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and perspicuous language. Then, indeed, your remarks might have been considered as a whole, of which the component parts would have amply harmonised; but, when you have recourse to quotations, which you are forced to clog with qualifications, not only are your own opinions entangled with those of others, but instead of a consistent whole, we find “ several contradictory principles reluctant* ly and irreconcileably brought and beld ** together. ... to claw and bite each other to “ their mutual destruction.”——Your opinions as they are now explained by you, are limited by distinct qualifications; but, as I think the principle on which they are founded, in whatever manner it may be qualified, is completely untenable, I shall shortly consider the arguments which you have advanced in its defence and least you should think me unreasonably scrupulous as to the proof which I would require, I must inform you, that as the proposition is not intuitive, it ought to be either demonstrated from elementary principles, or established by a reference to facts. If the proof on which you have grounded it be examined, it will be found to be radically defective, inasmuch as the position which ought to be proved is taken for granted. The substance of your argument seems to be, that as corn, even where there is neither discounting nor paper currency, can be kept back from the consumer by means of capital, on the prospect of a scarcity, it follows that discounting, by adding to the active capital of the corn-mer. chants, increases their power of withholding corn from the market. It is thus cypressed in your own words: “If then, all active ca. “pital does, in proportion to its amount, in“duce and enable the possessor to keep back
“ corn from the market in times of scarcity
“ or approaching scarcity; and, if the dis
“ counting of bills, unchecked by a due re
“ference to capital accumulated, greatly and
“ instantaneously adds to the active capital;
* if these two positions are granted, and, I “ think they will not be denied ; it follows “ of course, that, by means of discounting “bills, corn-dealers are induced and enabled “to keep corn back from the market, in “ those seasons when corn becomes an object “ of speculation.” The first position on which the whole of your reasoning is grounded, I do not admit, nor have you attempted to prove it. You have another passage to the following effect. Wee there no discount“ing at all, and no paper-money, a prospect “ or even rumour of scarciy of any article, “would cause such article to be, in some * degre kept back from the consumer; “but then, that degree, which must bear a
“ due proportion to the real capital of the “ possessors of the article, would never be “ so great as to amount to an evil. If the “withholding here spoken of be allowed to “ be practicable, &c." But, I do not allow it to be practicable; I deny that the cornmerchants can withhold corn from the cornmarket, so as to raise the price; that all the corn not destined for immediate consumption must be withheld from the market till it be required, seems to be almost a selfevident proposition; as the consumption is gradual, a very great stock must constantly be kept on hand; but, it does by no means follow that the necessary supplies of the corn market can ever be kept back so as to raise the price. When the price rises, there must always exist another cause unconnected with capital or paper currency, and perfectly adequate to produce the whole of the effect which you partly trace to a different source. A short consideration of the general principles by which the corn trade is regulated, will confirm the truth of these observations. I intended at first to point out at length the different operations, which the various branches of the capital employed in the corn trade, are by the necessary constitution of things appointed to perform. But, as a full exposition of this part of the subject is not essentially necessary to the present question, 1 shall only observe, that the business of the corn merchant seems to be to convey supplies. to the market as they are needed, and to replace with the produce of his sales the capital of the farmer. For this purpose, it does not appear to be necessary that any great proportion of the supply of the year should ever be in the corn-merchants hands; on the contrary, the quantity engrossed by them, will naturally be diminished as low as they find consistent with the regular supply of the market; in this way, the smallest possible quautity of capital will be required, and in every trade it is evident that the quantity of capital will soon adjust itself with the greatest nicely to the functions which it is destined to perform. Is too great a qua:tity of capital were attracted to the corn trade one year, it would be thrown out at the end ci the season, and never would return. The author of the Wealth of Nations very justly observes, that it is the interest both of the coin-merchants and c; the consumers, that the daily, we ky, and monthly coustinpoon of corn, should be proportion as exactly as possible to the supply of the season. It is evident, therefore, that that I rice which would regulate the consumotion of a day, week, or month, in exact proportion to that of a whol; year, must be cou. . .exed as the natural price, as that point to which the price
constantly tends, to which amid all its fluc
tuations it gravitates as to a “centre of con“tinuance and repose.” When it falls below this, its natural point of rest, it is again brought back to it by an increase of demand occasioned by a too rapid consumption; when it rises above it, consumption is checked, the demand decreases, and the price naturally falls.--it will be found on considering the subject, that all the variations of price which can possibly occur, are referable to the same general principles; and that, as corn never can sink below its natural level for want of money, so no command of capital can ever have the slightest influence in effecting a higher rise of price than would otherwise happen through the operations of obvious causes. It is evident that an alarm of scarcity, whether well or ill founded must raise the price, and that the rise of price which thus takes place, is beneficial, as it checks consumption, and thus mitigates the severity of expected scarcity, by distributing its pressure over a wider extent. The fact is, indeed, generally acknowledged, but a difference of opinion prevails as to the degree in which the price is affected, and as to the causes which operate in producing that effect.——'I he increase of price occasioned by an apprehension of scarcity, must evidently be proportioned to the degree of alarm which prevails. If it is generally believed that there will be a scanty crop, and that the value of corn will be increased 20 per cent. in three months, a very great demand will instantly take place, and will continue till the expectation of high profits from the probability of an advanced price, be counterbalanced by the rise which actually takes place. The equilibrium between the demand and the supply cannot be restored, until the increase of price leaves to the cornmerchants no more than a fair compensation for the disadvantages, whatever they may be, of keeping their stock on hand for three months longer. If the price was so low as left them more than an adequate compensation, there would be more buyers than sellers; the former proportions would not be restored between the demand and the supply, and the price would continue to rise, till it attained that point, at which, as long as circumstances remained the same, it would continue stationary. It is for the advantage of the consumers that corn should attain this its just value; for, if the fears of scarcity be well founded, and if a correspond
