McCulloch on the Corn Laws
Source: Cyclopedia of Political Science, Political Economy, and of the Political History of the United States by the best American and European Authors, ed. John J. Lalor (Chicago: M.B. Carey, 1899). 3 vols. Chapter: CORN LAWS.
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Hidden within the massive Lalor's Cyclopedia are some essays by important economists such as John Ramsay McCulloch (1789-1864) who was the leader of the Ricardian school following the death of Ricardo. He was a pioneer in the collection of economic statistics and was the first professor of political economy at the University of London in 1828. [The image comes from “The Warren J. Samuels Portrait Collection at Duke University.”] We have reproduced some of his essays from Lalor's Cyclopedia here in The Forum.
- BALANCE OF TRADE—J. R. M'CULLOCH and HUGH G. REID
- BILL OF EXCHANGE—J. R. M'CULLOCH and HUGH G. REID
- BROKERS—J. R. M'C.
- CANALS—J. R. M'C.
- COASTING TRADE—J. R. M'C.
- CORN LAWS.—J. R. M'C. and H. G. R.
- DRAWBACK—J. R. M'C. and H. G. R.
- HANSEATIC LEAGUE—J. R. M'CULLOCH AND H. G. REID
- SMUGGLING—J. R. M'CULLOCH
CORN LAWS. From the circumstance of corn forming, in England and most other countries, the principal part of the food of the people, the trade in it, and the laws by which the trade is regulated, are justly looked upon as of the highest importance. But this is not the only circumstance that renders it necessary to enter at some length into the discussion of this subject. Its difficulty is at least equal to its interest. The enactments made at different periods with respect to the corn trade, and the opinions advanced as to their policy, have been so very various and contradictory, that it is indispensable to submit them to some examination, and, if possible, to ascertain the principles which ought to pervade this department of commercial legislation.
—I. HISTORICAL SKETCH OF THE CORN LAWS. For a long time the regulations with respect to the corn trade were principally intended to promote abundance and low prices. But though the purpose was laudable, the means adopted for accomplishing it had, for the most part, a directly opposite effect. When a country exports corn, it seems, at first sight, as if nothing could do so much to increase her supplies as the prevention of exportation; and even in countries that do not export, its prohibition seems to be a prudent measure, and calculated to prevent the supply from being diminished, upon any emergency, below its natural level. These are the conclusions that immediately suggest themselves upon this subject; and it requires a pretty extensive experience, an attention to facts, and a habit of reasoning upon such topics, to perceive their fallacy. These, however, were altogether wanting when the regulations affecting the corn trade began to be introduced into Great Britain and other countries. They were framed in accordance with what were supposed to be the dictates of commonsense; and their object being to procure as large a supply of the prime necessary of life as possible, its exportation was either totally forbidden, or forbidden when the home price was above certain limits.
—The principle of absolute prohibition seems to have been steadily acted upon, as far as the turbulence of the period would admit, from the conquest to the year 1436, in the reign of Henry VI.; but at the last mentioned period an act was passed, authorizing the exportation of wheat whenever the home price did not exceed 6s. 8d. (equal in amount of pure silver to 12s. 108frac84;d. present money) per quarter, and barley when the home price did not exceed 3s. 4d. In 1463 an additional benefit was intended to be conferred on agriculture by prohibiting importation until the home price exceeded that at which exportation ceased. But the fluctuating policy of the times prevented these regulations from being carried into full effect, and, indeed, rendered them in a great measure inoperative.
—In addition to the restraints laid on exportation, it has been common in most countries to attempt to increase the supply of corn, not only by admitting its unrestrained importation from abroad, but by holding our extraordinary encouragement to the importers. This policy has not, however, been much followed in England. During the 500 years immediately posterior to the conquest, importation was substantially free; but it was seldom or never promoted by artificial means; and during the last century and a half it has, for the most part, been subjected to severe restrictions.
—Besides attempting to lower prices by prohibiting exportation, our ancestors attempted to lower them by proscribing the trade carried on by corn dealers. This most useful class of persons were looked upon with suspicion by every one. The agriculturists concluded that they would be able to sell their produce at higher prices to the consumers, were the corn dealers out of the way: while the consumers concluded that the profits of the dealers were made at their expense; and ascribed the dearths that were then very prevalent entirely to the practices of the dealers, or to their buying up corn and withholding it from market. These notions, which have still a considerable degree of influence, led to various enactments, particularly in the reign of Edward VI., by which the freedom of the internal corn trade was entirely suppressed. The engrossing of corn, or the buying of it in one market with intent to sell it again in another, was made an offense punishable by imprisonment and the pillory; and no one was allowed to carry corn from one part to another without a license, the privilege of granting which was confided by a statute of Elizabeth to the quarter sessions. But as the principles of commerce came to be better understood, the impolicy of these restraints gradually grew more and more obvious. They were considerably modified in 1624; and in 1663 the engrossing of corn was declared to be legal so long as the price did not exceed 48s. per quarter (15 Ch. II., c. 7); an act which, as Adam Smith has justly observed, has with all its imperfections done more to promote plenty than any other law in the statute book. In 1773 the last remnant of the legislature enactments restraining the freedom of the internal corn dealers was entirely repealed. But the engrossing of corn has, notwithstanding, been since held to be an offense at common law; and so late as 1800, a corn dealer was convicted of this imaginary crime. He was not, however, brought up for judgment; and it is not very likely that any similar case will ever again occupy the attention of the courts.
—The acts of 1436 and 1463, regulating the prices when exportation was allowed and when importation was to cease, continued, nominally at least, in force till 1562, when the prices at which exportation might take place were extended to 10s. for wheat and 6s. 8d. for barley. But a new principle—that of imposing duties on exportation—was soon after introduced; and in 1571 it was enacted that wheat might be exported, paying a duty of 2s. per quarter, and barley and other grain a duty of 1s. 4d., whenever the home price of wheat did not exceed 20s. per quarter, and barley and malt 12s. At the restoration the limit at which exportation might take place was very much extended; but as the duty on exportation was, at the same time, so very high as to be almost prohibitory, the extension was of little or no service to the agriculturists. This view of the matter seems to have been speedily taken by the legislature; for in 1663 the high duties on exportation were taken off, and an ad valorem duty imposed in their stead, at the same time that the limit of exportation was extended. In 1670 a still more decided step was taken in favor of agriculture; an act being then passed which extended the exportation price to 53s. 4d. per quarter for wheat, and other grain in proportion, imposing at the same time prohibitory duties on the importation of wheat till the price rose to 53s. 4d., and a duty of 8s. between that price and 80s. But the real effects of this act were not so great as might have been anticipated. The extension of the limit of exportation was rendered comparatively nugatory in consequence of the continuance of the duties on exportation caused by the necessities of the crown; while the want of any proper method for the determination of prices went far to nullify the prohibition of importation.
—At the accession of William III. a new system was adopted. The interests of agriculture were then looked upon as of paramount importance; and to promote them, not only were the duties on exportation totally abolished, but it was encouraged by the grant of a bounty of 5s. on every quarter of wheat exported, while the price continued at or below 48s.; of 2s. 6d. on every quarter of barley or malt, while their respective prices did not exceed 24s.; and of 3s. 6d. on every quarter of rye, when its price did not exceed 32s. (1 Wm. and Mary, c. 12.) A bounty of 2s. 6d. per quarter was subsequently given upon the exportation of oats and oatmeal, when the price of the former did not exceed 15s. per quarter. Importation continued to be regulated by the act of 1670.
—Much diversity of opinion has been entertained with respect to the policy of the bounty. That it was intended to raise the price of corn is clear, from the words of the statute, which states "that the exportation of corn and grain into foreign parts, when the price thereof is at a low rate in this kingdom, hath been a great advantage not only to the owners of land, but to the trade of the kingdom in general; therefore," etc. But admitting this to have been its object, it has been contended that the low prices which prevailed during the first half of last century show that its real effect was precisely the reverse; and that, by extending tillage, it contributed to reduce prices. It will be afterward shown that this could not really be the case; and the fall of prices may be sufficiently accounted for by the improved state of agriculture, the gradual consolidation of farms, the diminution of sheep husbandry, etc., combined with the slow increase of the population. In point of fact, too, prices had begun to give way 30 years before the bounty was granted, and the fall was equally great in France, where, instead of exportation being encouraged by a bounty, it was almost entirely prohibited, and in most other continental states. (For proofs of what is now stated, see the article "Corn Laws," in the new edition of the Encyc. Brit.)
