Chapter 5

Debt contracted.Population.Raised by Taxes.Funded.Unfunded.Total Debt contracted.Total Paymentsinto the Exchequer.17,750,0001813£68,748,363£52,118,722£55,478,938£107,597,660£176,346,02317,900,000181471,134,50339,692,53653,841,73192,934,267164,068,77018,150,000181572,210,51250,964,36646,968,13897,932,501170,143,016In 3 years,£212,093,378£142,175,624£156,288,807£298,464,428£510,557,809

If any one supposes these figures are inaccurate, or this statement exaggerated, we beg to say they are not our own. They are copiedliteratimfrom Porter'sParliamentary Tables, vol. i. p. 1; and we beg to refer to that gentleman at the Board of Trade, to whom, on account of his well-known accuracy, the Chancellor refers for all his statistical facts, for an explanation of these, we admit, astounding ones.

Was the capital of the country exhausted by these enormous contributions ofA HUNDRED AND SEVENTY MILLIONSannually to the public service, in the twentieth year of the most costly war on record? So far from it, the great loan for 1814 of £39,000,000 was made at therate of£4, 11s. 1d.PER CENT; that of 1813 at £5, 10s. on an average; that of 1815 at £5, 11s.per cent.[13]And it is evidently immaterial whether the immense amount of £100,000,000 debt, funded and unfunded together, was contracted in the form of direct loan to government, or of Exchequer bills issued from the Treasury, and forming the unfunded debt. Such bills required to be discounted before they were of any value; and their proceeds, as Mr Porter very properly states, were so much money paid into the public treasury. They were an exchange of the capital of the nation for Treasury bills, and were, therefore, just as much a draft on that capital as the exchange of the sums subscribed in loans for the inscription of certain sums in the 3per cent.consols.

In the next place, this poor nation, which has now nearly eaten up its resources in a single season, in the year 1844 possessed, in the two islands, real or heritable property of the yearly value of £105,000,000 sterling,[14]corresponding to a capital, at thirty years' purchase, of £3,150,000,000; and at twenty-five years' purchase, to one of £2,625,000,000. These figures are ascertained in the most authentic manner; that of England by the Report of the Lords' Committee on the burdens of real property;[15]that of Ireland by the Poors' Rate returns; and that of Scotland from an estimate founded on the amount of income-tax paid, as no poors' rate as yet extends universally over the country.

Further, we have the authority of Lord Palmerston, in the debate in last session of Parliament on foreign loans, for the assertion that this poor nation has advanced £150,000,000 in loans to republics since 1824, or to monarchies surrounded with republican institutions; the greater part of which has been lost. Yet so far have these copious drafts been from exhausting, or even seriously trenching, on the capital of the nation, that it appears from the subjoined valuable table, furnished from returns allowedto be taken from the great bill-broking house of Overend and Gurney in London,[16]that during that whole period the interest of money, even in the years when the pressure was severest, never rose above6 per cent., and immediately after fell to 3½ or 3per cent., and in 1844 and 1845, it is well known, it was still lower, at some times as low as 2½per cent.

Again, the income-tax returns for 1846, of this miserably poor nation, exhibit a revenue of £5,200,000 yearly drawn from this source, though the tax is only 7d. in the pound, or £2, 18s. 4d.per cent., and though the tax did not legally go below incomes of £150, and in practice generally excluded those under £200 a-year. The income-tax, in the last year of the war, produced £15,000,000 at 10per cent., reaching all incomes above £60 a-year. Had the same standard been adopted in 1842, when it was reimposed by Sir R. Peel, it would have produced at least £18,000,000 yearly, which sum, increased by 33per cent.from the enhanced value of money by the operation of the act of 1819, would correspond to about £24,000,000, according to the value of money in 1815. This proves that the wealth of the nation hadmore than kept pacewith the increase of its population; for the numbers of the people in the two islands in 1815 were 18,000,000, and in 1845 about 28,000,000, or somewhat above 50per cent.increase.

Lastly, this miserably poor nation, which has eaten up its resources in the shape of quarters of grain and fat bullocks in a single year, exported and imported in the three years 1812, 1814, and 1815, and 1843, 1844, and 1845, before free-trade began, respectively as follows:

Exports.Imports.Official value.Official value.1812,£29,508,517£24,923,9221813—Records destroyed by fire.1814,34,207,25332,622,7111815,42,875,99631,822,0531843,£117,877,278£70,093,3531844,131,564,50375,441,5551845,132,444,50385,281,958

Such were the commercial transactions of this nation, which, in the interval from 1815 to 1845, had become so miserably poor.

