VOL. VI. No. 5] " LONDON, SATURDAY, AUGUST 4, 1804. PRICE 100 "It is thus" [by the increase of paper and consequent depreciation of money]" that the public revenue is materially injured in all its branches; that the property of the public creditor "is diminished; and that the private rents and annuities of individuals are in reality reduced, though they consist of the same nominal sum. The general power of the revenue is diminished by the very means that are taken for its increase, as the effect of taxation, in augmenting the price of produce and causing an increase of currency, necessarily depresses the "value of money." WHEATLEY on Currency and Commerce, 1803. 101] TO THE RIGHT HON. WILLIAM PITT, CHANCELLOR OF H. M.'S EXCHEQUER, &c. &c. SR,-Circumstances arising out of the nature of this publication compelled me to break off somewhat abruptly the remarks which I took the liberty to address to you in the preceding Number, which it was absolutely necessary to commit to the press in a very few hours after your Financial Resolutions first attracted my attention. This must be my apology for now reviving the subject there treated of. I think little doubt can remain in the mind of any one, that the inference which was obviously intended to be drawn from the 13th proposition, or resolution, adopted by the House of Commons on the 24th ultimo, was this, that the permanent taxes existing in the year 1792, having produced in that year 14,284,000l. and the same taxes having, in the year 1803, produced 14,901,000l. the produce of the latter year was worth more than the produce of the former year, especially as the proposition concludes thus: "which last sum exceeds the produce of the "permanent taxes in 1792 by 617,000l." At the first thought upon the matter, it appears incredible, that, in comparing the produce of taxes in years so far distant from each other, you should have overlooked a circumstance so very material as that of the depreciation of money; yet I am bound to believe the fact, because the other alternative; to wit, that you intended to deceive the Parliament, is what cannot for a moment be entertained. I am, besides, fully con firmed in this belief by a reference to the statements which have been, and the inferences which have been drawn, by all those persons, who have written in defence of your system of finance, and whose writings have fallen within the narrow sphere of my examination. Of these writers I shall, for the present, content myself with mentioning three: Mr. Chalmers, Lord Auckland, and Mr. Rose. The first of these gentlemen, in the new edition of his "ESTIMATE," from [102 which I am glad to perceive (without any inquiry about his motives) that he has excluded his unmannerly, not to say insolent, attack upon those noblemen and gentlemen who opposed the peace of Amiens, in this edition, page 346, et seq. he makes a statement precisely similar to that which is contained in your 13th Resolution, except that he brings down his years no later than 1801. After some remarks upon the list of sums which he has inserted, he says, "in the "mean-time," that is, between 1792 and 1801, "there had been imposed the various "taxes, which were necessary for the loans, "and the expenses of the war; and which 66 seem not to have lessened the produce of "the previous revenue, as had happened "during the distressful times of King Wil "liam." Of either the meaning or the object of this statement there can be no doubt; and the statements of Lord Auckland and Mr. Rose will not appear, in any respect, more equivocal. The noble lord's statement is contained in a speech delivered in the House of Lords on the 8th of January, 1799, published in a pamphlet by his own. authority and under his inspection." It was highly encouraging," said he, "to "that extension" [the extension of the system for raising great part of the supplies. within the year] "to have observed, in the " ་་ 66 progress of the experiment, that the de"falcations made from the incomes or capitals of individuals, had not occasioned any distress or embarrassment. On the contrary, there has been a general and progressive increase in the prosperity of "the kingdom. Your lordships will find "ample proofs of this assertion in the com"parative statements of our trade; in the "favourable course of exchange with the "continent; in the nett produce of the permanent revenue; but, more especially "in the nett produce of permanent taxes "which existed antecedent to the war, "which in the year ended 5th January, "1799, has exceeded by 118,000l. the most "productive year of peace, I mean the year "1792." Having made this brillian display, his lordship turned for a moment, to the contrast exhibited by the enemy; “bankrupt in finance, ruined in manufactures. "deprived of all commerce, baffled in all "projects of invasion, disgraced and defeat"ed in every attempt to injure