CIRCULATION, the metropolis for cash ; tliat 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 fri- 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 having been reduced to 8,640,250/. * * The policy, on the j)art 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 tliei-e 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 3ld. per day, were sold at 31. and 31. 10s. per cent, discount, and it was said, that in some instances sales were made at 5l. per 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 28tli of Feb- ruary t the amount stood at one million higher than it had done on the S5th. 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 - 11,714,4'31 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 the 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 6,4 19,602 upwards, and post bills - - - 10,649,550 17,349,64-0 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 exchanges, 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 Appen- dix to the Report of the Lords' Committee of Se- crecy in 1797 * •• — '" s£ s. d. 1794 - - 8,335,592 5 5 1795 - - 11,040,236 13 1796 - - - 10,649,916 8 To the above sums is to be added 4,702,818/. 18s. 8d.f, 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 included the loan and advances to the Emperor of Austria, 5,570,000/. f Appendix to Lords' Reports, No. 27. X Appendix to Lords' Reports, 1797, No. 31. 1793—1798. 209 of no less than 42,174,675/., in those tln-ee years of whicli 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 the 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 ofdrain for internal circulation, that endangered the convertibility which was prematuvely suspended by an inter- ference of government. Prematurely^ inasmuch as the stock of bullion had not, on the 2()th 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 o^ policy which dictated the suspension, it was clearly not justified at that precise time as a measure o^ necessity. 210 TRICES AND CIRCULATION. Section i<. — Summaiy of the preceding Survey/, From the preceding view of the state of the circulation and of prices, from 179'^^ to 1798, it appears, 1. That 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 1791^ and 1795, a great rise of the prices of provisions took place in 1795 and 1796, 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 I796 to 1793—1798. 211 the close of 1798j 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 2 212 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^. Qd. Barley - 29*. A 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 fldlen so much if the Bank had then been paying in specie, inasmuch as the gold drawn from it for export- ation, w^ould in so far have diminislied the demand for bills. And, in the next place, judging by tlie conduct of the Bank in 1782, and again in 1795, when in the face of a similar fall of the exchange, the issues were extended instead of being con- I 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 already 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 2>\s. lOf/., is now 29^. lOc/., by which means the difference which then existed of nearly 9 per cent, against our currency is now increased to upwards of 14 per cent. If, therefore, 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 53t%, or nearly 53A. 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 1,! per cent., thus making the whole premium upon gold 10/. Ss. 8d. for every 100/. or something more than 10 |\ per cent." This letter of Mr. Boyd's elicited, among other answers, one from Sir Francis Baring, in which, after observing upon the in- consistency of INIr. 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 31 5. 10^^. to 29*. 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 K 2 244 ruiCEs and circulationt, But admitting tliat tliere Iiiul 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*. Sd., and on the 30th of January it is printed SI*. Sd. — a difference of very near 7 per cent. ; and j'et we do not perceive th.e sHghtest 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 eff^ect produced by tliese on the cir- culating medium, he proceeds to say, " I have to consider how far, allowing for that difference of two millions of vvhicii men- tion has been made, the circulating quantity of Bank of Eng- land paj)er has lately corresponded with that of antecedent periods. The average amount of Bank of England notes in circulation during three years 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 were then reduced. By a statement of their amount on the 6th of December, 1 800, laid before the House of Commons, they ap- pear to have been then 15,4-50,970. 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 1,475,397/. 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 compan}' in the spring of 1801, to have been then reduced to a sum less by about a million and a half than their amount on the 6th of December, 1800. 