was this, that the men of 1696 could see that the coinage did not contain much more than half of its proper weight of bullion. But the men of 1811 failed to see that the Bank note could only preserve its value by maintaining a certain proportion with the Metallic Currency. That an excess of quantity of the notes diminished their value relatively to gold; and this diminution in the value of the promise compared to what it professed to represent was exactly identical in principle with a debasement of the coinage by alloy, or a depreciation of it from deficiency in weight of bullion. When the Bank note became the measure of value, it was imperatively necessary that they should be able to purchase in the market the weight of bullion they professed to represent. When bullion rose to £5 10s. when paid in Bank notes, they were exactly in the same predicament as the coinage was under William III., when it had lost 25 per cent. of its weight. The diminution in the weight of the coinage was palpable to the senses, the diminution of the value of the "promises to pay" was only perceptible to the eye of reason and intelligence, and long escaped the observation of men who conscientiously disbelieved it

138. We will now bring this long but important discussion to a close, by observing that the grand principles of the Bullion Report are not what are properly termed matters of Opinion at all, but of Demonstration. Persons of the most excellent taste and judgment may entertain the widest differences of opinion on the comparative merits of various poems, or pictures, or pieces of music. There is no absolute standard of truth, which will enable any man to assume the office of arbiter on any of these subjects; at least none has yet been discovered. Different poets, artists, and musicians are most in harmony with different mental constitutions, of which there is no unerring standard of excellence. So in politics, it is a pure matter of opinion and judgment which is the best form of government, and which is most suitable for any particular people. But the principles of monetary science, as laid down in the Bullion Report, are matters of a totally different nature, they are matters of pure geometrical demonstration. They are no more matters of opinion, in the proper sense of the expression, than the demonstrations of Euclid are matters of opinion. It is acknowledged that there is an absolute standard of truth in such matters. There are many excellent persons, and of good ability in other respects, whose mental constitution is such that they never can follow out the train of reasoning, which establishes the truth of a certain famous proposition in Euclid. But we never heard of any one writing a pamphlet against the pons asinorum. Now, the famous doctrine of the regulation of the Paper Currency by the price of bullion is demonstrably true, and it is as vain to write pamphlets against it as against Euclid, B. I., prop. 5. When, therefore, a modern author says, "the fundamental error of Mr. Huskisson, and the Bullion Committee, on the subject, consisted in the principles which they laid down as axioms, that the measure of the depreciation of the Currency was to be found in the difference between the Market and the Mint Price of Gold"; this sentence is as wise as if one were to say, "the fundamental error of Cocker, and subsequent writers on arithmetic, is the principle which they adopt as an axiom that twenty-one is equal to twenty-one"; and when he says a little further on, "for as Bank notes never sank in value compared with specie, whatever party spirit may have affirmed to the contrary," he makes a statement which there is overwhelming evidence to prove to be untrue.

Table shewing the chief variations in the Market Price of Gold Bullion from 1790 to 1819, and the true value of the Bank of England £1 Note during the Restriction.

CHAPTER XI

FROM THE ACT FOR THE RESUMPTION OF CASH PAYMENTS IN 1819 TO THE BANK ACT OF 1844

1. The great Act for the preservation of the national good faith, the restoration of the measure of value, was accomplished amidst universal applause; but, unfortunately, it had no sooner become law, than an unusually severe and long-continued disturbance in the ordinary proportions of supply and demand in a great variety of productions took place. The violent fluctuations in prices, which necessarily followed this great derangement caused much public distress, and afforded an opportunity for the antagonists of the Act of 1819 to acquire such strength as to induce the Government to tamper with the Act before it came into full effect

2. The utter prostration of all the great producing interests of the country in 1815-16, had caused such severe distress as to diminish the consuming powers of the people to an enormous extent. The importations of the great articles of consumption in 1816 were, in most cases, not half what they had been in 1814. In 1817, when the general prosperity was reviving, the shortness of the supply caused a very general and rapid rise in prices of all commodities. The inevitable consequence followed, speculation began to revive again, and was much fostered in 1818 by an expected dearth of provisions. A long-continued drought from May to September was supposed to have destroyed the greater part of the crops, and, as imported produce was unusually low, the prices of all sorts of farming produce rose to an extravagant height. Enormous importations of wheat, added to the home crop, which turned out considerably better than was expected, caused rather a reduction in the price of that, but all other sorts of farming produce mounted up to a great height, barley being at 63s. 6d., oats at 35s., beans at 76s., and peas at 70s., in December, 1818. The high prices thus held out in this country caused importations on a scale of enormous magnitude at the close of 1818. After deducting the quantities re-exported the imports of colonial and foreign produce were more than double what they were in 1816. Mr. Tooke well remarks that before any great turn in the prices of commodities, there is usually a pause of more or less duration before it finally declares itself, like the slack water at the turn of the tide. There is a period during which sales are difficult or impracticable, when the prices are at a maximum, the buyer refuses to submit to them; and when they are at a minimum, the seller refuses to submit to them. A struggle of this nature prevailed through the autumn and winter of 1818-19, and just as the Act for the restoration of cash payments passed, the fall in prices was decidedly in progress

3. The usual consequences followed these extravagant importations. Importers, trusting to the prices of 1817, had given orders to the growers, based upon these prices, and, when the crops came to be brought to market, the price had given way. Failures, accordingly, were numerous in 1819, both in England and in America, the necessary consequence of a transition from high prices, caused by scarcity, to low prices, arising from excess of supply. Towards the autumn of that year commercial credit had revived. The great importations of wheat in 1818 somewhat reduced the price in 1819, but it stood at 75s. in August, and the average for the whole year was 72s. This price continued, with a few fluctuations, till August, 1820, and at that time wheat was still at 72s. A decided and unanswerable proof that the discussions in Parliament, and the Act for the resumption of cash payments, had no effect at all on the price of corn. Although the Bank was permitted to pay its notes in gold, at the rate of £4 1s. per ounce, yet they were actually at par, as the market price of gold fell to £3 17s. 10d. in August, 1819, and continued at that rate till June, 1822, when it fell to £3 178. 6d.

* The whole of Mr. Tooke's observations on this great crisis are perfectly invaluable, and must be read at length by every one who wishes to form a fair judgment on the subject. - Vol. II., pp. 60-116