Front Page Titles (by Subject) TRADE WITH INDIA 1828 - The Collected Works of John Stuart Mill, Volume XXX - Writings on India
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TRADE WITH INDIA 1828 - John Stuart Mill, The Collected Works of John Stuart Mill, Volume XXX - Writings on India 
The Collected Works of John Stuart Mill, XXX - Writings on India, ed. John M. Robson, Martin Moir, and Zawahir Moir (Toronto: University of Toronto Press, London: Routledge and Kegan Paul, 1990).
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TRADE WITH INDIA
Parliamentary Review, Session of 1826-27 (London: Baldwin and Cradock, 1828), 58-68. Headed and running titles: “Foreign Dependencies—Trade with India.” Not signed; not republished. Identified in Mill’s bibliography as “An article on trade with India which appeared in the Parliamentary Review for the session of 1827” (MacMinn, 8).
Trade with India
on the 15th may,* Mr. Wolryche Whitmore moved for a Committee to inquire into the trade between Great Britain and India. Mr. Whitmore rested his demand for investigation upon a specification of grievances; among which he insisted chiefly upon the inequality of the duties on East India and on West India produce; the impediments which, as he affirmed, the East India Company were accused of throwing in the way of private merchants trading to the East Indies; and lastly, the commercial restrictions, which he seemed to suppose existed at Singapore, and other “emporia in the Eastern Archipelago.”1
On the first of these topics, the discriminating duties on East India produce, our opinion has been already given. The subject was plainly treated, in the course of the debate, by Mr. William Smith; who placed the advocates of these duties in a dilemma from which they cannot possibly escape.2 If the duties were equalized, the taxed commodities either could, or could not, be obtained at less cost from the East Indies than from the West. If they could, the discriminating duties are a tax on the people of England, to enable the West Indians to carry on what is, or would otherwise be, a losing business, by means of slave labour. If not, the duties are meant for no purpose except to ward off a danger which does not exist: they ought, therefore, to be repealed, were it for no other reason but because animosities are engendered, and valuable time wasted, by the agitation of the question from year to year.
The complaints of Mr. Whitmore against the East India Company, it is impossible to decide upon without a full inquiry: and if they be persevered in, it is highly proper that they should be subjected to investigation by any committee which may hereafter be appointed to inquire into the East India trade. Judging, however, from what Mr. Whitmore hinted rather than stated concerning the nature of the imputations, we do not imagine them to be of a very serious character. “The Company secured to itself, in some cases, the right of preemption. Their resident agents advanced money to the growers, and then shut up the produce, so as to answer the demands of the Company.”3 This is the sum total of Mr. Whitmore’s complaints: but surely if, as would appear from this statement, the Company actually advances to the producers the capital with which they carry on the production, it is entitled to privileges somewhat greater than those of a simple purchaser; and there is nothing unfair in the transaction, unless it can be shewn, that, by an abuse of the powers of government, the Company extorts from the producers more favourable terms than the private merchants could obtain, for the same equivalent, by the competition of the market. This, however, Mr. Whitmore does not affirm.
The debate chiefly turned upon the question of the discriminating duties; on which subject Mr. Huskisson, though he opposed the motion, expressed his entire concurrence in the general principles laid down by Mr. Whitmore, and declared that he had nothing more at heart than to promote them, “so far as they could be fairly and justly brought into operation.”4 This, we believe, is a profession which few men would have any objection to make on any subject. To attach to it any meaning, it would be necessary that we should have the means of knowing how far the speaker’s ideas of fairness and justice extend. Mr. Huskisson, however, took particular care to say nothing which should give the remotest indication of the course he intended to pursue. His speech was according to the old approved parliamentary tactics. Fair words to all parties, pledges to none: impossibility of laying down any principles which could be inflexibly adhered to: necessity of delay; not a short delay, to give time for consideration, but a delay of several years—delay until the House should take into consideration the renewal of the East India Company’s charter, which expires, we believe, in 1834.5 It was impossible to shew one single point of contact or connexion between the question of the East India Company’s charter, and that of the duties on East India produce. If the duties on East India sugar are a grievance, they are a grievance whether the King or the Company is to have the government of India, and whether the Company or private merchants are to be, after 1834, the importers of tea from Canton. Yet, so truly parliamentary is the policy of postponing the consideration of whatever appears likely to give trouble or annoyance; so deeply rooted in the hearts of our public men is the desire to put off, till the latest period possible, the evil day when the partial interests of any powerful body are to be interfered with; that almost every member who followed joined with Mr. Huskisson in begging Mr. Whitmore to withdraw his motion, and “leave the matter to Government,”6 to be by them postponed until the time comes when attention will be distracted by so many other still more important topics connected with India, that whatever the Government may be pleased to ordain on the subject will pass, comparatively speaking, unchallenged and undiscussed.
