March 1825 to the present time, have been witnessed, or any of that distress in which we have been involved. This, I am persuaded, will be admitted to be perfectly indisputable. It will be admitted, that no necessity of whatever kind pressed on the Bank for withdrawing its notes in 1825, except the necessity which was imposed on it by the Act of 1819.

Your Lordship, in treating of different commodities that have fallen in price during the year 1825, has stated that you ascribed such depression to over-trading. But Government securities fell first in price: 3 per cent. consols, which stood in February 1825 at 95, fell before the end of November to 82; and Exchequerbills fell with them, from 37. premium to 20s. discount. This fall in the Funds, and in Exchequer-bills, cannot surely be ascribed to over-trading. It must have been occasioned by the reduction of the issues of the Bank which accompanied it; and which reduction must of necessity have had an equal effect in lowering the prices of all other property, whether over-trading had or had not existed.

Mr. Huskisson finds that a contraction of the currency, depression of prices, and consequent distress, go together. It may be assumed then that one of these is the occasion of the other. In 1824, and the beginning of 1825, we find existing a condition of great and general prosperity, accompanied with high prices and a full circulation. In March 1825, the Bank, urged by Mr. Peel's bill, commences to withdraw its notes from circulation. It proceeds with this operation down to the end of November. Early in December, breaks out "the Panic." The Panic, as it was called, was a feeling of alarm in the mind of the public respecting the security of all paper money and paper credit. It arose from this, that many banking-houses, the credit of which had been hitherto undoubted, were found to be unable to discharge in notes of the Bank of England their pecuniary engagements. Now this is precisely such an evil as the operation which has been described was obviously calculated to lead to. No man who has considered this subject at all, can doubt, that the withdrawing of nearly four millions of Bank notes from circulation in the manner those notes were withdrawn, was calculated to lead to the most extensive failures and general distress. I ask your Lordship, whether you did not yourself anticipate the most calamitous consequences from this operation? whether during its progress, and more particularly during the latter part of it,during the months of September, October, and November last, -you did not anticipate consequences nearly as great as any which have since fallen on us? and whether the Directors of the Bank did not press on your consideration their apprehensions

of danger which I am sure they felt? If this were the case, and it is scarcely possible to believe otherwise, your Lordship has, I think, acted most unwisely, and dealt unfairly with the country, in the exposition attempted to be given of the origin of the late and present distress.

Every great and general reduction in the amount of the notes of the Bank of England, must be of necessity followed (though perhaps at an interval more or less distant) by a proportionate reduction of all that mass of monied engagements, of paper, and credit, by which the pecuniary transactions of the kingdom are carried on. The bills of exchange of the merchant, drawn for commercial transactions; the notes of the country banker, issued for the payment of wages, or to carry on the exchanges of agricultural produce; all these, in whatever part of the kingdom drawn or issued, must receive their ultimate discharge in London, in notes of the Bank of England. In 1824, and the early part of 1825, these bills and notes,-drawn for large amounts, because the goods they represented were sold at high prices, or issued in great quantities, on account of the rate of agricultural productions, required the whole extent of the twenty-one millions put in circulation by the Bank of England for their regular discharge; seventeen millions were unable to give acquittance to an amount of engagements which required twenty-one millions, and had been founded on that amount. First, then, the Bank, driven to this step by an attempt to keep to the old metal standard, withdraws its notes from circulation;-next, the bills of the merchants and the notes of the bankers are unpaid;-then come failures amongst the traders ;-bankruptcies take place ;-commercial distress. We call this state of things over-trading! We are busy with some miserable nostrum; but before we can apply it, the evil has arrived at its next stage, and we are alarmed by the spectacle of laborers without employment, dying with artificial famine, and kept in subjection by the soldiery. This is overpopulation; and the next stage is agricultural distress, or overproduction. This is the course before us, and this the third time of our passing over it. Our exposition is-over-trading-farming too much speculation-too many people-too much production. We ought rather to say, over-taxation, rendered doubly oppressive by the Act of 1819. The country requires all its trade all its people-all its agricultural activity. If these were relieved from the fetters of that destructive and fatal measure adopted in an evil hour, we might rise over all other difficulties, and become as prosperous and happy, and more wealthy and powerful, than at any former period of our history.