—With some few exceptions, there was, during the first 66 years of last century, a large export of corn from England. In 1750 the wheat exported amounted to 947,000 quarters; and the total bounties paid during the 10 years from 1740 to 1751 reached the sum of £1,515,000. But the rapid increase of population subsequently to 1760, and particularly after the peace of Paris, in 1763, when the commerce and manufactures of the country were extended in an unprecedented degree, gradually reduced this excess of exportation, and occasionally, indeed, inclined the balance the other way. This led to several suspensions of the restrictions on importation; and at length, in 1773, a new act was framed, by which foreign wheat was allowed to be imported on paying a nominal duty of 6d. whenever the home price was at or above 48s. per quarter, and the bounty and exportation were together to cease when the price was at or above 44s. The bounty amounted to 5s. on every quarter of wheat; 2s. 6d. on every quarter of barley; 3s. 6d. on every quarter of rye; and 2s. 6d. on every quarter of oats. This statute also permitted the importation of corn at any price, duty free, in order to be again exported, provided it were in the meantime lodged under the joint locks of the king and the importer.
—The prices when exportation was to cease by this act seem to have been fixed too low; and, as Adam Smith has observed, there appears a good deal of impropriety in prohibiting exportation altogether the moment it attained the limit when the bounty given to force it was withdrawn; yet, with all these defects, the act of 1773 was a material improvement on the former system, and ought not to have been altered unless to give greater freedom to the trade.
—The idea that this law must, when enacted, have been injurious to the agriculturists, seems altogether illusory: the permission to import foreign grain, when the home price rose to a moderate height, certainly prevented their realizing exorbitant profits in dear years, at the expense of the other classes; and prevented an unnatural proportion of the capital of the country from being turned toward agriculture. But as the limit at which importation at a nominal duty was allowed was fixed a good deal above the average price of the reign of George II., it can not be maintained that it had any tendency to reduce previous prices, which is the only thing that could have discouraged agriculture: and, in fact, no such reduction took place.
—It is true that but for this act England would not have imported so much foreign grain in the interval between 1773 and 1791. This importation, however, was not a consequence of the decline of agriculture; for it is admitted that every branch of rural economy was more improved in that period than in the whole of the preceding century; but arose entirely from a still more rapid increase of the manufacturing population, and hence of the effective demand for corn. In 1772 the balance on the side of wheat imported amounted to 18,515 quarters; and in 1773, 1774 and 1775, all years of great prosperity, the balance was very much increased. But the loss of a great part of England's colonial possessions, the stagnation of commerce, and difficulty of obtaining employment, occasioned by the American war, diminished the consumption; and this, combined with unusually productive harvests, rendered the balance high on the side of exportation in 1778, 1779 and 1780. In 1783 and 1784 the crops were unusually deficient, and considerable importations took place, but in 1785, 1786 and 1787 the exports again exceeded the imports; and it was not till 1788, when she had fully recovered from the effects of the American war, and when manufacturing improvements were carried on with extraordinary spirit, that the imports permanently overbalanced the exports.
—Her growing wealth and commercial prosperity had thus, by increasing the population and enabling individuals to consume additional quantities of food, caused the home supply of corn to fall somewhat short of the demand; but it must not, therefore, be concluded that agriculture had not at the same time been very greatly meliorated. "The average annual produce of wheat," says Mr. Comber, "at the beginning of the reign of George III. (1760), was about 3,800,000 quarters, of which about 300,000 had been sent out of the kingdom, leaving about 3,500,000 for home consumption. In 1773 the produce of wheat was stated in the house of commons to be 4,000,000 quarters, of which the whole, and above 100,000 imported, were consumed in the kingdom. In 1796 the consumption was stated by lord Hawkesbury to be 500,000 quarters per month, or 6,000,000 quarters annually, of which about 180,000 were imported; showing an increased produce in about 20 years of 1,820,000 quarters. It is evident, therefore, not only that no defalcation of produce had taken place in consequence of the cessation of exportation, as has been too lightly assumed from the occasional necessity of importation, but that it had increased with the augmentation of our commerce and manufactures." (Comber on National Subsistence, p. 180.)
—These estimates are, no doubt, very loose and unsatisfactory; but the fact of a great increase of produce having taken place is unquestionable. In a report by a committee of the house of commons on the state of the waste lands, drawn up in 1797, the number of acts passed for inclosing, and the number of acres inclosed, in the following reigns, are thus stated: In the reign of queen Anne, 2 acts, 1,439 acres; reign of George I., 16 acts, 17,960 acres; reign of George II., 226 acts, 318,778 acres; reign of George III. to 1797, 1,532 acts, 2,804,197 acres.
—It deserves particular notice, that from 1771 to 1791, both inclusive, the period during which the greater number of these improvements were effected, there was no rise of prices.
—The landholders, however, could not but consider the liberty of importation granted by the act of 1773 as injurious to their interests, inasmuch as it prevented prices from rising with the increased demand. A clamor, therefore, was raised against that law, and in addition to this interested feeling, a dread of becoming habitually dependent on foreign supplies operated on many, and produced a pretty general acquiescence in the act of 1791. By this act the price when importation could take place from abroad at the low duty of 6d. was raised to 54s., under 54s and above 50s. a middle duty of 2s. 6d., and under 50s. a prohibiting duty of 24s. 3d. was exigible. The bounty continued as before, and exportation without bounty was allowed to 46s. It was also enacted that foreign wheat might be imported, stored under the king's lock, and again exported free of duty; but if sold for home consumption, it became liable to a warehouse duty of 2s. 6d. in addition to the ordinary duties payable at the time of sale.
—In 1797 the bank of England obtained an exemption from paying in specie, and the consequent facility of obtaining discounts and getting a command of capital, which this measure occasioned, gave a fresh stimulus to agriculture, the efficacy of which was most powerfully assisted by the scarcity and high prices of 1800 and 1801. Inasmuch, however, as the prices of 1804 would not allow the cultivation of the poor soils, which had been broken up in the dear years, to be continued, a new corn law was loudly called for by the farmers, and passed in 1804. This law imposed a prohibitory duty of 24s. 3d. per quarter on all wheat imported when the home price was at or below 63s.; between 63s. and 66s. a middle duty of 2s. 6d. was paid, and above 66s. a nominal duty of 6d. The price at which the bounty was allowed on exportation was extended to 50s., and exportation without bounty to 54s. By the act of 1791 the maritime counties of England were divided into 12 districts, importation and exportation being regulated by the particular prices of each; but by the act of 1804 they were regulated, in England by the aggregate average of the maritime districts, and in Scotland by the aggregate average of the four maritime districts into which it was divided. The averages were taken four times a year, so that the ports could not be open or shut for less than three months. This manner of ascertaining prices was modified in the following session; it being then fixed that importation, both in England and Scotland, should be regulated by the average price of the 12 maritime districts of England.
—In 1805 the crop was very considerably deficient, and the average price of that year was about 22s. per quarter above the price at which importation was allowed by the act of 1804. As the depreciation of paper compared with bullion was at that time only four per cent., the high price of that year must have been principally owing to the new law preventing importation from abroad till the home price was high, and then fettering mercantile operations, and to the formidable obstacles which the war threw in the way of importation. In 1806, 1807 and 1808, the depreciation of paper was nearly 3 per cent.; and the price of wheat in those years being generally from 66s. to 75s., the importations were but small. Several impolitic restraints had been for a long time imposed on the free importation and exportation of corn between Great Britain and Ireland, but they were wholly abolished in 1806; and the act of that year (46 Geo. III., c. 97), establishing a free trade in corn between the two great divisions of the empire, was not only a wise and proper measure in itself, but has powerfully contributed to promote the general advantage. From autumn, 1808, to spring, 1814, the depreciation of the currency was unusually great; and several crops in that interval being likewise deficient, the price of corn, influenced by both causes, rose to a surprising height. At that time no vessel could be laden in any continental port for England without purchasing a license, and the freight and insurance were at least five times as high as during peace. But the destruction of Napoleon's anti-commercial system, in the autumn of 1813, having increased the facilities of importation, a large quantity of corn was poured into the kingdom; and in 1814 its bullion price fell below the price at which importation was allowed.