The reasons stated for the postponement were far from sufficient to account for the apparent universality of the desire for it. There were “experiments already in progress,”7 of which the result was not yet apparent. We are aware of none, the result of which, if known, could have the slightest influence upon the merits of this question. The inquiry would “excite and inflame those anxious alarms,” which Mr. Huskisson said it was his “earnest wish to allay.”8 This argument, though it is perfectly en règle, being invariably brought forward as a reason against discussion whenever discussion is inconvenient, is yet such a one as ought never to be heard from the lips of an enlightened statesman. Common sense, if it were listened to, would dictate a directly opposite conclusion. If there are groundless alarms, by what means can they be so effectually dispelled as by laying open promptly and completely the real state of the case? As a general proposition, it will scarcely, we presume, be maintained, that ignorance or misinformation is less likely to produce groundless alarms than correct information; and if it is on the sugar question in particular that correct information is expected to prove so alarming, the reason must be one which it would not answer Mr. Huskisson’s purpose to tell; that, if all the facts were known, so gross and glaring would the injustice appear which is done to the public of Great Britain, for the sake of the planters, that public indignation would at once compel a reform of the system. The absurdity of this plea is the more obvious, because the West Indians, and Mr. Huskisson along with them, profess to believe that the East Indies, even if the duties were equalized, could not supply sugar on equally advantageous terms with the West. Surely, if this be true, an inquiry, the result of which would be to establish this fact, would allay apprehensions, not excite them. True it is that the West Indians, by their strenuous opposition to the removal of these unpopular duties, an opposition which would be without a motive if they themselves believed what they say, prove sufficiently their own insincerity. But every one will acquit Mr. Huskisson of such paltry artifices. The true reason, as we suspect, which would render the granting of a committee a source of real alarm to the planters, is one which Mr. Huskisson could not decently state, however strongly he may have felt it. This reason is simple;—it would convince them that Government was in earnest. At present, they may flatter themselves, with some appearance of justice, that it is not.
It well deserves attention, that such flimsy excuses, when they were excuses for delay, should have been so completely satisfactory to the House. But any reason is good enough, when the conclusion accords with our inclinations: any ostensible motive will suffice, when the course which it recommends falls in with the predominant habit of our minds.
In answer to what had been observed by Mr. Whitmore on the subject of Singapore, and the other “emporia in the Eastern Archipelago,”9 Mr. Huskisson stated, that “no tonnage, or duty of any description,”10 was now demanded at those ports: and the fact is, that Singapore has always been a free port, and that the duties which were formerly levied at Penang and Malacca have recently been discontinued. Mr. Huskisson viewed this circumstance “with great satisfaction, because it was the result of those principles of policy which he had recommended.”11 Were we, also, convinced that the measure was borne out by the principles to which Mr. Huskisson alluded, it could not but have our entire approbation. We are afraid, however, that, instead of being a result of those principles, it is in direct opposition to them; and that the ministry, which recommended or sanctioned such a measure, have been misled by names.
The principle, which Mr. Huskisson supposes to have dictated this course, is the principle of free trade; and if we look to the words alone, free trade undoubtedly implies exemption from all taxes or duties whatsoever. But a principle, when it is expressed in two words, is very seldom expressed accurately; some necessary condition or qualification is almost always omitted: and when we are satisfied with adhering to the terms of a proposition, and are not careful to keep always in view the grounds of it, we are perpetually in danger of acting in contradiction to the very principle which we imagine to be directing our conduct.