ing list of price do not take place, the peo
ple will suffer, instead of a comparatively slight inconvenience, all the unmitigated dis
tress of an unforeseen calamity. This evil, however, never can happen from any want of capital; a particular corn inerchant, may, indeed, be forced to sell his stock for want of capital, but a variety of purchasers will immediately appear, by whose competition whatever is disposed of will sell for its full value. There never can exist in any trade either a permanent superfluity or deficiency of capital; both these evils necessarily tend to their own cure. In the one case, profits are sunk below their ordinary level, and the superfluous capital seeks more profitable employment; in the other, they are raised above it, and capital is soon attracted from other branches of industry, which quickly reduces profits. It is curious to observe with what exactness the various relations of society are adapted to each other; what perfect barmony subsists in that apparent complexity of parts which the machine exhibits to a super. ficial observer. This arises out of the pa. ture of things. For if the system of civilised society, did not possess, by the very funds. mental laws of its constitution, a power to rectify temporary derangement, and, indeed, an internal energy sufficient to preserve a just equilibrium between its parts, it would want the means of its own conservationIf corn can never be degraded below itsjust value for want of capital, upon the same principles it is demonstrable, that no com: mand of active capital cau ever in any cir.
cumstances effect the slightest variation inits
value. As the idea of any combination is too absurd to deserve serious refutation, the coin dealers must act from circumstances which are totally beyond their control. These must be some general cause to give the same direction to their operations. Scarcity of the approhension of scarcity is fully adequal: to produce this effect. In the case which I have supposed, it is generally believed, that the value of corn will be increased 20 Per cent. in three months. From the increased demand which the apprehensions of this rio will produce, the value of corn must cont" nue to increase, till the actual price be goto rally decmed, on a full consideration of the circumstances of the case to be a fair equi" valent for the expected advance. If it * thought more than a fair equivalent, those who have that view of things will eago! avail themselves of this opportunity to solo and if this be the general opinion, there will be a general inclination to sell rather than” buy ; the price must therefore fall, what of be the quantity of capital in the bands of to corn-merchants; if the actual prio. " thought less than a fair equivalent for the expected advance, in the same manue. " will be a general inclination to buy rather than to sell, and the price must rise. When it is generally thought that the actual price is neither more nor less than a fair equivalent for the expected advance, the natural equilibrium will be established between the supply and the demand; they will be exactly suited to each other, and here the price, while circainstances remain the same, will continue stationary; to this point, it is evident, it must constantly gravitate by the operation of fixed laws. It does not appear that capital has the slightest influence in occasioning these fluctuations. The price is fixed by the general opinion, and capital is necessary to give practical effect to that opinion. There must, by the very constitution of society, be always a sufficient-quantity of capital to raise corn to that price at which it is estimated by those best qualified to appreciate its just value, and it never can be raised higher ? It is not easy to understand upon what principle this sort of influence is ascribed to capital. If when an alarm of scarcity prevails, the value of corn must increase, till the actual price is generally believed to be equivalent to the chance of high profits from the expected advance, how can the influence of capital raise it higher. The generality of corn-merchants thinking that the actual price of corn is as high as to offer a fair compensation for the chance of high profits from the expected rise, although they had the most extensive command of capital, could have no farther inducement to withhold corn from the market. Whatever quantity they may have had on hand during the rise, will yield them a great profit; but the profit on all future transactions must be according to the ordinary rate. Those who refuse to sell must certainly be impressed with the belief that the price will speedily be higher. If this be the general belief, although it may ultimately prove groundless, it must be founded on a consideration of the circumstances of the case by those best qualified to form a correct judgment. Capital never can be wanting to raise corn to the waluation at which it is rated by the general opinion of the dealers, and were it possible to suppose that it could rise higher by the influence of partial causes, it would be instantly brought jown by the great supply which would pour into the market from all quarters. In the case which I have supposed it is thought that corn will increase one-fifth; now if it be the general opinion, that the actual increase of price offers a fair compensation for the expected advance, there never can be a general disposition to employ capital in with-holding. No corn merchant can