—Before this fall of price, a committee of the house of commons had been appointed to inquire into the state of the laws affecting the corn trade, and recommended in their report (May 11, 1813) a very great increase of the prices at which exportation was allowable, and when importation free of duty might take place. This recommendation was not, however, adopted by the house; but the fact of its having been made when the home price was at least 112s. per quarter displayed a surprising solicitude to exclude foreigners from all competition with the home growers.
—The wish to lessen the dependence of the country on foreign supplies formed the sole ostensible motive by which the committee of 1813 had been actuated in proposing an alteration in the act of 1804. But after the fall of price in autumn, 1813, and in the early part of 1814, it became obvious, on comparing the previous prices with those of the continent, that without an alteration of the law in question this dependence would be a good deal increased; that a considerable extent of such poor lands as had been brought into cultivation during the high prices would be again thrown into pasturage; and that the rents would be lowered. These consequences alarmed the landlords and occupiers; and in the early part of the session of 1814 a series of resolutions were voted by the house of commons, declaring that it was expedient to repeal the bounty, to permit the free exportation of corn, whatever might be the home price, and to impose a graduated scale of duties on the importation of foreign corn. Thus, foreign wheat imported when the home price was at or under 64s. was to pay a duty of 24s.; when at or under 65s. a duty of 23s.; and so on until the home price should reach 86s., when the duty was reduced to 1s., at which sum it became stationary. Corn imported from Canada, or from the other British colonies in North America, was to pay one-half the duties on other corn. As soon as these resolutions had been agreed to, two bills founded on them—one for regulating the importation of foreign corn, and another for the repeal of the bounty, and for permitting unrestricted exportation—were introduced. Very little attention was paid to the last of these bills; but the one imposing fresh duties on importation encountered a very keen opposition. The manufacturers and every class not directly supported by agriculture, stigmatized it as an unjustifiable attempt artificially to keep up the price of food, and to secure excessive rents and large profits to the landholders and farmers at the expense of the consumers. Meetings were very generally held, and resolutions entered into, strongly expressive of this sentiment, and dwelling on the fatal consequences which, it was affirmed, a continuance of the high prices would have on manufactures and commerce. This determined opposition, coupled with the indecision of ministers, and perhaps, too, with an expectation on the part of some of the landholders that prices would rise without any legislative interference, caused the miscarriage of this bill. The other bill, repealing the bounty, and allowing an unlimited freedom of exportation, was passed into a law.
—Committees had been appointed in 1814, by both houses of parliament, to examine evidence and report on the state of the corn trade; and, in consequence, a number of the most eminent agriculturists were examined. The witnesses were unanimous in this only: that the protecting prices in the act of 1804 were insufficient to enable the farmers to make good the engagements into which they had subsequently entered, and to continue the cultivation of the inferior lands lately brought under tillage. Some of them thought that 120s. should be fixed as the lowest limit at which the importation of wheat free of duty should be allowed; others varied from 90s. to 100s., from 80s. to 90s. and a few from 70s. to 80s. The general opinion, however, seemed to be that 80s. would suffice; and as prices continued to decline, a set of resolutions founded on this assumption were submitted to the house of commons by Mr. Robinson, of the board of trade (afterward lord Ripon); and having been agreed to, a bill founded on them was, after a very violent opposition, carried in both houses, by immense majorities, and finally passed into a law (55 Geo. III., c. 26). According to this act all sorts of foreign corn, meal or flour might be imported at all times free of duty into any port of the United Kingdom, in order to be warehoused; but foreign corn was not permitted to be imported for home consumption, except when the average prices of the several sorts of British corn were as follows: viz., wheat, 80s. per quarter; rye, peas, and beans, 53s., barley, bear, or bigg, 40s.; and oats, 26s.; and all importation of corn from any of the British plantations in North America was forbidden except when the average home prices were at or under—wheat, 67s. per quarter; rye, peas, and beans, 44s.; barley, bear, or bigg, 33s.; and oats, 22s.
—The agriculturists confidently expected that this act would immediately raise prices, and render them steady at about 80s. But, for reasons which will be afterward stated, these expectations were entirely disappointed; and a more ruinous fluctuation of prices took place during the period it was in existence than in any previous period of her recent history. In 1821, when prices had sunk very low, a committee of the house of commons was appointed to inquire into the causes of the depressed state of agriculture, and to report their observations thereon. This committee after examining a number of witnesses, drew up a report, which, though not free from error, is a valuable document. It contains a forcible exposition of the pernicious influence of the law of 1815, of which it suggested several important modifications. These, however, were not adopted; and as the low prices, and consequent distress of the agriculturists, continued, the subject was brought under the consideration of parliament in the following year. After a good deal of discussion, a new act was then passed (3 Geo. IV., c. 60) which enacted, that, after prices had risen to the limit of free importation fixed by the act of 1815, that act was to cease and the new statute to come into operation. This statute lowered the prices fixed by the act of 1815, at which importation could take place for home consumption, to the following sums, viz:
|For Corn not of the
in North America.
|For Corn of the
in North America.
|per quarter.||per quarter.|
|Rye, peas, and beans...||46s.||39s.|
|Barley, bear, or bigg...||35s.||30s.|
But, in order to prevent any violent oscillation of prices from a large supply of grain being suddenly thrown into the market, it was enacted that a duty of 17s. per quarter should be laid on all wheat imported from foreign countries, during the first three months after the opening of the ports, if the price was between 70s. and 80s. per quarter, and of 12s. afterward; that if the price was between 80s. and 85s., the duty should be 10s. for the first three months, and 5s. afterward; and that if the price should exceed 85s., the duty should be constant at 1s.; and proportionally for other sorts of grain.
—This act, by preventing importation until the home price rose to 70s., and then loading the quantities imported between that limit and the limit of 85s with heavy duties, was certainly more favorable to the views of the agriculturists than the act of 1815. But, unluckily for them, the prices of no species of corn, except barley, were sufficiently high, while this act existed, to bring it into operation.
—In 1825 the first approach was made to a better system by permitting the importation of wheat from British North America, without reference to the price at home, on payment of a duty of 5s. per quarter. But this act was passed with difficulty, and was limited to one year's duration.
—Owing to the drought that prevailed during the summer of 1826, there was every prospect that there would be a great deficiency in the crops of that year; and in order to prevent the disastrous consequences that might have taken place, had importation been prevented until the season was too far advanced for bringing supplies from the great corn markets in the north of Europe, his majesty was authorized to admit 500,000 quarters of foreign wheat on payment of such duties as the order in council for its importation should declare. And when it was ascertained that the crops of oats, peas, etc., were greatly below an average, ministers issued an order in council, on their own responsibility, on Sept. 1, authorizing the immediate importation of oats on payment of a duty of 2s. 2d. per boll; and of rye, peas and beans on payment of a duty of 3s. 6d. per quarter. A considerable quantity of oats was imported under this order, the timely appearance of which had undoubtedly a very considerable effect in mitigating the pernicious consequences arising from the deficiency of that species of grain. Ministers obtained an indemnity for this order on the subsequent meeting of parliament.
