STATE OF TFIE REVENUE—STATE OF THE COUNTRY.

[Though we cannot reach the practical conclusions of the following communi- cation, yet, recognizing its great ability, and knowing that the writer has studied his subject deeply and long, in circumstances to exempt him from the influence of personal interest and partisan bias, we lay the paper before the readers of the Spectator, as a provocative to closer investigation of a branch of our public economy which, after a world of writing and talking about it for more than twenty years, is still in a most unsatisfactory state. J

TO THE EDITOR OF THE SPECTATOR.

SIR—England has often had crises in her affairs, political, social, and religious ; but never till now has she confessed an empty pocket. There are many valves for the escape of ordinary national excitement,

which is often little more than a fit of hypochondria and flatulence ; but it is an old saying, that Samson was a strong man and Solomon a wise one, yet neither of them could pay money except he had it. What Parliamentary doctors may be disposed to do to restore their exhausted patient, is not the question which agitates the minds of think- ing men ; the real question is, what can be done ? It is a question of immense difficulty, even if disencumbered of party opposition. The probability is, that the three following courses will be suggested, and that one or more will be wholly or partially adopted—first, a loan ; second, additional taxation ; third, further approximation to free trade.

Whichever of these plans is adopted, I predict its failure : for the fol- lowing reasons. First, a loan will be the shift of a prodigal, and will increase the ultimate difficulty. Second, additional direct taxation will curtail the expenditure by means of which the indirect taxes of the coun- try are paid ; it will induce an economy of living, a contraction of esta- blishments, and a dismissal of servants, clerks, and labourers ; and it will in various ways encumber the wheels of industry and diminish produc- tion. Third, free trade will indeed increase the industry of the people on the one hand, but as it will on the other necessarily lower the prices of the country, so it will proportionally increase the burden of our engage- ments; to such an extent, indeed, that it is probable the additional burden which industry will then be called upon to pay will more than countervail the advantages of the removal of international restrictions. For, let it be remembered, that reduction of general prices is at all times equal to increase of taxation. So true is this, that if we suppose the real capital and property of the country to be 3,000 millions, and the debts public and private to be half that sum, 1,500 millions, (they are probably much more,) and if we admit that the measures of the last Parliament have reduced general prices 10 per cent, (and there is no doubt they have reduced them much more,) then we must also admit that the same thing has been done as if 174 millions of additional debt had been contracted.. This is clear ; for if prices have fallen 10 per cent, the capital of 3,000 millions has sunk in value to 2,700, whilst the 1,500 millions of debt has remained unaltered; and note- 2700 : 1500:: 3000 would have been to 1674.

And whether the relief which that step towards free trade will afford will be sufficient to countervail this 174 millions increase of debt, is a question of some doubt. This calculation appears in practical life in another form : the man who has 100/. annuity can buy one-tenth more meat, bread, cloth- ing, pleasure, and comfort ; whilst the tenant, mortgagor, and national debtor, must sell one-tenth more corn, cattle, calico, or other produce of industry, to pay his rent, interest, and taxes. The above calculation is worth pondering. There are some who will deny that the alteration in the Tariff has had any effect in the reduction of prices ; and I will admit with them that the alteration has not been the whole cause of the fall : I will also admit that the importation of cattle has been a small part of the cause of the fall in the price of stock— panic has done something, no doubt, and the poverty and idleness of the people something more : but the greatest part of the fall has sprung from the fact that the alteration in the Tariff has diminished the capa- city of the country to contain money,—a fact which the mere temporary condition of the Bank of England no way contradicts. I will readily make it plain that the imposition of a tariff increases the capacity of the country to contain money, and thereby increases prices ; and that a return from protection to free trade must as necessarily reduce prices. A few positions will suffice.

1st. Gold is a commodity. 2d. The exchangeable value of other commodities for gold depends on their relative abundance and the demand for them ; hence the in- crease of prices in the world since the discovery of America.

3d. Gold having been adopted as a universal medium of exchange, the demand for it, cmteris paribus, is constant. 4th. The general prices of all things, therefore, depend upon the abundance of gold ; but the value of a particular commodity in relation both to gold and to all other commodities may rise or fall in conse- quence of causes peculiar to itself—such as sudden abundance or scarcity, fashion or caprice. 5th. Towns lying side by side cannot have different prices for the same goods, except to the extent of the cost of transport between them, unless some artificial cause intervene ; and the greater the facilities of transport, the nearer the equality of prices ; for if inequality exists for a time, it affords such profits as merchants seek, and their action restores equilibrium. They take goods to the place where goods are scarce and money plentiful, and bring back money to the place where money is scarce and goods plentiful ; and so of nations as well as towns.