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 5l. in circulation From 25 November to 25 December 1800, was 2,148,700 And from 25 December to 25 January 1801 - 2,519,400 I r/99— 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 whicli 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, Vv^as 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 tiiat 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 179(3, 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 thatit can have been toany- * With reference to the country hank circuhition at this pe- riod, the following further extract from Sir Francis Baring's answer to Mr. Boyd may not he 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 2l<6 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 tliat 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 were not materially lower than they had been at the close of 1799 ; whence it should seem that an increase of our commercial exports vances of money : but the 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 mider the two important heads of government expenditure abroad, and of imports * of grain. The question here occurs, wliat would have been the effects on commercial credit and prices, and on tlie rate of interest, if the issues of the Bank liad been so limited at the close of 1799, and through ISOO, as to have preserved the value of the paper on a level with gold ? All hypothetical reasoning, as to what miglit have been, instead of what teas, 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 ISOO, 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 ])roduce, 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 sup})ly of which was below the ordinary rate of consum})tion, would in all probability have been full as higji. The prices of provisions were determined by the * The computed value of grain imported, in ISOO, was 8,755,995/., iu 1801, 10,119,098/. R 4 248 TRICES AND CIRCULATION, liighest sum wliicli 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 aifected, 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 tlie first six months. And the aveiage 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 5/., 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 wliich 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 w^as not increased, and could not, therefore, be the cause of the rise in the price of provisions between the summer of 1799 and tliat 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 time that anotlier I 1799—1803. o{.g great class of commodities was falling in nearly an eqnal 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. The 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. Foreign Gold. Silver DUrs. Wheat. se s. d. I. .9. d. A\ d. s. d. 1800 was 13,421,920 30 4 6 5 9 133 1801 — 13,454,370 31 11 4 3 6 5 lOi 75 6 1802 — 13,917,980 34 4 5 4l 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 liad not the cflect 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 ^50 PRICES AND CIRCULATION, prices of provisions, and of otlier produce, wliicli attained their greatest elevation in the spring of 1801, would have reached the same lieight under a convertible state of the currency; and that, there- fore, as regards these, 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 of fwHt neces.siti/^ 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 w^ould have been probably higher, instead of continuing to fall as they did. Among the grounds of presumption in favour of this view is the fact, tiiat 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 Jiis report of March, 1826, states the manner in which the competition of France for 17D9— 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 1 803. 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*. Id. - 5Qs. 3d. Barley - - 25.s. Jd. - 23.9. lid. Oats - - 20.9. Of/. - 2U. Id. The great fall 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 1801 - 1199 1799 - 717 1802 - 1090 1800 - 951 1803 - 1214 2579 3503 being an increase of more than one-third. It is probable that the excess of failures 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 faihu'es of consequence among the country bankers. Section 7- — Suinmari/ 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 tlie 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 1799-1808. 253 necessary consequence of the two very deficient liarvests 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, the 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. Tiiat 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 the rise in the prices of provisions, and of European produce generally, in 1799 and J 800, w^as 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 flill 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 exchanii'es, were attended with a further increase of the circulation of bank notes ; thus aftbrding 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. 0. 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 18U2, 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 o? depreciation o^ i\\e.\ii\\ie oi 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. 255 CHAP. IV. STATE OF PRICES AND OF THE CIRCULATION FROM THE COMMENCEiAIENT OF 1804 TO THE CLOSE OF 1808. The state of stagnation and declining markets wl)ich 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*. G'd. Barley - - 22*. 9d, 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*. Od.* * 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 they 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. Barley. Oat=. s. d. s. d. S. d. 47 2 29 10 18 6 47 10 29 19 10 49 6 22 9 19 9 1792, December 1798, November 1804, March - The higher price of wheat in 1804 is compensated by the lower price of barley, and with this allowance the subsidence is complete. 