Keeping these facts in view, we again ask: Having down to 1845 been so rich,what has since made us so poor? The free-traders and bullionists tell us it was neither the abolition of the corn-laws nor the Bank CharterAct. Then what is it which in so short a time has produced so great, so terrible a revulsion? Government, and their organs in the press, assert that it was the Irish famine, and the absorption of capital in railways. To avoid any chance of misconception on so vital a point, we subjoin the words of the Chancellor of the Exchequer in the debate on the currency on 30th November 1847, as reported in theMorning Postof December 1, which were in substance the same as those employed by the Marquis of Lansdowne in the House of Lords:—

"Up to October there had been no great pressure; but in that month the pressure rapidly rose by reason of theabstraction of capital for railways and corn. The House would be surprised to hear the amount of capital thus abstracted for corn in fifteen months.

June 1846 to January 1847,£5,139 000January 1847 to July 1847,14,184,000July to October,14,240,000Total,£33,563,000

Then as to the capital absorbed in railroads, it had been in each year, from 1840, on an average, to

1843,£4,500,0001844,6,000,0001845,14,000,0001846{ First half-year,9,000,800{ Second half-year,26,600,0001847,First half-year,25,770,0001847,Last half-year,38,000,000

the latter being, of course, estimated on the supposition of the expenditure having continued at the same rates."—Morning Post, December 1, 1847.

Now of all the marvellous statements that ever were put forth by a government to explain a great public disaster, we do not hesitate to say this is the most marvellous. For let it be conceded that these are the real causes of the distress,—that it is the railways and the importation of foreign corn which have done it all—Who introduced the railways and let in an unlimited supply of foreign corn? Who passed all the railway bills, and encouraged the nation in the undertakings which are now held forth as so entirely disproportioned to its strength? Who took credit to themselves for the prosperity which the construction of railways at first occasioned, and dwelt with peculiar complacency, in the opening of the Session of 1846, on the increased produce of the excise, and diminution of crime, as indicating at once the augmented enjoyments and diminished disorders of the poor? Who disregarded the cautious, and as the event has proved, wise warnings of Lord Dalhousie at the Board of Trade? Who opened the railway of the Trent Valley with a silver trowel, and enlarged in eloquent terms on the immense advantages which that and similar undertakings would bring to the country? Sir Robert Peel and the party who now put down the whole evils which have ensued to the foreign corn and railways. Was a single word heard from them condemnatory of the mania which had seized the nation, and prophetic of the disasters which would ensue from its continuance? Did Sir Robert Peel warn the people that the currency was put on a new footing; that the act of 1844 had forbid its extension beyond thirty-two millions issuable on securities, and that as credit was thus materially abridged, the capital of the nation would be found inadequate to the undertakings in which it had engaged? Quite the reverse; he did none of these things. He encouraged the embarking of the capital of the nation in railways to the extent of above two hundred millions,[17]all to be executedin the next four years; and now we are told that the disasters which have ensued are mainly owing to that very unmanageable railway progeny which he himself produced!

Again, as to the importation of foreign grain, the second scape-goat let go to bear the sins of the nation—who let that scape-goat loose? Who introduced the free trade system, and destroyed the former protection on native agriculture, and disregarded or ridiculed all the warnings so strenuously given by the Protection party, that it would induce such a drain on the metallic resources of the country as must induce a speedy monetary crisis, and would subject the nation permanently to that ruinous wasting away which proved fatal to the Roman empire, when the harvests of Egypt and Libya came to supplant those of Italy in supplying the cities of the heart of the empire with food? Who declared that the great thing is to increase our importations, and that provided this is done the exportations will take care of themselves? Who laughed at the warning, "Two things may go out, manufacturesor specie"? It was Sir Robert Peel and his free trade followers who did all these things; and yet he and his party, in or out of administration, (for they are all his party,) coolly now turn round and tell us that the misery is all owing to the foreign corn and the railways, which they themselves introduced!

The Irish potato rot of 1846, it is said, occasioned the great importation of grain, which for the next winter and spring deluged the country; and but for them we should have been landed in the horrors of actual famine over a great part of the country. We entirely agree with this statement. The Protectionists always were the first not only to admit, buturgently to insistthat absolute freedom of importation should be allowedin periods of real scarcity. The sliding-scale formerly in use expressly provided for this; for the duty began to fall when wheat reached sixty-three shillings, and declined till at seventy-three shillings it was only one shilling a-quarter. It was on the propriety of admitting grain duty-free in periods ofaverage or fine harvests, such as we have just been blessed with, that they were at issue with their opponents. Under the old system, nearly all the grain which was imported in the winter of 1846 and spring of 1847, would have come in, for the duties became nominal when wheat rose to seventy-three shillings a-quarter, and it rose during that period to one hundred and five and one hundred and ten shillings. What the Protectionists said, and said earnestly, when this vast importation,necessary at the time, was going on, that itanticipatedthe effects of a free importation of grain, and by its effect on the currency, while it lasted, might teach the nation what they had to expect whena similar drain, by the effects of free trade,became perpetual. Eight months ago, on March 1, 1847, we made the following observations in this Magazine:-

"The quantity of grain imported in seven months only, viz. from 5th July 1846, to 5th February 1847, exceeded six millions of quarters, at the very time when our exports were diminishing. Itmay be imagined how prodigious must have been the drain upon the metallic resources of the country to make up the balance. The potato rot, it is said, hasconcealedthe effects of free trade. Quite the reverse. Providence has done the thing at once. We have got on at railway speed to the blessings of the new system. Free trade was to lead to themuch desired substitution of six millions of quarters of foreign, for six millions of quarters of home growth in three years. But the potato rot has done itin one. The free trade policy could not have done it so expeditiously, but it would have done it as effectually. It is a total mistake, therefore, to represent the famine in Ireland and the West of Scotland as an external calamity which has concealed the effects of free trade.It has only brought them to light at once."—Lessons from the Famine.Blackwood's Magazine, March 1847.

