THE UNIVERSITY OF ILLINOIS LIBRARY •332 ■BS7 5 V/.15 EPITOME OF A SCHEME OF FINANCE; WHEREBY A CONSIDERABLE REVENUE MAY BE OBTAINED, 52aitf;out Caintion or anp IJurtljcn on ti)t Countrjj, Wiile it would afford great Relief to the Agricultural^ Conunercial, Trading and Manufacturing Interests OF THE COUNTRY, AT THIS PARTICULAR AND MOST IMPORTANT CRISIS, BY LENMNG MONEY ON MORTGAGES, AND BY Issuing Notes as a Circulating Medium, WHERE EVERY NOTE SO ISSUED, SHALL REPRESENT THE FRACTION OF A MORTGAGE ON ^rectiolD:, €opvW^ atrD LeajsefjolD l^ropcrtr. And pass into the Hands of the Public, THROUGH THE MEDIUM OF SUCH LOANS. WITH OBSERVATIONS ON THK Means of Improving and ExUnd'wg the geneial Resources or THE BRITISH EMPIRE. LONDON : PRINTED BY C. sMEkTQN, hT. MARTIN'S LANE; FOR ' J. HATCHARD, Booksei.lir to the Qceen, PICCADILLY. 1816. PRICE ONE SHILLINO AND SIXPENCE. ] ^vtlimimv^ (Bb^tvMtion^, HERE are in the aiFairs of nations, as well as individuals, epochas producing important discoveries, and demanding the utmost expanse of the powers of the human mind, for the purpose of adopting remedies rigainst threatened misfortune, and private and public calamity. — Such was the situation of this country in the month of February 1797, when the Bank of England was restrained by law from paying in specie. — The then deplorable state of public credit rendered a bold experiment necessary, which at any other period would have been considered, as wild, dangerous, and extravagant. — It is now approaching twenty years since the experiment has been tried, while during the last twelve years of this period, the gold coin of the realm has totally disappeared. — The only circulating medium for the exchange of commodities has been the promissory notes of the Bank of England, and similar notes issued by about 900 private banking establish- ( 4 ) ments in the provincial towns of England and Wales. — The Bank of England promises to pay on demandy but they have paid only bi/ re-issuing their own paper, which in fact is no payment at all. The Country Banks, when demands have been made upon them, have not been in so favourable a situation, since they have been required either to pay in specie, or in the notes of the Bank of England. — Hence their profits have been curtailed and their circulation reduced. — Hence num- bers of those bankers have failed, and are constantly failing, by which great distress is brought upon the country, by a decreased currency, and by an insuf- fiency even of this, to answer the demands of the public. These provincial bankers are compelled, for their own safety, to keep a considerable amount in their pos- session of the notes of the Bank of England, for which that corporation receives five per cent, interest, although they are subject to no interest themselves, as their cur- rency costs them only the expence of paper and print- ing. Yet the knowledge of the immense capital they have acquired by these unexampled privileges granted by the legislature, has established a confidence which renders their notes in the public estimation equal to goverment securities and to coin. — The privileges thus granted by the legislature operates in a striking and singular manner to the advantage of the Bank and ( 5 ) the disadvantage of the Public. — In the course of the hist nineteen years, since the Bank of England ceased to pay specie, it is not too much to say, that the expejicca of government have required an issue of Exchequer Bills, which must have amounted in the whole to at least £500,000,000. —These bills generally bear an interest of somewhat more than five per cent, at which high expence they obtained only Bank of England notes, which placed the great expence of interest in the cofl'ers of this opulent corporation, since their notes which uniformly, and with very few exceptions, were exchanged for these Exchequer bills, cost them nothing, as has already been observed. — They gave a shadow, and received a substance. Thus we see in the practical effect of this operation of finance, that the Government actually purchased the credit and responsibility of the Bank, although much inferior to their own, at a most enormous sacrifice of money, while the Bank, under its restrictions, were responsible for nothing. They gave, it is true, their promissory notes ; but secured at the same time by law from the fulfilment of their promise to pay them. — They gained every thing and lost nothing. Their notes ac- quired however a value in the public estimation ; but from what source did this value spring ? From the legis- lature alone. The legislature conferred the benefit ; a ( 6 ) benefit* which il was competent and easy for government to have retained, to the great advantage of the public. But in new measures, so much out of the common coui-se, this has not been heretofore rendered obvious : and after all, the circulating medium of the country, is by no means equal to the labour and property of the nation, which is required to be exchanged, or to give vigor and energy to productive industry. The almost unexampled distress which at the present crisis appears to affect the agricultural classes of the community, as well as the commercial and manufac- turing interests, will be found in a great measure to have arisen from the want of a healthy and secure circulating medium, equal to the demands of the country, and to the extreme pressure of the case. To ifemedy this evil, and to extend to the nation those fair advantages, to which the public and the government of the country are entitled, the following Scheme of Finance, is humbly submitted to the consideration of His Majesty's Government and to the Legislature. • This benefit conferred on the Bank does not all remain with the National family, since Aliens being permitted to become Stock holders, a certain proportion of these protits, go to persons residing in foreign countries. EPITOME SCHEME OF FINANCE. 