Blackwood's Edinburgh Magazine, Volume 63, No. 387, January, 1848

by Various

The imports for 1847 have not yet been made up, and cannot be till January next, when the year is concluded. But in the figures we have given, there is abundant room for the most serious reflection. The fact which the Chancellor of the Exchequer has mentioned as to the sums paid for grain alone, in fifteen months, having reached the enormous and unprecedented amount of £33,000,000, leaves no room for doubt that, in the year 1847, our imports will have reached £100,000,000, while our exports have sunk below £50,000,000.[18] Now, how was this fearful balance paid? The answer is evident. In cash. Here then, without going farther, is a balance on the exports and imports already returned, in 1846, of forty millions against the nation, on the transactions of the present year, of probably not less than FIFTY MILLIONS STERLING.[19] Whoever considers these figures with attention, will be at no loss to perceive from what cause in the main the present disasters have arisen.

To give only one example of the way in which, under the system of free importation, the balance of trade has been turned against this country, we subjoin the official returns of the progress of our trade with America since Sir Robert Peel's tariff was introduced in 1842, and for five years previously.[20] From that it appears that the trade with that country, which in 1830 was £8,000,000 on each side, has now so immensely changed, especially since the tariff of 1842, that, while our exports to it in 1845 were £10,000,000, our imports from it were £22,000,000! How was the balance of £12,000,000 paid? The answer is, in money; and that money it was which enabled them to conquer the Mexicans. We shall look with anxiety for the returns of our exports to, and importations from America for the last two years. When they appear, it will at once be seen where the money, the want of which is now so severely felt, has gone, under the fostering influence of free trade.

Sir Robert Peel says that the Americans have tried the system of paper money, and they have had enough of it. We thank the Right Honourable Baronet for having reminded us of this example of the effects of a contracted currency. It appears that in 1836 the imports of English manufactures into the United States were £15,116,300. In the next year they were only £5,693,094 official value; and the declared or real value in that year was only £4,695,225; and the declared value of the imports from Great Britain in 1842, was only £3,528,807.[21] What occasioned this extraordinary defalcation, we shall inform the Right Honourable Baronet. In spring 1837, the metallic system was introduced by General Jackson, then President of the United States, (by his refusal to take any thing but specie in payment of government claims,) the country being at the time engaged in vast railway and other undertakings, with the concurrence and by the authority of government. Thence the prodigious falling off in the imports from this country, under which our own manufacturers suffered so severely, and from which they have scarcely yet recovered. Thence the destruction of three-fourths of the mercantile capital of the United States. May heaven avert a similar catastrophe, resulting from the same policy, in this country!

The causes, then, to which the present dreadful crisis is owing, are as plain as if the proofs of them were to be found in Holy Writ. We shall simply record what Sir Robert Peel and the bullion party have done for the last five years, and then ask whether under such a system it was possible a catastrophe could be averted.

In the first place, they introduced the tariff of 1842, which so materially diminished the duties on importation in this country, and gave so great an impulse to the introduction of foreign articles of all sorts into the consumption of the people, as raised our imports in 1845 to £85,000,000, while our exports were only £53,000,000, exhibiting a balance of £32,000,000 against the country, which of course required to be paid in the precious metals.

Secondly, having established this great drain of nearly thirty millions annually on the metallic resources of the country, Sir Robert Peel next proceeded to pass the Bank Charter Acts, for England of 1844, and for Scotland and Ireland of 1845, which limited the bank notes of the empire, issuable on securities, to £32,000,000,[22] and enacted that for every note issued beyond that amount, a sovereign should be in the bank's strong-room to represent it.

Thirdly, having imposed these firm restrictions on the increase of the paper circulation, and left no room for an augmentation to meet the growing wants of the community but by an addition to the stores of bullion in the country, and compelled a proportional contraction of the currency when the bullion was withdrawn, the Right Honourable Baronet and his administration next passed railway bills to the amount of above £150,000,000 sterling, to be executed in the next three years, and gave every facility to the undertaking of such projects, by lowering the deposits required from ten to five per cent. on the estimated cost of the undertakings.

Fourthly, when the strain on the metallic resources of the country was beginning to be felt, from the immense balance of thirty millions in our commerce against us, and the calls on railway shares were becoming considerable, the Right Honourable Baronet next, as a permanent system, not an extraordinary remedy to meet a temporary disaster, introduced a free trade in grain, which was immediately applied by his successors to sugar. He thus sent thirty-three millions, in gold and silver, abroad in fifteen months. The consequence has been that the imports of the empire have probably become double its exports in money value; that a balance of nearly £50,000,000 has this year been sent abroad in payment of articles of import; that the sums paid for grain alone in the three months immediately following the finest harvest on record, have exceeded £14,000,000; that nearly all the railways in the country have been stopped from the necessary contraction which, under the existing law, this export of specie occasioned to the currency; that distress of dreadful magnitude pervades the mercantile and manufacturing classes; and that our exports have fallen off at the rate of a million a-month, and our revenue above six millions a-year.

Such are the principles and results of that splendid combination effected by modern wisdom—FREE TRADE AND A FETTERED CURRENCY. And as these results flow naturally and necessarily from the principles put in practice, it is evident that they may be expected in a less or greater degree to be permanent, so long as these principles regulate the policy of government.

Suppose a general at the head of one hundred thousand men were to double, by orders issued or licenses granted from head-quarters, the distance to be marched, and the work done by the men, and at the same time to establish a system which sent half of the commissariat stores out of the camp,—what could be expected from such a policy but starvation, discontent, and ultimate mutiny among the soldiers? Or suppose a master manufacturer, as a great improvement on the machinery of his mill, were to introduce a system which abstracted the oil in proportion to the quickened movement of the wheels, or diminished the moving power in proportion to the increase of the work to be done,—what could be expected from such a change, but that the machine would stop when it had most work to do? And yet, is not a currency, and a sufficient currency, as necessary to an industrious nation as food to the soldier, or coals to the steam-engine, or oil to the wheels? Can we be surprised that such a system, when applied to a nation, terminated in disappointment and ruin? But one result of inestimable value has followed from its adoption; it is in periods of suffering that truth is learned, because the consequences of error are experienced. It is now seen what the true principles on the subject are, because the effects of the opposite principles have been demonstrated. With truth may it be said, that Sir R. Peel is the philosopher who "HAS INSTRUCTED US IN THE CURRENCY."