The Online Library of Liberty

A project of Liberty Fund, Inc.

• Preface.
• Conversation I.: Introduction.
• Conversation II.: Introduction — Continued.
• Conversation III.: On Property.
• Conversation IV.: On Property— Continued.
• Conversation V.: On the Division of Labour.
• Conversation VI.: On Capital.
• Conversation VII.: On Capital — Continued.
• Conversation VIII.: On Wages and Population.
• Conversation IX.: On Wages and Population. Continued.
• Conversation X.: On the Condition of the Poor.
• Conversation XI.: On Revenue.
• Conversation XII.: On Revenue Derived From Property In Land.
• Conversation XIII.: On Revenue Derived From the Cultivation of Land.
• Conversation XIV.: On the Revenue of Those Who Do Not Employ Their Capital Themselves.
• Conversation XV.: On Value and Price.
• Conversation XVI.: On Money.
• Conversation XVII.: Subject of Money Continued.
• Conversation XVIII.: On Commerce.
• Conversation XIX.: On Foreign Trade.
• Conversation XX.: Continuation of Foreign Trade.
• Conversation XXI.: Subject of Foreign Trade Continued.
• Conversation XXII.: On Expenditure.

CONVERSATION XX.

Continuation of FOREIGN TRADE.

mrs. b.

When we last parted, you expressed a wish that we should raise all our corn at home, in order to be completely independent of the casualties attending a foreign supply.

caroline.

Yes; for were we at war with those countries which usually furnished us with corn, they would withhold the supply. Or, should they experience a dearth, they would no longer have it in their power to send us corn.

mrs. b.

We occasionally import corn from different parts of America, from the shores of the Baltic, and those of the Mediterranean seas. Now, it is very improbable either that we should be in a state of warfare with those various countries at the same period of time, or that they should all be afflicted with a dearth of produce in the same season. There is much greater chance of a scarcity prevailing in any single country than in every part of the world at once. Indeed, facts have fully demonstrated, that when the weather is unfavourable to the crops of one country, it is almost invariably found to be favourable to those of another. I believe no single instance can be produced of a simultaneous failure of the crops throughout the whole commercial world. In the year 1800, when England suffered so much distress from the deficiency of the harvest, the crops were very abundant in Spain. While the harvest of 1803, which was extremely plentiful in this country, was so deficient in Spain as to produce a famine. Now it is evident, that had a free corn trade existed between these countries, the distresses of both would have been alleviated.

caroline.

Under such circumstances it would certainly be right to import corn; I object only to doing so habitually, and not depending in ordinary times on the produce of our own country.

mrs. b.

If we apply to corn countries only in seasons of distress we shall find it very difficult to obtain relief. Those countries raise corn expressly for the nations which they usually supply with that article; but they will have but little to spare for a new customer, who, from a dearth at home, is compelled to seek for food abroad; and we could obtain it only by out-bidding other competitors. The supply, therefore, would be both scanty, and at a price which the lower ranks of people could ill afford to pay; so that there would be great distress, if not danger of a famine.

caroline.

To prevent such a calamity we have only to raise so large a quantity of corn at home as will afford a plentiful supply in years of average produce; then in seasons of abundance we have the resource of exportation, and in bad seasons we might still have a sufficiency.

mrs. b.

It is impossible to raise at all times a sufficiency, without having often a superfluity. This is particularly the case with corn, as it is the most variable of almost all kinds of agricultural produce. If, therefore, we wish to raise such a quantity as will always secure us against want, we must in common seasons have some to spare, and in abundant years a great superfluity.

Now the more corn-land we cultivate, the higher will the price of corn be in average seasons. You start, Caroline; but paradoxical as this may appear, if you reflect upon the causes which occasion the regular high price of corn, independently of the variations of supply and demand, you will understand it.

The more corn is grown in a country, the greater will be the quantity of inferior land brought into cultivation, in order to produce it; and the price of corn, you know, must pay the cost of its production on the worst soil on which it is raised* , otherwise it would cease to be produced. If, therefore, in order to insure a home supply, we force an ungrateful soil, at a great expense of capital, to yield a scanty crop, we raise the price of all the corn of the country to that standard, and we thus enable the landed proprietors to increase their rents.

caroline.

That is very true; and then by enhancing the price of the first necessaries of life we must raise the rate of wages, in order to enable the labouring classes to live.

mrs. b.

Nor is this all; when the home supply proves superabundant, what is to become of it? The unnatural high price at which it usually sells in our market, owing to the forced encouragement given to agriculture, renders it unsaleable in foreign markets until the price is fallen so low as to be ruinous to farmers.

caroline.