1st. JLt is proposed to pass an Act of Parliament, authorising and requiring — 1st. That a general register shall take place in England and Wales, of all the Freehold, Copy- hold and Leasehold Property in each country. 2d. That all the country bankers, shall after a time to be limited, cease to issue any pro- missary notes;* leaving them at liberty to carry on the banking-business on the same principle as the bankers in Loudon, and others, who do not issue their own notes. * Ib Lancashire and other districts of Eo^^laud, many bankin; homes do oot issue their owu notce. ( 8 ) 2*^. That Parliament should authorise the appointment of a public establishment in London, and at each county town in England and Wales, attached to which shall be directors, an able conveyancer, a solicitor, a land valuer, and clerks. That there shall be three directors at the head office in Lon- don ; and also a competent number of inspectors, who shall visit the country offices. One director, one conveyancer, one solicitor, one valuer of land, and a competent number of clerks, shall form these provincial establishments. 3^. That these directors shall be authorised to issue notes for one pound, one pound Jive shillings^ one pound ten shillings and one pound fifteen shillings , with a view to econimize the use of silver coinage, so that in any one payment no more than 5s. in silver will be ever required. — That they shall also be authorised to issue notes from jg2. up to £100.000. in different sums. 4^^. That these Mortgage-Notes, as they will all re- present the fraction of a mortgage on real and other estates of undoubted titles, shall be made a legal tender. They shall be declared the lawful currency of the realm, and be received and paid in all trans- actions with the same advantages as specie, save and except, that it shall not be competent for any corporation or banking establishment bound to pay in specie, to tender such notes in payment, when specie is required. The circulating medium ( 9 ) thus fabricated, and rendered the legal currency of the country, shall be lent on mortgage to all persons applying whose estates are unincumbered, to the amount of one half the value as estimated by the land agent employed for that purpose, or to the extent of one moiety of the value of that part which is not in- cumbered, at an interest of five per cent, to be paid half yearly. — The loans shall be for ten years, and ten per cent, of the principal sum to be repaid each year : and the commissioners shall have power to re- ceive loans of these notes at three or four per cent, in order to prevent the possibility of a greater issue than the trade and commerce of the country, and iis agri- culture, will require. This may be regulated by the price of stocks for the time being. iScgulattottgs* 5*h. That in order to render counterfeits impossible, the notes shall be fabricated in the apartments of his Majesty's Mint, since they are to assume the same quality as an actual coinage of Bullion, and having been declared a legal tender, the same as gold and silver coin ; they shall in their fabrication be considered as a species of moneij issued and main- tained under the prerogative of the crown. — The fabrication of these notes therefore in all their component parts shall be carried on in bis Majesty's Mint and no where else. ( 10 ) iBt. The paper shall be manufactured within the walls of the Mint, aided by the power of a steam engine. It shall be of a particular texture and colour, on which there shall be water niaiks and stamps, all calculated to prevent forgery: morc- oyer, the fabrication of paper of a similar tex- ture or colour, or any paper with similar water marks or stamps, shall be declared by law to be felony without benefit of Clergy. 2d. One of the first Engravers in the kingdom shall be employed and reside in the Mint, to engrave the head or profile of his Majesty, and such other parts of the Note as may be required to be engraved in copper plate,-^ This engraving to be done in a superior style. 