The Online Library of Liberty

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• Preface
• Editorial Note
• I.: Biographical Sketch
• II.: Early Economic Writings: 1804-1808
• An Essay of the Impolicy of a Bounty On the Exportation of Grain
• Introduction
• Essay On the Corn Laws
• Chap. I: Of the History of the Corn Laws
• Chap. II: Influence of the Principle of Population Upon the Corn Trade
• Chap. III: Effects of the Bounty On the Rent of Land
• Chap. IV: Effects of the Bounty On the Profits of the Farmer
• Chap. V: Effects of the Bounty On the Value of Silver
• Chap. VI: Exportation
• Chap. VII: Importation
• Chap. VIII: Landlords, Farmers, and Corn-dealers
• Postscript to Essay On Impolicy
• Commerce Defended.
• Introduction
• Chapter I: On the Security Or Insecurity of the British Commerce
• Chapter II: On Land, As a Source of Wealth
• Chapter III: Of the Definition of the Terms Wealth and Prosperity
• Chapter IV: Of Manufactures
• Chapter V: Commerce
• Chapter VI: Consumption
• Chapter VII: Of the National Debt
• Chapter VIII: General Reflections
• Smith On Money and Exchange
• III.: James Mill and David Ricardo
• Elements of Political Economy,
• Preface
• Preface (to the 2nd Edn.)
• Introduction the Subject—its Limits—and Division
• Chapter I: Production
• Chapter II: Distribution
• Chapter III: Interchange
• Chapter IV: Consumption
• Mill On Scope and Method
• Whether Political Economy Is Useful London Review, Jan. 1836, Vol. Ii, Pp. 553–572.
• V.: James Mill and India
• Book Ii of the Hindus
• Chapter I: Chronology and Ancient History of the Hindus
• Chapter II: Classification and Distribution of the People
• Chapter III: The Form of Government
• Chapter IV: The Laws
• Chapter V: The Taxes
• Bibliography

CHAP. VII

Importation

The sect who admire the duty on exportation, are terribly afraid of a free importation. They desire to confine importation within the narrowest limits, and indeed to permit it at all, only in cases of the greatest necessity. Their prejudices are miserable. It would, they say, ruin the farmer, and hurt agriculture.

There is only one direct effect, which a free importation can produce; that is, a reduction of the average price of corn. I have already stated reasons to prove that this reduction would have no tendency to reduce the profits of the farmers, nor to injure agriculture. Even the single argument of Smith, Mr Mackie, the most dauntless champion of the monopoly system, allows, would be perfectly adequate to support this conclusion, if it held as truly in the advancing state, as it does in the declining or stationary states of society. I have proved that it does hold in that state as well as in both the others. It is therefore extorted from this eager adversary, that the importation can have no bad effects.

But it may be necessary, though not for the refutation of my opponents, for the satisfaction of the public, to consider a little more minutely the effects of a free importation.

It is evident that the market from which all corn imported must be brought, is the general free market, common to all countries in the world. Now, as the domestic market in every country is regulated by the wants and superfluities of the individuals who inhabit the country; so this general market of all countries is regulated by the wants and superfluities of the different countries which repair to it. It is the nature of this market to be very stationary, and scarcely subject at all to fluctuation. For though one country may very much fail in a particular year, or very much abound, that is never the case with all countries; and the deficiency of one or more is always very exactly supplied by the super-abundance of others; so that a steady medium price is always maintained in this market of nations.

The adversaries of a free importation tell us that countries, such as North America, Poland, and the countries around the Baltic, which are thinly peopled, and in which manufactures are but little established, can always raise corn cheaper than fully peopled, rich, and commercial countries; and that if importation is permitted from those countries free, they must undersell our farmers greatly, and so ruin agriculture. Those persons understand not, in the least degree, the nature of that great general market, in which the wants of all nations are supplied. We are not competitors in that market with poor nations only, but with rich also, with all the nations in the world. It is the circumstances therefore of all the richest nations, of those who are most completely our rivals, which settle the price in that market; and we are forced to buy in it not according to the circumstances of the poor nation, but according to those of the rich.

Corn never can be bought for importation into Great Britain below that standard price, in the market of nations, which is established by the wants and superfluities of them all; and which therefore must be the medium price of the nations which come into that market, taken altogether. The medium in some of them may be above it; and the medium in others below. These are the two extremes. But in all the rest it must be nearly the same. Whatever corn, therefore, is at any time imported into Great Britain must come into it purchased at this medium price, and loaded with all the expence of freight and insurance from the country where it is bought. And corn is an article of so much bulk in proportion to the value, that this expence must always bear a pretty high proportion to the original price. Foreign corn, therefore, can never come into England very cheap; and unless in England the medium price of corn be very much above the medium price in the other countries of Europe, none can ever be imported, except in years of particular scarcity. If the medium price in England therefore be the same with the standard of the universal market, which there is good reason to think it is, agriculture cannot receive any discouragement from a free importation, even on the principles of the bounty people themselves.

But let us suppose that the medium price in England is very much above this standard. This must be owing either to some peculiar degradation of the value of money in England, an evil of the greatest magnitude, and which the free importation of corn would greatly tend to redress, and without affecting permanently, or to any considerable degree, either the profits of the farmer, or the interests of agriculture. Or if the value of money be the same in England as it generally is in the rest of Europe, and the medium price of corn be still higher, it must be owing to this, that a smaller proportion of the people are engaged in agriculture, and a greater in other occupations. Now this must arise from one or other of two causes, either from agriculture's being more encouraged in those countries, or from other occupations having more encouragement in this country. In almost all the countries of Europe, the same or greater discouragements are laid upon agriculture than are laid in England. But in no country in the world are there such encouragements to other occupations. England then has the same advantage with regard to agriculture as other nations, but advantages peculiar to herself with regard to other occupations. But it is always the wisdom of nations as well as of individuals to pursue the employments in which they have peculiar advantages, rather than others in which they have no advantages. With regard to the inconvenience of depending upon the great general market of nations for any part of our supply, it is to a nation with half the commerce, and naval resources of this country absolutely nothing at all. Nothing in human affairs can be more certainly depended upon than that market.

