Peel’s Bill (Ofer Abarbanel online library)

Peel’s Bill, or the 1819 Act for the Resumption of Cash Payments (59 Geo. III, cap. 49), marked the return of the British currency to the gold standard, after the Bank Restriction Act 1797 saw paper money replacing convertibility to gold and silver under the financial pressures of the French Revolutionary Wars.

Controversial in its passing, Peel’s Bill generated debate and conflict over the decades that followed.

Antecedents

The debate over the return to the gold standard dated back at least to the Bullion Report of 1810, whose recommendations of a return to cash payments within two years were hotly opposed by, among others, Nicholas Vansittart on both theoretical and practical grounds.[1] While the principle of a return to gold became broadly accepted, its implementation was repeatedly postponed, until in 1819 public outrage forced the establishment of a committee to review the matter, chaired by Sir Robert Peel.[2] Initially proclaiming himself a neutral on the matter – “I voted with Van in 1811”[3] – Peel soon swung his weight behind the Bullionist call for a return to what was seen as the sound and honest money of the gold standard.

Passing the bill

Opposition to “Peel’s Bill” was widespread among financiers, businessmen, and industrialists alike, who saw it as a potentially deflationary move:[4] among them, perhaps only Manchester’s cotton merchants, looking to export more cheaply, were in favour.[5] The landed interest, however, looking to rein in speculation,[6] was strongly in favor of Peel’s measure, and the House of Commons accordingly passed it without dissent. A phased return to the gold standard was then set in motion, which was completed by 1821.

Consequences

Britain remained on the gold standard until World War I, something which helped entrench sterling as the global currency of choice throughout the 19th century.[7] However, in the short term, the bill produced a sharply deflationary effect, and falling prices strongly favored holders of money over borrowers of money: agriculturalists were doubly squeezed, with mortgages costing more in real terms, and produce selling for less.[8] Country gentlemen clamoured for relief, whether from the issuing of small paper notes (briefly tried), by a return to bimetalism, or by a debt restructuring to allow for the changing value of money.[9]

The Radical William Cobbett helped crystallise feeling with his slogan “The farmer versus the fundholder”; the Whig Sir James Graham published a best seller lambasting “an administration, more connected with annuities than land”, and the Tory banker Thomas Attwood set up the Birmingham Political Union to reform Parliament and rid it of rentier power exercised through rotten boroughs.[10] Backbench dissatisfaction on the currency question helped bring down the Pittite regime and pass the Great Reform Act, and in 1833 the new Parliament saw an attempt by Attwood, backed by both Radicals and Ultra Tories, to undo the gold standard, narrowly defeated by an alliance of both front benches.[11] A Whig select committee report that same year acknowledged that creditors and those on fixed incomes had gained from resumption of the gold standard at others’ expense, but concluded, as Viscount Althorp put it, that while “a gross robbery on the public was committed by Mr. Peel’s bill in 1819”, its repeal would only constitute “a similar robbery” in reverse.[12]

References

  1. ^ Hilton, A Mad, Bad, & Dangerous People?(Oxford 2008,) p. 258.
  2. ^ Halevy, The Liberal Awakening(London 1961), pp. 51-52.
  3. ^Quoted in E. Halevy, The Liberal Awakening (London 1961), p. 52.
  4. ^ Gaunt, Sir Robert Peel(2010), p. 47.
  5. ^ Gordon, Political Economy in the British Parliament 1819-1823(1976), p. 206.
  6. ^ Hilton, A Mad, Bad, & Dangerous People?(Oxford 2008), pp. 256-261.
  7. ^ Hurd, Robert Peel(London 2007), pp. 50-51.
  8. ^ Hilton, A Mad, Bad, & Dangerous People?(Oxford 2008), p. 194.
  9. ^ Halevy, The Liberal Awakening(London 1961), pp. 113-114.
  10. ^ Hilton, A Mad, Bad, & Dangerous People?(Oxford 2008), pp. 409-410 and 407.
  11. ^ Hilton, A Mad, Bad, & Dangerous People?(Oxford 2008), p. 544.
  12. ^ Hilton, A Mad, Bad, & Dangerous People?(Oxford 2008), p. 545.

Ofer Abarbanel online library

Ofer Abarbanel online library

Ofer Abarbanel online library