Peel's Bill
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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 A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from the l ...
, after the Bank Restriction Act 1797 saw paper money replacing convertibility to gold and silver under the financial pressures of the
French Revolutionary Wars The French Revolutionary Wars (french: Guerres de la Révolution française) were a series of sweeping military conflicts lasting from 1792 until 1802 and resulting from the French Revolution. They pitted France against Britain, Austria, Prussia ...
. 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. 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. Initially proclaiming himself a neutral on the matter - "I voted with Van in 1811" - 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: among them, perhaps only Manchester's cotton merchants, looking to export more cheaply, were in favour. The landed interest, however, looking to rein in speculation, 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

Following the restoration of convertibility in 1821, there was a stock market bubble and collapse in 1825 which is widely attributed to the return to the gold standard. Nonetheless, Britain remained on the standard until
World War I World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, the United States, and the Ottoman Empire, with fightin ...
, something which helped entrench sterling as the global currency of choice throughout the 19th century. 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. Country gentlemen clamoured for relief, whether from the issuing of small paper notes (briefly tried), by a return to
bimetalism Bimetallism, also known as the bimetallic standard, is a monetary standard in which the value of the monetary unit is defined as equivalent to certain quantities of two metals, typically gold and silver, creating a fixed rate of exchange betwee ...
, or by a debt restructuring to allow for the changing value of money. The Radical
William Cobbett William Cobbett (9 March 1763 – 18 June 1835) was an English pamphleteer, journalist, politician, and farmer born in Farnham, Surrey. He was one of an agrarian faction seeking to reform Parliament, abolish "rotten boroughs", restrain foreign ...
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. Backbench dissatisfaction on the currency question helped bring down the Pittite regime and pass the
Great Reform Act The Representation of the People Act 1832 (also known as the 1832 Reform Act, Great Reform Act or First Reform Act) was an Act of Parliament of the United Kingdom (indexed as 2 & 3 Will. IV c. 45) that introduced major changes to the electo ...
, 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. 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.B. Hilton, ''A Mad, Bad, & Dangerous People?'' (Oxford 2008), p. 545.


See also

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Unintended consequences In the social sciences, unintended consequences (sometimes unanticipated consequences or unforeseen consequences) are outcomes of a purposeful action that are not intended or foreseen. The term was popularised in the twentieth century by Ameri ...


References

{{Reflist Gold History of banking Metallism Monetary policy