The Debate of 1819.

Mr. Peel opened the debate. He said: “He was ready to avow, without shame or remorse, that he went into the committee with a very different opinion from that which he at present entertained, for his views of the subject were most materially different when he voted against the resolutions brought forward in 1811, by Mr. Horner, as the chairman of the Bullion Committee. Having gone into the inquiry determined to dismiss all former impressions which he might have received,... he had resolved... to adopt every inference which authentic information or mature reflection should offer to his mind.... He conceived them [the principles of the. Bullion Report], to represent the true nature and laws of our monetary system.”

“All the witnesses examined before the committee strongly recommended the establishment of this [metal] standard, one witness alone excepted, who was an advocate for the indefinite suspension of cash payments. But when this witness was asked whether the indefinite suspension of cash payments was to exist without any standard of value, he answered: ‘No—the pound should be the standard.’ He was required to define what he meant by the pound. His answer was, ‘I find it difficult to explain it, but every gentleman in England knows it.’ The committee repeated the question and Mr. Smith answered, ‘It is something which has existed in this country for eight hundred years—three hundred years before the introduction of gold.’”

“Sir Isaac Newton... entered on the examination of this subject, but that great man came back to the old, the vulgar doctrine, as it was called by some, that the true standard of value consisted in a definite quantity of gold bullion. Every sound writer on the subject came to the same conclusion—that a certain weight of gold bullion, with an impression on it denoting it to be of that certain weight and of a certain fineness, constituted the only true, intelligible, and adequate standard of value, and to that standard the country must return, or the difficulties of our situation would be aggravated as we proceeded.”

“That the excess of commercial speculation which led to such evils was the consequence of an over-issue of paper currency was a fact not to be disputed.”

“If the continuance [of this system] should be sanctioned by the House, let it not be imagined that they ought to measure its future evils by its past.”

Silver had been demonetized in 1816, and the shillings since that time pass current at six per cent, above their value as metal. Gold is the only legal tender for sums above £2. The object of this law is to avoid the effect of fluctuations in the value of the two metals as compared with each other. The United States passed a similar law in 1853. (See p. 187.)

It was believed by many that this law would prove fatal to resumption in gold, and that only silver would circulate. The provision that silver should be legal tender only for 40s. precluded any such danger.

Mr. Tierney objected to the proposed scheme for resumption. He wanted to have the Bank thrown on its own responsibility to resume on a set day, the government repaying, as was proposed, £10,000,000 of the advances of the bank before the day of resumption. He was a very able man, with a reputation for pugnacity. For instance: “The House did not withdraw its confidence from the Bank from any doubt of its wealth or integrity, but from a conviction of its total ignorance of the principles of political economy.”

Alderman Heygate denied inflation and depreciation.

Sir H. Parnell said that any one who still denied this would pay little heed to any further elucidation. He said: “There was another subject so connected with the question before the House that he thought it peculiarly entitled to the consideration of Parliament. He meant the usury laws, for it was evident that if those laws remained in their present state they must operate very injuriously with regard to the supply of capital for the purposes of trade, by diminishing the means of obtaining discounts.”

Mr. Gurney (banker) opposed resumption He dreaded the effects of contraction, and wanted the standard lowered so that 1 oz. of gold should be £4. os. 6d.

Mr. Canning closed the debate, saying that it was “the unanimous determination of Parliament that the country should return, as speedily as possible, to the ancient standard of value in the establishment of a metallic currency.” [Loud and universal cries of “Hear! hear!”]

In the House of Lords, the Marquis of Lansdowne said: “He hoped the country would never again hear of the theories founded on the abstract idea of a pound sterling as a unit, or a bank-note and a shilling being in public estimation equal to a guinea; on the tendency of gold to fly to other countries where it was dearer, without producing any change of value, and other absurdities of that kind. These theories, which had been so ruinous to the country, deserved to be stigmatized as they were by the bill before their lordships, every enactment of which declared their falsehood. By acting on them the country had been overwhelmed by an oppressive mass of debt and grinding system of taxation, all the evils of which were augmented by the fluctuation of values.”

Lord Liverpool thought that the restriction had enabled the country to go through the war. Also, that the opposition to the plan proposed really raised the question, not of resuming sooner or later, but whether to resume at all.

Lord Lauderdale thought that the demonetization of silver had done great mischief, turned the exchanges, and driven out gold in 1817; that the paper was not really depreciated, but at par with silver coinage; that it was quackery to say the Clearing House economized currency; and that the plan proposed, together with the mint law, would bring ruin.

Lord King said that if no day was fixed, the Bank would not get ready, as it had not since the Peace.

Lord Grenville said that, “having considered this restriction as one of the greatest calamities under which this suffering country had labored; having frequently had occasion to lament and deplore the part which he had himself taken on its original proposition in prolonging it for the term of the then existing war... he could not help expressing his joy and satisfaction that the country was at last arrived at that period in which it could look forward with certainty to the repeal of this injudicious and unfortunate measure.” He declared that an irredeemable paper currency was, under any circumstances, a greater evil than good; that “he hoped it would be recorded of him as his decided conviction, that in proportion to the danger under which the country labored, he would almost say, in proportion to the extent of that danger, was the impolicy and desperate madness of such a measure as they were now considering how to rescind.... He could show how the miseries of 1816 followed on the issues of the preceding year; he could show how the excessive issues of country paper, which could not maintain itself like bank paper by legislative enactment, led to a fearful depreciation, and without any fault of individuals, by the mere force of the system, involved the whole kingdom in one general desolation. Not only its trade and commerce, but its agriculture, its landed interest, even classes the most remote from connection with, or even knowledge of, the paper system, found themselves suddenly consigned to total and inexplicable ruin. If their lordships could see at their bar, not merely the victims of commercial failure, but those numerous persons of all ages, sexes, and classes, who had unconsciously suffered without even understanding how or whence the evil fell upon them, such a spectacle would fill their lordships with horror; and he sincerely believed that not only would no voice be raised for the maintenance of such a system in commerce, but not even in war.”

He also urged strongly the necessity of making the Bank independent of government.

The bill was passed, and the government having repaid £10,000,000 of the advances of the Bank, which was recognized as an indispensable condition of resumption, the act went into operation. At the same time the law forbidding the exportation of the precious metals was repealed.