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COMPARISON BETWEEN THE STATE OF THE CURRENCY IN THE REIGN OF WILLIAM 111. AND ITS PRESENT
DE BASED OR DEPRECIATED STATE,
NE great error which has been committed by those who advocate a restoration of the Currency to its ancient standard, and which has occasioned much confusion of ideas, and greatly tended to bring the country into its present difficulties, has been the representing and believing, that the depreciated state of our Currency of late years, is analogous to the deranged or debased state of the coinage in former periods of our History, and more particularly to its state in the Reign of William the 3rd, from 1692 to 1697.
A candid and impartial inquiry will show, that'a very Wrong view has been taken of this subject, and that the deranged or debased state of the Currency, by clipping of the silver nioney in William the Third's time, was little similar in 'its nature, and less so in its effects, to the depreciated state of our Currency at the present mo
Mr. Peel, in his Speech on the subject of the restoration of the Currency, when introducing and recommending the bullion payment plan, May 24th, 1819, is reported to have said, “If the House would look to the arguments on both sides, (alluding to the reformation in the coinage in William the Third's Reign) at those advanced by Lowndes on the one side, and those by Locke on the other—they would see how analogous they were to those advanced at present. Lowndes' complained that the value (price) of silver was enhanced, and wished for the return of the good old times when silver was at 5s. 2d. an ounce, while then it was at 6s. 3d.; and also contended that the shilling was the real standard of value.
Locke on the other hand maintained, that the pound weight of silver was the standard of value, and that the coin was depreciated and not the bullion raised. The present value (price) of silver he affirmed to be as formerly, 58. 2d. an ounce, and therefore not at all altered except in comparison with the deteriorated Currency (clipt money); silver in coin was of the same value as silver in bullion. It was perfectly true, he said, that an ounce of silver, which the Mint regulations determined to be only 5s. 2d, in value, had risen to 6s.3d.; but that was only because the silver coin had been clipt or reduced in value, by the difference between 5s. 2d. and 6s. 3d. Give me,' says he, Five shillings of Standard weight and fineness, as originally coined, together with ed., and I will with that sum purchase for you an ounce of silver, for which you now give 6s. 3d. (in the clipt money).' Mr. Locke had no abstract idea of a shilling, or standard of value, as detached from something substantial and tangible." " These arguments, (says Mr. Peel) happily prevailed, and notwithstanding the expence, the project of the new coinage was carried into execution.”
In another part of this speech Mr. Peel acknowledges with candor, the errors which he had before entertained on this subject, viz." that the Currency or paper money had not been depreciated, and he says, he does it without pain or remorse; but he now sees
: that the paper money had been depreciated : and silver having risen to 7s. 3d. an ounce, and gold to 110s, an ounce, at the close of the war, as paid for in the paper money, was a clear and convincing proof of that depreciation. But when Mr. Peel was acknowledging his former errors, he ought to have been particularly cautious that he was not again running into errors on the opposite extreme, quite as great, and much more injurious to the interest and permanent welfare of his country. Instead, therefore, of hastily forming his opinion again, upon this intricate and embarrassing subject, from assertions unsupported by proof and from the opinions of others, had be carefully read throughout, and attentively considered, the treatises and arguments of Lowndes and Locke, he never would have come to the conclusion to which he did come, or bave recommended the restoration of that depreciated paper money Currency again to its former standard, at this critical juncture. For, had he read those treatises attentively throughout, he must have perceived the great distinction, and wide difference, existing between the two cases, and that they bore little analogy to each other. And if Mr. Peel will now give himself the trouble to read over those treatises and carefully reconsider the subject, possessing as it is believed he does possess, great candor and sense of justice and humanity, he will perceive with pain, that the measure which he then recommended, and which is now being acted upon, has been the
cause of bringing upon a great mass of his countrymen their present ruin, misery, and degradation; and he will, or ought to be, among the first candidly to come forward and acknowledge the contrary error, which he has been led into, and before it be too late, do all in his power to endeavour to relieve the country from the evils now impending over it, which are fast destroying its peace and prosperity, and which he has been so greatly instrumental in bringing about.