The real amount of the famine in Ireland, of which so much has been said, was very much magnified, however, by the fears of some parties and the interested exaggerations of others. The deficiency in the two islands has been stated variously, at from sixteen to twenty million pounds worth. Take it at the larger sum to avoid all idea of misrepresentation—what is this to the total agricultural produce of Great Britain and Ireland? That is estimated by Mr Porter on very rational grounds at three hundred millions annually, in produce of all kinds. The subtraction of twenty millions worth;—a fifteenth part, at the very utmost, could never account for the prodigious rise of prices from forty-nine shillings a-quarter to one hundred and ten shillings, which wheat rose to in March 1847. It was the impulse given to speculation in grain, by the sudden throwing open of the ports by Sir Robert Peel's free trade measures, which really occasioned the prodigious importation so much exceeding what was required, which actually took place. The defalcation occasioned by the Irish potato rot, and the deficiency of the oat-crop in Great Britain, was at the very utmost a fifteenth part of the annual supply. But the grain imported in the first nine months of this year has exceeded ten millions of quarters, being a fullsixthpart of the annual consumption of the nation, which for the use of man and animals together is estimated at sixty million quarters. And hence the rapid fall of prices which followed the fine harvest of 1847, from one hundred shillings to fifty shillings, which has involved in ruin so many houses concerned in the corn trade.

But what is particularly worthy of notice, and what we in the most earnest manner beg to impress upon our readers as by far the most luminous and important fact which the recent discussions in parliament have elicited, is this. It is stated, as has been already noticed, by the Chancellor of the Exchequer, that the sum paid for foreign grain in the three months ending November 30th 1847, that is in the months of September, October, and November, 1847, had reached the enormous and unprecedented amount of £14,240,000! The same statement was made by Lord Lansdowne in the House of Lords; and the Chancellor of the Exchequer added, that to be sure of the figures, he had them remitted to and corrected by Mr Porter. Now, this immense importation, be it recollected, took placeIN THE FACE OF THE FINEST HARVEST KNOWN FOR YEARS, and for which a public and solemn thanksgiving has just been returned. We say nothing of the prospects of foreign importation which this fact opens to our agricultural interests,—that furnishes ample subject for future consideration; what we pray the public attention to, is the warning which it gives of the effects of free trade upon themonetary concernsof the nation, and above all on the credit of the trading and commercial classes. This is the importation, in an uncommonly fine season, with a noble harvest in both islands, just reaped! The dreadful monetary crisis of October 1847, which rendered the suspension of the Bank Charter Act, on the 25th of that month, indispensable, was evidently owing to the prodigious importation which all the fineness of the preceding harvest could not check. The crisis of April 1847, may with justice be ascribed to the failure of the potato crop in Ireland, and would probably have come on, though not with the same intensity, though the change on the corn laws had been made by SirRobert Peel in the July preceding. But it is rather too much to go on talking in December 1847, about the failure of the crop of 1846 in Ireland, four months after one of the finest crops in the memory of man had been reaped in the British dominions.

This points to one great and lasting truth, the due appreciation of which by the people of Great Britain is of such paramount importance, that it will be cheaply purchased even at the cost of all the misery and destruction of property which the late crisis has occasioned in the British empire. This is, that the great importation of grain, and consequent abstraction of the precious metals consequent upon the free-trade system, may be expectedto be permanent. We have repeatedly warned the nation in every possible form that this would be the case, but our warnings during the free-trade mania met with no attention. Now, however, it has been proved by the event that they were too well founded. The old and rich state will always be undersold by the young and poor one in the supply of grain for its own market. The grain-growing state never will take manufactures to any proportional extent, butalways will take gold in exchange. This was the case with Rome in ancient days; this is the case with England in these times. The steam-engine and machinery do little or nothing for agriculture, though every thing for manufactures. The great grain states are always those nations in which the labouring-class are poor, or have few artificial wants, and consequently take few or no manufactures. Poland, the Ukraine, the Valley of the Mississippi, are examples. Gold is what they want, and what they will have; for it is the cheapness of their production which enables them to export to advantage. So universal is this truth, of such paramount importance is it upon the fortunes of an old and highly civilised state, that, it may safely be affirmed, its existence in its old age depends on the requisite safeguards against the danger thence arising being established. Such are the effects of the constant drain of gold and importation of grain on such a state in its advanced stages, that even the strongest nation will sink in time under the strain, as Rome did, if nothing is done to avert the danger.