25G PRICES AND CIRCULATION, This fall ami 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 mcreased charo'es 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 freiglit and insurance cannot be taken at less than from 5s. to ]0,s\ 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. 1804—1808. %5q 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 hai'vest 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 24s. 3^. per quarter, when the price should be under Q)''is, ; and 2.S-. Cr/. per quarter, when at or above that rate and under 6G.S'. ; and Go?., when above ^^h. 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 g58 TRICES AND CIRCULATION, inoperative. It is only here mentioned for the purpose of showing that, neither the state of the currency under the Bank restriction, nor the con- tinued and increasing consumption arising out of the war, were at that time reUed 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 hypothesis, 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, with either of the two theories of modern times, that I have met with no instance 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 had 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 \.— -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, g59 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 four seasons in suc' cession without the occurrence of one harvest or more 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 proportion 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 having 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 tliroughout tliis s 2 ^(iU PRICES AND CIRCUI.ATION, long series, it will appear that an increase of issues has, with v)onderful 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 5is. 1804, 12,621,348 S6s. 1805, 12,697,352 76s. 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 -a^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, that 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 506-. to lOO.v. 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 unfounded 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 tlie 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 tlie nature and causes of the failiu'e of the wheat crop of 1801-, and as to the extent of the s 3 262 PRICES AND CIRCULATION, deficiency. The cause of failure seems to have been an extensive prevalence of Wight and mildew ; and nearly all the answers concur in stating a deficiency of 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 eifect 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 supply of foreign wheat which has been quickly brought to market." The average prices accordingly which had been. Wheat. Barley. Oats. March 1804, 4^9s.6d. 22*. 8^. 19*. 9^. were, Dec. 1804, *86*. 2d 43*. lOd 26.5. 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 will be best shown by the quotations of wheat in Mark Lane. April 23. 1804. 30^. 45*^. 52*. per quarter. Essex and Kent, SQs. 57s. Foreign Red, 35s. 48*. White Dantzic, 50*. 54*. 58*. Oct. 29. 1804. New 48*. 63*. 72*. 78*. 84*. Old 59s. 76*. 88*. Fine White, 90*. to 92*. Foreign Red, 52*. 78*. 82*. White Dantzic 75*. 85*. Fine 90*. Jan. 28. 1805. New 65s. to 100*. Old 79*. 105*. 116*. Foreign Red, 80*. 95*. 105*. White Uantzic, 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 w^heat 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 witnessed 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 6tb 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 Ss, to \0s. '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, ISOt: — "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, qn account of its long continuance, was remarked Ijy every body." 3 4 264 PRICES AND CIRCULATION, TJie 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, 2471 — 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. In 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." 1804—1808. 265 There has been the more reason for dwelling upon 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 w^hich 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 w^as the specific occasion of renewed demands by the working classes for advanced wages ; claims which were rendered the more effectual by the resource which tlie 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 16s. in November, and this, be it observeil, when we found in the south of Europe, and in Spain especially, a source of very cnnsideral)le supply, instead of competition, as in 1801— 5, for sharing witii us in suj)plies from the north of Europe. If in 1828 our exter- nal relations had been as they were in 1801', the average price of wheat would inevitably have reached upwards of 100.>.'. ^GG 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 98,v. "id. 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 20s. per quarter before the close of the year, and con- tinued to decline till the spring following, when the Gazette average was 74*. 5c?., or a fall of about 24^.9., 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 to be sufficient for the consumption.. * The Prussian government issued a proclamation, dated in March, 1806, prohibiting the entrance of British ships into any of its ports or rivers. 1804—1808. 