6th. But if the inhabitant of the town A cannot take any commodity into the town B without paying a heavy toll at B's town-gate, whilst B sends out her goods freely into A, B will bring back money till her prices are so raised by increase of money, and A's prices so reduced by the drain of it, that at last the merchant of A will be able to sell his goods in B for a profit after paying the toll. The trade between the towns will be suspended for awhile till B's prices overflow the wall of protection, and then the commerce will be renewed. Of course B can gain nothing by this system ; for it is no profit to sell at a high price if you buy at a high price, and it is worse to buy at a high price and sell at a low one. And if B produces goods which A requires and cannot produce so well, and if A produces goods which B requires and cannot produce in sufficient quantity, then B's protection injures both herself and her neighbour by preventing the exchange of mutual conveniences. Such is protection both between towns and kingdoms : it is as good between London and Liverpool as between England and the Continent. But if on a sudden B takes off her toll, of course A will begin importing, and will continue to import into B, till she gets back her stolen money ; and their prices will be equal again, except so far as the cost of trans- porting may prevent equality. Such is the effect of abandoning pro- tection. 11 is not the competition in the sale of particular commodities which reduces the price, but the contraction of the inflated circulation.which high protection alone can uphold. There is a great difference between the prices of England and France—between Dover and Calais ; but it Is self-evident the difference exists only by force of artificial laws. If the laws go, the high prices go ; and if the high prices go, down goes the value of all visible property, and up goes the value of all invisible property, or debts. To those, then, who ask for free trade as a means of paying the taxes \ tell them they are self-deceivers if they think that that alone will mend their pockets. It may give them increased employment and increased' means of paying, (not indeed in money, but in the produce of industry); but the debts being contracted in money, Government will require them to render the produce of that industry in money, which will then repre- sent a double quantity of industry and real wealth.

What then is to be done ? A national compromise, a composition with creditors. Ay, if you please : we are our own debtors, and we may honestly say to ourselves in secret that we are bankrupts. Yet, as it is but the right hand pocket in debt to the left, the case is not so very bad, and we should* have as much goods and chattels after the composi- tion as before. But this will not be done. A general sponging, act is not more improbable.

What then remains? Is confiscation—confiscation by the hands of anarchy—the only and ultimate prospect of our gambling system of finance ? Are we to submit to increased and increasing taxation, tilt industry, ignorantly and unnecessarily oppressed., shall rise to tear off the seals from the bonds of our pecuniary embarrassments ? and shall we become like Spain and Portugal, the least creditable of the contractors of the world ? God forbid. Yet such is the only prospect so long as we continue to worship the golden image which ignorance and prejudice have set up for us in the shape of a metallic standard of value. Does any man dare to say the one pound sterling of 1822 was the same thing as the pound sterling of 1815? Does any man dare to say that the pound sterling of 1843 is the same as that of 1841? Will any man contend that it will be just to repeal the Tariff, to double the weight of every tax, of the rent on every lease, of the interest on every bond and mortgage, and to leave the standard as it is ? Will any man say it would be justice to pay our debts in commodities valued by gold if gold were to become as scarce as diamonds ? And yet it is a notorious fact, that not only in England is gold becoming scarcer and more valuable, both by force of the causes of which we ourselves are the authors, as above stated, but also by force of the many recent copies of our own ancient policy which have lately been adopted by other nations who have instituted tariffs like our own, thereby attracting the gold of the world to their shores, and locking up the commerce of the nations with toll-bars at every port; and further, by causes over which Government has no control—by a falling-off in the supply of the precious metals from the mines, and by consumption of those metals, by abrasion and for purposes of luxury, to a much greater extent than they are produced.

All these causes are lowering the prices of this country ; and still let gold represent what quantity of goods it may, we are required to pay them. But the thing is impossible as time will prove.