—Nothing could more strikingly evince the impolicy of the acts of 1815 and 1822 than the necessity, under which the legislature and government had been placed, of passing the temporary acts and issuing the orders referred to. The more intelligent portion of the agriculturists began, at length, to perceive that the corn laws were not really calculated to produce the advantages that they had anticipated; and a conviction that increased facilities should be given to importation became general throughout the country. The same conviction made considerable progress in the house of commons; so much so, that several members who supported the measures adopted in 1815 and 1822 expressed themselves satisfied that the principle of exclusion had been carried too far, and that a more liberal system should be adopted. Ministers having participated in these sentiments, Mr. Canning moved a series of resolutions, as the foundation of a new corn law, on March 1, 1827, to the effect that foreign corn might always be imported, free of duty, in order to be warehoused; and that it should always be admissible for home consumption upon payment of certain duties. Thus, in the instance of wheat, it was resolved that, when the home price was at or above 70s. per quarter, the duty should be a fixed one of 1s.; and that for every shilling that the price fell below 70s. a duty of 2s. should be imposed; so that when the price was at 69s. the duty on importation was to be 2s., when at 68s. the duty was to be 4s., and so on. The limit at which the constant duty of 1s. per quarter was to take place in the case of barley was originally fixed at 37s.; but it was subsequently raised to 40s., the duty increasing by 1s. 6d. for every 1s. when the price fell below that limit. The limit at which the constant duty of 1s. per quarter was to take place in case of oats was originally fixed at 28s.; but it was subsequently raised to 33s., the duty increasing at the rate of 1s. per quarter for every shilling that the price fell below that limit. The duty on colonial wheat was fixed at 6d. per quarter when the home price was above 65s.; and when the price was under that sum the duty was constant at 5s.; the duties on other descriptions of colonial grain were similar. These resolutions were agreed to by a large majority; and a bill founded on them was subsequently carried through the house of commons. Owing, however, to the change of ministers, which took place in the interim, several peers, originally favorable to the bill, and some, even, who assisted in its preparation, saw reason to become among its most violent opponents; and a clause moved by the duke of Wellington, interdicting all importation of foreign corn until the home price exceeded 66s., having been carried in the lords, ministers gave up the bill, justly considering that such a clause was entirely subversive of its principle.
—A new set of resolutions with respect to the corn trade were brought forward in 1828 by Mr. Charles Grant (afterward lord Glenelg). They were founded on the same principles as those which had been rejected during the previous session. But the duty was not made to vary equally, as in Mr. Canning's resolutions, with every equal variation of price; it being 23s. 8d. when the home price was 64s. the imperial quarter, 16s. 8d. when it was 69s., and 1s. only when it was at or above 73s. After a good deal of debate Mr. Grant's resolutions were carried, and embodied in the act 9 Geo. IV., c. 60.
—The crops having been deficient in 1829 and 1830, there was a large importation of corn in these years, its average price being at the same time about 65s. per quarter. But the crops from 1831 to 1836 having been more than usually abundant, importation almost wholly ceased, and the price of wheat sunk in 1835 to 39s. 4d. per quarter, being less than it had been in any previous year since 1776. In consequence of this succession of good harvests and low prices, the corn laws ceased for awhile to attract any considerable portion of the public attention, and an impression began to gain ground that the improvement of agriculture was so rapid that, despite the increase of population, and the existence of the corn laws, prices in England would fall to about the level of those of the continent. But the cycle of favorable seasons having terminated in 1837, the crops of that and the succeeding five years were considerably deficient; so much so that prices rose in 1839 to 70s. 8d. per quarter, the importations in that and the three following years being also very large. This increase in the price of corn, combined with the depressed state of the commerce of the country, originating in the pecuniary revulsion in the United States and other causes, again attracted a great deal of attention to the corn laws; and the oppressive magnitude and injurious operation of the duties were very strongly animadverted upon at public meetings in the manufacturing towns and elsewhere. An association, denominated the anti-corn law league, originally founded in Lancashire, but which subsequently extended its ramifications to most parts of the country, was set on foot for the express purpose of keeping up an incessant agitation against the corn laws, which, in consequence of these concurring circumstances, were assailed with greater bitterness than ever. The importance of the subject at length forced it on the attention of government, and in 1841 ministers, actuated partly by a sense of the mischievous influence of the sliding scale, and partly by a wish to strengthen their declining popularity, brought forward a plan for remodeling the corn laws, by repealing the sliding scale and imposing in its stead a constant duty of 8s. per quarter on wheat, and in proportion on other grain. But, having no majority in parliament, ministers were obliged to resort to a dissolution; and their proposal having, notwithstanding its moderation, excited the greatest apprehensions among the agriculturists, without being very warmly supported by the other classes, a new parliament was returned, which gave a decided majority to the opposition. It was, nevertheless, felt on all hands to be necessary to make some considerable change in the existing law, and in 1842 a measure was introduced in that view by Sir Robert Peel, which was subsequently passed into a law, 5 Vict., 2nd sess., c. 14.
—Unfortunately, however, this measure, like that by which it was preceded, was bottomed on the principle of making the duties vary with the variations in the price of corn; and though the duties were decidedly less oppressive than those imposed by the 9 Geo. IV., c. 60, still they were in no ordinary degree objectionable, as well from their too great magnitude as from their adding to the natural insecurity of the corn trade, and increasing the chances and severity of fluctuations. It is not, therefore, to be wondered at that the new measure gave but little satisfaction. Instead of being abated, the agitation and clamor against the corn laws continued progressively to gain strength; and the conviction began at the same time gradually to extend itself among many of those by whom these laws had hitherto been supported, that further modifications would have to be made in them, and that they might be made without inflicting any very serious injury upon agriculture.
—This conviction was greatly strengthened by the result of the important changes made by Sir Robert Peel in the tariff in 1842, and more especially by those which had reference to the importation of live cattle and fresh provisions. These had previously been prohibited; but the minister proposed that this prohibition should be repealed, and that their importation should be permitted under reasonable duties. This proposal, when first brought forward, excited the greatest apprehensions among the farmers and graziers, and was followed by an immediate fall in the price of cattle. Happily, however, the measure was carried, and it was speedily discovered that there was no such difference between the prices of cattle of the same quality here and in the adjacent parts of the continent as had been supposed; and that the fears entertained by agriculturists of the approaching ruin of the businesses of breeding and grazing were altogether visionary and unfounded. The experience afforded by the reduction and subsequent abolition of the duty on wool was exactly similar. Instead of being injured, the interests of the British sheep farmers have been most materially promoted by these measures; the demand for homegrown wool having been rendered comparatively steady, and its price considerably increased by the powerful stimulus which the change in the duty on foreign wool gave to the woolen manufacture.
—In the following year, that is, in 1843, a measure was adopted which made a wide breach in the corn laws. In 1842 the legislature of Canada passed a law imposing a duty of 3s. per quarter on all wheat imported into the province, unless from the United Kingdom, stating in the preamble to this act that it was passed in the expectation and belief that a corresponding reduction would be made in the duties on wheat and wheat flour imported into the United Kingdom from Canada. And conformably to this anticipation, the act 6 and 7 Vict., c. 29, passed in the course of 1843, reduced the duty on wheat imported from Canada to 1s. per quarter, and proportionally on wheat flour. This act met with much opposition from a part of the agricultural interests in England, who contended that it would lead to the introduction of unlimited supplies of corn from the United States at a duty of only 4s. per quarter, or, allowing for smuggling, at perhaps only half that amount. But experience showed that these anticipations were not likely to be realized; for, though the imports from Canada were materially increased, the obstacles in the way of the importation of corn from the United States into Canada, and the danger and expense of the voyage from Montreal or Quebec to England, must necessarily have prevented the importation through this channel from ever becoming of much importance. Still, however, the measure was in so far an abandonment of the corn laws; and if she was justified in admitting the produce of the United States to her markets in this indirect way, it was not easy to discover satisfactory grounds on which to exclude the produce of other states.
—The success of the measures adopted in 1842 encouraged Sir Robert Peel to attempt still more considerable changes in 1845, when he totally abolished the customs duties on no fewer than 420 different articles, some of which were of very considerable importance. The measures then adopted were equivalent, in fact, to the virtual abandonment of the protective system; and under such circumstances it could not be expected that the corn laws, on which so serious an inroad had been made by the Canada act, would be able to maintain their place on the statute book for any very lengthened period.