267 The winter of 1806-7 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, tlie 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, — I8O7. "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 tlie bad weather set in, and was brought early to market, prices declined to 66s. in November, being a fall of upwards of 30^. per quarter since August 1305. This fall, be it observed, took place notwithstanding the increasing gloom of the political horizon, which led to the apprehension, well founded as the events proved, of great, and at one time nearly insurmount- able, impediments to importation. The orders in council issued by our government, in retaUationof the French decrees, formed the grounds for the non-intercourse act of America, the year following. And the bombardment of Copenhagen in the autumn of I8O7, 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 ot this country. Under these circumstances, tlic farmers were naturally induced, as by their increased capital from their great gains of late years they 208 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 was 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 off 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 tliose 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 ^rain 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 1 3th 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. 20g to have done great injury to the wheat, and they were followed by a great deal of wet and stormy weather, from that time 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-west of London : — " July 1. 1808. — The leading feature of this month has been the extreme heat of the 12th, 13th, and 11th days. We have paid nmch 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, gyO PRICES 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 1.5,000 quarters of wheat, occasioned by the wants of Spain and Portugal. The high price, therefore, (wheat having advanced by July to an average of 81s. Id. per quarter, and by January following to 90.9. 4r/.) 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 806*. 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. Thus it was not till May, 1808, that the average got up to 73.9. 6d. for wheat. But thenceforward a backwardness of the crops, and unfavourable ap- it was as high as 88^° ; 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, we 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 feelings 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.' " 180i— 1808. ^71 pearances of them, and very stormy weather during a great part of the harvest, which was considered to be deficient, occasioned a more decided rise, viz., to 92*., at the close of the year. Under these 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- dence of the trade at that time, that there was so much 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 1804 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. ] 804, 4s. 6d. to 5s. 8d. 5s. to 6s. 1808, 36-. to 5s. 3s. 4 ^^'''''^^,f,^:,\Hr' 66s. 1807, 13,221,988 | l^JJ7,404^. 905. 1808, 13,402, 160 J And for the purpose of comparison with the cir- culation anterior to the Bank restriction, it may be worth wliile 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 51. 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, wliile 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 ?ew 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 had, 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 Mas brought to them? 28:2 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 1791. 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 3 1st August 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 14,956,39 1 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 34^. 4«/., in February, to 3os. 2d. 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 lower than it had been during the greater part of last century, and loiver than it was in 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 tlie 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 convertibiUty, the directors having avowed, moreover, that in the regulation of the amount, they disregarded the exchanges, ■which 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 with such motives to excess, and under the guidance of opinions so unsound, there was so trifluig 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, imder the varying but progressive increase of our trade, and under the very extraordinary circumstances of the political and financial state of the country, 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 progi^essive ; 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 full value of the 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 180^—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 tlie whole of that in- terval vary by more than three millions. The most material variation that occurred may here be instanced, as showing the manner in which the two descriptions of securities held by the 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 millions j 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 has 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 lonq; as the state of the money market admitted of funding without ob- vious disadvantaiije. The amount of discounts, too, bore a nearer and more uniform proportion to the adv^ances 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 t/te 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 hi/ 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 years somewhat under fourteen million five hundred thousand pounds. So that the real cash advance, or the medium for the issue of Bank 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 faciUtating 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 gov-ernment, will be found to have been confined to the two last years of the war, and the Jive years following the iieace. 