Tooke, Thomas (DNB00)
TOOKE, THOMAS (1774–1858), economist, born at Cronstadt on 29 Feb. 1774, was the eldest son of William Tooke (1744–1820) [q. v.], at that time chaplain to the British factory at Cronstadt. Thomas began life at the age of fifteen in a house of business at St. Petersburg, and subsequently became a partner in the London firms of Stephen Thornton & Co., and Astell, Tooke, & Thornton. He took no important part in any public discussion of economic questions until 1819, in which year he gave evidence before committees of both Houses of Parliament on the resumption of cash payments by the Bank of England.
As a follower of Ricardo, Horner, and Huskisson, he was a strenuous supporter of the principles embodied in the report of the bullion committee of 1810. The three years which followed the Resumption Act of 1819 were marked by a great fall in the prices of nearly all commodities, and the opinion rapidly gained ground that the fall was due to a contraction of the currency which was assumed to result from the return to cash payments.
To combat this view was the task to which Tooke applied himself in his earliest work, ‘Thoughts and Details on the High and Low Prices of the last Thirty Years,’ published in 1823, and the same line of argument is pursued in his ‘Considerations on the State of the Currency’ (1826) and in a ‘Letter to Lord Grenville’ (1829). His object was to ‘negative the alleged influence of the bank restriction and resumption in raising or depressing general prices beyond the difference between gold and paper,’ and to show that the act of 1819 was practically inoperative so far as any contraction of the currency was concerned. For this purpose he entered upon a detailed examination of the causes which might affect prices, and claimed to establish the conclusion that the variations, both during the period of restriction and after the resumption, were due to circumstances directly connected with the commodities themselves, and not to alterations in the quantity of money.
The same views are developed at greater length in the ‘History of Prices,’ of which the first two volumes, dealing with the period from 1793 to 1837, were published in 1838. His conclusions as regards that period were that the high prices which, speaking generally, ruled between 1793 and 1814 were due to a relatively large number of unfavourable seasons, coupled with the obstructions to trade which were created by the war; while the lower range of prices in the subsequent years was attributable to a series of more prolific seasons, the removal of the adverse influences arising out of a state of war, and the consequent improvement in the processes of manufacture and industry.
The ‘History of Prices’ was completed in six volumes; the third, dealing with the years 1838–9, was published in 1840, the fourth in 1848, and the fifth and sixth, in the compilation of which he was assisted by William Newmarch [q. v.], in 1857, the year before Tooke's death.
The whole work is an admirable analysis of the financial and commercial history of the period which it covers; and the subject was one with which Tooke was peculiarly well fitted to deal, possessing as he did the rather rare combination of a wide practical knowledge of mercantile affairs with considerable powers of reflection and reasoning. Whatever may be thought of his conclusions, the value of his methods of investigation is beyond dispute.
The chief interest of the later volumes lies in their record of the steps by which he gradually severed himself from the supporters of the ‘currency theory,’ who may be regarded as the direct heirs of the bullionists of 1810 and 1819.
The act passed in the latter year was a practical recognition of the evils inseparable from an inconvertible paper currency. But it did not take long to convince the wiser heads in the commercial world that the measure was incomplete. The experience of the great crisis of 1825, followed by those of 1836–9, showed that it was not enough to impose on the Bank of England the liability of payment in gold unless there was also security that the bank had the means of discharging the liability. Both in 1825 and in 1839 the danger of another suspension of cash payments was imminent. But while all were agreed that the management of the currency, so far as it rested with the bank, was unsatisfactory, there was great difference of opinion as to the remedy which should be applied.
Out of the controversy emerged the act of 1844, the main object of which was to prevent the over-issue of notes, and so to regulate their quantity that the volume of the currency should at all times conform in amount to what it would have been under a purely metallic system.
Tooke was resolutely opposed to the provisions of the act, holding them to be either superfluous or mischievous. He did not dispute that the affairs of the bank had been gravely mismanaged; but he attributed this less to the system than to want of prudence in administering it. He thought that by some changes in the management of the bank, coupled with the compulsory maintenance of a much larger reserve of bullion, more satisfactory results would be achieved than under the inelastic system prescribed by the act.