The present dreadful crisis under which the nation is labouring, therefore, is not owing to a want of capital for all its undertakings, nor to any present deficiency in our native supply of food. It is in vain that Sir R. Peel, to throw the blame off the Bank Charter Act, says it is all owing to a deficiency of capital to carry on our undertakings. Has the Right Hon. Baronet forgotten that, so recently asMarch last, the Chancellor of the Exchequer borrowed £8,000,000 for the destitute Irish at £3, 7s. 6d.per cent.? Was this like a nation, the capital of which was exhausted? Has he forgotten that, till within these few months, the funds were from 88 to 90, and interest generally at 3 or 3½per cent.? What has come of all this capital since August last? Has it vanished before the genial showers and bright sun which gave us so fine a harvest? But if deficient capital has been the cause of our disasters, how has it happened that Lord John Russell's letter of 25th October, authorising the Bank to make advances beyond what the Act allowed, has already had a sensible effect in arresting the disorder, at least in the metropolis? Can it be said that that letter added one pound to the realised capital of the country? It might as well be affirmed that it added a cubit to every man's stature in it, or a quarter to the produce of every field it contained. Then how has it to some degree arrested the panic in London, raised the 3per cents.from 79 to 86, and lowered the interest of money from 8 or 9 to 6 or 7per cent.? Evidently by its effect uponCREDIT; because it begat a hope—not likely, we fear, to be realised—that government had at last become sensible of the ruinous effect of the Bank Charter Act, and would speedily restore the circulation of the country to that amount, which the magnitude of its population and transactions imperatively required.

To illustrate the terrible and all-powerful operation of this deplorable Act on the best interests of the country, let it be supposed for a moment that thewholecurrency of the country,without any change in its laws as affecting debtor and creditor, were to be withdrawn. What would be the result? Evidently that every man and woman it contained, from Queen Victoria and the Chancellor of the Exchequer downwards, would become bankrupt. A nation possessing real property, as the income-tax and poor-rate returns show, of the value of £3,000,000,000 sterling, and moveable property of £2,000,000,000 more, would, without the exception of a single living creature in it, become bankrupt because £70,000,000 or £80,000,000 was withdrawn from its circulation, while its laws remained unchanged. By these laws, every debtor must discharge his liabilitiesin money; and therefore, if the whole money was withdrawn, no debt could be discharged at all, and universal bankruptcy would ensue.

Now, the contraction of the currency to any considerable extent operates, so far as it goes, in just the same way on general credit and the national fortunes. When money becomes scarce, no one can, without difficulty, discharge his obligations, because the banks, who are the reservoirs from which payment of all considerable transactions are drawn, cannot afford the usual accommodation. Those who are not in first-rate credit can get nothing from them at all, and at once become bankrupt. The sum-total of difficulty and embarrassment thus occasioned, is not to be measured by the amount of specie or bank-notes actually withdrawn from circulation by the Bank of England, though that on occasion of the present crisis has been very considerable. It is to be measured by the shock given to credit; the increase in the practice of hoarding, which a feeling of general insecurity never fails to engender; the reluctance in the country banks to make advances; the universal effort made to recover debts at the very time when the means of discharging them have been rendered most difficult; the rapid diminution in the private bills put in circulation from the experienced impossibility of getting them discounted. The contraction of the currency on the part of the Bank of England, from July 1846, when it was £21,000,000, to September 1847, when it was only £17,840,000, was no less than £3,160,000. Including the simultaneous and consequent contraction by the country banks in Great Britain and Ireland, the diminution of the paper currency was above £5,000,000. But this, considerable as it is, was but a small part of the evil. The bills in circulation in Great Britain in 1839 were estimated by Mr Leatham, a most experienced Yorkshire banker, at £130,000,000. In 1845, it may safely be assumed, that they had reached £160,000,000 or £170,000,000. Without a doubt this immense sum was reduced by at least a fourth, probably a half, from the contraction of the currency consequent on the Bank Act of 1844. It is this prodigious contraction, the necessary consequence of the banks having been rendered unable or unwilling to discount bills, which is the real cause of the present universal distress and general stoppage of all undertakings. And it was the more ruinous from the circumstance, that it occurred atthe very timewhen, from the vast encouragement given by government to domestic railways by the bills they passed, and to foreign trade from the abolition of the main duties protective of industry by them, the nation was landed in transactions of unheard-of magnitude, and producing an unparalleled strain upon its metallic resources.