this country." How dearly have we paid, Sir, for these delusions! His lordship, unintentionally without doubt, mis-stated the fact even as to the nominal amount of the old taxes; for, those taxes in the year 1798, that is the year ended 5th January 1799, did not produce so much in nomina amount as they produced in 1792, as wil.app ar from the list contained in your propositions. But this is a trifle compared to his making no allowance for depreciation of money, in which respect, however, his example has bi, strictly followed by Mr. George Rose, lite beretary of the Treasury, and now one of the Paymasters of the Forces as also VicePresident, of the Board of Trade and Plantations!!! This gentleman published, in the year 1799, a pamphlet entitled, "A Brief "Examination into the Increase of the Re<< venue, Commerce, and Manufactures of "Great-Britain, from 1792 to 1799." In the course of this work the author makes several s.atements and assertions the truth of which is by no means of a doubtful cast, but which are only just noticed, at this time, merely to guard against a belief, that, because they are not contradicted, they are ac quiesced in. One of the objects of Mr. Rose is to defend the plan of raising great part of the supplies within the year, particularly the plan of the income tax, which had just then been imposed, and which Mr. Rose thought necessary to suggest would not lessen the produce of the permanent taxes, imposed prior to 1793. "Apprehen"sions, it is true," says he, "have been expressed, that the produce of the perma "nent taxes may be affected by a large "sum being raised within the year; "must, however, afford great consolation to those who really entertain such fears, "to see it ascertained, that, in the last year, when nearly seven millions were so raised, the old taxes existing before the war were almost a million higher than in the year preceding." In another place he gives a list of the years since 1792 inclusive, together with the produce of the old taxes in each year, which, he observes, "can hard ly be contemplated without some degree "of quonder and exultation, when it is con"sidered that 7,500,000l. per annum has "been imposed in new taxes." After this he seeks an average of the produce of the old taxes during the seven last years of peace, in order to compare its amount with that of the produce of the same taxes during the seven years of war, and he makes the pleasing discovery, that "notwithstand ing the imposition of new taxes, to the "annual amount of 7,500.000l. the pro"duce of the old taxes during war exceeds "that during peace by the sum of 1,080,000). "per annum." The same principle per vades all his calculations, whether of re venue, commerce, or manufactures. The average of four years exports of British manufactures, for instance, he states thus: "Four years from 1795 to "1798 "Four years from 1789 to 66.1792 .... Balance in favour of 4 years "of war. £30,648,000 27,135,000 But, if he had made due allowance for the depression of money; if he had not totally overlooked the principle which we shall find him taking for his guide when he comes to treat of the civil list, he would have perceived, and, perceiving, ought to have stat ed, that the real value of the pound sterling had diminished, between 1792 and 1798, in the degree of 20 per centum at least; that, therefore, the average of the four years ending with 1798, to make it equal in real value to the average of the four years ending with 1792, should have amounted to 32,562,0001. instead of 30,648,000l.; and, of course, that, reckoning in the money of 1798, the exports of that year actually fell short of the exports of 1792 by the sum of two millions, while Mr. Rose has contrived to find out a "balance in favour" of the four years ending with 1798! Through the whole of the statements, therefore, of all these gentlemen there appears to be not the most distant idea of a depreciation in the value of money having taken place. But, when they have occasion to speak of the expenses of the Civil List, when they find it necessary to justify the demands made upon the country for an addition to the sum formerly fixed on as the proper amount of these expenses; then they take good care, and indeed they are very right in so doing, to insist upon a depreciation of money. Lord Auckland, who has not spo ken, or, at least, has not published any thing upon the subject of the civil-list, may, probably, deny that money has undergone any depreciation; but this is not the case with Mr. Rose and Mr. Chalmers, the for mer of whom was quoted in my last letter, and shall be quoted a little more at length here. "The exceeding in the departments "of the Lord Steward, Lord Chamberlain, "and Master of the Horse, is to be explain"ed in an expenditure, estimated at 116,000l. " per annum, amounting in sixteen years "to 1,856,000 1.; equal to about 20 