3*. One of the first Engrai^ers in wood shall be employed, to execute that part of the Note which shall be required to be engraved or cut in wood. 4th. A Type Foundery shall be established in the Mint, for the purpose of fabricating types in sterio or otherwise — of a particular construc- tion, between the roman and black letter, which shall be used in printing a certain part of the Notes. It shall be felony to fabricate or imitate such types in any manner whatsoever, other than for the Mortgage Notes. It shall be felony to imitate the engraving or wood cut. 5th. There shall be stamped upon the back of each Note by means of a type cast from an impression made in sand, of a natural ( 11 ) leaf of a tree, lepresentiiig all its various fibres, and this cast to have a crack in the middle. — This precaution and the absolute impossibility of imitating the leaf, and still more the crack, will enable the most illiterate person by comparison to detect a forgery if such were possible. Thus five Artists, all masters of their different professions, would be employed in fabricating the different portions of each Note, which would render forgeries totally impracticable ^ since it would be impossible to find five persons of professions totally different, and all of the first class of artists, who would combine for the purpose of fabricating such notes. In order to distinguish one note from another in the most facile manner, the mark (Txcenty Shillings J shiW be red. fTicenty-fve Shill- ingsj blue. (Thirty Shillings) green, (Thirty-five Shillings) yellow. (Two Pound Xotes) brown. (Five Pound Notes up to One Hundred Pounds) black. This will greatly facilitate the counting of small money in the intercourse of trade, and prove an additional check against forgeries. 6tb. The Bank of England to he restrained from issuing more notes in amount than what were issued at any period >Thcn the greatest amount was in circulation, previous to 1797, when they paid iu specie, or at least not exceeding that sum above five millions, to take place at a gixen period ( 12 ) to be fixed, and at which period they shall be obliged by law to pay in specie. — There can be no hardship in this, as (he Bank, from prudential motives, would naturally limit their circulation to meet such an exigency, while such limitation without the collateral aid of the proposed new cur- rency, would prove a serious inconvenience to the country. — The Bank-issues would prove a criterion or barometer, whereby it would be discovered at once the comparative value between the Mortgage Notes and the Bank Notes; and establish a rule by which it would also be discovered at once whether there existed an over issue of the former, which could be checked in the easiest manner, by withholding further loans until the circulation was reduced, so as to form an equilibrium between the two currencies ; but it is supposed the amonnt of interest and principal paid annually, would always be sufficient to keep up the value of the Mortgage Notes, or rather to render them more valuable, since the holders on depositing any sum with the commissioners would receive four per cent, which could not be obtained from the Bank of England. 7th. This new currency would supercede, in a great measure, the necessity of gold coin, and would greatly reduce the amount of the silver coin, for small change, which is found necessary at present. Supposing £60,000,000. of gold and silver currency , to be coined for the circulation of the countrt/y and supposing the same amomU in Mortgage Notes ( IS ) the differmce of profit and loss to the comihy stand thus in the course of 56 years. would il*!, c 5 H ■a -" S c"^ ? 2 o T =' ft s r <» JC) t-p a. g? 3 ^ D f» » o =•3 sr> V -■ 2. -a » p S - = n X ^ ? 2, o 5" ? • 3 3 K fS J* J» » O ^ -• o X- i '^ =" 5 g sT - n n a zL ~ — 3 B e O B r, V! c p 3 ?• >*, i i s o •IS sl s 1 1 o 8 o o 11 11 ^ 1 1 11 o o O 3 o o o > O ? I" p (^ Ok 00 :;• t« o o g 2 o o o i i i ( 14 ) aotantage^ cjtrpecteD to nmlt from t\^i^ ^cl^eme of finamz. 1st. A large revenue after a few years will be raised from this system for the exigences of the state mthout any burthen upon the public. 'i^. A sufficiency of legitimate and safe currency would be thrown into circulation for the convenience of the public, which is absolutely and indispensibly necessary at this crisis, and without which incal- culable distress will be experienced by the Agricultural, Commercial, Trading and Manufac- turing classes of the community, whose exertions to increase the property of the nation through the medium of land and labour, employed in the various sources of industry, by which the country is supported, and from which the public revenues are obtained, are extremely crippled at present. It is by an extensive circulating medium on a secure foundation, that enterprize is generated, and in- dustry rendered active and productive to a great extent. Without this, the national resources of the empire cannot be made effectual, nor will it be easy to support public credit. 3d. It is calculated that when the issues shall amount to SO or £40,000,000. the notes lost annually by fire- shipwreck and other accidents, will pay the whole expences of all the different establishments y which will prevent any deduction from the interest of the ( 13 ) sums lent. It will be a clear sum paid into the Exchequer without any expence of collection or management. 4th. It will afford a certain and immediate relief to the Landed luteresl, who can borrow no money at present, except at the most exorbitant premiums, nor can money be procured upon the sale of land or farming stock without making the most rainous sacrifices of valuable property, which through this medium will again acquire its proper and just value; nor is it possible under a limited circulating medium to protect the Merchants, Traders, and Manufacturers against similar sacri- fices, by selling goods under first cost to support credit. 