This last is a consideration of such paramount importance, that it is of itself adequate to explain the whole phenomena, which have occurred; and yet, strange to say, it has hitherto met with very little attention either in or out of Parliament. The point to which we allude, and to which we crave, in an especial manner, the attention of the nation, isthe progressive and now alarming disproportion between the money value of our imports and our exportswhich has grown up ever since Sir Robert Peel's tariff was introduced in 1842, and which has now, from the action of the free-trade in corn, risen to such a height as to be absolutely frightful. The declared or money values of our total exports and official value of our imports since Sir Robert Peel's tariff was passed in 1842, have stood as follows:—

Imports, official value.Exports, declared value.1841,£64,377,9621841,£51,604,4301842,65,204,7291842,47,361,0431843,70,093,3531843,52,278,4491844,75,441,5551844,Not made up.1845,85,281,9581845,53,298,0261846,Not made up.1846,57,279,735Three first quarters of1847,39,240,0001847,Not made up.

The imports for 1847 have not yet been made up, and cannot be till January next, when the year is concluded. But in the figures we have given, there is abundant room for the most serious reflection. The fact which the Chancellor of the Exchequer has mentioned as to the sums paidfor grain alone, in fifteen months, having reached the enormous and unprecedented amount of £33,000,000, leaves no room for doubt that, in the year 1847, our importswill have reached £100,000,000, while our exports have sunk below £50,000,000.[18]Now, how was this fearful balance paid? The answer is evident. In cash. Here then, without going farther, is a balance on the exports and imports already returned, in 1846, offorty millionsagainst the nation, on the transactions of the present year, of probably not less thanFIFTY MILLIONS STERLING.[19]Whoever considers these figures with attention, will be at no loss to perceive from what cause in the main the present disasters have arisen.

To give only one example of the way in which, under the system of free importation, the balance of trade has been turned against this country, we subjoin the official returns of the progress of our trade with America since Sir Robert Peel's tariff was introduced in 1842, and for five years previously.[20]From that it appears that the trade with that country, which in 1830 was £8,000,000 on each side, has now so immensely changed, especially since the tariff of 1842, that, while our exports to it in 1845 were £10,000,000, our imports from it were £22,000,000! How was the balance of £12,000,000 paid? The answer is,in money; and that money it was which enabled them to conquer the Mexicans. We shall look with anxiety for the returns of our exports to, and importations from America for the last two years. When they appear, it will at once be seen where the money, the want of which is now so severely felt, has gone, under the fostering influence of free trade.

Sir Robert Peel says that the Americans have tried the system of paper money, and they have had enough of it. We thank the Right Honourable Baronet for having reminded us of this example of the effects of a contracted currency. It appears that in 1836 the imports of English manufactures into the UnitedStates were £15,116,300. In the next year they were only £5,693,094 official value; and the declared or real value in that year was only £4,695,225; and the declared value of the imports from Great Britain in 1842, was only £3,528,807.[21]What occasioned this extraordinary defalcation, we shall inform the Right Honourable Baronet. In spring 1837, the metallic system was introduced by General Jackson, then President of the United States, (by his refusal to take any thing but specie in payment of government claims,) the country being at the time engaged in vast railway and other undertakings, with the concurrence and by the authority of government. Thence the prodigious falling off in the imports from this country, under which our own manufacturers suffered so severely, and from which they have scarcely yet recovered. Thence the destruction of three-fourths of the mercantile capital of the United States. May heaven avert a similar catastrophe, resulting from the same policy, in this country!

The causes, then, to which the present dreadful crisis is owing, are as plain as if the proofs of them were to be found in Holy Writ. We shall simply record what Sir Robert Peel and the bullion party have done for the last five years, and then ask whether under such a system it was possible a catastrophe could be averted.

In the first place, they introduced the tariff of 1842, which so materially diminished the duties on importation in this country, and gave so great an impulse to the introduction of foreign articles of all sorts into the consumption of the people, as raised our imports in 1845 to £85,000,000, while our exports were only £53,000,000, exhibiting a balance of £32,000,000 against the country, which of course required to be paid in the precious metals.

Secondly, having established this great drain of nearlythirty millionsannually on the metallic resources of the country, Sir Robert Peel next proceeded to pass the Bank Charter Acts, for England of 1844, and for Scotland and Ireland of 1845, which limited the bank notes of the empire, issuable on securities, to £32,000,000,[22]and enacted that for every note issued beyond that amount, a sovereign should be in the bank's strong-room to represent it.

Thirdly, having imposed these firm restrictions on the increase of the paper circulation, and left no room for an augmentation to meet the growing wants of the community but by an addition to the stores of bullion in the country, and compelled a proportional contraction of the currency when the bullion was withdrawn, the Right Honourable Baronet and his administration next passed railway bills to the amount of above £150,000,000 sterling, to be executed in the next three years, and gave every facility to the undertaking of such projects, by lowering the deposits required from ten to fiveper cent.on the estimated cost of the undertakings.