—They might, however, have been continued for some time longer, had not the unsatisfactory corn harvest, and the failure of the potato crop of 1845, made it necessary to adopt measures for averting the anticipated deficiency in the supplies of food. Under the critical circumstances in which the population was then believed to be placed, the temporary suspension of the corn laws could hardly have been avoided; but if once suspended, their reenactment would have been all but impossible, and it was better by at once providing for their repeal to make an end of the system, and of the dissatisfaction and agitation to which it had given birth, than to endeavor to continue it in any modified shape. Such was the view of the matter taken by Sir Robert Peel, and he fortunately succeeded, despite difficulties that none else could have overcome, in carrying the act 9 and 10 Vict., c. 22, for the immediate modification of the corn laws, and for their total repeal at the end of three years, or on Feb. 1, 1849.
—II. PRINCIPLES OF THE CORN LAWS.—1. Internal Corn Trade. It is needless to take up the reader's time by endeavoring to prove by argument the advantage of allowing the free conveyance of corn from one province to another. Every one sees that this is indispensable, not only to the equal distribution of the supplies of food over a country, but to enable the inhabitants of those districts that are best fitted for the raising and fattening of cattle, sheep, etc., to addict themselves to these or other necessary occupations not directly connected with the production of corn. We shall, therefore, confine the few remarks we have to make on this subject to the consideration of the influence of the speculations of the English corn merchants in buying up corn in anticipation of an advance. Their proceedings in this respect, though of the greatest public utility, have been the principal causes of that odium to which they have been long exposed.
—Were harvests always equally productive, nothing would be gained by storing up supplies of corn; and all that would be necessary would be to distribute the crop equally throughout the country and throughout the year. But such is not the order of nature. The variations in the aggregate produce of a country in different seasons, though not perhaps so great as are commonly supposed, are still very considerable; and experience has shown that two or three unusually luxuriant harvests seldom take place in succession; or that when they do they are invariably followed by those that are deficient. Speculators in corn anticipate this result. Whenever prices begin to give way in consequence of an unusually luxuriant harvest, speculation is at work. The more opulent farmers withhold either the whole or a part of their produce from market; and the more opulent dealers purchase largely of the corn brought to market and store it up in expectation of a future advance. And thus, without intending to promote any one's interest but their own, speculators in corn become the benefactors of the public. They provide a reserve stock against those years of scarcity which are sure at no distant period to recur; while, by withdrawing a portion of the redundant supply from immediate consumption, prices are prevented from falling so low as to be injurious to the farmers, or at least are maintained at a higher level than they would otherwise have reached; provident habits are maintained among the people; and that waste and extravagance are checked which always take place in plentiful years, but which would be carried to a much greater extent if the whole produce of an abundant crop were to be consumed within the season.
—It is, however, in scarce years that the speculations of corn merchants are principally advantageous. Even in the richest countries a very large proportion of the individuals engaged in the business of agriculture are comparatively poor, and are totally without the means of withholding their produce from market in order to speculate upon any future advance. In consequence the markets are always most abundantly supplied with produce immediately after harvest; and in countries where the merchants engaged in the corn trade are not possessed of large capitals, or where their proceedings are fettered and restricted, there is then, almost invariably, a heavy fall of prices. But as the vast majority of the people buy their food in small quantities, or from day to day, as they want it, their consumption is necessarily extended or contracted according to its price at the time. Their views do not extend to the future; they have no means of judging whether the crop is or is not deficient. They live, as the phrase is, from hand to mouth, and are satisfied if, in the meantime, they obtain abundant supplies at a cheap rate. But it is obvious, that were there nothing to control or counteract this improvidence, the consequence would very often be fatal in the extreme. The crop of one harvest must support the population till the crop of the other harvest has been gathered in; and if that crop should be deficient—if, for instance, it should only be adequate to afford, at the usual rate of consumption, a supply of 9 or 10 months' provisions instead of 12—it is plain that, unless the price were so raised immediately after harvest as to enforce economy, and put, as it were, the whole nation on short allowance, the most dreadful famine would be experienced previously to the ensuing harvest. Those who examine the accounts of the prices of wheat and other grain in England, collected by bishop Fleetwood and Sir F. M. Eden, will meet with abundant proofs of the accuracy of what has now been stated. In those remote periods when the farmers were generally without the means of withholding their crops from market, and when the trade of a corn-dealer was proscribed, the utmost improvidence was exhibited in the consumption of grain. There were then, indeed, very few years in which a considerable scarcity was not experienced immediately before harvest, and many in which there was an absolute famine. The fluctuations of price exceeded everything of which we can now form an idea; the price of wheat and other grain being four or five times as high in June and July as in September and October. Thanks, however, to the increase of capital in the hands of the large farmers and dealers, and to the freedom given to the operations of the corn merchants, we are no longer exposed to such ruinous vicissitudes. Whenever the dealers, who, in consequence of their superior means of information are better acquainted with the real state of the crops than any other class of persons, find the harvest likely to be deficient, they raise the price of the corn they have warehoused, and bid against each other for the corn which the farmers are bringing to market. In consequence of this rise of prices, all ranks and orders, but especially the lower, who are the great consumers of corn, find it indispensable to use greater economy, and to check all improvident and wasteful consumption. Every class being thus immediately put upon short allowance, the pressure of the scarcity is distributed equally throughout the year; and instead of indulging, as was formerly the case, in the same scale of consumption as in seasons of plenty, until the supply became altogether deficient, and then being exposed without resource to the attacks of famine and pestilence, the speculations of the corn merchants warn us of our danger, and compel us to provide against it.
—It is not easy to suppose that these proceedings of the corn merchants should ever be injurious to the public. It has been said that in scarce years they are not disposed to bring the corn they have purchased to market until it has attained an exorbitant price, and that the pressure of the scarcity is thus often very much aggravated; but there is no real ground for any such statement. The immense amount of capital required to store up any considerable quantity of corn, and the waste to which it is liable, render most holders disposed to sell as soon as they can realize a fair profit. In every extensive country in which the corn trade is free, there are infinitely too many persons engaged in it to enable any sort of combination or concert to be formed among them; and though it were formed, it could not be maintained for an instant. A large proportion of the farmers and other small holders of corn are always in straitened circumstances, more particularly if a scarce year has not occurred so soon as they expected; and they are consequently anxious to relieve themselves, as soon as prices rise, of a portion of the stock on their hands. Occasionally, indeed, individuals are found who retain their stocks for too long a period, or until a reaction takes place, and prices begin to decline. But instead of joining in the popular cry against such persons, every one who takes a dispassionate view of the matter will perceive that, inasmuch as their miscalculation must, under the circumstances supposed, be exceedingly injurious to themselves, there is the best security against its being carried to such an extent as to be productive of any material injury or even inconvenience to the public. It should also be borne in mind that it is rarely, if ever, possible to determine beforehand when a scarcity is to abate in consequence of new supplies being brought to market; and had it continued a little longer, there would have been no miscalculation on the part of the holders. At all events, it is plain that by declining to bring their corn to market, they preserved a resource on which, in the event of the harvest being longer delayed than usual, or of any unfavorable contingency taking place, the public could have fallen back; so that, instead of deserving abuse, these speculators are most justly entitled to every fair encouragement and protection. A country in which there is no considerable stock of grain in the barn-yards of the farmers, or in the warehouses of the merchants, is in the most perilous situation that can easily be imagined, and may be exposed to the severest privations, or even famine. But so long as the sagacity, the miscalculation, or the avarice of merchants and dealers retain a stock of grain in the warehouses, this last extremity can not take place. By refusing to sell it till it has reached a very high price, they put an effectual stop to all sorts of waste, and husband for the public those supplies which they could not have so frugally husbanded for themselves.
—We have already remarked that the last remnant of the shackles imposed by statute on the freedom of the internal corn dealer in England was abolished in 1773. It is true that engrossing, forestalling and regrating are still held to be offenses at common law; but there is very little probability of any one being in future made to answer for such ideal offenses.