3th. It will enable the landlords, by forbearance and pecuniary aid to the tenants, to preierve their farming stock, and to follow uj) their usual pursuits without those sacrifices, which must otherwise paralize their exertions for the purpose of rendering the soil productive to its full extent, which is impracticable under the present circum- stances, producing a vast loss to the country, and a great deficiency in the public revenue. 6*»». It will in consequence of an increased circulation invigorate commerce^ manufacture, trades and navi sta- tion by rendering discounts more easy to be obtained without which even the most opulent Citablishnunts cannot carry on trade.— It will fill up thoK' chasms C 16 ) in the circulation which have been so severely felt in consequence of the insolvencj of so manj banking houses, and the great reduction of the issue of notes, in consequence of the necessary caution practised by the solvent country bankers, which has rendered it impossible to obtain the use of the circulating medium nearly to the extent required. 7th. It will prevent that general convulsion of credit, and universal distrust among all classes of the com- munity engaged in creating or circulating property, which at present threaten for a time to disorganize the system of the country, and to suspend the organs of productive industry. §tii. It will render metallic money which is no less expensive than troublesome (as has been already seen) totally unnecessary, except to that extent which is meant to meet the demands upon the national bank, upon such a reduced scale of cal- culation, as will enable the directors to conduct their business with safety. 9'*^. In fine, it will give vigour and energy to every species of productive industry. — It will restore confidence, which is already much shaken, and will bring back the country to that state of pros- perity which will arise from productive industry, and the full employment if the existing resources for the support of all classes of the community, and for the improvement of the revenue. ( 17 ) Concltt^wn. ft may possibly be argued that the Scheme of Finance now proposed, may place government in the situation of bankers ; but in opposition to this, it is humbly con- tended, that the functions which are to be performed are materially different, both in principle and practice from the banking system, which embraces in its operation, the dealing in money — the issue of promissory notes on the responsibility only of the parties issuing — the receiving deposits of money without interest, and discounting bills with this money, and purchasing government securities aided by their own capital ; and in aflPording facilities to the depositors of money by the payment of their acceptances and drafts; in receiving dividends, and in the purchase and sale of Stock and Exchequer bills. The functions of the Commissioners or Directors under the proposed system, have little or no analogy to the system of banking. — The important discovery arising from the practical eflect of the circulation and credit of the paper currency of the Bank of England, since the suspension of metallic payments, by which it is clearly ascertained that paper money, where perfect con- fidence is established with respect to the solidity or re- sponsibility of the issuers, have answeretl every purpose of utility, -which could be derived from metallic money, nvith great additional convenience to the public, from the c ( 18 ) facilities it affords in the interchange of commodities. — Its operation during nineteen years experience having also incontestably proved that it has not only had no effect upon the exchanges with foreign countries, but that it has maintained its full nominal value in the purchase and sale of commodities, which have risen and fallen in price not on account of an over issue of promissory notes, since the demand for them has been always greater than the supply ; and since no individual could desire to possess them at the expence of an interest of five per cent, unless a greater advantage could be obtained by such possession. Every attentive observer of the progress of events during the last nineteen years must now be fully con- vinced that no depreciation in the nominal value of bank notes ever took place. ]t is in all articles where the demand in any degree exceeded the supply, that the prices naturally advanced, while in other articles where the supply exceeded the demand, a reduction of prices uniformly took place. — This result or effect is manifest in every country where the precious metal constitute the only circulating medium, and it operated in the same way in this country before the important discovery of the great advantages of paper money had any operation. — Even at those recent periods when one hundred pounds in bank notes would not purchase above half the quantity of provisions and other articles which could have been obtained in 1792, yet the same hundred pounds, and at the same time, would purchase almost double the quantity of cotton goods, and other articles which the like sum would only have procured twenty-four years ago. — It now happens ( 19 ) that the supply of corn and other provisions has become greater than the