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 channel 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 the price of gold was above 288 PRICES AND CIRCULATION, 4/. per ounce, or the price of silver higher tlian 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, were 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. 290 PRICES AND CIRCULATION, Section 9- — Summary of the preceding Survey. As the results of the survey of the period, which lias passed under review, it appears — 1. That, during the first year after the renewal of the war with France, the prices of corn were falling, and were, in the early part of 180i, as low as they had been, on an average, in ten years before the war or the Bank restriction. 2. That the harvest of 1801< 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 those years, the insurmountahle, 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, usuallv attendant 1S04— 180S. 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 I8O7 and 1809, took place under a remarkably restrioied and equable state of the Bank circulation, and in a state of the currency which, judging by the exchanges, and the price of bulhon, 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 years of the war and twelve years of the Bank restriction. u !2 292 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. — Price fi of Agricultural Produce^ from the Commencement of 1809 to the Summer 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, whicli was not forthcomifig; preserved a high range of the price of wheat tlu'ougli the early part of 1809, and the averages reached 95s. 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., wliile our exports to the Peninsula were 77,567. u 3 294 PRICES AND CIRCULATION, by the liigli price, and by the prohibition of dis- tillation from grain. As, therefore, the harvest approached, and appearances became favourable of tlie 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 1816. 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. f 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 125*. The price of oats was comparatively low because the quality had been more ii jured 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 liave 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, w^ere imported before the close of 1809. The spring of 1810 was singularly cold and un- genial : a series of dry east winds prevailed for many weeks together. The hay crops were 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-llS.v. 5d.f ; and the weather having become wet and stormy in July, and the first fortnight of August, prices ex- perienced some further advance, viz., to an average of llG.v. for wheat. These high prices, and tlie speculation on the pro- spect of a further adv^ance, 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 30.9. 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. -|- Barley and oats did not participate in the advance ; the averages at the close of June, 1810, being 495. 9d. and 'Ms. 6d. The prohibition of the distillation from grain might contribute to keep down the price of barley. U 1 296 PRICES AND CIRCULATION, amounted to about 1,500,000 quarters of wheat and flour, and about 600,000 quarters of other grain 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 gi*ain, 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. Mog. vol. xi. p. 100. March, 1810. « Letter from London, Mark-lane, 5th March, 1810. " The character of the crop of 1 809 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 diminislied 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. Tlieir 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 oi' British icheat 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 oivn inferior and damp descriptions of wheat. " State of London markets, Monday, 5th March. Wheat, English white 1055. 110*. 115*. per qr, . Ditto, red 9\s. 9Qs. 102*. Dantzic, &c. 108«. 115*. 117*. 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 formerly. 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*. 6r/. ; whence it will appear that a large part is of inferior quality." — Farm. Mag. vol. xi. p. \\Q. 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 20s. lower than in August preceding. The averages at the close of 1810 being for Wheat - - 94.V. 7d. Barley - - 4Ls\ Jd. Oats - - 266-. 3d. The corn-dealers, who had speculated on the bad weather at the commencement of the 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 followmg ; the averages for June, 1811, being, for Wheat - - 86.9. Ud. Barley - - 38s. 6d. Oats - . Q7s. 5d. It is not a little remai'kable, 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 the 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 gi'ain, 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 j)opulatioa 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 PUICES AND CIRCULATION, The retort v/as complete, but produced no iin- pression. The attention of the house and of the pubHc was absorbed in the question of principle; and the utter untenableness in argument of the principles for whicli 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, but 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.S'. 