per "cent, thereupon. This increase must be "thought extremely moderate, when it is "known, that it appeared by accounts be"fore the Committee of the House of "Commons, that, in the Lord Steward's "department, the prices of many kinds of "provisions are more than double, and, on "the whole, at least 70 per cent, higher "than in 1786. It is also notorious that very great advances have taken place in "the price of labour and articles for build 66 ing, &c. &c. under the direction of the "Lord Chamberlain; and in the price of "provender, &c. for horses, under the con "trol of the Master of the Horse." All this was very true, and it was no more than repeating the statement made by the Committee of the House of Commons; what I find fault of, is, that Mr. Rose, who had, in 1799, taken such pains to persuade the people, not only of England but of the whole world, that the produce of the old permanent taxes had not fallen off because it still kept up to its old nominal amount, did not acknowledge his error, when, in 1802, he discovered that those taxes, when applied to the payments of the civil-list, had sunk in value 70 per cent. You also, Sir, must ex pect to share in this blame; for, it is altogether improbable, that Mr. Rose should have published the pamphlets here referred to without your consent and approbation; especially the former pamphlet, several copies of which, it is well known, were transmitted to each of our ministers at foreign courts, for what purpose is too obvious to need pointing out. Mr. Chalmers, too, has his remarks on the effect which the depreciation of money has had with regard to the expenses of the civil-list, though, as we have just seen, he so stoutly contends that the old taxes have experienced no falling-off; and, he has, in point of boldness, an evident advantage over Mr. Rose, for the latter gentleman blows hot and cold with different publications made at three years distance from one another, whereas Mr. Chalmers performs this double operation in the very same book. He takes the table of Sir George Shuckburgh Evelyn, mentioned in my last letter, as the basis of his argument on the depreciation of money. He gives us a history of the civil-list ar pitulates the various sums, which, from "time to time, have been paid in supplementary aid of the civil list, and, at length infers, that the total, during the space of twenty-eight years, amounts to "923,1961. per annum. But his sagacity seems not to have perceived, that the de "preciation of money was out-running the "annuity; and his algebra did not disco"ver, by computation, that, 923, 1961. in "1786 were not equal in power of pur. "chase to 800,000 1. the annuity fixed on "in 1760. In fact, according to the table "and the principles of Sir George Shuck"burgh, an annuity of 800,000l. was equal "in its energies during the year 1760 to an "annuity of £1,478,947. 7s. 4d. in the "year 1800." (A depreciation of almost cent. per cent.) Now," adds he, "the "mathematics cannot be out-faced by con"fidence, nor out-argued by declamation." Mr. Rose has a remark of the same sort; but, both these gentlemen must now confess, that what neither confidence nor de clamation can do, they have attempted; and, I should be glad to ask Mr. Chalmers what becomes of his clumsy sarcasm on Sir John Sinclair's sagacity, when we find Mr. Chalmers himself not only totally omitting, in his estimate of the old taxes, any allusion to depreciation of money, but averring, that their produce had suffered no diminution, and exulting in the contrast between the present times and that of the "distressful "times of King William?" But, it seems that Mr. Chalmers did not content himself with an application of this "important ta "ble" (for so he describes the table of Sir George Shuckburgh) to the expenses of the civil-list, having since pushed it into practice with regard to another annuity, which, without the slightest imputation to his loyalty, we may suppose to be still nearer and dearer to his heart. I allude to his own salary as Chief Clerk to the Board of Trade and Plantations, of which, for reasons which I dare say you could give, Mr. Rose, his rival in the science of political economy, is now become the Vice President. This salary, Sir, was 500l. a year, which, at the time when it was fixed, was certainly not too much, especially for a person so attentive, so laborious, and, in his way, so useful as Mr. Chalmers. When, therefore, he came to apply this sool. of $786 to the affairs of life in 1803, he dis covered, whether by the aid of that " moral 86 as great a proportion as ever to the value and nominal amount of the public debt. Previous to any observations upon this opi nion, it will be best to insert my correspondent's letter, which is dated on the 30th of July. "In your letter to Mr. Pitt," says he, "contained in the last Register, you clearly show, that, though