demand, and although the issues ot specie by the Bank of England are still restrained, the same one hundred pounds in paper currency will pur- chase in some instances double^ and in others one thirds ofie half, and two thirds more of the necessaries of life, than could have been procured for the same sum a few years ago. The same is the case with the precious metals, which are merely an article rising and falling like other com- modities, and thcii'i'oie amobt enoacousbtandard. Since at present the same one hundred pounds in paper cur- rency can obtain nearly one third more of these precious metals than could have been purchased a few years back. If this standard were not a delusion (perplexing the minds even of judicious and enlightened individuals and producing erroneous conrlnsion) how does it hap- pen that the Bank-note opposed to the guinea, is now worth one pound and sixpence ? The proposed Scheme of Finance is exactly anala- gous to the system already pursued by the Legislature by authorising in three instances within the last twenty- five years, the issue of Exchequer Bills to be lent lo the merchants and manufacturers, and to the West- India proprietors who suffered in Grenada and St. Vincent — With this important difference however in favour of the public, that while the Agricultural, the Commercial and Manufacturing interests of the country are to derive a most important benefit calculated to increase the annual property and reso\irces of the empire, the crown derives a considerable revenue for the exigencies of the state without laying any tax or ( 20 ) burthen on the people ; giving at the same time to those districts of the country where the notes of the Bank of Eiij^land are not circulated, a healthy and secure currency, in which the utmost confidence must be placed, instead of a circulating medium, which experience has proved to be in many instances totally the reverse, and which in its practical efiects, has produced convulsions in public credit, with other calamities shaking to its foundation that confidence which never fails to paralize the productive industry of those large districts of the country where extensive failures take place. In fact the mischiefs which the failure of so many provincial banking establishments have occasioned are incalculable — they not only involve the Agriculturists, Traders and Manufacturers in distress, but also many private individuals living on narrow incomes (unacquainted witli the nature of the public funds) who have placed their all in such banks at the usual interest. It is by no means proposed, that this system should in any respect interfere with the Charter of the Bank of England or the privileges thereby granted, under the condition that they should resume payments in specie, in which event they may possibly find it convenient to return to the old practice of issuing no promissory notes under ten pounds ; in that case the proposed Mortgage Notes would fill up a considerable chasm in the circulation of the Bank of England, which must be considerably reduced in the event of payments in the precious metals. The proposed system might with much advantage be extended to Ireland, where great abuses are said to ( 21 ) prevail in those districts where the notes of the national bank do not circulate, and where persons of little or no properly establish banks and issue their own promissory notes.— It might also to a certain extent be useful and beneficial to Scotland. — No doubt can be entertained of the utility and advantage of country' banks, where the security to the public can be ren- dered perfect. — They have even, with all the incon- veniences attending them, done much to give a spring to the industry of the nation in all its various ramifica- tions : — but they have left a sting behind. — This sting would be eflectually removed by the substitution of the proposed Mortgage Notes. — The public would justly consider them as eveu superior to the precious metals, so liable to deterioration, and so troublesome in counting over, and in weighing, and so liable to be counterfeited. When a paper circulation is employed in exchanging the commodities of any country upon tlic principles now proposed, it is not within the reach of possibility that it ever can exceed in quantity which the necessities of the country requires. — From the nature of the system the surplus must always roll back to i(s source. — It contains in its structure that principle which exactly measures the extent of its utility, the demand will always regulate the supply ; and it will be greater or less according as a country advances in prosperity and productive industry, or declines. — A sufiiciency of a healthy and secure circulating medium is the great mainspring of productive industry and of on- terprize.— It is upon the extent of this productive industry, and thi^ enterprise alonr. Ihnt thr Mrifish ( 2:2 ) empire must now depend for the support of the people and the revenues of the slate. — -This is the great and only resource to which the nation is to look for the improvement of its finances, and the general prosperity of the Empire at large. For the purpose of rendering the resources of this ex- tensive Empire productive to the utmost extent, a great and comprehensive system must be adop