The principle of free trade is the principle of leaving undisturbed the natural distribution of capital; and the foundation of it is the observed and well-established fact, that capital, when left to itself, under the guidance of individual interest, always finds out the channels in which, under the existing circumstances, and in the existing state of knowledge, the greatest produce can be obtained at the least expense to the community. When this principle is clearly apprehended, it is evident at once that free trade does not require that the different employments of capital shall be subject to no taxation, but only that, if taxed at all, they shall be taxed equally, so that one employment may not be encouraged more than another.
If there are two modes of obtaining the same commodity, and both are taxed,—taxed moreover to an exactly equal amount,—the commodity will naturally be obtained in the cheaper of the modes; but if a minister awkwardly attempts to introduce free trade, by removing the tax from the more expensive mode of obtaining the article, while the cheaper mode remains taxed, as before, the commodity will probably be obtained in the more expensive mode, and a quantity, greater or smaller, of expense and labour, will be uselessly thrown away.
This is precisely what has been done in the Eastern seas. The ports of Continental India, particularly Calcutta and Bombay, have hitherto been the entrepôts of a very extensive and valuable commerce; but at these places the port charges still continue, while they are now abolished in the Straits of Malacca. The unavoidable consequence will be, that many ships, for unloading which the situation of Bombay or Calcutta is more convenient, will resort to Penang or Singapore in order to save the duties, at the cost of a longer, a more hazardous, or a more expensive voyage. The whole of what is thus expended is sheer loss to the nation and to the world; and a loss, too, of that very kind, which it is the particular object of the principle of free trade to prevent; loss, by substituting a less advantageous disposition of capital for a more advantageous one. It is as if all duties and port charges were to be abrogated in London, while they continued to be levied at Bristol and Liverpool. No doubt, this would give to the commerce of London a most flourishing appearance, since a much larger number of ships, from America and the West Indies, would resort to London, in order to avoid the duties; but it is obvious, that the additional expense of the more circuitous voyage would be a clear and uncompensated loss to the community.
But even if the remission of duties, instead of being partial, had been universal, extending to all India, or even to all the world; we should be prepared to maintain, that the measure was a violation of that principle of which the doctrine of free trade is a consequence,—the principle of not disturbing the natural arrangement of capital. That principle, we contend, absolutely requires that all expenses which are incurred for commerce should be defrayed by commerce. The natural distribution of capital is equally disturbed, when any of its employments is charged with factitious expenses, or when it is relieved from its own.
The settlements of Singapore, Penang, and Malacca, were established, and are maintained, solely for the convenience of commerce; and none of them possesses any resources, independently of commerce, at all adequate to the liquidation of its own expense. The question now is, whether this expense, which must be borne by somebody, shall be borne by those who alone benefit by it, and for whose sake it was incurred; or be charged upon the community in general of Great Britain or India. We maintain that the former, both on the principles of justice and on those of political economy, is the advisable arrangement.
Free trade implies freedom not from restrictions only, but from all partial encouragement. Why is it that Government never thinks of erecting, at its own charge, buildings or machinery for any branch of manufacture—the cotton manufacture, for example? Not because the removal of any source of expense is not in itself advantageous; but because, when it can be removed from one class only by being transferred to another, there is no good reason for giving a bounty to the consumers of cotton, at the expense of the public in general, or any other portion of it.
If, instead of buildings, Government were to supply means of conveyance; if they were to abolish all tolls, and to supply waggons and other vehicles, free of charge, for carrying from place to place all descriptions of goods, could they here plead free trade in their defence? or rather would not such a measure be a direct infringement of the principle on which free trade is founded? The consumers of goods brought from a distance, have no claim to receive a premium at the expense of those who consume goods produced in their immediate vicinity; and as such a system would inevitably cause goods to be brought from a distance, which could be obtained cheaper by being produced at hand, the excess of expense, which would not be taken away, but only be laid upon other shoulders than those of the consumer, would be a clear loss to the community.
To take another illustration still more exactly appropriate to the case in hand: suppose that Government were to purchase the London Docks, and lay them open, with the warehouses adjoining, to all importing merchants, free of charge—would this be a proper application of the public money? Surely not. Let the expense of procuring commodities be borne by the consumers of those commodities: they will then be the more frugal in their consumption; and let not the whole public be taxed to afford, without necessity, a separate advantage to a part.