Fourthly, when the strain on the metallic resources of the country was beginning to be felt, from the immense balance of thirty millions in our commerce against us, and the calls on railway shares were becoming considerable, the Right Honourable Baronet next, as a permanent system, not an extraordinary remedy to meet a temporary disaster, introduced a free trade in grain, which was immediately applied by his successors to sugar. He thus sent thirty-three millions, in gold and silver, abroad in fifteen months. The consequence has been that the imports of the empire have probably becomedoubleits exports in money value; that a balance of nearly £50,000,000 has this year been sent abroad in payment of articles of import; that thesums paid for grain alone in the three months immediatelyfollowing the finest harvest on record, have exceeded £14,000,000; that nearly all the railways in the country have been stopped from the necessary contraction which, under the existing law, this export of specie occasioned to the currency; that distress of dreadful magnitude pervades the mercantile and manufacturing classes; and that our exports have fallen off at the rate of a million a-month, and our revenue above six millions a-year.

Such are the principles and results of that splendid combination effected by modern wisdom—FREE TRADE AND A FETTERED CURRENCY. And as these results flow naturally and necessarily from the principles put in practice, it is evident that they may be expected in a less or greater degreeto be permanent, so long as these principles regulate the policy of government.

Suppose a general at the head of one hundred thousand men were to double, by orders issued or licenses granted from head-quarters, the distance to be marched, and the work done by the men, andat the same timeto establish a system which sent half of the commissariat stores out of the camp,—what could be expected from such a policy but starvation, discontent, and ultimate mutiny among the soldiers? Or suppose a master manufacturer, as a great improvement on the machinery of his mill, were to introduce a system which abstracted the oil in proportion to the quickened movement of the wheels, or diminished the moving power in proportion to the increase of the work to be done,—what could be expected from such a change, but that the machine would stop when it had most work to do? And yet, is not a currency, anda sufficient currency, as necessary to an industrious nation as food to the soldier, or coals to the steam-engine, or oil to the wheels? Can we be surprised that such a system, when applied to a nation, terminated in disappointment and ruin? But one result of inestimable value has followed from its adoption; it is in periods of suffering that truth is learned, because the consequences of error are experienced. It is now seen what the true principles on the subject are, because the effects of the opposite principles have been demonstrated. With truth may it be said, that Sir R. Peel is the philosopher who "HAS INSTRUCTED US IN THE CURRENCY."

It is the same thing, it is often said, whether we send specie abroad in return for imports or manufactures of our own creation, for specie is not the growth of this country, and it could only have been brought here in return for some produce of ours previously exported. The common sense of mankind, founded on experienced suffering arising from the abstraction of specie, has ever repudiated this doctrine of the schools; and present experience has amply demonstrated that, how specious soever it may appear, there is some fallacy in it. Nor is it difficult to see what that fallacy is. If we send manufactures abroad in exchange for specie, we make a fair exchange; but if, having got the specie, we sendITabroadagain, instead of manufactures, to buy food,—we haveonly oneexport of British produce to set off againsttwoimports of foreign. For instance, if we send £5,000,000 worth of manufactures to South America to buy that amount of specie, it is a fair exchange, and there is no unfavourable balance established against us. But if, having got the £5,000,000 worth of specie, we again send it to North America for grain, which is imported into this country, instead of sending £5,000,000 worth of manufactures, we have, on the whole, only exported £5,000,000 worth of manufactures for £10,000,000 worth of produce, bullion and corn imported: that is, there is a balance of trade to the amount of £5,000,000 established against us, which, to that extent, is a drain on our metallic resources. Had we sent £5,000,000 worth of manufactures instead of the same amount of specie to North America to buy food, our exports on the whole would have been £10,000,000 instead of £5,000,000; and the difference of £5,000,000, instead of beinga deduction from, would have beenan addition tothe metallic resources, that is, the life-blood of the nation. It is because a great import of grain invariably leads to such an export of specie, that it is so hazardous a trade for a nation: it is because Sir R.Peel's policy contracted the paper currency at the very time that he sent the metallic abroad in quest of food, that he has brought such calamities on the State.

The Right Hon. Baronet's defence of his policy is mainly to be found in the following paragraph of his late able speech, in the close of the currency debate:—

"I think there has been some misapprehension as to the objects contemplated by the Act of 1844. I do not deny that one of them was the prevention of the convulsions that had theretofore occurred in consequence of the Bank of England not taking due precautions as to the regulation of its issues. I did hope, after the experience of former crises, that the Bank of England would adhere to those principles of banking which the directors acknowledged to be just, but from which they admitted they have departed. (Hear, hear, hear.) I am bound to admit that in that hope, and in that object, I have been disappointed; and I also admit, seeing the number of houses that have been swept away—some of which, I fear, were long insolvent—(Hear, hear)—and others which, being solvent, have suffered from the failure of other houses—I am bound to say that in that object of the Bill I have been disappointed. (Hear, hear.) It was in the power of the Bank to have, at an early period of the distress, raised the rate of discount, and to have refused some of the accommodation they granted between 1844 and 1846. (Hear, hear, hear.) I cannot, therefore, say that the defect is exclusively, or mainly, in the Bill—(Hear, hear)—but my belief is, that executive interference might have been given without the necessity of the authority of the noble lord."—Morning Post, Dec. 2, 1847.