I cannot easily bring myself to look upon a superfluity of the necessaries of life as a calamity; — if it is injurious to the farmer, what an advantage it is to the lower classes of people!

mrs. b.

The advantage is of a very temporary nature. The farmer who cultivates poor land in hopes of a remunerating price, must be ruined if he continues to cultivate at the low price occasioned by superfluity: he will therefore throw up the inferior lands, and the consequence will be that less corn will be produced in succeeding years than is requisite for the supply; and the superfluity will be succeeded by dearth or famine. Thus the price of corn will be continually fluctuating between the low price of a glutted market and the high price of scarcity.

A redundance of the necessaries of life is in some respects attended with more pernicious consequences than the excess of any other species of commodity. If the market were overstocked with tea and coffee, those articles would fall in price, and would not only be more freely consumed by the people accustomed to enjoy them, but the reduction of price would bring them within reach of a lower and more extensive class of people. Now this cannot happen with bread, because it is already the daily and most common food of the lowest ranks of society, and though in seasons of great plenty they may consume somewhat more than usual, the difference will not be very considerable; they will rather avail themselves of the cheapness of bread to devote a larger share of their wages to other gratifications; they will eat more meat, drink more spirits, or wear better clothes. Great part of the superabundance of corn will therefore remain in the granary of the farmer, instead of supplying him with the means of carrying on the cultivation of his land; the labourers who raised that corn will probably be driven to the parish for want of work, and the consequences which will ensue to the community who would have been fed by the fruits of their industry, may be easy to conceive.

caroline.

But do you then regard a low price of corn, under all circumstances, as an evil?

mrs. b.

On the contrary, I consider it in general as highly advantageous when it results from low cost of production; it is attended with injurious consequences only when it will not remunerate the farmer. But when corn can be raised at a small expense, it can afford to be sold at a low price. It is this which renders it desirable to bring only good land under tillage, and not to force poor soils to yield scanty and expensive crops.

Countries that have plenty of good land and but little capital, find no branch of industry so advantageous as the productions of agriculture; and the exportation of corn, we have observed, is their first attempt at foreign commerce. Thus America, being a newly settled country, and as yet but thinly inhabited, has great choice of fine soils, and can raise corn at a very small expense of production; accordingly we find that she not only feeds her own population, but regularly exports corn.

Poland and Prussia are still agricultural countries, exporting corn; but old established countries in general, such as England, which are far advanced in arts and manufactures, and have raised a population too great to be maintained by the produce of her good soils, will find it answer better to import some portion of the corn they consume, and to convert their inferior lands into pasture. This would not only lower the price of bread, but also that of meat, milk, butter, and cheese, the supply of which would be increased by the conversion of corn land into pasture. When the home crops proved abundant, they would import less; when scanty, they would import more. Thus without difficulty they would proportion the supply to the demand, and keep both bread and wages steadily at moderate prices.

caroline.

But with the additional expenses of freight and insurance, can we import corn from America cheaper than we can produce it at home?

mrs. b.

In ordinary seasons we certainly can; but not at the present price of corn.

caroline.

And do you suppose that the present low price of corn, and the distressed state of agriculture, are owing to our producing too much corn at home?

mrs. b.

I have no doubt but that it is one of the causes, but it is connected with many others, which render the question so complicated and intricate that we must leave it to wiser heads than our own to unravel it.

The system of growing a home supply of corn, in countries where great capital affords the means of maintaining a very large population, is attended not only with the disadvantage of keeping the price of corn high in average seasons, but likewise occasions greater fluctuations of price in times of dearth or abundance, than if those casualties were diminished by a free corn-trade with other countries. It would perhaps be difficult to say whether we have suffered most from a high or a low price of corn, within these last twenty years; but we have acquired sufficient experience of the evils arising from both these extremes to think, that the wisest course we could pursue, would be to adopt such measures as would prevent great fluctuations of price.

Nothing is more injurious to the interests of the labouring classes than great and sudden fluctuations in the price of bread: they are either distressed by unexpected poverty, or intoxicated by sudden prosperity; but if that prosperity is the effect but of one fruitful season, it gives rise to expenses they are unable to maintain. It is but a gleam of sunshine on a wintry day, and the buds it untimely developes are nipped by the succeeding frost.

caroline.

Well, Mrs. B., I see that you will not allow of any exception in favour of the corn-trade, and that I must consent to admit of the propriety of leaving all trade whatever perfectly free and open.

mrs. b.