—2. Exportation to Foreign Countries. The fallacy of the notion so long entertained, that the prevention of exportation was the surest method of increasing plenty at home, is obvious to every one who has reflected upon such subjects. The markets of no country can ever be steadily and plentifully supplied with corn unless her merchants have power to export the surplus supplies with which they may be occasionally furnished. When a country without the means of exporting grows nearly her own average supplies of corn, an abundant crop, by causing a great overloading of the market and a heavy fall of price, is as injurious to the farmer as a scarcity. It may be thought, perhaps, that the greater quantity of produce in abundant seasons will compensate for its lower price; but this is not the case. It is uniformly found that variations in the quantity of corn exert a much greater influence over prices than equal variations in the quantity of almost anything else offered for sale. Being the principal necessary of life, when the supply of corn happens to be less than ordinary the mass of the people make very great, though unavailing, exertions, by diminishing their consumption of other and less indispensable articles, to obtain their accustomed supplies of this prime necessary; so that its price rises much more than in proportion to the deficiency. On the other hand, when the supply is unusually large, the consumption is not proportionally extended. In ordinary years the bulk of the population is about adequately fed; and though the consumption of all classes be somewhat greater in unusually plentiful years, the extension is considerable only among the lowest classes, and in the feeding of horses. Hence it is that the increased supply at market, in such years, goes principally to cause a glut, and consequently a ruinous decline of prices. These statements are corroborated by the widest experience. Whenever there is an inability to export, from whatever cause it may arise, an unusually luxuriant crop is uniformly accompanied by a very heavy fall of price, and severe agricultural distress; and when two or three such crops happen to follow in succession, the ruin of a large proportion of the farmers is completed.
—If the mischiefs resulting from the want of power to export stopped here, they might, though very great, be borne; but they do not stop here. It is idle to suppose that a system ruinous to the producers can be otherwise to the consumers. A glut of the market, occasioned by luxuriant harvests and the want of power to export, can not be of long continuance; for, while it continues, it can hardly fail, by distressing all classes of farmers and causing the rain of many, to give a check to every species of agricultural improvement, and to lessen the extent of land in tillage. When, therefore, an unfavorable season recurs, the reaction is, for the most part, appalling. The supply, being lessened, not only by the badness of the season, but also by a diminution of the quantity of land in crop, falls very far below an average; and a severe scarcity, if not an absolute famine, is most commonly experienced. It is therefore clear, that if a country would render herself secure against famine and injurious fluctuations of price, she must give every possible facility to exportation in years of unusual plenty. If she act upon a different system—if her policy make exportation in such years impracticable or very difficult—she will infallibly render the bounty of Providence an injury to her agriculturists; and two or three abundant harvests in succession will be the forerunners of scarcity and famine.
—3. Bounty on the Exportation of Corn. In Great Britain, as already observed, not only was exportation permitted for a long series of years, but from the revolution down to 1815 a bounty was given on it whenever the home prices were depressed below certain limits. This policy, however, erred as much on the one hand as a restriction on exportation errs on the other. It caused, it is true, an extension of the demand for corn: but this greater demand was not caused by natural, but by artificial means; it was not a consequence of any really increased demand on the part of the foreigner, but of England furnishing the exporters of corn with a bonus, in order that they may sell it abroad below its natural price! To suppose that a proceeding of this sort can be a public advantage is equivalent to supposing that a shopkeeper may get rich by selling his goods below what they cost.
—4. Importation from Foreign Countries. If a country were, like Poland or Russia, uniformly in the habit of exporting corn to other countries, a restriction on importation would be of no material consequence; because, though such restriction did not exist, no foreign corn would be imported unless its ports were so situated as to serve for an entrepôt. A restriction on importation is sensibly felt only when it is enforced in a country which, owing to the greater density of its population, the limited extent of its fertile land, or any other cause, would either occasionally or uniformly import. It is familiar to the observation of every one, that a total failure of the crops is a calamity that but rarely occurs in an extensive kingdom; that the weather which is unfavorable to one description of soil is generally favorable to some other description; and that, except in anomalous cases, the total produce is not very different. But what is thus generally true of single countries, is always true of the world at large. History furnishes no single instance of a universal scarcity; but it is uniformly found, that when the crops in a particular country are unusually deficient, they are proportionally abundant in some other quarter. It is clear, however, that a prohibition of importation excludes the country which enacts it from profiting by this beneficent arrangement. She is thrown entirely on her own resources. Under the circumstances supposed, she has nothing to trust to for relief but the reserves in her warehouses; and should these be inadequate to meet the exigency of the crisis, there are apparently no means by which she can escape experiencing all the evils of scarcity, or, it may be, of famine. A country deprived of the power to import is unable to supply the deficiencies of her harvests by the surplus produce of other countries; so that her inhabitants may starve amidst surrounding plenty, and suffer the extreme of scarcity when, but for the restrictions on importation, they might enjoy the greatest abundance. If the prohibition be not absolute, but conditional—if, instead of absolutely excluding foreign corn from the home markets, it be merely loaded with a duty—the degree in which such duty will operate to increase the scarcity and dearth will depend on its magnitude. If the duty be constant and moderate, it may not have any very considerable effect in discouraging importation; but if it be fluctuating and heavy, it will, by falsifying the speculations of the merchants, and making a corresponding addition to the price of the corn imported, be proportionally injurious. In whatever degree foreign corn may be excluded in years of deficient crops, to the same extent must prices be artificially raised, and the pressure of the scarcity rendered so much the more severe.
—Such would be the disastrous influence of a restriction on importation in a country which, were there no such obstruction in the way, would sometimes import and sometimes export. But its operation would be infinitely more injurious in a country which, under a free system, would uniformly import a portion of her supplies. The restriction in this case has a two-fold operation. By preventing importation from abroad, and foreign the population to depend for subsistence on corn raised at home, it compels recourse to comparatively inferior soils; and thus, by increasing the cost of producing corn above its cost in other countries, adds proportionally to its average price. The causes of fluctuation are, in this way, increased in a geometrical proportion; for, while the prevention of importation exposes the population to the pressure of want whenever the harvest happens to be less productive than usual, it is sure, at the same time, by raising average prices, to hinder exportation in a year of unusual plenty, until the home prices fall ruinously low. It is obvious, therefore, that a restriction of this sort must be alternately destructive of the interests of the consumers and producers. It injures the former by making them pay, at an average, an artificially increased price for their food, and by exposing them to scarcity and famine whenever the home crop proves deficient; and it injures the latter by depriving them of the power to export in years of unusual plenty, and by overloading the market with produce which, under a free system, would have met with an advantageous sale abroad.
—The principle thus briefly explained shows the impossibility of permanently keeping up the home prices by means of restrictions on importation, at the same time that it affords a clue by which we may trace the causes of the most part of the agricultural distress experienced in England since the peace. The real object of the corn law of 1815 was to keep up the price of corn at about 80s per quarter; but to succeed in this, it was indispensable not only that foreign corn should be excluded when prices were under this limit, but that the markets should never be overloaded with corn produced at home: for it is clear, according to the principle already explained, that if the supply should in ordinary years be sufficient to feed the population, it must, in an unusually abundant year, be more than sufficient for that purpose; and when, in such a case, the surplus is thrown upon the market, it can not fail, in the event of the average prices being considerably above the level of those of the surrounding countries, to cause a ruinous depression. Now, this was the precise situation of England at the end of the war. Owing partly to the act of 1804, but far more to the difficulties in the way of importation, and the depreciation of the currency, prices attained to an extraordinary elevation from 1809 to 1814, and gave such a stimulus to agriculture, that she grew, in 1812 and 1813, sufficient corn for her own supply. And, such being the case, it is clear, though her ports had been hermetically sealed against importation from abroad, that the first luxuriant crop must have occasioned a ruinous decline of prices. It is the exclusion, not the introduction, of foreign corn that has caused the occasional distress of the agriculturists since 1815; for it is this exclusion that has forced up the price of corn there, in scarce and average years, to an unnatural level, and that, consequently, renders exportation in favorable seasons impossible without such a fall of prices as is most disastrous to the farmer. It may be mentioned, in proof of what is now stated, that the average price of wheat in England and Wales in 1814 was 74s. 4d. per quarter, and in 1815 it had fallen to 65s. 7d. But as these prices would not indemnify the occupiers of the poorest lands brought under tillage during the previous high prices, they were gradually relinquishing their cultivation. A considerable portion of them had been converted into pasture; rents had been generally reduced, and wages had begun to decline; but the legislature having laid additional restrictions on the importation of foreign corn, the operation of this natural principle of adjustment was unfortunately counteracted, and the price of 1816 rose to 78s. 6d. This rise was, however, insufficient to occasion any new improvement; and as foreign corn was now excluded, and large tracts of bad land had been thrown out of cultivation, the supply was so much diminished that, notwithstanding the increase in the value of money, prices rose in 1817, partly, no doubt, in consequence of the bad harvest of the previous year, to 96s. 11d; and in 1818 to 86s. 3d. These high prices had their natural effect. They revived the drooping spirits of the farmers, who imagined that the corn law was, at length, beginning to produce the effects anticipated from it, and that the golden days of 1812, when wheat sold for 126s. 6d. per quarter, were about to return! But this prosperity carried in its bosom the seeds of future mischief. The increased prices necessarily occasioned a fresh extension of tillage; capital was again applied to the improvement of the soil; and this increase of tillage, conspiring with favorable seasons and the impossibility of exportation, sunk prices to such a degree, that they fell, in October, 1822, so low as 38s. 1d., the average price of that year being only 44s. 7d.