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 higji 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. 1808 1809 1810 lbs. 2,353,725 6,845,933 10,936,224 fts. 637,102 698,189 1,341,475 ITjS. 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 1,119,763 511,970 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 were, in 1808 - - 43,605,98^2 /^».y. 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 what it had been in 1807, viz., 1807 - - - 417,642 cwts. 1810 - - - 828,683 302 PRICES AND CIRCULATION, ►as MS I i>:i:^CM'fi5C00:OOOOCNOOCOO'*iC0'5C0CMCM 0-1 COt^iO r- o t- *j'^ OOOOK5r-(OCOG^iOt^iO^OO(>> CM CO T-C tJ< CO l-H p-H ^/^ _ OiOOC^-^Ot^^OOOOOOOO CO O Op-iOOCTiCDG^IOOOCTJOf-OOO u^ CO oooor-ioor^ioooc^iooo^p-ir-i p-h >-i CO t> CO o o o o CO lO o o vo O ^"^ bO 'c O-li— lOOCOOCJiCOOOOOOOOO O oo ^^M00^coio00c>qioo05cooo t- coo OOOOCMOOCOOOOOOOCO— (rH r-i CNOO CO CO i:- ooiOTj^ot-cooooooooo ci oo coOi— lOOOCOC^OOCOGOO-^OO-H OOOOp-(OOt--V^C)-:^ Under ditto 4^ 4 1" Besides board. Head shepherd 1 2 2 H Under ditto 73 1 4 Farm-yard boy Poultry-yard maid 3 7i 3 j- Besides board. Thresher _ . _ 1 02 2 It Reaper and mower o '2. 4 9^ V Is paid by measure. Day labourer (man) (woman) lU 5\ 1 8§ ■ In summer. A plough ... 2 8 4 It. A cart 9 17 J- With its iron work. A cart harness 2 8 5 12 For the shaft horse . Ropes (the quintal 108ft. \ avoirdupois - - J 2 8 4 A spade or a hoe - 2 4f 4 A horse shoe H 7^ Nailed on. Rough building stones - 1 2 43 1 12 0, J" The cubic toise (about l^ 261 cubic feet Eng.). Plaster (of Paris) - 12 9§ 17 7i f The nuiid of 36 sacks \ (about 22 bushels). Lime ... 2 1 H 3 1 7i f The setier (about 4j old \ bushels). Tiles (the 100) 12 1 4 f Made in the neighbour- \ hood. Bar iron - - 14 43 17 7^ The cent. A plough horse 13 8 24 A fat pig - - 3 4 6 f Weighing about 216 lbs. |_ avoirdupois. A sheep (of that country) 9 n 14 4i Chickens (the pair) 1 1 5k A cloth coat . - - 2 12 4 A pair of leather breeches 19 n 2 8 A pair of shoes 3 n 5 n A hat 9 H 14 4f f The double Hire on voie Fire-wood - . _ 16 H 1 8 H < (2 cubic metres, about [^ GG cubic feet English). Charcoal . . - 2 9§ 5 H 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, liave 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 pj'opoi^tionate 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 tlie rise of prices as could be referred to a law which was supposed to be in steady and progressive operatioPx 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 o/'1813. 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 Edinhuryh Revieia, 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 save 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. Tallow. Hemp. Flax. Linseed. lbs. Ifes. lbs. cwt. cwt. cwt. bush. 1810 10,936,224 1,792,200 136,488,935 479,440 955,799 511,970 1,645,998 1811 4,739,972 C22,383 91,662,344! 292,530 1 458,547 243,899 594,016 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. 3il anticipated scarcity, objects of speculation ; these natiu'ally 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 181'2, 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.v. ; viz. from 155s. to 1 1 3^'. Qd., but thenceforward there was not much variation till August, 1813. The prices gave way, however, rapidly after the harvest of 1813*, which proved to be very abundant. * The fact of a great fall in the price of agricultural produce Iiaving 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 the average of the year ending with December. This mode involves the fallacy 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*. \0\cL which makes that year the highest with the z 3 342 PRICES AND CIRCULATION, It was this decidedly favourable season whicli 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, 1555. Od. 79s. }0d. 56s. 2rf. Dec. — 121,9. 0^. 64.9. Od. 44.9. Id. August, 1813, 112.9. 0^. 55s. Jd. 40.9. 4rf. Dec. — 73s. 6d. 42*. llrf. Tis.7d.* Here is a fall exceeding fifty i^er 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, 3l5. 9 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!, 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 50s. 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 4c/. the pound, it was worth 4a-. 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 inducem.ent 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, 183-1', 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 Conniiittec of 1810, in a Letter addressed to the Members of the Political Economy Club, by A. G. Stapleton, Esq." 1837. A A 354 PRICES AND CIRCULATION, of our manufactures. Tlie 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 reducino' 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 1:, 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 coffee, held here unsaleable at 6d. the pound, while coffee was ^s. 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. If 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 \no\\\(A.^ although 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 offered 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 - - 33,772,4-09 1810 - - ^l, 136,135 A A 2 S56 PRICES AND CiriCULAIIOy, difference under these two heads alone, there woidd 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 tliis saving of the 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 higher, their 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 liave 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 part 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 liistory. 