That is certainly the wisest way. Instead of struggling against the dictates of reason and nature, and madly attempting to produce every thing at home, countries should study to direct their labours to those departments of industry for which their situation and circumstances are best adapted.

caroline.

Yet you must allow me to observe, that there are numerous instances of our having established flourishing manufactures of goods which we formerly procured entirely from foreign commerce: such, for instance, as china-ware, muslins, damask linen, and a variety of others. Now does not this imply that we may sometimes direct our labour to a new branch of industry with greater advantage than by importing the goods from foreign countries?

mrs. b.

It certainly does; and it shows also, that as soon as we are able to cultivate or fabricate the commodities we have been accustomed to procure from foreign parts as cheap as we can import them, we never fail to do so. But the period for the introduction of any new branch of industry should be left to the experience and discretion of the individuals concerned in it, and not attempted to be regulated or enforced by government. James I. attempted to compel his subjects to dye their woollen cloths in this country, instead of sending them to the Netherlands, as had been the usual practice; but the English-dyed woollen cloths proved both of worse quality and dearer than those of the Netherlands, and James was obliged to abandon his plan. Had the sovereign not interfered, dyers would have established themselves in this country as soon as the people had acquired sufficient skill to undertake the business; but the discouragement produced by an unsuccessful attempt probably retarded the natural period of adopting it.

If it were possible for a country both to cultivate and manufacture all kinds of produce with as little labour as it costs to purchase them from other countries, there would be no occasion for foreign commerce: but the remarkable manner in which Providence has varied the productions of nature in different climates, appears to indicate a design to promote an intercourse between nations, even to the most distant regions of the earth; an intercourse which would ever prove a source of reciprocal benefit and happiness, were it not often perverted by the bad passions and blind policy of man.

caroline.

And independently of the diversity of soils, climates, and natural productions, I do not suppose that it would be possible for any single country to succeed in all branches of industry, any more than for a single individual to acquire any considerable skill in a great variety of pursuits?

mrs. b.

Certainly not. The same kind of division of labour which exists among the individuals of a community, is also in some degree observable among different countries; and when particular branches of industry are not formed by local circumstances, it will generally be found the best policy to endeavour to excel a neighbouring nation in those manufactures in which we are nearly on a par, rather than to attempt competition in those in which by long habit and skill they have acquired a decided superiority. Thus will the common stock of productions be most improved, and all countries most benefited. Nothing can be more illiberal and short-sighted than a jealousy of the progress of neighbouring countries, either in agriculture or manufactures. Their demand for our commodities, so far from diminishing, will always be found to increase with the means of purchasing them. It is the idleness and poverty, not the wealth and industry of neighbouring nations, that should excite alarm.

caroline.

A tradesman would consider it more for his interest to set up his shop in the neighbourhood of opulent customers than of poor people who could not afford to purchase his goods; and why should not countries consider trade in the same point of view?

mrs. b.

Mirabeau, in his “Monarchie Prussienne,” has carried this principle so far, that it has made him doubt whether the trade of France was injured by the revocation of the edict of Nantz, which drove so many skilful manufacturers and artificers out of the country.

“Il est en général un principe sûr en commerce: plus vos acheteurs seront riches, plus vous leur vendrez: ainsi les causes qui enrichissent un peuple augmentent toujours l’industrie de ceux qui ont des affaires à négocier avec lui. Sans doute c’est une démence frénétique de chasser 200,000 individus de son pays pour enrichir celui des autres; mais la nature qui veut conserver son ouvrage ne cesse de réparer, par des compensations insensibles, les erreurs des hommes; et les fautes les plus désastreuses ne sont pas sans remèdes. La grande vérité que nous offre cet exemple mémorable, c’est qu’il est insensé de détruire l’industrie et le commerce de ses voisins, puisqu’on anéantit en même tems chez soi-même ces trésors. Si de tels efforts pouvoient jamais produire leur effet, ils dépeupleroient le monde, et rendroient très-infortunée la nation qui auroit eu le malheur d’engloutir toute l’industrie, tout le commerce du globe, et de vendre toujours sans jamais acheter. Heureusement la Providence a tellement disposé les choses que les délires des souverains ne sauroient arrêter entièrement ses vues de bonheur notre espèce.”

caroline.

The more I learn upon this subject, the more I feel convinced that the interest of nations, as well as those of individuals, so far from being opposed to each other, are in the most perfect unison.

mrs. b.

Liberal and enlarged views will always lead to similar conclusions, and teach us to cherish sentiments of universal benevolence towards each other; hence the superiority of science over mere practical knowledge.

[* ]See Conversation on Rent.