—It is thus demonstrably certain that the recurrence of periods of distress, similar to those which have been experienced by English agriculturists since the peace, can not be wanted off by restricting or prohibiting importation. A free corn trade is the only system that can give that security against fluctuations that is so indispensable. The increased importation that necessarily takes place, under a free system, as soon as any considerable deficiency in the crops is apprehended, prevents prices from rising to an oppressive height; while, on the other hand, when the crops are unusually luxuriant, a ready outlet is found for the surplus in foreign countries, without its occasioning any very heavy fall. To expect to combine steadiness of prices with restrictions on importation is to expect to reconcile what is contradictory and absurd. The higher the limit at which the importation of foreign corn into a country like England is fixed, the greater is the oscillation of prices. If we would secure for ourselves abundance, and avoid fluctuation, we must renounce all attempts at exclusion, and be ready to deal in corn, as we ought to be in everything else, on fair and liberal principles.
—That the restrictions imposed by Great Britain on the foreign corn trade down to 1846 should not have been productive of more disastrous consequences than those that have actually resulted from them, is partly and principally to be ascribed to the unparalleled improvement of tillage in that country during that period, and partly also to the great increase that has taken place in the imports from Ireland. Previously to 1806, when a perfectly free corn trade between Great Britain and Ireland was for the first time established, the yearly imports did not amount to 400,000 quarters, whereas in 1866 they amounted to 1,523,460; and any one who has ever been in Ireland, or is aware of the wretched state of its agriculture, and of the fertility of the soil, must be satisfied that a slight improvement would occasion a great increase in her exports to England; and it is not improbable that the check that has been given to the pernicious practice of splitting farms, to the potato culture, and consequently to the increase of a pauper population, may eventually lead to material improvements. Hence it is by no means improbable, seeing the fall that has already taken place, that the rapid spread of improvement at home, and the growing imports from Ireland, may, at no distant period, reduce prices in England to the level of those of the continent, and even render her an occasionally exporting country. These, however, are contingent and uncertain results; and supposing them to be ultimately realized, the corn laws, had they been maintained on their old footing, would, in the meantime, have been productive of great inconvenience, and would have materially aggravated the misery inseparable from bad harvests.
—Nothing but the great importance of the subject could excuse us for dwelling so long on what is so very plain. To facilitate production, and to make commodities cheaper and more easily obtained, are the grand motives which stimulate the inventive powers, and which lead to the discovery and improvement of machines and processes for saving labor and diminishing cost; and it is plain that no system of commercial legislation deserves to be supported which does not conspire to promote the same objects; but a restriction on the importation of corn into a country like England, which has made a great comparative advance in population and manufacturing industry, is diametrically opposed to these principles. The density of her population is such, that the exclusion of foreign corn has obliged her to resort to soils of less fertility than those that are under cultivation in the surrounding countries; and, in consequence, the average prices there are comparatively high. The impolicy of this conduct is obvious. If she could, by laying out £1,000 on the manufacture of cottons or hardware, produce a quantity of these articles that would exchange for 500 quarters of American or Polish wheat; and if the same sum, were it expended in cultivation in England, would not produce more than 400 quarters; the prevention of importation would occasion an obvious sacrifice of 100 out of every 500 quarters consumed in the empire; or, which is the same thing, it would occasion an artificial advance of 20 per cent. in the price of corn. We do not mean to say that this statement exactly represents the amount of injury that was inflicted by the late corn laws; but, at all events, it clearly illustrates the principles which they embodied. But though plainly injurious to the public, it may seem, at first sight, as if this system were advantageous to the landlords. The advantage is, however, merely apparent; at bottom there is no real difference between the interests of the landlords and those of the rest of the community. It would be ridiculous, indeed, to imagine for a moment that the landlords could be benefited by a system in which those fluctuations of prices, so subversive of all agricultural prosperity, were inherent; but though these could have been got rid of, the result would have been the same. The prosperity of agriculture must always depend upon, and be determined by, the prosperity of other branches of industry; and any system which, like the corn laws, is injurious to the latter, can not but be injurious to the former. Instead of being publicly advantageous, high prices are in every case distinctly and completely the reverse. The smaller the sacrifice for which any commodity can be obtained, so much the better. When the labor required to produce, or the money required to purchase, a sufficient supply of corn is diminished, it is as clear as the sun at noon-day that more labor or money must remain to produce or purchase the other necessaries, conveniences and amusements of human life, and that the sum of national wealth and comforts must be proportionally augmented. Those who suppose that a rise of prices can ever be a means of improving the condition of a country might with equal reason, suppose that it would be improved by throwing its best soils out of cultivation, and destroying its most powerful machines. The opinions of such persons are not only opposed to the plainest and best established principles, but they are opposed to the obvious conclusions of common sense, and the universal experience of mankind.
—It would, however, be unjust not to mention that there has always been a large and respectable party among the landlords in Great Britain opposed to all restrictions on the trade in corn, and who have uniformly thought that their interests, being identified with those of the public, would be best promoted by the abolition of restrictions on importation. A protest expressive of this opinion, subscribed by 10 peers, was entered on the journals of the house of lords, against the corn law of 1815. It is said to have been written by the late lord Grenville, distinguished as an enlightened advocate of sound commercial principles. Its reasoning is so clear and satisfactory, that we are sure we shall gratify our readers, as well as strengthen the statements previously made, by laying it before them.
—"Dissentient. I. Because we are adverse in principle to all new restraints on commerce. We think it certain that public prosperity is best promoted by leaving uncontrolled the free current of national industry; and we wish rather, by well-considered steps, to bring back our commercial legislation to the straight and simple line of wisdom than to increase the deviation by subjecting additional and extensive branches of the public interest to fresh systems of artificial and injurious restrictions.
—II. Because we think that the great practical rule, of leaving all commerce unfettered, applies more peculiarly, and on still stronger grounds of justice as well as policy, to the corn trade than to any other. Irresistible indeed must be that necessity which could, in our judgment, authorize the legislature to tamper with the sustenance of the people, and to impede the free purchase of that article on which depends the existence of so large a portion of the community.
—III. Because we think that the expectations of ultimate benefit from this measure are founded on a delusive theory. We can not persuade ourselves that this law will ever contribute to produce plenty, cheapness, or steadiness of price. So long as it operates at all, its effects must be the opposite of these. Monopoly is the parent of scarcity, of dearness, and of uncertainty. To cut off any of the sources of supply can only tend to lessen its abundance; to close against ourselves the cheapest market for any commodity must enhance the price at which we purchase it; and to confine the consumer of corn to the produce of his own country is to refuse to ourselves the benefit of that provision which Providence itself has made for equalizing to man the variations of climate and of seasons.
—IV. But whatever may be the future consequences of this law at some distant and uncertain period, we see with pain that these hopes must be purchased at the expense of a great and present evil. To compel the consumer to purchase corn dearer at home than it might be imported from abroad is the immediate practical effect of this law. In this way alone can it operate. Its present protection, its promised extension of agriculture, must result (if at all) from the profits which it creates by keeping up the price of corn to an artificial level. These future benefits are the consequences expected, but, as we confidently believe, erroneously expected, from giving a bounty to the grower of corn by a tax levied on its consumer.