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, w^ould not have been more than compensated by the smaller amount which would * With reference to the state of commercial distress and discredit which prevailed in 1810, it may here be observed, that little 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 mihtary stores, the cost of which was increased by Ihe depression of the exchanges. Upon the whole, if the grounds for computation of the saving in the government expenditure on the one liand, 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 tlie 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 facts 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 1795, 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. Last quarter of 1808, j^l3,259,780 ^1,163,380 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 ])reserve 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 4 360 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 fiur jjrimd facie 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 — 1813. 361 exchange, or simple credit, but for tlie 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 wonder 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, althougli the small increase 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 jjvice.s of nearli/ all commodities fell co- inci dentil/ with such increase. The greater part of the commodities which had been the subject of speculation on the extraordinary political events of 1807 and 1808, and the consequent short importations, had reached their greatest height before the close of 1808 : but after the spring of 1809, 36^ 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 obviously 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 51 and upwards, and 2,000,000/. in notes under 5/., did not fully supply the vacuum of the circulation so created, is aflbrded by the circumstance, that the foreign expenditure being on an increasing scale, the exchanges rose, that on Hamburg from 28.v. 4^. to 31s. 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 86s. 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 afforded a con- stant facility, and consequeutmotivey 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 facility, but an inducement, to the speculations which occurred during the restriction ; 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( TRICES AND CIRCULATION, securities lield by the Bank ranged at between 13 and 14 millions, — 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 vi'hich the rise and fall of prices took place. There is one point of view in which there might be a question whether, if the Bank had, 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 with 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. 365 through the medium of discounts, which in August, 1810, reached the enormous and unprecedented amount of 23,77-5,093/. 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 })eriod, — 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 5/. 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 ])art 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 was 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 dimini.shed ciVcw^«/zo?2 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 tlie 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 Do. 1810 - 97 1 Do. 1811 - 15,4-13,310 Do. 1811 - 106 8 30 June 1812 - 15,458,660 30 June 1S12 - 133 10 o/^ C .101^ , r can ^T,^ fSlAug. 1812 - 155 30Sept.l812 - 15,833,770 1 30 gept. 1812 -131 31 Dec. 1812 - 15,64-7,350 3J Dec. 1812 - 121 Do. 1813 - 16,092,590 Do. 1813 - 73 The reduction of Bank issues between 1810 and 1813 is remarkable, not only as accompany- 368 PRICES AND CJIICULATJON, 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. v. 9d. to 24.9., and the price of gold rose from 4/. 4.s. 6d. to 4/. 19.^. 6f/." Notwithstanding this great fall of the exchanges, and the rise of the price of gold, there is every reason to believe that tlie quantity of money, re- latively to the transactions of the country, was less in 1811, than it had been before or has been since.! 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 30s. 6d., being an advance of near 25 per cent., while the price of gold coincidently rose to 5l. 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 j^aper issues, although, on the whole, tahhig paper and guineas together, the amount of the currency might not he increased hy a si?iglc jwund." VOL. I. B B 370 TRICES AND CIRCULATION, " If, then, in estimating the coin in 179S, we 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 tlie amount of gold above stated is an exaggerated estimate ; and the country bank circulation is wliolly omitted. At the same time it is doubtful whether the country circulation, reduced as it had been by failures and general discredit in 1811, was then, except by the amount of small notes, M^iicli 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 179^-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 tlie period preceding the restriction. But although in the 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 falling, 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 whicli has been described (p. 31<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 very far 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 5/. and upwards was also less in 181'2. How, then, consistently with that theory, is a rise of 50 per cent, in the price of corn from 1810 to 1S12 to be explained, supposing 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 tlie 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.s\ 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. 