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The standard value of the pound -sterling

The profits of agriculture.
The pressure of the public debt.
The amount of private contracts.
Injustice of the present standard.

Necessity of altering its value.

Necessity of a reduction in the amount of rents.

Justice and expediency of lowering the interest paid to the public creditor.






&c. &c.

SIR, Having in the preceding letter discussed some of the sources from which the present distresses of Agriculture have been supposed to spring, I shall now proceed to consider another cause to which they have been ascribed. This is a branch of the subject

a which involves a question of very great importance, and merits the most candid and temperate discussion. Many are deeply impressed with the idea that the distress which, at the present moment, presses upon the English agriculturist, and which, if not by some means alleviated, must inevitably ruin him, arises principally from the contraction of the circulating medium produced by the operation of what is commonly termed Mr. Peel's bill enacting the repeal of the Bank Restriction Act.

Those who ascribe the difficulties of agriculture to this measure, as their source, assert that the Act passed in 1819, to regulate the standard of our currency, has added nearly one fourth to the exchangeable value of the pound sterling ; and that this increase in the value of the pound sterling, produced by a mere act of the legislature, has made an addition of 25 per cent, to the previous outgoings of the farmer. They affirm that his rent, though nominally the same, has really increased one fourth; that his taxes have increased one fourth, and that parochial rates, tithes, and the wages of labor, have increased, at least for a time, in an equal proportion. Rents are at present generally regulated upon what are commonly termed war prices, or upon the standard of value which existed previously to the passing of the bill enacting the prospective repeal of the Bank Restriction Act. This, at least, is the fact of all farms let on leases executed before 1819.

The fact of a depreciation having taken place in our currency, during the suspension of cash payments, has been unanswerably established by the arguments and proofs of the bullion committee in 1811: there are few who do not now accede to the truth of the following resolution recommended by that committee for the adoption of the legislature. It is the tenth of the resolutions proposed by Mr. Horner in a committee of the whole House of Commons, May 6th, 1811 ; Resolved, “ that it appears, that the actual value of the promissory notes of the Bank of England (measuring such value by weight of standard gold and silver,) has been, for a considerable period of time, and still is, considerably less than what is established by the laws of the realm to be the legal tender in payment of any money contract or stipulation.” The present Chancellor of the Exchequer strongly denied, and, to the inexpressible astonishment of the public, still continues to deny, that any such depreciation had taken place in our currency, and on the 14th and 15th of May, 1811, among other memorable resolutions, he prevailed upon a majority of the House of Commons to adopt the following :-Resolved, “ that the promissory notes of the Governor and Company of the Bank of England have hitherto been, and are at this time held in public estimation to be equivalent to the legal coin of the realm, and generally accepted as such in all pecuniary transactions to which such coin is lawfully applicable.” But when it is a fact, notorious to all the world, that the guinea sold for, at least, il. 6s. 3d. ; nay, when it is known, that government itself gave 28 shillings a piece for guineas, to be sent abroad, it is an absolute waste of trouble to argue with any man who, in the very teeth of these facts, has still the hardihood to maintain, that the guinea was not worth “ more than a pound note and a shilling: At the very moment, when this right honorable financier maintained that a pound note and a shilling were equivalent to a guinea, his agents and emissaries were traversing the country, in all directions, and buying up all the gold which they could meet with, at the rate of 28 shillings for each guinea ; which is as convincing a proof as that two and two make four, that the depreciation in the value of the pound sterling was at that time 33 } per cent. Of the fact therefore, that a very considerable depreciation had been produced in our currency by the suspension of cash payments in 1797, no rational mind can, for a moment, entertain a doubt. Indeed, it is now almost universally acknowledged that the currency of this realm had suffered some depreciation ; although there be not an equal concurrence of opinion as to the amount of this depreciation. Mr. Ricardo maintains that it did not exceed seven or eight per cent. ; while Mr. Baring, with equal confidence, rates it as high as 334 per cent. These two estimates

} appear to be the extremes between which this depreciation fluctuated between the year 1797 and the year 1819. If we take the mean amount of these two estimates, or 22 per cent., it will probably give very nearly the average amount to which the pound sterling had, during that period, been depreciated.

To show the additional pressure thrown upon the occupier by the operation of this alteration in the standard, let me take the instance of one hundred acres of land hired, seven years ago, at 40s. per acre. The tenant then promised to pay his landlord 2001. sterling in paper : gold bullion, at the same time, sold in the market at five of these pounds sterling per oz. The 2001, sterling which the tenant, therefore, promised to pay, as rent, for these 100 acres of land, would have purchased at this rate just 40 oz. of gold. Now every school-boy must know that if 2001. sterling are equivalent to 40 oz. of gold, one of these pounds sterling must be equivalent to the fifth part of an oz., or to 96 grains. The standard of the pound sterling was, therefore, 96 grains of gold. The repeal of the Bank Restriction Act raises this standard from 96 grains to 120 grains of gold, (I shall leave out the fractions) that is, it raises the standard of the pound sterling from the depreciated rate into which it had fallen during the suspension of cash payments by the Bank, and restores it to its metallic value before that suspension. The rent which the tenant contracted to pay his landlord for 100 acres of land was 2001. sterling, or 40 oz. of gold. The repeal of the Bank Restriction Act raises the value of the standard to 120 grains, and obliges him to pay his landlord the same number of pounds sterling containing this quantity of gold. Before the repeal of this Act each oz. of gold counted for five pounds sterling, since its repeal it can count only for four pounds; and, to make up his rent, the occupier must now purchase 50 oz., thus making an addition of one fourth to the quantity of gold which he had engaged to pay his landlord.

As it appears of great importance that this subject should be rendered as plain as possible, to those who are not much accustomed to think and reason on political economy, no apology need be made for adding another illustration to point out the effect produced by a variation in the standard of value. Let it then be supposed that, instead of gold, rents were paid in corn, and that the occupier of one hundred acres of land had covenanted to give the owner as rent, one hundred bushels of wheat, containing eight gallons each. A theoretical economist imagining ten to be the proper number of gallons to constitute a bushel, prevails upon the legislature to enact that, for the future, the standard

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