COMMERCIAL RESTRICTIONS—PETITION OF THE MERCHANTS OF LONDON
8 May 1820
Mr. Baring presented a petition from the merchants of London, the object of which, he said, ‘was a renewal, under certain limitations, of the freedom of trade by the abolition of all injurious restrictions.’ It was not his intention to recommend any immediate disturbance of the corn laws. But some alterations were possible at once, including the removal of the duty on the importation of wool, of the restrictions on the importation of timber, and of all prohibitions; the throwing open of the trade in the Indian seas and the repeal of the Navigation laws. Mr. Robinson (President of the Board of Trade) said, ‘that the restrictive system of commerce in this country was founded in error, and calculated to defeat the object for which it was adopted’; yet it was ‘impossible all at once to alter our commercial system’. Lord Milton concurred in all the principles of the petition. The restrictive system was one of the causes of the distress; another cause was the change lately effected in the currency. This change was necessary, but hon. members had not fully anticipated the embarrassments it would occasion. ‘He believed even his hon. friend near him (Mr. Ricardo) had formed too low an estimate of the pressure which a change in our currency would create.’
Mr. Ricardo begged the noble lord to recollect, that at the time when he spoke on the bullion question last session the price of gold was at 4l. 3s. per oz. and that now it was at 3l. 17s. 10½d.; there could not, therefore, be such a pressure arising from this measure as the noble lord had described. At the time when that discussion took place, he certainly would rather have been inclined to have altered the standard than to have recurred to the old standard. But while the committee was sitting, a reduction took place in the price of gold, which fell to 4l. 2s. and it then became a question whether we should sacrifice a great principle in establishing a new standard, or incur a small degree of embarrassment and difficulty in recurring to the old. With regard to the petition before the House, he had heard it with great pleasure; and he was particularly pleased with the liberal sentiments delivered by the right hon. gentleman opposite. It was to him a great source of satisfaction that sound as well as liberal principles were put forward by so important a body as the merchants of London; the only thing that astonished him was, that it was only now that these principles were put forward—that they should have taken so much time in their progress, since they were first promulgated by Adam Smith. However desirable the system now suggested, it could not be denied but that some difficulties lay in the way of its completion. The difficulties were of two kinds; the first difficulty resolved itself into a question of revenue. To increase the sources of revenue was doubtless the object of every wise government; and where taxes of a particular kind pressed heavily upon the people, it did not appear to him a very difficult thing to substitute other taxes. Another difficulty, and a greater, was, respecting the vested interests. Many persons vested their capital on the faith of the continuation of the restrictive system, and therefore, however injurious that system might be, nothing could be more unjust than, by the immediate abolition of that system, to occasion the absolute ruin of those who vested large capital on the faith of laws so long established as the restrictive laws. But from this no argument could be surely drawn to continue the system in future times. No argument appeared to him more mischievous— more calculated to promote commotion and rebellion, than this—that if they once did wrong they should never do right, but that they should go on in error and make every mischievous system perpetual. He thought the House ought now to do what was suggested by the bullion committee. There were difficulties of a very formidable kind connected with the system embraced by the committee, at least with its immediate execution. And what was done on that occasion? Why, that which ought to be done on the present—to spread the return to cash payments over a great space of time. So now might they return, gradually return, to a better system of commercial regulation, allowing full time to those who had their property invested, to turn it into other channels. After they had done so, they might say to the capitalists, “The present system will continue only so long as you can accommodate yourselves without any sacrifice of your interests, to the new one which we propose.” Some restrictions might thus be removed immediately, without any inconvenience; others might be gradually relaxed, and others might be left till our situation had so greatly improved as to render their removal no inconvenience. He was surprised that the right hon. gentleman who had expressed such liberal principles of political economy, and had so freely declared himself against the policy of our commercial restrictions, had yet made a reservation in favour of the corn laws. They were necessary, he said, to protect the agricultural interests; and he (Mr Ricardo) would admit the validity of the argument, provided it could be made to appear that the agriculturists suffered more burthens than other classes of the community. But what were their peculiar burthens? They did not suffer more from the malt-tax, or from the leather tax, or from any other tax with which he was acquainted, than any other class of men. These taxes were common to all, and all felt their pressure alike. But the poor-rates, it was said, operated on them as a peculiar burthen. Well; if the poor-rates were really more oppressive to them than to other classes, and tended to raise the price of grain, he would recommend a countervailing duty on the importation of foreign corn, to the amount of the operation of that cause. He allowed that the poor-rates actually raised the price of corn, because they fell upon the land, and operated as a burthen solely upon agriculturists. But if, while this burthen was felt by them, other classes of the community felt equal burthens, they were put to no disadvantage, and ought to receive no protection. He was fully prepared to admit, that the necessity for supporting the poor constituted the only or the best apology for the corn-laws. Tithes likewise were another burthen to the landed interest, and tended, he would allow, to a certain extent, to raise the price of grain, and for these he would have no objection to allow a countervailing duty. There was this difference between poor-rates and tithes—that while we must support the poor, whatever was the produce, the church could only claim a tenth of what was raised; for, whatever was the deficiency of produce, the clergy must conform to their proportion, and find it sufficient for their support.
Mr. Baring said, ‘that there was one point of importance on which he had the misfortune totally to differ with his hon. friend (Mr. Ricardo); on that point, as on every other, he would differ with him with reluctance and with diffidence.’ Mr. Baring conceived that on an average during the war as compared with the present time the difference in the currency was at least 25 per cent. ‘All the difficulty of the country was in its having a large debt;’ creditors had to be paid a higher value than had been received from them. ‘To add facilities to the circulation he should probably propose, if events did not alter his opinion, in the first place to make perpetual the plan of his hon. friend for payment in metallic bars instead of coin, for which the country was infinitely indebted to his hon. friend, and in the next place to give the Bank the option of paying, either in gold or in silver, not in depreciated or debased coin, but in weight.’
Mr. Ricardo, in explanation, stated that he had never imagined that the currency had never been depreciated more than 4 per cent. He had merely contended, that at the time when the subject was taken up by parliament in the last year, there was only that depreciation; which was too small to warrant an alteration of the ancient standard. He was well aware that during some of the latter years of the war, the depreciation had been as great as 25 per cent.
The petition was ordered to lie on the table. A similar petition being presented from the chamber of commerce of Edinburgh,
Mr. Ricardo said, he would take that opportunity of making an observation as to the two standards of gold and silver. He fully agreed with his hon. friend, that a payment in both would facilitate the payment of the public creditor; but then there was a question whether two standards would not be more liable to fluctuation than one invariable standard. If payment were made in one metal, it would be liable to less fluctuation than if made in two, and in two it would be less than if made in three; therefore he considered the payment in one metal as preferable, being liable to less fluctuation.
Mr. Baring replied, that he ‘considered the difference in this respect as more theoretical than it would be found in practice.’