But is it not absurd to attempt to liquidate engagements on terms which were not in contemplation at the time of the original contract ? As a mere question of equity, such equity as is dealt even by human courts, we may state, that the contract for the debts we owe was essentially a contract to pay as much as we borrowed—as much of the produce of our industry as we borrowed, and not as much gold : this was our con- tract, and so let us liquidate it. But if the mere consideration of the equity of the measure does not convince us, let us regard our rights of taxation. Is it more unjust to take three separate sovereigns from every 100/. which we pay to the national creditor on his half-yearly dividend, or to take 3 per cent from the weight of the coin in which we pay it ? Long as the people have known that their troubles were troubles of the pocket, they have not had wit enough to understand that it is the money and not the purse which is in fault. Let them consider what a pound sterling means, and let them severally consider whether within their own individual experience, it has consistently and constantly re- presented an equal quantity of their labour, their goods, and their land. And if not, why not ? Who makes the scales, and who shifts the beam ?

Let it be remembered, that the sole and whole evil which this country is now suffering is in the derangement of the relations of debtor and cre- ditor; that all that is called property consists either of visible and tan- gible property on the one hand or of debts on the other—of the mortgaged estate and the mortgage debt—of the industry of the man who works and the proportion of the produce of his labour which the creditor consumer claims. Let it be remembered, that when one of these species of property changes for the other, at every such change, money, ay, gold—deceit- ful, treacherous things, called pounds sterling—are ever present to mea- sure and determine ; to weigh, as by a scale, how much property, how much of the produce of industry, belongs to the creditor ; and that the value, the capacity of this measure, is daily, yearly, and century by cen- tury, changed, both by means of legislation and in spite of it ; and let it be asked, is this the golden image we are to fall down and worship ?

Note, that this standard money, this ignis fatuus, is present at every conversion of property into debt and of debt into property—of invi- sible property into visible property—of a bill of exchange into a cargo of goods—of a share in a bank into a coach-and-four. Let it then be remembered, that if we take 10 per cent by way of income-tax from the visible property of the country, and at the same time take 10 per cent from the weight of the coin, we shall tax all the creditors, by way of deduction, to a certainty and without exception. We shall take 10 per cent from the freeholder, 10 per cent from the mortgagee, and 10 per cent from the bondholder, by paying in the lighter coin, without being at the trouble of inquiring for them, or making any law to charge them, and without requiring any certificates of commissioners to justify the deduction.

Such would be the effect of a reduction of the weight of the coin, as a mere measure of taxation.

As a separate and independent measure, every alteration of the coin undoubtedly is a direct act of spoliation ; but when, by such a measure as the last alteration of the Tariff, or when by any such measure as free trade agitators are now proposing, the value of the pound sterling is to be increased, it is but fair to the debtors and creditors of the country, that the increase of the v..lue of money, and the consequent increase of the standing engagements of the country and people, should be coun- teracted by an adjustment in the weight of the coin.

Time will prove. Let them try a few more years to raise the money- revenue of this country in the present coin : it is an impossible thing, and it is flagrant injustice to attempt it.

Of all the truths which philosophy has taught to men, none is more —rtain than the truth of the advantages of free trade: of all the follies flack nations have invented for their own destruction, none has been so sulcidal as laws of protection. It is as though they set their people to work in chains. Doubtless and indisputable as this is, and few as there are who in their consciences believe the contrary, why do the farmer and the landowner resist the application of the doctrine ? Is it ignorance, or is it selfishness that prompts them? Far from it. John ,Bull has quite as generous a soul as your merchant-manufacturer, and would make as great sacrifices for the service and protection of his country. But he sees truly, that if protection is removed from agricul- ture, though his farm will not cease to produce real wealth, cattle and corn, as abundantly as before, it will require thirty for twenty of all his produce to realize the rent on his lease : a difference equal to all his profits—a difference which will ruin and destroy him. And the land- lord, whose patrimony is overwhelmed with portions and mortgages, well knows that the 10 or 20 per cent which he gives to his supplicating and suffering tenant, will be counterbalanced by no like concession from the incumbrancers who devour his estate. And is it likely that he will face such a state of affairs, or lend his hand to bring it about? They are fools who think that this result would not follow a repeal, and knaves who would persuade the agriculturist to believe it. There can be no doubt that the fall in the price of agricultural produce will, when- ever the repeal comes, be equal to the whole amount of protection. If the farmer could see his rent reduced in proportion to the fall in -the value of the produce—if the landowner could see the interest on his mortgage reduced in proportion to the diminution of his rent, and if he could see the surplus which remained to himself, though diminished in money-amount, capable of purchasing the same or very nearly the same amount of the commodities of life as the larger money-amount which he had before received—if, in addition, by means of the libera- tion of the industry of the country, he could see the paupers who are now devouring his patrimony in idleness turned to habits of industry, and his rent-roll increased by the addition of the price of all their workhouse maintenance—think you he would hesitate a moment to accede to the demand for free trade ? Not he. He would gladly make a sacrifice to relieve his country : but he will not consent to the confiscation which Corn-law repeal, unattended by other measures, would produce ; and he has good sense in his opposition.

