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ABSTRACT
In 1797 the British government relieved the Bank of England of the obligation to pay specie for its notes upon demand; then, after bitter debate and sustained inflation, it restored this burden in 1821. The episode is studied as the “Bullion Controversy”, and it is commonly assigned high significance in the development of monetary theory. Yet the Bank stood as an old target for so-called “country” thought, which suspected commerce of corroding virtue and undermining the proper functions of Parliament. Both the Bank and the Whig regime that created it in 1694 had withstood such attacks, but in the nineteenth century these critical voices were joined by political economists who reworked the existing lines of attack, above all by presenting themselves not as defenders of an ancient virtue but as the champions of a modern, commercial society that was being endangered by the government's and the Bank's ignorance and self-interest. This paper thus examines the Bullion Controversy in relation to the history of political thought, and reveals how the return to convertibility represented an early victory for political economy's self-styled “theorists” in reforming the state's institutions in the nineteenth century.
Acknowledgements
I would like to offer my sincere thanks to the anonymous journal referees for learned suggestions and comments that improved the paper. Conal Condren and Ian Hunter also gave invaluable advice in response to earlier versions of the argument.
Notes on contributor
Ryan Walter teaches the history of political and economic thought. He is completing a monograph that examines the persona of the economist in the early nineteenth century.
Notes
1 Cobbett, Cobbett's Paper against Gold, 8.
2 The literature is voluminous. For a recent overview and synthesis, see Arnon, Monetary Theory and Policy. Arnon's approach is indicative of the history of economic thought, wherein macroeconomic theory is taken for granted as the relevant context for making sense of thought produced before such a thing existed. Classic studies are: Fetter, Development of British Monetary Orthodoxy; Hollander, “Development of the Theory of Money”; Cannan, “Introduction”; Clapham, Bank of England.
3 Pocock, The Machiavellian Moment, ch. 13; Pocock, Virtue, Commerce, and History, ch. 6.
4 But see Hilton, Mad, Bad, and Dangerous People?, 257–58, 309–10, 316, 323–24; Gambles, Protection and Politics, ch. 4; Shin, “Paper Money”, 435–39.
5 In addition to Pocock's texts given in note 3 above, see also Dickinson, Liberty and Property, 94, 170, 182. Pincus provides an account of the Bank of England as a Whig institution resented by Tories; see Pincus, 1688: The First Modern Revolution, 366–99. Isaac Kramnick's study of Bolingbroke covers similar terrain, but with a view to restricting country thought to a reactionary and aristocratic perspective grounded in the agrarian economy; see Kramnick, Bolingbroke and His Circle. Pocock has disputed this account by offering a rival one in which country thought displays Tory, Old Whig, urban and rural sensibilities; see Pocock, Virtue, Commerce, and History, 242–43, 259. This paper adheres to the latter account.
6 The focus on vocabulary is an attempt to heed the warnings in Condren, Language of Politics, 1–24.
7 Pocock, “Burke and the Redefinition of Enthusiasm”.
8 Like “enthusiasm”, the polemical work of “innovation” had been extensively rehearsed in the seventeenth century; see Condren, “Vicissitudes of Innovation”.
9 For the terms in which the debate was reviewed, see [Herries], Review of the Controversy, 9.
10 For parliament's capitulation, see Hilton, Corn, Cash, Commerce, 43–46. For the Bank's, see Horsefield, “The Bankers and the Bullionists”.
11 More gently named “appraisive vocabulary” in Skinner, “ Idea of a Cultural Lexicon”, 163.
12 Report of the Select Committee, 46.
13 King, Restriction of Payments in Specie.
14 A historical phenomenon brought to my attention in Pocock, Politics, Language, and Time, 21.
15 Incredulity towards the claims of political economy defined its early reception; see Walter, “The Enthusiasm of Ricardo”.
16 Cannan, “Introduction”, x–xii.
17 Anderson, The Iniquity of Banking; Anderson, The Iniquity of Banking. Part II.
18 For other works, see Anderson, Notices on Political Economy; Anderson, Iniquity of the Landholders; Anderson, Letter to Lord Althorp. His anti-Pitt stance is noted in Pullen, “Anderson on Banking”, 360.