the old tr permanent taxes collected in 1803 ex"ceed in nominal amount the same, taxes "collected in 1792, yet there is a real di"minution in value in the produce of the "former year: but, Sir, you seem to me "to have lost sight of the object Mr. Pitt "had in view by drawing the comparison, "for I apprehend, that, with reference to "the charge upon the taxes in question, "there is a real excess to the extent "appearing by the difference of the nomi"nal amount of the two years alluded to. "In other words, the interest of the sum charged upon those taxes is permanent, "and not variable, like the price of bread "and other commodities, according to the "value of money, consequently, with refe rence to the debt, there is a surplus, and "that surplus is, of course, as valuable as any other balance in favour of income beyond expenditure. I consider Mr. Pit's "statement as proving, that the permanent taxes of 1792 do now yield, not a sum of arithmetic," which he so strenuously recommended to the use of the opposers of the peace, or by that of an arithmetic of a less refined sort, I know not, but discover he did, that, of his 500l. the "powers of purchase" were diminished in the degree of 60 per centum; and having made this discovery he lost no time in communicating it, accompanied with all the necessary vouchers, to your predecessor at the Treasury, praying that 300l. a year might be added to his depreciated salary. A conclusive answer to this prayer would have been found in a page or two of his own book: "here," might the Treasurer have said, "here, Sir, you positively assert, that there "has been no defalcation in the produce "of the old taxes; the nominal sum is the same, and you say that there has been no diminution in the produce. Well, then, take your salary from the tax-gatherers, and let me hear no more of your complaint." Would not the petitioner's lips have been sealed? Would not the public have been justly avenged for the deception contained in his book? Not thus, how. ever, did the well-meaning personage above alluded to think proper to act: he saw, he felt, the reasonableness of Mr. Chalmers's prayer, and the salary was augmented to Sool. a year, though the person that received the augmentation had contended that 14,000,000l. in taxes of 1803 was worth as much as a like sum in taxes of 1786, and though it was evident, that, if the whole of the taxes had been paid away in salaries at the same augmented rate, the taxes of 1803, to have been equal in powers of payment to those of 1786, must have amounted to 22,400,000 1.--Excuse me, Sir, if I presume, that nothing further need be said to prove, that the 13th resolution, upon which I have been induced to trouble you with these remarks, presents to the nation and the world an adventurous fallacy instead of an interesting fact; at the same time, however, I cannot refrain from expressing my sincere belief, that this fallacy was not an intentional one; and for this belief I have above, perhaps too much at length, given my reasons. But, from a letter, which I have received upon the subject, and which I shall here insert, I find, that one person at least did not understand the statement contained in the 13th resolution to aim at the object that I have attributed to it. The writer seems to imagine, that the inference intended to be drawng was, not that the old taxes had preserved their fiumer intrinsic value, but that they still boreratively, you make no allowance for the des แ 66 money greater in value, but a larger sum "for payment of the permanent charge "thereon, than in the year 1792, by the amount of 617,000l. and, supposing the charge to have been exactly equal to the revenue of 1792, there is an overplus 10 that amount in the Exchequer applicable "to the exigencies of the state." This gentleman's meaning, Sir, expressed in somewhat fewer words, is this: that you meant not to cause it to be believed, that, under all the weight of additional taxes since the year 1792, the old taxes still retained their real value as applied to expen diture in general; but that, as the interest of the debt, existing in 1792, had experi enced the same degree of depreciation as the produce of the old taxes had, the produce of those taxes, though greatly depre ciated, was yet sufficient and even more than sufficient for the payment of that interest. Could this be the intention of the Resolution? Still I think not, because the same degree of care is taken to avoid, in every other part of your Resolutions, all allusion to the difference occasioned by the depreciation of money. In stating the "real value" of British manufactures exported in the years 1802 and 1803 compa preciation of the money in which the amount is stated. The excuse made by my correspondent cannot apply here; because it is impossible for you here to speak of the value of the goods with reference to any charge or debt. It is true, that you no where say that money has not depreciated: you do not say that a million's worth of goods exported in 1803 was equal in value to a million's worth of goods exported in 1802, but you do not say that it was not equal; and, as I have before remarked, the inference evidently intended to be drawn from every comparative statement, is, that, wherever there has been an increase in the nominal, there has also been an increase in the real amount.If, however, this was not the intention of the proposition contained in the 13th Resolution, it should, I repeat it, have been so explained. 