Edward Cooke

“ A tax, or a levy is not an addition of income, but a diversion of it from its natural employment. Extension of capital, and credit and profits thereupon make and increase income, and income will increase more rapidly in proportion as the resources of industry are not diverted from their natural employment by state necessities.—When I first heard the argument for the diminution of our currency, founded on the diminution of levies and taxes, which has taken place since 1810, I was puzzled from not having reflected on the subject. ”

“ The real criterion of the necessary quantity of a circulating medium for a great community, is its adequacy to circulate the whole exchangeable, annual value of all its labour, ingenuity, productions, and imports, and to support the payment of all its taxes and of all its expenditures in war. And the relaxation or increase of demand for such medium, is the measure of its deficiency or excess. ”

“ If this reasoning is plainly unanswerable, when we are thinking of a measure or rule, for the amount of a currency, we must turn our thoughts to the income of a country in its most extended sense,—and as we must admit that currency ought to be augmented proportionably with income, whatever be the amount of debts and taxes and levies, we must also admit that a greater currency is necessary now than in 1809 or 1810, or in any other year, if our income on the whole is greater. ”

“ If a system for contracting our currency, for the sole purpose of forcing the price of Gold to Mint price, is to be inflicted upon the nation, upon the principle that the present currency is excessive in amount, at least let the fact be proved. ”

“ So that whatever is adopted to lower prices by diminution of the quantity of currency, produces, in the nature of things, a direct spirit of counteraction, because the lowering of prices augments the pressure of taxation. And in addition to the abstract nature of things, we have also to combat all the passions and interests of mankind, as far as they relate to their ease and profit. ”

“ If we should be in a different situation from the rest of Europe, in consequence of the higher price of Gold in the home market, the natural result of superior taxation, we should not be making absurd and fruitless attempts to equalise that price to the price existing in other countries not similarly circumstanced; but should be employed in taking the only sensible means of producing a level, viz. in increasing our capital, extending our credit, lowering our interest, lowering our profits on mercantile transactions, perfecting our machinery, and improving our manufactures ”

“ And as our taxes and currency are equal in amount to one another, and of course their proportion to our income respectively the same; and as their tendencies are diametrically opposite, and counteractive to each other, it necessarily follows, that whatever effect is produced by a change in one, that change will work a contrary effect in the other. Add to this, that from the nature of man, he will reluctantly submit to any cause which should oblige him to lower prices; whilst he will most eagerly embrace every possible means to counteract the pressure of taxation. ”

“ I hope that no person will suspect that from what is stated, the Author makes no distinction between a Metallic and a Paper Currency, a currency of universal and intrinsic value, and a currency limited to the home market and founded upon confidence: he is fully sensible of the folly of confounding things in their nature totally separate and distinct, whilst he is anxious that the existing circulation should not be impeached upon unfounded statements and false reasonings, and that destructive remedies should not be applied to evils which do not exist. ”

“ For a numerous demand for the discount of good bills, is a test that money is scarce, and the market wants a fresh supply—whilst the paucity of demand, is a test that there is plenty of money in the market, and that discounts can be more easily and cheaply procured elsewhere than at the Bank: so also the cessation of demand from Government for advances upon parliamentary securities, is another proof that money is plentiful, and that Government can easily dispose of their securities in the market. ”

“ I cannot devise any other possible cause to account for Gold not returning to us, in the natural course of things, but one, viz.—that as we have banished it from circulation there is no real market for it, in proportion to the markets on the Continent; for if there is a large market for any commodity, many will speculate in that market, but if the market is very small and contracted, it will not attract any speculation at all; and want of demand may produce a scarcity and high price, for failure of competition and of quantity of the article. ”

“ Now if it appears that there is no excess of currency to which the high price of Gold is attributable, and if it also appears that this high price may arise from our taxation,—does not this consequence directly follow, that as soon as exchanges naturally come round in our favour, by the cessation of loans abroad and the superior balances of our trade, that Gold will flow in as usual, and remain here as before the war, unless some other contravening cause prevents it? ”

“ If the price of Gold had been raised by excess of issue, to an inordinate height, it could not have been lowered almost to mint price by a great additional excess of issue. If the course of our exchanges had been depressed by a superabundant quantity of paper, it could never have turned in our favour and risen above par, by a quantity of similar paper still more superabundant. ”

“ Above all, I deprecate a starving system, which has already produced great distress, lowered our funds, augments the necessary amount of the loan, increases its interest, and which has thrown a gloom over our affairs, and spread an universal terror in the market. ”

“ I beg leave to substitute Increase of Taxes to Excess of Currency, as the cause of the rise of prices—and then I argue with the Report, that in the event of prices being greatly augmented in one Country by a great increase of taxes, whilst no similar increase has led to a similar rise of prices in a neighbouring Country, the price of gold will no longer continue to bear the same relative value in the two Countries as before. ”

“ Is it the tendency of levies and taxes to increase or decrease national income? or do government levies and taxes merely divert the existing income of the kingdom from its natural channels into forced channels? ”

“ Whilst the silver remains in the Bank, its price is fixed; when taken from the Bank, its price varies in the market according to demand, and commands a greater or less quantity of the coin for which it is sold. The Bank itself takes in silver at one price, and issues it again to the owners at a higher price, and the owner of course never takes his silver out of the Bank but when the course of the market enables him to make a profit. ”