19 Anderson, The Iniquity of Banking. Part II, 8.
20 Anderson, The Iniquity of Banking, 15–17.
21 Anderson, The Iniquity of Banking. Part II, 9–10.
22 Ibid., 27, 33, 40.
23 Ibid., 12–14.
24 Ibid., 39–43, 59–60. He returns to this in Anderson, Letter to Lord Althorp.
25 Anderson, The Iniquity of Banking. Part II, 43–46.
26 Ibid., 50–53.
27 Ibid., 58–59.
28 Sinclair, Letters, 5.
29 Mitchison, “Sinclair”.
30 Sinclair, Letters, 6–11.
31 Ibid., 26–27, 33.
32 Ibid., 35.
33 Thorne, The House of Commons, 140.
34 Baring, Observations, 1–2, 6, 34.
35 Ibid., 5.
36 Ibid., 12, 42.
37 Ibid., 72–73.
38 Ibid., 74–75, 81. In Baring's subsequent work, the neglect of his advice on both points forms the focus; see Baring, Further Observations.
39 Hollander, “Development of the Theory of Money”, 441.
40 Burke, “Reflections on the Revolution in France”, 280–81.
41 Ibid., 286.
42 Hales, Correct Detail, 21.
43 Ibid., 36–37, 39.
44 Ibid., 36.
45 But see Sinclair,' Thoughts on Circulation and Paper Currency.
46 Cope, Boyd, 48–49.
47 Clapham, Bank of England, vol. 2, 16–17.
48 Boyd, Letter to Pitt, 1–4, 69–70.
49 Ibid., 74–75.
50 Ibid., 7–8.
51 Ibid., 77.
52 Ibid., 13, 17–18. See also Tribe, Land, Labour and Economic Discourse, 80–109.
53 Boyd, Letter to Pitt, 35.
54 Ibid., 51–60.
55 Ibid., 47–48, 74.
56 Surr, Refutation of Certain Misrepresentations, 27–30.
57 Ricardo, “Plan for the Establishment of a National Bank”.
58 Brief Observations, 5–6.
59 Ibid., 15–16.
60 A Twelve-Penny Answer.
61 Boyd, Letter to Pitt.
62 A Second Twelve-Penny Answer.
63 Ibid., 7.
64 Ibid., 14, 16.
65 Ibid., 8–9.
66 Ibid., 21, 24.
67 Ibid., 11, 32, 51.
68 Ibid., 13–14, 27.
69 Ibid., 46.
70 Ibid., 47–49.
71 Boase, Guineas.
72 Ibid., 123.
73 Ibid., iv–ix, 58, 88, 91, 103, 122–23.
74 Ibid., 71–72, 75.
75 Ibid., 33–35 39.
76 Ibid., iv.
77 Ibid. This position is also (erroneously) said to entail emphasis on the proportion of the total circulation that bullion represents; see ibid., 21, 26.
78 Ibid., 31, 83, 86, 110.
79 Ibid., iv–v, 108.
80 Ibid., 88–89.
81 Ibid., 89–90, 95, 103.
82 Ibid., 104–6, 109–16.
83 Hollander, “Development of the Theory of Money”, 451–54; Hayek, “Period of Restrictions”, 190–95.
84 Thornton, Enquiry, v–viii.
85 Ibid., viii.
86 Ibid., 31.
87 Ibid., 61–62, 68, 69n.
88 Ibid., 111.
89 Ibid., 112–13.
90 Ibid., 113.
91 Ibid., 193–96, 202–3. See also Hayek, “Thornton”, 338–39.
92 For example, Thornton, Enquiry, 222–31, 240, 243.
93 Ibid., 236, 242, 295.
94 King, Restriction of Payments in Specie. A second edition appeared in 1804; see King, Effects of the Bank Restrictions. The text is based on King's speech in parliament; see King “Bank of England Restriction Bill”, 1673–76.
95 King, Restriction of Payments in Specie, 1, 3–5.
96 Ibid., 25.
97 Ibid., 53.
98 Ibid., 55. The full quotation reads: “all men possessed of an uncontrouled discretionary power leading to the aggrandisement and profit of their own body have always abused it: and I see no particular sanctity in our times, that is at all likely, by a miraculous operation, to overrule the course of nature”; see Burke, “Thoughts on the Present Discontents”, 302.