Such precisely is the case of Singapore, Penang, and Malacca; but with this great aggravation, that as each of those settlements is confessedly only an entrepôt, the parties for whose benefit British money is expended, are, for the most part, not even British subjects. It may be true that the merchants, who resort thither, are generally subjects of Great Britain; but the system which exempts them from all share in the expense incurred specifically for their convenience, is a boon, not to them, but to the consumers of the goods, of which they are only the carriers. They are benefitted indeed, but it is only by that extension of business which proceeds from a diminution of price, and by being freed from the trouble and annoyance attendant on a custom-house. Whatever tax might be imposed upon them, would be ultimately paid by their customers; the people on the east side of the Gulf of Malacca, and those among the people on the west side, who consume goods brought from the east. If the duty were one or two per cent, (or whatever else might be a fair equivalent for the protection given, and the wharfs and warehouses afforded,) one or two per cent would be added to the price of European and Indian goods in the Eastern Archipelago, and one or two per cent to that of the goods carried from thence to Europe and India. The effect, therefore, of this mistaken application of the principle of free trade, is merely to occasion to the purchasers of such goods a saving of that amount. So far as concerns the goods which pass to the east of the Gulf, being exactly one half of all which touch at the settlements, the saving is purely to the nations of Eastern Asia. On the remaining half, our countrymen merely share the advantage with all other nations trading to the east.
We have entered into a somewhat minute examination of this question, not so much for the importance of the subject immediately before us, but rather because we were anxious to clear up the misunderstanding with respect to the scope and effect of the principle of free trade, by which Mr. Huskisson seems, in this instance, to have been misled. We earnestly deprecate the converting any phrase, however unobjectionable in itself, into a catch-word, because it is sure in that case to find its way into the mouths of many who do not understand, or do not attend to its accurate meaning. “Equality,” in a neighbouring nation, and “No Popery” in our own, originally meant nothing but what was innocent and laudable. If the inventors of these expressions had taken for their motto a principle instead of an abbreviation, the one phrase could never have been made a handle wherewith to exterminate men for being unequal to their neighbours, by superiority in riches or talents; nor the other a ground for persecuting the men, whose opinions only it was originally intended to condemn. Such disastrous effects are not likely to arise from any abuse of the terms “Free Trade;” but it is necessary, when that phrase is made use of, always to bear in mind that the real principle of legislation is that of allowing private interest to regulate wholly the disposition of private capital, and avoiding to give any factitious advantage to one employment of it over another. It is by this test alone that every proposition, be its object to free trade from restrictions, or to impose them, must ultimately be tried.
[* ]See Times, May 16. [William Wolryche Whitmore (1787-1858), Motion for a Committee to Inquire into the Trade between Great Britain and India, PD, 2nd ser., Vol. 17, cols. 814-15, reported on 16 May in The Times, p. 2, and in the Morning Chronicle, p. 2. The report in The Times does not contain the passages Mill cites below; that in the Morning Chronicle bears some resemblance to the quotations, but obviously Mill was using another, unidentified source.]
[1 ]Quoted in the report in the Morning Chronicle, but not in either The Times or PD.
[2 ]William Smith (1756-1835), Speech on Trade with India (15 May, 1827), PD, 2nd ser., Vol. 17, cols. 836-8.
[3 ]Quoted in the report in the Morning Chronicle.
[4 ]The reports of the Speech on Trade with India (15 May, 1827) by William Huskisson (1770-1830) in PD, The Times, and the Morning Chronicle, do not contain this passage.
[5 ]53 George III, c. 155 (1813) had (like the other Charter Acts) a twenty-year term.
[6 ]See Charles Wentworth-Fitzwilliam (1786-1857), Lord Milton, later 3rd Earl Fitzwilliam, Speech on Trade with India (15 May, 1827), The Times, 16 May, p. 2, and cf. Charles Ross (ca. 1800-60), Speech on Trade with India (15 May, 1827), PD, 2nd ser., Vol. 17, col. 836.
[7 ]Huskisson, speech of 15 May, The Times, 16 May, p. 2.
[9 ]Whitmore, motion of 15 May, Morning Chronicle, 16 May, p. 2.
[10 ]Huskisson, speech of 15 May, The Times, 16 May, p. 2.