The observations which have now been made, show that these remarks are not only unfounded, but precisely the reverse of the truth. Had the Bank of England drawn in their discounts, and raised the rate of interest between 1844 and 1846, at the very time when the railway and free-trade work, into which Sir Robert Peel had plunged the nation, was at its height, what must have been the result? Nothing but this: that the catastrophe which has ensued would have come on two years sooner than it has actually done. The Right Hon. Baronet would have been prevented from making his emphatic speech on the admirable effects of his policy, and the diminution of crime, in the opening of the Session of 1846; he would have found the jails and the workhouses full enough, at the period of that glowing eulogium on free-trade policy and its effects. By making liberal advances to railway companies in 1844 and 1845, the Bank of England, and the other banks which followed its example, only enabled the country for a time to do the work upon which Sir Robert Peel had set it. By enabling, by similar advances, the manufacturers for two years longer than they otherwise could have done, to send a large export of manufactures abroad, the Bank, for that period, averted or postponed the catastrophe which must ensue in a commercial state, when its imports, for a series of years, have come greatly to exceed its exports. It is because the contraction of the currency, rendered imperative on the Bank by the Right Hon. Baronet's bill, has disabled our manufacturers from carrying on their operations to their wonted extent, that the import of the raw materials employed in manufactures, has decreased during the last eighteen months to such an extent, our export of manufactures declined in a corresponding degree, and the drain of specie abroad to pay for the enormous importations simultaneously introduced, increased to such a ruinous extent.

Sir R. Peel reminds us of the great catastrophe of December 1825, and observes that that disaster, at least, cannot be ascribed to his Bank Charter Act, and that it arose from the everlasting tendency to overtrading in the people of this country. Again we thank the Right Hon. Bart. for reminding us of that disastrous epoch, which, in the still greater suffering with which we are now surrounded, had been well-nigh forgotten. We entirely agree with him as to the magnitude of that crisis, and we will tell him to what it was owing, and how it was surmounted. It was owing to Mr Secretary Canning, in pursuance of liberal principles, "calling a new world into existence," by violating the faith and breaking through the duties of the old one. It arose from the prodigious loans sentfrom this country to prop up the rickety, faithless, insolvent republics of South America, and the boundless incitements held out to wild speculation at that period by "Mr Prosperity Robinson," especially in South American mining speculations. It arose from all this being done and encouraged by the government, at the very time when the act of 1819, introduced by Sir R. Peel, compelled the Bank,—though drained almost to the last guinea, by the prodigious quantity of gold sent headlong to South America to support these speculations, induced or fostered by the government,—to pay all its notes in gold. This was what induced the crisis. And what arrested it? Lord Ashburton has told us it was the issue of £2,000,000 of forgottenbank-notes, drawn out of a cellar of the Bank; but which sum, inconsiderable as it was, proved sufficient to arrest the consequences of the gold being all sent away to South America, in pursuance of liberal principles, to prop up "healthy young republics," carved out of the dominions of an old and faithful ally. Sir R. Peel, two-and-twenty years afterwards, has repeated the same error, by sending the gold to North America in the midst of great domestic transactions for grain, but he has not repeated the same remedy.

In truth, the system now established in regard to the bank by the acts of 1819 and 1844,necessarilyinduces that very feverish excitement in periods of prosperity, and sudden contraction in those of adversity, of the consequences of which Sir R. Peel so loudly complains. When the bank is obliged to accumulate and keep in its vaults so prodigious a treasure as £15,000,000 in prosperous times, and £9,000,000 or £10,000,000 in those of adversity,lyingdead in its possession;how is it to indemnify itself for so vast an outlay, without, whenever an opportunity presents itself, pushing its circulation to the utmost? The very interest of this treasure amounts, at 5per cent., to above £700,000 a-year; at 7per cent., the present rate, it will reach a million. How is this sum to be made up, the expense of the establishment defrayed, and any profit at all realised for the proprietors, if paper, to a large amount, is not pushed out whenever an opportunity presents itself for doing so to advantage?

Again, in adverse times, when there is a heavy drain upon the establishment for buying foreign grain, or discharging adverse exchanges, how is the bank to avoid insolvency, without at once, and suddenly, contracting its issues? The thing is unavoidable. Undue encouragement to speculation in prosperity, and undue contraction of credit in adversity, is to the Bank, since the acts of 1819 and 1844, not merely an essential preliminary to profit, but in trouble the condition of existence. Yet Sir R. Peel complains of the Bank doing that which his own acts have rendered indispensable to that establishment.