60 per centum? Was I to blame in bidding the widow and the orphan beware of the effects of a system, which is thus swiftly, though silently, reducing them to beggary if their property be placed in the public funds? Was I for this t be called an enemy to my country? "The most material "sufferer," says Mr. Wheatley, whose treatise I beg leave, Sir, to recommend to your perusal, by the depreciation of money is "the public creditor, who has no power of "renewing his contract at stated periods, and whose interest is paid in the same sum, whatever alteration be effected in "the value of money. His capital suffers "the same diminution as his interest. The "rise or fall of stocks is problematical, and "cannot fairly be brought into the com"parison, as it may be at any given moment as much against as in favour of the proprietor. From 1780 he has lost onefourth of his principal and interest, without any possibility of recovery. 66 66 The person, who, twenty years ago, invested "his money in the funds, will find, if he "had invested it in land, he would "have possessed one-fourth more in income "and capital, than he can now command. "In the original contract between the go"vernment and the public creditor, it was stipulated that he should receive the same "interest till the redemption of the debt; "and, as that interest is continued to be paid in the same nominal sum, no aetual "breach of faith is committed, but the "public faith is virtually violated, as that 46 sum no longer retains the same real value as at the commencement of the contract: "The property of the public creditor is fre 66 But, that such an explanation would have been embarrassing in the extreme will soon appear, from the observations suggested by the subject having taken this new, and, to me at least, most unexpected turn. To keep faith with the public creditor, to continue paying him honestly the whole of the interest due upon the annuity which he may have in the funds, is a duty, which, by you, it has been constantly asserted the government is bound to perform. Most people agree with you; and I myself dissent from the doctrine, only because I know, that the performance is absolutely impossible. I have been very harshly censured, not to say basely traduced; I have even been represented as the friend of our enemies, and, of course, as a traitor to my king, because I expressed my dislike, my abhorrence if you will, of the funding Bystem, and because I bid the widow, the orphan, the guardian, the executor, the aged, and the infirm, to beware of its ruinous cousequences. Yet, Sir, we are now told by those who defend that system, that, though certain taxes have greatly fallen off in real value, they are as good as if they had retained their full value for the purpose of paying the interest of the national debt, that is to say, the annuities of the persons who have deposited their property in the public funds! A declaration so bold that I hardly think you can approve of it. It is nevertheless very true; and I must, of course, be well pleased to have thus obtained an unlooked-for acknowledgement of the truth of my own doctrine. I say, that we cannot continue to pay the interest upon the debt; and, can we be said to pay the interest of an annuity purchased in 1786, when, according to your own statement, the money In which we pay it, has already depreciated quently invested in the hands of trustees "for a period of long duration. Should the "depression proceed only in the same ratio "for these next twenty years, in which it "has advanced for the last twenty, the "value of the pound sterling of 1780 win "be diminished one half by 1820, three 66 quarters by 1840, and, in 1860 its value "will be no greater than that of a French "livre of 1780. Every pound sterling "which a creditor possessed in the funds "in 1790 will be worth no more than a "shilling in 1860." Was it not right, thes, Sir, to caution fathers, mothers, guardians, and trustees against the effect of this depre. ciating system? Or, was it right, in the persons to whom I have alluded, to insingate that the man who gave this caution was disaffected to his king and country? Mr. Wheatley proceeds upon the calculations of Sir George Schuckburgh, but, it is clear that the learned baronet, whose table |