suppose for one moment, that by withholding his own stock from the market, he can raise the price. He must look to the operation of a more general cause. But after he thinks that this canse has already completed its effect, what further inducement can he have to keep up his stock; unless he either thought that his own solitary efforts could raise the price, or that other corn merchants would follow his example. As the dealers in grain are not combined, each must pursue that plan which he thinks most conducive to his own particular interests. After he thinks that corn has risen to its just value, whatever be his command of capital, it never can be his interest not to sell. By not selling he keeps his capital idle, without any apparent means of remuneration. What is true of one corn merchant is true of the whole body. When corn has attained what they consider its just value, it never can be their interest to keep it, unless they were to act in combination. After they think that the alarm of scarcity has completed its operation, their profit must be made by selling not by keeping; and the most extensive command of active capital could never induce them to keep up corn longer from the expectation of extraordinary profits. Indeed there is no principle in political economy more firmly established than this, that if too great a quantity of capital be attracted to any employment, profits will quickly be reduced; if there were too great a quantity of capital in the hands of the corn merchants, the market would be supplied too liberally, and the price would consequently be reduced below its natural level.—As au unfounded alarm of searcity must raise the price, an unfounded belief of plenty nast lower it. Accordingly, before the harvest of 1800, on the prospect of plenty, the price of wheat fell as low as 58s, and very fine wheat, which had been as high as 150s. fell to 85s., which was afterwards found to be too low a price. There appeared to be a very general mistake as to the produce of the crop, for after the harvest was got in, and the demand fairly brought to bear upon it, the mistake was quickly corrected, and superfine wheat rose as high in January as from 140 to 158s. Were I pretending to exhibit a complete view of the subject, f would take notice of the fluctuations which generally happen in a year of scarcity particularly, previous to the harvest; b.; as it is not absolutely recessary for my prescuit purpose, I shall only observe, that al; these variations of price are plainly deducible from the operation of obvious causes, a d do not seem to be in the slightest degree connected with paper currency.——Having thus stated to you the grounds of my dissent from the fundamental position on which your theory rests, little more remains for me to do. You think that the prospect of scarcity would cause corn to be kept back from the market; even though there were neither discounting nor paper currency; but that the degree which would bear a proportion to the real capital of the possessors of the article, would never be so great as to amount to an evil. I have already endeavoured to shew that there must always be a sufficient quantity of capital to raise corn to that value at which it is rated by those best qualified to form a correct judgment, and that no addition of capital can raise it higher. The capital employed in any sort of trade must always adapt itself to the functions which it is destined to perform. The determination of a superfluous quantity to any employment, is the very mode prescribed by the nature of things for reducing profits, and of benefiting instead of distressing consumers. The undue reduction of price which took place before the harvest of 1800, will not, I suppose, be attributed by you to the operations of our paper system. Yet the variation in the price at that time was far greater than those variations of price which you partly attribute to paper currency, and it was undoubtedly occasioned solely by the unfounded belief of approaching plenty; for when that opinion was corrected, the price immediately rose higher than even it had done before, notwithstanding a continual supply from importation. Now I cannot help thinking, that if an unsounded belief of plenty occasions a very great fall of price, an unsound ed belief of scarcity may occasion a very great rise without the intervention of auy other cause. If a law were passed granting a premium of a guinea for each bnshel of corn exported after next Christmas, you ask me if I will deny that such a law would induce all the corn dealers to raise the corn in hand from one and the the same motive An answer will be found to this quere in the case of an expected rise with which I have endeavoured to illustrate my view of the subject. If such a law were passed, there could be no want of capital to raise corn to its full value, and no capital could raise it higher. But here I must observe, that corn dealers all act as unconnected individuals; it is the expectation of the
bounty solely, which raises the price, and not the influence of active capital. You say that the present rise of price is not to be accounted for upon my principles, and you ask what cause has produced such a sudden augmentation of the demand above the supply The cause obviously is a general belief that the price will be higher, which must occasion a continually increasing demand, till that demand is checked by a proportional rise of price. It is not a paper currency which affords the means of acting upon the mind; there must always exist a sufficient quantity of capital to give practical effect to the general belief, and no superfluous capital can be employed. As to a depreciation of money, I am totally at a loss to understand how that circumstance can raise the real value of provisions; it appears to me, that it may with equal propriety be asserted, that physical magnitude may be enlarged or diminished by a variation of the measurement in which its dimensions are ascertained. The price of labour must depend upon the average value of corn, for a number of years; it never can be adjusted to all the transitory fluctuations in the price of provisions. A depreciation of the currency must affect equally both the nominal value of corn and labour. In whatever degree the present rise of provisions is owing to a depreciation of money, in the same degree the price of labour must rise. If it has not risen, and if the demand has continued the same, an unanswerable argument arises out of this fact against any depreciation. But allowing that the currency is depreciated, how can the real value of corn be affected by that circumstance 2 As money is the only practical measure of value, corn is more frequently compared with it than with any other commodity. But the real value of corn has surely nothing to do with the variations of the measure by which that value is ascertained. I have now submitted to you the grounds on which my opinions are founded, and if they are erroneous, you will have an opportunity of refuting them. In the mean time I cannot belp thinking, that the influence of paper currency on the price of provisions, which never can act but in conjunction with another very powerful cause, is an illusion very similar to those legendary tales concerning forestaliers, regraters, and engrossers, which were propagated and believed during the monkish age political economy.—Montrose, 214 Nov. 1804.-D. B.