99 King, Restriction of Payments in Specie, 63–65.
100 Ibid., 85.
101 Ibid., 81, 85.
102 Ibid., 83–84.
103 Ibid., 10.
104 Ibid., 12–13, 30.
105 Ibid., 14.
106 Ibid., 14–15.
107 Ibid., 16, 19, 23.
108 Ibid., 22, 26–29.
109 See Fontana, Rethinking the Politics of Commercial Society, 118–26.
110 Fetter, “Politics of the Bullion Report”, 106–13.
111 Hilton, Mad, Bad, and Dangerous People?, 324; Hilton, “Peel: A Reappraisal”, 589–92.
112 Report of the Select Committee, 65.
113 Ibid., 43.
114 Ibid., 3–6.
115 Ibid., 4–17.
116 Ibid., 21.
117 Ibid., 32.
118 Ibid., 33–34.
119 Ibid., 36.
120 Ibid., 43.
121 Ibid., 43–44.
122 Ibid., 44.
123 Ibid., 45. Here I diverge from Fontana's characterisation of the Report as perfectly respectful towards the Bank's directors; see Fontana, Rethinking the Politics of Commercial Society, 120.
124 Report of the Select Committee, 49. See also ibid., 53.
125 Ibid., 46, 48–49.
126 Ibid., 46, 50–51.
127 Ibid., 52.
128 Ibid., 52–53. Ricardo objected to this claim; see Ricardo, “Notes on the Bullion Report”.
129 A Replication to All the Theorists, 6, 75, 84.
130 Ibid., 84.
131 Bosanquet, Practical Observations. Sraffa nominated Bosanquet as a serious opponent; see Sraffa, “Note on the Bullion Essays”, 10. Ricardo made the same point; see Ricardo, “Reply to Bosanquet”, 159.
132 O'Shaughnessy, “Bosanquet”; Lee, Story of the Bosanquets, 80–81.
133 Bosanquet, Practical Observations, 3–48.
134 Ibid., 38, 45, 68.
135 Ibid., 92–100, 108, 118.
136 Ibid., 108.
137 Ibid., 108–9. Bosanquet was quoting Playfair, Inquiry.
138 Ricardo, “Reply to Bosanquet”, 160.
139 Ibid.
140 Ibid., 165.
141 Ibid., 172.
142 Ibid., 190.
143 Malthus, “Depreciation of Paper Currency”.
144 Ibid., 22–23.
145 Ibid., 40.
146 Ibid., 53.
147 Ibid., 55.
148 Ibid., 56. Malthus combines the appeal to experience with a defence of “theorists” in his other contribution to the debate. He writes that the depreciation of the currency and the rising price of gold and the exchange are all “in exact conformity with the general principles which have been laid down on this subject by those who are called theorists; and the experience of the past enables us, with the utmost certainty, to predict, that an excessive issue of paper in England will be accompanied with precisely the same results which have invariably attended it in other countries”; see Malthus, High Price of Bullion, 80.
149 Gilbert, Plain Statement. (Titled “Davies Giddy”.)
150 Ibid., 4, 7–17.
151 Ibid., 18–27.
152 Ibid., 30, 43.
153 Ibid., 32.
154 Ibid., 33, 37–38, 46.
155 Ibid., 39.
156 Hilton, Corn, Cash, Commerce, 31–66; Fetter, “Politics of the Bullion Report”.
157 Hilton, Corn, Cash, Commerce, 43.
158 Ibid., 46–48.
159 Ibid., 53–54.
160 Ibid., 52
161 Horsefield, “The Bankers and the Bullionists”.
162 Horsefield, “Origins of the Bank Charter Act”.
163 See clause I of the Bank Charter Act 1844. Ricardo's contribution is discussed in Horsefield, “Origins of the Bank Charter Act”, 184.
164 Ricardo “Plan for the Establishment of a National Bank”.
165 Horsefield, “Origins of the Bank Charter Act”, 188.
166 Ricardo, “Plan for the Establishment of a National Bank”, 276.
167 Ibid., 285–89.