Sir R. Peel asserts that many of the houses which have lately become insolvent, have done so from excessive imprudence of speculation; and he succeeded in eliciting some cheers and laughter from the House of Commons, by contrasting in some extreme cases the amount of the debts brought out in bankruptcy with the assets. Without deeming it necessary to defend the conduct of all the houses, the affairs of which have been rendered public by the vast corn trade and railway speculations into which he plunged the nation, it seems sufficient to observe, thatallfortunes made by credit must, if suddenly arrested in the course of formation by such a contraction of the currency as we have lately experienced, exhibit the same, or nearly the same, results. Fortunes, with the magnitude of which the Right Hon. Baronet and Mr Jones Loyd are well acquainted, might possibly, if they had been thrown on their beam-ends suddenly, by such a tornado, have exhibited, when in growth, not a much more flattering feature. But the "Pilot who weathered the storm" was then at the helm, and he weathered it for their fortunes not less than for those of the country. Heaidedcommercial distress in adversity by increasing, instead ofaggravatingit by contracting, the currency. It is credit which has made us what we are, and credit which must keep us such. Had the monetary system of Sir R. Peelbeen adopted forty years ago, as the bullion committee said it should, we shall tell the Right Hon. Baronet what would have been the result. Great Britain would have been a province of France: the fortunes of all its merchants would have been destroyed: the business talents of Mr Jones Loyd would probably have procured for him the situation of cashier of the branch of the Bank of France established in London; and possibly the rhetorical abilities of Sir R. Peel might have raised him to the station of the English M. De Fontaine, the orator on the government side in the British Chamber of Deputies, held under an imperial viceroy on the banks of the Thames.

Sir R. Peel admits his bill has failed in checking improvident speculation in the nation; nor could he well have maintained the reverse, when the most extravagant speculations on record, at least in this island, succeeded, in thevery next year, the passing of his bill. Experience has proved that it required to be suspended by the authority of the executive when the disaster came; and the effect of that suspension has already been to raise thethree per centsfrom 79 to 86. It is ineffective during prosperity to check imprudence; it requires to be suspended in adversity, because it aggravates disaster. This is all on the Right Hon. Baronet's own admission. What good then has it done, or what can be ascribed to it, to counterbalance the numerous evils which have followed in its train?

Sir R. Peel says the experience of the last half century proves, that every period of prosperity is followed by a corresponding period of disaster, and that it is under one of the latter periods of depression that the nation is now labouring. We agree with the Right Honourable Baronet that for thirty years past this has been the case, and we will tell him the reason why. It is because for that period his principles have been in operation. But there was a period before that when no such deplorable alternations of good and evil took place; when the nation in prosperity was strong without running riot, and the government in adversity checked disaster, instead of aggravating it. It was the period from 1793 to 1815, when a currency adequate to the wants of the nation was supplied for its necessities, and our rulers had not yet embraced the principle that, in proportion as you increase the work men have to do, and enlarge their number, you should diminish their food. It was the period when Mr Pitt or his successors in principle were at the helm. Three commercial crises came on at that time, all occasioned by the abstraction of specie for the use of the great armies then contending on the Continent,—those of 1793, 1797, and 1810. In the first, the panic was stopped by Mr Pitt's advance of £5,000,000 exchequer bills; in the second, by the suspension of cash payments; in the third, when gold was so scarce that the guinea was selling for twenty-five shillings, by the issue of bank-notes to the extent of £48,000,000. That last period, which under the present system would at once have ruined the nation, was coincident with its highest prosperity: with the Torres Vedras campaign, and a revenue raised by taxes of £65,000,000 yearly. All the panics on record have arisen from the abstraction of gold in large quantities, and have been cured by the issue, sometimes speedy, sometimes tardy, of a corresponding amount of paper. Sir R. Peel's policy doubles the evil, for it at once sends abroad the cash under his act of 1846, even in the finest seasons, to buy grain, and, under the act of 1844, at the very same moment contracts the currency, by the increase of which alone the evil could be remedied.

Sir R. Peel, however, has completely, as already noticed, instructed us in the true principles of the currency. It is his policy which has brought them to light. He contracts the currency when gold is scarce, and expands it when it is abundant. The true principle is just the reverse: it is to contract the paper when gold is abundant, and an expansion of the currency is therefore little needed: and to expand it when it is scarce, and therefore an addition to it is imperatively called for. The price of gold will at once tell when the one or the other requires to be done.

We conclude in the words we used onthis day twenty-two years, on Jan. 1, 1826, immediately after the cessation of the dreadful panic of December 1825:—"It may be that the Ministry is right, and that all these changes are wise and necessary, but we cannot discover it. The more accurately we examine, the more firmly we are convinced of the truth of our own opinions. Time has brought no refutation to us, whatever it may have done to those from whom we differ; in so far as experiment has gone, we may point to it in triumph in confirmation of our principles and predictions. If at the last we be proved to be in error, we shall at least have the consolation of knowing that we have not erred from apostasy; that we have not erred in broaching new doctrines and schemes, and supporting innovation and subversion; that we have not erred in company with the infidel and revolutionist,—with the enemies of God and man. We shall have the consolation of knowing that we have erred in following the parents of England's greatness,—in defending that under which we have become the first of nations, and in protecting the fairest fabric that ever was raised under the face of heaven, to dispense freedom and happiness to our species. Our error will bring us no infamy, and it will sit lightly on our ashes when we shall be no more!"

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