In order to understand this subject more clearly, it will be necessary to consider with attention the arguments, which really were made use of, between Mr. Lowndes and Mr. Locke, and particularly those of Mr. Locke, in whose treatise (setting aside some trifling errors on the abstract subject of money) the whole affair is clearly explained. The true state of the Currency then was much as follows:
In William the Third's Reign (according to Locke,) 'silver was the legal money, and standard of value. The gold coins were then permitted to pass, or to find their value in the silver money by an agio, or at whatever people pleased to give or to take for them, the Guinea usually passing for 21s. 6d. in the legal silver money. From 1690 to 1697 was a period of continental wars, and it was in the early part of William's Reign, that the Bank of England was first established, and the paper money and funding systems began.
To go into the detail of all the transactions of those periods as connected with the subject of money, would occupy too much time; but it may be necessary to refer to some of those transactions, in order to form a more correct idea of the cause of the then debased state of the currency, and of the effects, wbich such debasement, and the subsequent reformation of the money, had upon individuals and upon the general prosperity of the country.
During that war, in consequence of subsidies and payments abroad, the balauce of payments and the exchanges became unfavorable to this country; this balance could only be made good by the transmission of bullion or coin, consequently as long as this unfavorable balance continued, no bulion would have been brought into this country to remain in it, or to be taken to the Mint to be coined into money; but what did arrive from Spain or from Amesica, was immediately bought op for exportation to the Continent, at a price above the price paid by the Mint, to coin ito money.
The Mint price at that period, was, 5s. 2d. an ounce for silver and 77s. 10;d. an ounce for gold, and the exportation of the coin of the Realm was prohibited under severe penalties. Consequently, as long as the balance of payments continued against this country, a demand for bullion for exportation would continue also, and silver bullion would then bear a price above the value of the coic, as much higher as would cover the risk of the illegal exportation
of the coin. This difference would be about Id. or ed. an ounce, and it would raise the price of silver, 'in bullion, which could be freely exported, up to 5s. 3d. or 55. 4d. an ounce; this appears to have been the price in 1692, when Locke wrote his first Treatise “ On raising the value of Money,” and at that time, as appears through the whole of his arguments, silver had not risen more than 2d. ar . an ounce above the Mint price, in the legal silver
then in circulation.
But the balance of payments abroad still continuing, the drain of silver bullion continued also, when the weighty milled money, the beaviest and the best of the sterling silver money, being more sought after to be exported, or to be melted into bullion, a greater temptation and profit were thus progressively held out to the clippers; and the clipping of the coin had been carried to such an extent in 1695; such loss, and confusion, had, through it, been introduced into money transactions, that the Government found it absolutely necessary to put a stop to it, to prevent the evil from extending itself farther; and this could only be done in the then deteriorated state of the Currency, by crying it down, or by calling in all the clipt and debased money, and having a new coinage.
It was at this period, September 12th, 1695, that Mr. Lowndes wrote his Essay "On the Amendment of the Silver Coins," and Locke's reply to it was published soon afterwards.
Mr. Lowndes, in his Essay, after calculating the probable quantity of silver
money then in the country, and the extent to which the clipping of the coins had been carried, says, (page 105.) “ Then the whole of the silver sterling coins, clipt and unclipt, hoarded and current, now in England, may be computed at five millions and six hundred thousand pounds ; aud if it be granted, that four millions of this sum consist of pieees that are diurnished, some more, some less, by clipping; then it will follow, that there remains in the Kingdom about one million, six bundred thousand pounds, of heavy money, a great part of which is supposed to lie in hoards, and the rest current chietly in the counties most remote froin London.'
He then proceeds to state the result of various trials made at the Mint, and to calculate therefrom the value of the clipt money then in circulation, from which it appears,(page 107.) “That the moneys commonly current are diminished near one half-to wit, in the proportion something greater than that of ten to twenty,
“ That going by the medium of the said number of bags, (tried) and making but a small allowance for the unclipt pieces in the said bags, and for the difference of money brought to the Exchequer, and that which passes among the common people, (the former being in most payments the best of the clipt money) every one must be