What, then, are the measures which are required to make this change as harmless as I have supposed ? Adjustment of the standard by means of which the injustice would otherwise be done. The repeal of the Corn-law would operate injustice by diminishing the quantity of money in the country and increasing its value and the value of the debts to be paid in it. It is by maintaining the measure of value at a constant equality that contracts are to be kept at integrity ; and this cannot be done consistently with any measure of free trade without altering the standard of the coin. Free trade, by letting out the excess of our circulation, would reduce our prices to the level of neighbouring nations. The money that remained would advance in value ; and the only means of preventing this advance, and the injustice attending it, would be to reduce its weight, and to make the diminished quantity into the same number of pieces as the previous currency had consisted of. Prices would then remain steady ; the exchangeable value of gold, reckoned in ounces, would advance, but the number of coins of a given denomination which an ounce should be made into might be so regu- lated as to mantain the value of the coin, and consequently of the debts, unaltered. Let us have no mistake or misunderstanding on this subject. Gold is a commodity, which is valuable in exchange for other goods according to its abundance or scarcity ; and the quantity which will remain in this country, either with or without the tariff, does not depend on the number of its pieces, but on the weight of the whole as raw bullion. The stamp on the current coin gives it no value either at home or abroad, except that at home it makes it a good tender for debts. It denotes only the weight and fineness of the piece on which it is impressed, and saves the trouble of weighing and assay lag it. If a bullock sells for an ounce of gold, which is coined into four pieces and called sovereigns, it will not the less sell for an ounce of gold though Government coin it into eight pieces and call them sovereigns also. So, also, it matters not for purposes of present exchange whether gold is plentiful ; for as a man buys so he sells : and therefore, if by reason of the increase of gold the price of a bullock advance from one ounce to two ounces, the vendor will gain nothing by the advance ; for the two ounces will produce no more to him when he parts with them for other goods than one ounce would have done before the advance. But it is upon the relation of debtor and creditor in its various forms— but especially in the cases of landlord and tenant, mortgagor and mort- gagee tax-payer and tax-receiver—that fluctuations in the abundance of gold or alterations in the weight of coin operate to produce justice or injustice, and to alter or maintain the spirit of the contracts of the people ; for though it is true in fact that the contracts of the people are made for gold, they are made so in obedience to the law which has given us that metal as a measure of value, that metal being itself never the object but merely the instrument of the contract : and all that I contend for is this, that if in pursuance of a system of free trade we alter the value of the gold by reducing its quantity, we ought at the same time to adjust the value of the coin in which our debts are con- tracted by reducing its weight. It is a fact admitted by all reasoners on this subject, that as a mea- sure of value from year to year, and for the purposes of commerce, nothing is so steady and constant as gold, nothing so uncertain and fluctuating as corn ; whilst as a measure of value from century to century, we have no measure so changeable as gold, and none so certain as corn. Let it be observed, that in a very recent instance—in the Tithe Com- mutation Act—we have applied the principle that I am here contending for, on an extensive scale and in a very scientific way, avoiding alike the fluctuations of corn, of bullion, and of money. It will be observed, that of all the contracts subsisting in the country from an ancient period, none has maintained its intergrity and the intention of the contractors so well as that between the Church and the people ; none has advanced so steadily with our prosperity or receded so steadily with our distress. The feudal rackrents which the customs of the various manors of the country fixed in a money-name have dwindled into insignificance, whilst the tenth of the Church, fixed by reference to corn, has outgrown them a hundredfold. To abolish the unchristian contests between

the Church and her people, it lately became advisable to change the nature of her endowment, and to convert it into a permanent charge ; and for once, to the credit of John Bull's arithmetic, he has done a wise thing. He has not given her an annuity in pounds sterling, which might in process of time change with the value of gold or the consti- tution of the coinage, but he has contracted to give her the value, in gold, of a certain quantity of corn ; and he has been wise enough to neutralize the annual inequality which varying seasons might produce, by giving her the average of seven years. And so the contract re- solves itself into this, that if gold become scarce and prices low, the Church gets a small quantity of gold ; if gold increases and prices rise, she gets gold in proportion. If this arrangement had not been made with the Church—if we had contracted to give her a fixed amount of gold, or of money of a certain name, then, with every change in the state of the gold-market, and with every change in the constitution of the coin, her revenue would have changed also, and under the recent change of the Tariff would certainly have increased 10 per cent at least.