Printed by Cox and Baylis, No. 75, Great Queen Street, and published by R. Bagshaw, Bow Street, Covent * Garden, where former Nurnbers may be had ; sold also by J. Budd, Crown and Mitre Pall-Mali. o
Vol. VI. No. 24.]
LONDON, SATURDAY, DECEMBER 15, iso. [Price tor.
* It is impossible not to see, in these feeble and sickly imaginations, that fatal temper of mind, “ which leads men to look for help and comfort from any source rather than from their own “ exertions.”—Mr. WiNDHAM's Speech on the Preliminaries of Peace.
St R, At a time, when every post from the continent is bringing fresh proofs of the triumphant progress of our enemy; at a time when the man, (a prayer for rotection against whom makes part of the iturgy of our church,) is putting on the crown, having already taken possession of the dominions, of Charlemagne, while, by way of episode in the grand drama, he is keeping us plunged in all the expenses, the embarrassments, the uncertainties and anxicties of war; at such a time, it is natural that men should inquire, when and how, this state of shings is to terminate. This question is, in fact, frequently asked; and, it is truly melancholy to observe, that the answer is seldom, or never, found expressive of confidence in cur internal resource, our ability, or our resolution. We rarely hear any thing beyond a vague undefined hope, that all will turn out well at last, that we are not yet to be conquered, and that something or other will happen to frustrate the designs of the enemy. Those who are called upon for some foundation of their hope, refer us, 1. to the powers of the Continent; and, 2. to the discontents of the people of France, sometimes appearing to think, that it is not the interest of Buonaparté himself to conquer this country, nor to subvert its government. It must be evident, that a fallacious hope can be productive of no good to the country, and that it may be productive of great mischief; therefore, it is well worth our while to consider, what degree of solidity there is in either of the foundations abovethentioned. As far as we can speak from official documents, Russia appeared, at the close of her diplomatic, intercourse with Napoleon, to be resolved, not on war, but, on a sort of hostile neutrality, a state, without doubt,
very unnatural, but one not altogether without a precedent in the history of Europe. The views of Russia, as they have been be
fore described, appear to have been very
steady; and her grand ob. ...,
every recent reign, has be trificed to Russia.
ject was, as the Russian politicians seem to have thought, tool; advanced by the part which that power took in the ever-memorable German Indemnities. Prussia found her account in that distribution of territory and power; but Austria was cruelly injured and humiliated. Napoleon (I use his name to suit the purposes of perspicuity, always meaning, of course, to include the whole government of France); Napoleon took good care, however, that the kussian influence should not, by means of the German Indemnitics, find its way permanently to the Southward; and, whether by the showing of great partiality to the princes connected by the ties of blood
with the Imperial Russian family, or by the
tone which the Russian plenipotentiaries were encouraged to take, the only effect which the new-modelling of the German Empire produced with regard to Russia, was, an addition to that jealousy, not to say envy and hatred, which was already entertained towards her by Austria; while, on the other side, o the fears of Prussia could not have been diminished. That the ill-will of these two great German
Powers should not have been greatly in
creased by seeing a Russian Plenipotentiary distributing the dominions of the Empire, new-moulding and new-modelling its con. stitution, would, indeed, have been something for an age to wonder at. But, long before the affair of the German Indemni: ties, Napoleon had provided himself with the means of setting Russia at defiance upon any future occasion. Those means we now find amply treasured up in a secret convention, concluded between the two powers on the 11th of October, 1801, ten days after the date of the preliminaries of peace between England and France. On the 8th of the same month a treaty of peace was concluded between France and Russia; but, in this treaty, war, is merely put an end to, and the ancient rolationships of peace