OF THE

INCREASED PRICE OF THE

NECESSARIES OF LIFE,

AND OF THE

HIGH PRICE

OF

GOLD BULLION.

WITH

AN APPENDIX.

BY

EDWARD COOKE, ESQ.

&c. &c. &c.

LONDON.

VOL. XIV.

Pam.

NO. XXVII.

Р

THE REAL CAUSE,

&c. &c.

THE Question to be decided upon the REPORT of the Committees of the two Houses of Parliament, seems of the greatest importance to the Empire that was ever agitated upon a financial subject.

The imposing upon the Bank a Restriction in 1797, suspending Cash Payments, was not an act of deliberation and choice, but of irresistible necessity. The measures now to be taken are to be the result, not of necessity, but of mature deliberation; to be founded on the principles, not of temporary expediency, but of permanent policy.

It seems, that whatever shape the discussion may take, whatever faces it may present, whatever schemes it may open, the decision must be ultimately formed on one of the two following principles.

1.-Either that the amount of our circulation is to be measured

by its adequacy to all the wants, demands, and interests of the Kingdom, arising from the whole of its income taken in the most extended sense, and that a system is to be ever acted upon for keeping its amount fully adequate to all these purposes;

or,

2.-That a system of contracting our Currency is to be acted upon for the sole purpose of bringing gold to mint price, and

for keeping it invariably at that price by alternate contractions and augmentations of the issue of Bank Notes, according to the variations in the market price of gold, without reference to the wants, interests, or income of the country.

There could not possibly be any hesitation which of these two principles should be the foundation of our national policy, did not some violent and predominant circumstance interfere.

And I conceive this circumstance is the following: that as we have a Paper Currency, unless we combine and unite it, with a fixed standard of intrinsic value, it may from excess be depreciated to any possible extent. And that the preservation of this union in value is so essential, that all conveniences, all utilities attending a full and redundant currency, are to be sacrificed to it.

Having thus opened my view of the chief principles on which the national decision upon the question of our Currency, will turn, I proceed to the object of this Paper, which is to remove some important errors and misconceptions which seem to have made an impression, a false impression on the public mind.

The two great points upon which the discussions on the restriction of our currency have turned, are the nature of our money standard, and the cause of the Rise in the price of gold.

With respect to the first point, on one part it has been contended, that our standard was some ideal pound sterling, of an abstract theoretical nature, which formed our money unit. On the other part it is contended, that our money standard is the mere Quantity of gold of a certain purity, which quantity and purity are ascertained by law, and form the Mint standard.

The first of these explanations of the money standard is too speculative for any practical purpose, supposing it not to be completely visionary; the second is defective, from being an incomplete enumeration of the ingredients by which our money standard is fixed.

Blackstone lays down truly, that with respect to coinage, three things are to be considered, the Materials, the Impression, the Denomination. Now it is Denomination, or the Rate of Value for which Coin is to pass current, by which the money standard is ultimately formed. The weight, and the purity of the metal of which coin is to be composed, being fixed, the value for which it is to pass current must then be added; and when these are all decided by legal authority, a Mint Indenture is framed accordingly, and a Royal Proclamation issues thereupon, describing the Coins which are to be circulated, and fixing the rates at which they are to pass current.

The Mint Indentures therefore, and the Proclamations thereupon, fix our money standard.

According to these Indentures and Proclamations, the Gold Standard of Value is 31. 17s. 10d. the ounce Troy: at 22 carats fine.

70000

And a Sovereign is valued at 20 shillings, being equivalent to 5 dwts. 34% grs. of Standard Gold, at the Mint Price of 31. 17s. 104d. an ounce. This Sovereign is our Gold Pound Sterling, and the Bank Pound Note represents this Pound Sterling, the Gold of which is valued at 31. 17s. 104d. an ounce.

The Pound Sterling, thus formed under the law, and ascertained by Mint Indenture and Proclamation, is our Money Unit, the foundation of all our money of account, and the basis of all our money transactions.

It is the representation of the gold Sovereign, coined of sterling standard gold, of the price of 31. 17s. 104d. an ounce Troy.

It does not represent gold of 31. an ounce, or 31. 15s. an ounce, or 47. an ounce, or 51. an ounce,—but gold of 3l. 17s. 101d. an ounce only.

Thus is the character of our Gold Standard fixed, and it is of course invariable, until the Sovereign and the Law which formed it, shall alter it.

The Government and the Law may alter the Standard of Gold, as it has recently done the Standard of Silver: but so long as our present Standard remains, the One Pound Sterling is equivalent to 5 dwts. 32740 100 grs. of Gold, at the price of 31. 17s. 10d. an ounce, and of this standard the One Pound Bank Note is the counterpart, and passes current in the market at the same value.

Having thus explained the nature of our Money Unit, or Pound Sterling, and shown it to be fixed on a triple basis of invariable quality, as to Weight, Fineness, and Denomination; and having shown that our Bank Note is its counterpart, I beg leave to refer the reader, if he has any doubts on the subject, to the Statutes, to the Mint Indentures, and Proclamations upon them.

And if the character of the Standard I have thus given be adhered to in all our considerations, the confusion and perplexity which attend the discussions on our Currency, will be greatly alleviated. These have very much arisen from considering our Standard as merely relating to the quantity and purity of the Gold contained in our Coin, and from not including its Denomination, which alone ascertains its legal rate of value in currency; and renders its value fixed, in contradistinction to Bullion, the value of which is variable with the market.

Having explained the nature of our Money Standard, I proceed to show the misconceptions which have arisen with respect to the cause of the rise in the market price of gold.

The Bullion Report of the House of Commons of 1810, was pleased to state at its very outset, that the prices of all commodities had risen, and gold appeared to have risen in price only in common with them. If this effect is to be attributed to one and the same cause, that cause can only be found in the state of the Currency of this country. And it afterwards (p. 17.) reasons in the following manner: and that in the event of prices being raised in one country by an augmentation of its circulating medium, whilst no similar augmentation in the currency of a neighbouring country has led to a similar rise of prices, the currencies of those two countries will no longer continue to bear the same relative value to each other as before. And then the Reporters having formed all their reasonings upon these two assumptions, conclude, that the whole rise of the price of gold, and the fall of exchanges, were solely ascribable to an excess in the Issue of Bank Notes.

Here then we see the rise of prices accounted for per saltum at once. An excessive Issue of Notes is stated not only to be the cause, but the sole cause- and of course the leaders of that Committee having presumed this point, their sole business was to prove it, if they could. They of course naturally avoided any thing like a fair inquiry into any other event or circumstance which might influence the question, and clash with their prejudice; but it was not to have been expected, that they should not have investigated very fact they asserted; viz. the existence of an Excess of Issue, but preferred taking it for granted, without any proof

even the

at all.

Now it seems to me-that when an excessive Issue of Notes was proclaimed as the sole cause of the extraordinary rise in the price of gold, the Committee were bound to prove that Excess.

They were bound to have shown the quantity of Coin and Bank Notes which were in circulation before the Restriction Acts.-They were bound to prove what was the population of Great Britain at the commencement of the War, and what in 1810.-They were bound to show what was the amount of taxes at the commencement of the War, and what in 1810.-They were bound to show what was the amount of sums levied before the War, and what in 1810. They were bound to show what was the state of Imports and Exports, and Commerce, and Navigation in general at the commencement of the War, and what in 1810.

And before they should have resolved, that Excess of Issues was the sole cause of the rise of the price of gold, they should have stated the different results of the inquiries in the above men