ON

MR. M'CULLOCH'S DOCTRINES

RESPECTING

THE CORN LAWS,

AND

THE RATE OF WAGES, &c. &c.

BY GODFREY HIGGINS, Esq.

OF SKELLOW GRANGE, NEAR DONCASTER.

ORIGINAL.

LONDON:-1826.

OBSERVATIONS,

&c. &c.

1. Of all the branches of political economy, there is no one on which there has been more difference of opinion than that of the nature of the rent of land; and undoubtedly there is no one of greater importance. This question equally concerns the luxuries of the rich and the comforts of the poor and on its being rightly understood, may depend the actual existence of millions of persons. Under these circumstances, it is surely then a matter of the highest moment, and most imperatively incumbent on the Legislature that it should not adopt the suggestions of theorists, who recommend a total alteration in a system which has been found by experience to work well on the whole, until it has fully satisfied itself by a most minute examination of their propositions, that they have not only drawn just conclusions, but also that the principles from which they have deduced them are correct. If we proceed to legislate hastily, we may produce effects ruinous in the extreme, and which it may be impossible to repair. It is the object of the author in the following pages to demonstrate the erroneous nature of some of the fundamental positions of those, whose mere dicta are apt to be received as unquestionable authority amongst a certain class of political economists, and to caution his readers against implicitly confiding in doctrines (no matter what may be the reputation of the holders of them) which have been built on such unstable foundations.

2. The doctrine of Mr. Ricardo and Mr. M'Culloch is stated by the latter in the following terms: "On the first settling of any country abounding in large tracts of unappropriated lands, no rent

is ever paid; and for this plain and obvious reason, that no person will pay a rent for what may be procured in unlimited quantities for nothing. Thus, in New Holland, where there is an ample supply of fertile and unappropriated land, it is certain, that until the best lands are all cultivated, rent will never be heard of. Suppose however that tillage has been carried to this point, and that the increasing demand for raw produce can, in the actual state of the science of agriculture, be no longer supplied by the culture of the best lands: under these circumstances it is plain that either the increase of population must cease, or the inhabitants must consent to pay such an additional price for raw produce as will enable the second quality of land to be cultivated. No advance short of this will procure them another bushel of corn: and competition will not, as will be immediately shown, allow them to pay more for it. They have, therefore, but one alternative. If they choose to pay a price sufficient to cover the expence of cultivating land of the second quality, they will obtain additional supplies; if they do not, they must want them. Suppose now, that the consumers offer such a price as will pay the expence of producing corn on soils, which, in return for the same expenditure as would have produced 100 quarters on lands of the first quality, will only yield 90 quarters; it is plain it will then be indifferent to a farmer whether he pays a rent of 10 quarters for the first quality of land, or farms the second quality, which is unappropriated and open to him without paying any rent. 111. C. p. 266.

3. The doctrine here laid down in such plausible terms is not only not true, but in part the direct contrary is the truth, as has been decidedly proved by Mr. Torrens in the following words:

"Mr. Ricardo contends that rent is the difference between the quantity of produce obtained by a given capital from lands of superior quality, and the quantity of produce obtained by the same given capital from the worst quality of land resorted to. Thus if there be three qualities of land under cultivation, from which the same given quantity of the ingredients of capital raises respectively, 100, 90, and 80 quarters of corn, then the rent upon the first quality of land will be 20 quarters; that upon the second quality w ill be 10 quarters; while the third and last quality will pay no rent at all. The same principle is maintained by Mr. McCulloch and Mr. Mill, and constitutes, indeed, the distinguishing doctrine of the Ricardo school on the important subject of rent."

Mr. Torrens continues :-"This doctrine is erroneous. Rent is not the difference in the quantities of produce obtained by equal capitals from lands of different degrees of fertility."-Torrens, Ess. Corn Law, p. 144.

VOL. XXVII.

Pam.

NO. LIII. Q