The supporters of the ‘currency theory,’ whose principles were adopted by Peel and embodied in the act, were represented by Samuel Jones Loyd, baron Overstone [q. v.], Robert Torrens [q. v.], and George Warde Norman [q. v.] They contended that banks of issue, by the arbitrary extension of their circulation, could produce a direct effect upon prices, and thus stimulate speculation, with the consequent fluctuations and revulsions of credit; that the mere enactment of convertibility on demand was not a sufficient safeguard against these evils; and that the only adequate remedy was to separate the business of issue from that of banking in such a way that the former should regulate itself automatically, and that the discretion of the directors should be confined to the latter alone.
Tooke, on the other hand, reinforced later on by Fullerton and James Wilson (1805–1860) [q. v.], maintained that a paper currency which was readily convertible on demand must necessarily conform, so far as its permanent value was concerned, to the value of a purely metallic currency; that for this purpose no other regulation was required beyond ready and immediate convertibility; that under these conditions banks had no power of arbitrarily increasing their issues; and that the level of prices was not directly affected by such issues. Before the committee of 1832 Tooke went so far as to state that, according to his experience, a rise or fall of prices had invariably preceded, and could not therefore be caused by, an enlargement or contraction of the circulation.
This brief summary of Tooke's views represents his matured opinions as they took shape between 1840 and 1844, and were defined in his ‘Enquiry into the Currency Principle’ (1844), and as they remained to the end of his life. But in his earlier writings there are many passages inconsistent with his later opinions; and the process of development was very gradual (see Fullerton, Regulation of Currencies, 2nd edit. p. 18). Overstone also observed before the committee of 1857 that ‘Mr. Tooke is upon this subject of science very like our great artist Mr. Turner upon the subject of art: he has his later manner as well as his middle manner.'
Tooke was one of the earliest supporters of the free-trade movement, which first assumed a definite form in the petition of the merchants of the city of London presented to the House of Commons by Alexander Baring (afterwards Baron Ashburton) [q. v.] on 8 May 1820. This document, which contains an admirable statement of the principles of free trade, was drawn up by Tooke; and the circumstances which led to its preparation are described in the sixth volume of the 'History of Prices.' The substantial advances in the direction of free trade made by Lord Liverpool's government, especially after the accession of William Huskisson [q. v.] in 1828, were no doubt largely due to the effect produced by the petition; and it may fairly be claimed for it that it gave the first impulse towards that revision of our commercial policy which was the work of the next half-century.
It was to support the principles of the merchants' petition that Tooke, with Ricardo, Malthus, James Mill, and others, founded the Political Economy Club in April 1821. From the beginning he took a prominent part in its discussions, and continued to attend its meetings till within a few weeks of his death, his last recorded attendance being on 3 Dec. 1857.
Besides giving evidence on economic questions before several parliamentary committees, such as those of 1821 on agricultural depression and on foreign trade, of 1832, 1840, and 1848 on the Bank Acts, Tooke was a prominent member of the factories inquiry commission of 1833. He retired from active business on his own account in 1836, but was governor of the Royal Exchange Assurance Corporation from 1840 to 1852, and was also chairman of the St. Katharine's Dock Company.
He was elected a fellow of the Royal Society in March 1821, and correspondant de l'Institut de France (Académie des Sciences Morales et Politiques) in February 1853. He resided in London at 12 Russell Square, afterwards in Richmond Terrace, and at 31 Spring Gardens, where he died on 26 Feb. 1858. He married, in 1802, Priscilla Combe, by whom he had three sons.
In the year after Tooke's death the Tooke professorship of economic science and statistics at King's College, London, was founded in his memory, the endowment being raised by public subscription. There is a watercolour sketch of Tooke in the office of the Royal Exchange Assurance Corporation, and a portrait by Sir Martin Archer Shee is in the possession of his granddaughter, Mrs. Padwick, of the Manor House, Horsham.[Tooke's writings; Parliamentary Papers, 1819–48; Proceedings of Political Economy Club, vol. iv.; Economist, March 1858; Athenæum, 1858, i. 306, 595.]