But if it be accounted an indispensable policy to bring the number of persons employed in agriculture, and those in other occupations to the proportion that the former shall at all times feed the latter, it must be done either by affording greater encouragements to agriculture, or imposing discouragements upon other occupations. The former will be the plan adopted undoubtedly. But to grant a bounty upon exportation, and to impose a duty upon importation, is to adopt the latter plan, not the former; is to discourage all foreign commerce, but to afford no encouragement whatever to agriculture, as we have already abundantly proved. To obtain this object then some other means must be devised of encouraging agriculture. And some most important ones are not far to seek. Render the commerce of land as free and easy as that of all things else; relieve agriculture from those vexatious imposts from which other occupations are exempted; and render the employment of large capital as independent in agriculture, and a source of as great authority, as it is in trade, and you will have no occasion to complain of a slowly progressive agriculture.

If importation is rendered free, so long as the price of corn in England is high enough to surpass the price in that general market of nations, together with all the expence of carriage into England, corn will flow into that country, till it reduce the price there to that in the general market, augmented by all this expence of carriage. If exportation is rendered free, as soon as corn in England sinks below the price in the general market, it will flow out of England till the price become as high as in that market, bating the expence of carriage. The medium price in England is thus rendered the same with the standard price in the general market; and the range of fluctuation is rendered very small indeed. Price can only depart from the medium by the expence of carriage added in the one case and subtracted in the other. That this steadiness and uniformity would be one of the most advantageous things both to the farmer and to every other class of the people, is too obvious to require any proof.

What now would be the effects of this reduction of price upon the general wealth of the country, and upon the progress of agriculture? It is evident that every country, in which the price of grain is above the standard of this general market, lies under peculiar disadvantages in respect of its whole foreign commerce. The value of its money is degraded below that of other countries exactly in the same proportion; and to this extent it must be undersold by other nations in all foreign markets. To bring the price of grain therefore down to the standard of the general market, is of the utmost possible importance to foreign commerce, and to all those interests of the state which are dependent upon foreign commerce. What again would be the effect of the same reduction upon the progress of agriculture is abundantly evident from what has already been said. The owners of land would be obliged to reduce their rents till the farmers could make the same profits as are usual in the country, that is to say, the very same which they made before, and by which, of course, they would have the very same encouragement to improve their business. At the same time neither the farmers nor the landlords would be losers. The prices of every thing would fall. And though they would not pay for the things which they want with so much money, they would be able to buy just as many as they were before.

It may be shewn at the same time that the reduction of price in England by a free importation would be very immaterial. This is of no consequence with regard to the real policy of the measure which we recommend. But it may serve to render some persons who cannot regard it with the eye of a true statesman, less obstinate in their prejudices against it. Notwithstanding all that has been said about the deficiency of England in corn, it is abundantly certain that the medium price in England is very nearly the same with the standard price in the general market. This has undoubtedly been the opinion of the legislature as often as it granted a bounty on importation on the appearance of scarcity; because if the medium price were much above the general market, and that inhanced too by the appearance of scarcity, assuredly corn enough would come into the country without any bounty. As the bounty itself has never brought it with any peculiar rapidity, it is a certain proof that the price in England has never been very much above the general price in Europe.

The same thing appears from the state of the exportation of corn. Since the year 1790, the affairs of Europe have been so much deranged, and so many peculiar causes have affected the corn trade in England, that it would be unfair to draw any general conclusions from that period. From the year 1770 to the year 1790, we find that exportation and importation have alternated. During one year we have exported, during another we have imported. During the one year it is plain the price in England must have been below that in the general market, and during the other above it. The number of years however in which it was above it is greater than that in which it was below it. The price in England therefore was during that period more frequently above the price in the general market than below it. But it was frequently below it; and therefore though the medium price in England must have been somewhat above the standard price in the general market, it cannot have been much above it. The same thing appears from another fact. Even in the years of greatest importation, and when the price by consequence must have been highest, we always exported too. But this it is impossible we could have done, had the price been much higher in England than it was abroad. The same thing appears too from the very small quantity of grain imported during that period, notwithstanding the rout which has been made about it. My readers will perhaps be surprised when I tell them that of the two most important species of grain, wheat and barley, we have upon the whole of that period exported more than we have imported to the amount of 157,542 quarters; and it is altogether in the coarser species of grain, oats, pease, and beans, that the extra importation has been made.

From these consideration it evidently appears, that by a free exportation and importation of corn, the medium price in England would be somewhat reduced, but not much; that this reduction would be of the greatest importance to the country in respect to its foreign trade, and no discouragement whatever to agriculture; and that this free trade would produce a steady, regular price, very little subject to fluctuation, which would preserve the farmer from all the hardships of very low prices, and the people from all the hardships of very high prices; that the system of bounties on the other hand must raise the price of corn, which lays the country under great disadvantage in respect to foreign trade, without affording the smallest encouragement to agriculture; and that it has a tendency to produce the greatest fluctuation in prices, and to produce all the miseries and inconveniences both of too high and of too low prices.