“ I am induced therefore most firmly to believe, that the increase of prices generally, and of Bullion in particular, is owing, by no means solely to an excess of Paper Circulation, which in fact has never taken place, but to the great increase of taxation, which every man feels and laments. ”

“ Let it be asked of any common logician, whether there is any connexion between the necessity of supplying a circulating medium proportioned to the whole income and transactions of a wealthy community, and the identity of price between Coin of a fixt value and Bullion of a variable value. It is evident that any attempt to prove such a connexion must be preposterous. ”

“ It would be very entertaining in any other case, but it is lamentable in the present, to find many very sensible and intelligent men in other respects, puzzling themselves and their readers about the necessity of an invariable Standard and the steadiness of prices, which would arise were the value of Bank Notes, Coin and Bullion identified: and attributing all our embarrassments to the fluctuation of prices arising from the excess of Paper Issue. ”

“ If it be admitted that prices may be reduced, and facilities for export increased, by a contraction of our circulating medium; it must be admitted, under this proviso, that there shall not be any counteracting circumstances,—and are there none of this description? And is not the great amount of our taxation the strongest principle of counteraction which can be imagined? ”

“ Taxes increase prices always,—and, as every person on whom a tax falls, endeavours to shift the burthen of it from himself on others, and to live as well after paying the tax as he did before, taxes increase prices in a double ratio to the amount of the taxes. If then we pay a revenue of above 56 millions a year, including the expenses of collection, instead of 19 millions, and if these 56 millions act upon prices in a double ratio, will not this circumstance as fully account for the increase of prices alone, as the excess of issues alone, had it been proved? ”

“ If the Committees of Parliament have directed their inquiries to the points I have above suggested, and no longer impute, without proof, the state of the price of gold or the cause of exchange to excess of currency, we shall hope that the real truth will at length be admitted and fairly acted upon. ”

“ It must always be considered, that the levy of a great additional amount, or a sudden great increase of expenditure, does not at once effect an increase of capital. The new additional permanent capital which is made on these levies and expenditure, follows gradually till the ultimate profit upon them becomes a fixed solid increase of capital.—Let Government spend 50 additional millions in a year: these 50 millions are taken from the existing capital, and the advance of such a sum will also require additional currency ”

“ When the Nation is made to understand the question, and to feel that diminution of currency will not tend to bring back our gold, but will most certainly augment the pressure of our taxes, and diminish the powers of production ”

“ Our present Currency being founded upon a true theory of supplying the wants of a community, admits the regulations which have been stated, for controuling its excess without prejudice to the system; because they are all wisely adjusted to nature of the subject they are intended to controul. ”

“ But any forced system will soon break. Let the circulation be limited by real demand, not by legislative violence. A forced restriction of currency is as much against the natural order of things as a forced issue. ”

“ When I advert to the comparative burthens and abilities of the country before the war and at present, according to the views I have taken, I cannot but indulge a gratifying hope of increasing prosperity and diminished incumbrances, provided the government will continue uniformly an encouraging and protecting policy, and pot suffer to be introduced a principle of impoverishment under the false idea of increasing security. ”

“ And before they should have resolved, that Excess of Issues were the sole cause of the rise of the price of gold, they should have stated the different results of the inquiries in the above mentioned points,—and given leave to every impartial man to make his judgement accordingly. ”

“ But from our immense exertions during the war, our taxes have been raised to such a height, that, excluding our Poors' Rates, we are taxed more than in the proportion of four to one.—The population of France is estimated at near 28 millions, and the amount of its taxes is nearly the same.—The population of Great Britain is about 13 millions, and the taxation above 50 millions, expenses of collection included, which makes a proportion of 4 l. ”

“ It is trusted however that the present Committees will not adhere to a line so culpable, but emancipating themselves from the trammels of prejudice, will enter into every view of the question, and face every difficulty which may present itself. ”

“ Bullion being forced by taxation to a higher level here, than in those countries were taxation less prevails, to suppose that bullion must be upon a par in both (except by the casual and temporary reciprocation of exchanges) when its relation to all commodities is so different, is to suppose that equals and unequals produce the same effects. If 4l. can only command a relative quantity of value in Great Britain, whilst 3l. ”

“ Let it feel assured, that the protecting and fostering hand of Parliament will aid and encourage the genuine speculations of commercial and manufacturing ingenuity, and that the same accommodations will be continued to uphold, as were supplied to induce the investment of capital. ”

“ Let us advert also to the annual amount of income which the present population annually expends. Supposing the income of Great Britain was equal in 1790 to 10 l. per annum per head, the income of Great Britain computed in a population of 10,242,000, was 102,420,000 l., but as prices were doubled in 1810, the income must have nominally doubled also ”

“ Perhaps from the variety of opinions and prejudices public and recorded, and from the supposed difficulties on the subject of currencies, by which the ablest men have been sometimes puzzled and perplexed, it may not be easy to obtain any early decision, as to what shall be the final system, in which the country is to repose. ”

“ We have suffered enough already by the misconceptions on this head—even Mr. Locke was deceived by it; and by carrying this reasoning too far, a large silver coinage was issued, which in a few years disappeared with a loss to the Nation of I think 2,700,000l.—The late Lord Liverpool made an attempt on a similar principle in regard to a copper coinage. ”