373 last six mornths 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 currency. Section 11. — Summary of the preceding Survey. As the result of the view thus presented of the great variation of prices, in connection with tlie 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 imder the dominion of France ; but in the two last years, there behig a severe dearth also in France, and the charges of importation being nearly 50*. 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 the 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 371' TRICES AND CIRCULATION, circulation, and was coincident with a great rise in the price of gold : on the other hand, a rise of the prices of corn and otlier European produce in 1811 and 1812, liadbeen 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 while 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 them to fall ? 6. That the rise of prices on the Continent of Europe, and in France especiall}', 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 tlie 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 siuns 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 tor thegreat pressure upon, and the low state of, the exchanges, without tiie supposition that an excess of pa])er (exce})t 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 : rrinted by A. Spottisvvoode, New-Strcet-Square.^ October IS:>8. NEW WORKS AND NEW EDITIONS LATFXY PUBLISHED BY LONGMAN, ORME, BROW^N, GREEN, AND LONGMANS, PATERXOSTER ROW. Tliis day was published, in 8vo. 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By the same Author, Atlas of Modern Geography, consist- ing of 23 Coloured Jlaps, from a New Set of Plates, witli an Index of all the Names. Svo. 12s. hf-bd. Atlas of Ancient Geography, consist- ing: of 22 Coloured Maps, with a complete accentuated Index. Svo. 12s. lif-bd. General Atlas of Ancient and Modern Geography, 45 Coloured Maps, and two Indexes. 4to. 24s. half-bound. *»* The Latitude and Longitude are given in the Indexes to these Atlases. ENCYCLOPEDIA of GEOGRAPHY: Comprising a complete Description of the Earth ; exhibiting its Relation to the Heavenly Bodies, its Physical Structure, the Natural History of each Country, and the Industry, Commerce, Political Institutions, and Civil and Social State of all Nations. By Hugh Murray, F.R.S.E. Assisted in Astronomy, &c. byProfessor Wallace ; I Botany, &c. by Sir W. J. Hooker ; Geology, &c. by Professor Jameson ; | Zoology, &c. by W. Swainson, Esq. 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With a liberality of which there are certainly few (if any) examples, it has not merely taken pains to supply him with ample and authentic details as to the Commerce, Finances, &c. of that flourishing kingdom, but has authorized him to make any use he pleased of the in- formation so communicated, without stipulation or condition of any kind, or so much as insinuating, directly or indirectly, what might be agreeable to it. LIBER MERCATORIS; or, The Merchant's Manual: Being a practical Treatise on Bills of Exchange, particularly as relating to the Customs of Merchants ; with the French Code relating to Bills of Exchange. By F. HoBLEK, Jun. Attorney-at-Law ; Author of " Familiar Exercises between an Attorney and his Articled Clerk." Fcp. 8vo. 6s. cloth lettered. "Avery intelligent little work, and we think will be found of much practical utility at times of exigency when oral advice cannot conveniently be resorted to." Justice of the Peace. 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THE DOCTRINE of the DELUGE: Vindicating the Scriptural Account from the doubts which have recently been cast upon it by geological speculations. By the Rev. Leveso.n Vernon Harcourt. 2 vols. 8vo. 3Gs. cloth lettered. " Mr. Harcourt has exectited his task with the ajisiduity and enthusiasm which nn object sn important and so noble was calculated to inspire. He has ciiUrcted a >nii.ss of rich inatrrials, which he has set before his readers in a style at once eloi/uent and convincing. Altogether the work is one of extraordinary learning and research." — St. James's Chronicle. COLONIZATION and CHRISTIANITY: A Popular History of the Treatment of the Natives in all their Colonies by the Europeans. By William Howitt. 1 vol. post. 8vo. 10s. 6d. cloth lettered. " We have no hesitation in pro7t()uncing this volume, in its object and scope, the most im- portant and valuable of any that Mr. Howitt has yet produced." — T.\IT's Magazine. By the same Author, THE RURAL LIFE of ENGLAND. 2 vols, post 8vo. beautifully illustrated with Woodcuts, by S. Williams, 24s. cloth lettered. Con&AavaaiH'^'^ ^JIWDJO^" -^OJITVJJO^ ^\^EUNIVER% o ^VWSANC[1% "^Aa^AINn-JWV , rvF-fAiipriDi, .,c\FrAiiFnpi,. ^V^FIINIVFR.^/A .vinSANf.Flfr.; 1^' M \ M i -, -JJldjriYMJ: ,^10SANCEI% ^v\l-LIBRARY6>^ UCLA-Young Research Library HB231 .T61h 1838 L 009 608 846 3 %JJ]AINil IWV"^ yc UNIVERSy/y ^ •;:', // •jHVS:; VSOl^'