If between the Church and the people such a contract was advisable, why not between the people and the Government? Surely our debt is not likely to be suddenly paidl If the price of corn, on an average of seven years, had been taken as the measure in which our war-debts had been contracted, our national engagements would at this moment have pressed with less than half (we might almost say a third) of their pre- sent burden. If the value of any other production of industry, such as calico or woollen, (which I admit would not have been a fair measure,) had been taken as the standard, our debt would not have pressed us with a tenth, nay scarcely with a twentieth of its present burden. What are the causes of the evils under which we suffer ?—First, in- creasing population and production at home, which increase the demand for gold, and reduce prices ; second, increasing population and produc- tion abroad, which increase the demand for gold, and reduce prices ; third, hostile tariffs, which increase the prices of the countries in which they are established, and, pro tanto, reduce ours ; fourth, dimi- nished fertility of the mines of South America, (ay, it is little known how much diminished,) which also enhances the value of gold to all the world, and reduces prices ; fifth, increased consumption of gold for all purposes of luxury, which also reduces the prices of the world ; sixth, approximation to free trade in our own country, which by pulling down the wall of protection which upheld or contained our inflated cir- calation, diminishes our proportion of gold, increases the value of what remains, and reduces prices. These causes are still progressing ; and if Government suppose either that we ought or that we can continue to pay our debts in gold at 31. 17e. 101d. to the ounce, let them try : be- fore all the world it will be demonstrated that they attempt an impossi- bility. The whole currency of the country, reckoned at fifty millions, passes through the hands of the public and private creditor more than twice every year ; and as our currency diminishes, it must pass still oftener if we are to pay by the same standard. Let them try how many more times it can pass.

A Parliamentary paper was published some years ago, the materials of which were collected by the Diplomatic and Consular Agents of this Government, and was copied in the Quarterly Review, No. 94, about the year 1828. This paper contains a statement of the average decen- nial price of wheat from 1700 down to 1826 in the following European markets,—viz. all England, all France, Amsterdam, Dortrecht, Ham- burg, Berlin, Kiinigsburg, Warsaw, Dantzig, Ancona, and Biscaya; and it also contains a statement of the average decennial coinage in Mexico and Potosi during the same period. The perusal of that table would probably do much to remove the scepticism of those who think that the abundance of gold does not govern the prices of the world. I have not room for the table here, but I give you the summary of it in abstract numbers.

Ten years ending. Total average price of wheat Total coinage in in all the markets above Mexico and named. Potosi.

1710 100 100 1720 111 114 1730 93

137

1740 90

148

1750 107

173

1760

104 206 1770 123 192 1780 132 275 1790 137 304 1800 174 352 1810 244 331 1820 232 155 1826 139 123 Here I leave the subject ; well knowing how the public despises and laughs at the people she calls Currency Doctors, but not the less assured that the laugh will be the other way by and by. Before I conclude, I have only two observations to make. First, the paper-money of this country, and its banking system, radically bad as they both are, have little or no connexion with the causes of evil here pointed out. Every political reader will know, that the quantity of paper money which can exist in the country depends upon the quantity of gold, and that the former expels and replaces the latter very nearly to its own amount. Second, there is no country, save Eng- land, to whom the Currency question, in the light I have considered it, is of much importance, except so far as a knowledge of the danger of debt may deter from the imitation of our example. The follies of America in regard to her monetary system, wanton and wicked as they are, may ruin individuals, but can never put in question the possibility of paying the interest of her present debts and the expense of her Government. Treacherous as a mere metallic standard necessarily is, and reasonable as it is that every state should use a measure of value which should maintain her own and her people's contracts at integrity, still the stability of the government of a state unincumbered by debt could never depend upon that question ; but eight hundred millions of debt, and twenty millions annually of public salaries, in addition to the engagements of the people and the incumbrances of the public institu- tions of an ancient kingdom, are indeed causes that should make her jealous and watchful of the nature of that instrument by which the animal produce of the industry of her people is meted out in liquidation of those incumbrances.

I am, Sir, yours, &c.