—V. Because we think the adoption of any permanent law for such a purpose required the fullest and most laborious investigation. Nor would it have been sufficient for our satisfaction, could we have been convinced of the general policy of a hazardous experiment. A still further inquiry would have been necessary to persuade us that the present moment is fit for its adoption. In such an inquiry we must have had the means of satisfying ourselves what its immediate operation will be, as connected with the various and pressing circumstances of public difficulty and distress with which the country is surrounded; with the state of our circulation and currency, of our agriculture and manufactures, of our internal and external commerce, and above all with the condition and reward of the industrious and laboring classes of our community.
—On all these particulars, as they respect this question, we think that parliament is almost wholly uninformed; on all we see reason for the utmost anxiety and alarm from the operation of this law.
—Lastly. Because, if we could approve of the principle and purpose of this law, we think that no sufficient foundation has been laid for its details. The evidence before us, unsatisfactory and imperfect as it is, seems to us rather to disprove than to support the propriety of the high price adopted as the standard of importation, and the fallacious mode by which that price is to be ascertained. And on all these grounds we are anxious to record our dissent from a measure so precipitate in its course, and, as we fear, so injurious in its consequences."
—Attempts have sometimes been made to estimate the pecuniary burden which the restrictions on importation entailed in ordinary years upon England. This, undoubtedly, is a subject with respect to which it is not possible to obtain any accurate data. But supposing the total quantity of corn annually produced in Great Britain and Ireland to amount to 50,000,000 quarters, every shilling added to its price by the corn laws was equivalent to a tax on corn of £2,500,000; and estimating the average rise on all sorts of grain previously to 1846 at 3s. per quarter, the total rise would be £7,500,000. So great a quantity of corn is, however, consumed by the agriculturists themselves, as food, in seed, the keep of horses, etc., that not more than a half, perhaps, of the whole quantity produced is brought to market. If we are nearly right in this hypothesis, and in previous estimates, it will follow that the restrictions cost the classes not engaged in agriculture no less than £3,750,000 a year, exclusive of their other pernicious consequences. Of this sum a fifth, probably, or £750,000, went to the landlords as rent; and this is all that the agriculturists can be said to have gained by the system, for the additional price received by the farmer on that portion of the produce which is exclusive of rent was no more than the ordinary return for his capital and labor. His profits, indeed, like those of all other capitalists, instead of being increased by this system, were diminished by it; and though, nominally at least, it somewhat increased the rents of the landlords, it is, notwithstanding, abundantly certain that it was anything but advantageous to them. It would have required a far larger sum to balance the injury which fluctuations of price occasioned to their tenants, and the damage done to their estates by over-cropping when prices were high, than all they derived from the restrictions.
—5. Duties on Importation. A duty may be equitably imposed on imported corn, for two objects; that is, either for the sake of revenue, or to balance any excess of taxes laid on the agriculturists over those laid on the other classes. (Treatise on Taxation, by J. R. M'Culloch, 2nd ed., pp. 193-203.) With respect, however, to a duty imposed for the sake of revenue, it may be doubted whether corn be a proper subject for taxation. At all events, a duty for such an object should be exceedingly moderate. It would be most inexpedient to attempt to add largely to the revenue by laying heavy duties on the prime necessary of life.
—If it be really true that, in England, agriculture is more heavily taxed than any other branch of industry, the agriculturists are entitled to demand that a duty be laid on foreign corn when imported corresponding to the excess of burdens affecting them. It has been doubted, however, whether they are in this predicament. But though the question be not quite free from difficulty, it would be easy to show, were this a proper place for such inquiries, that, owing to the various local and other direct and indirect burdens laid on the land, those occupying it are really subjected to heavier taxes than any other class. It is difficult, or rather perhaps, impossible, to estimate with any degree of precision what the excess of taxes laid on the agriculturists beyond those laid on manufacturers and merchants may amount to; but it can be shown, that if we estimate it as making an addition of 5s. or 6s. to the quarter of wheat, we shall probably be beyond the mark.
—When a duty is laid on the importation of foreign corn, for the equitable purpose of countervailing the peculiar duties laid on the corn raised at home, an equivalent drawback should be allowed on its exportation. "In allowing this drawback we are merely returning to the farmer a tax which he has already paid, and which he must have, to place him in a fair state of competition in the foreign market, not only with the foreign producer, but with his own countrymen who are producing other commodities. It is essentially different from a bounty on exportation, in the sense in which the word bounty is usually understood; for by a bounty is generally meant a tax levied on the people for the purpose of rendering corn unnaturally cheap to the foreign consumer; whereas, what I propose is, to sell our corn at the price at which we can really afford to produce it, and not to add to its price a tax which shall induce the foreigner rather to purchase it from some other country, and deprive us of a trade which, under a system of free competition, we might have selected." (Ricardo on Protection to Agriculture, p. 53.)
—A duty accompanied with a drawback, as now stated, would not only, under the circumstances supposed, have been an equitable arrangement, but it would have been highly for the advantage of the farmers, without being injurious to any one else. The radical defect, as already shown, of the system followed in Great Britain, from 1815 down to 1846, in so far, at least, as respected agriculture, was, that it forced up prices in years when the harvest was deficient, while it left the market to be glutted when it was abundant. But while a constant duty of 5s. would have secured to the home growers all the increase of price which the regard due to the interests of others should allow them to realize in a bad year, the drawback of 5s., by enabling them to export in an unusually plentiful year, would have prevented the markets from being overloaded, and prices from falling to the ruinous extent that they have occasionally done. Such a plan would have rendered the businesses of the dealers in and growers of corn comparatively secure, and would, therefore, have provided for the continued prosperity of both. It is surprising the agriculturists did not take this view of the matter. If they were really entitled to a duty on foreign corn on account of their being more heavily taxed than the other classes of their fellow-citizens (and they had no title to it on any other ground), they were also entitled to a corresponding drawback. And it admits of demonstration that their interests, as well as those of the community, would have been better promoted by such a duty and drawback than they ever could have been by any system of mere duties, how high soever they might be carried.
J. R. M'C. and H. G. R.
- Aquinas on fraudulent dealing
- Atkinson: Protection promotes War - Free Trade promotes Peace
- Bentham on Usury
- Boehm-Bawerk’s Theory of Capital
- Böhm-Bawerk, “On the Completion of Marx’s System (of Thought)” (1896, 1898)
- Böhm-Bawerk, “Zum Abschluß des Marxschen Systems” (1896)
- Cobden’s Speeches on Free Trade
- Cobden: An Appreciation I
- Cobden: An Appreciation II
- Condillac’s Economic Thought
- Coquelin on Competititon
- Coquelin on Industry
- Coquelin on Political Economy
- Demsetz and Property Rights
- Early Republican Economic Policy
- Eugen Richter and the Critique of Socialism
- Famous Economists and Political Philosophers
- Faucher on Property
- Fetter’s Economic Thought
- Friedman on “I, Pencil” & the Invisible Hand
- Friedman on Capitalism and Freedom
- Garnier on the Origin of the Term Laissez-faire
- Garnier on the Physiocrats
- Grampp on the Manchester School of Economics
- Hazlitt, The Future of Capitalism
- Heyne, Economics as a Way of Thinking
- Higgs on the Influence of the Physiocrats
- Hirst on the Manchester School
- Hutt, Reflections on the Keynsian Episode
- Ingram, History of the Early Austrian School of Economics
- Invisible Hand Explanations of Society
- Jasay, The Capitalist State
- Jevons on Richard Cantillon
- Kirzner on the Economic Point of View
- Kirzner, Entrepreneurship & the Market Approach to Development
- Lachmann and the Subjective Paradigm
- Lachmann, The Significance of the Austrian School
- Lalor’s Cyclopedia - 19thC French Political Economy
- Lalor’s Cyclopedia - Preface and Table of Contents
- Marshall on The Growth of Free Industry and Enterprise
- Martineau on Property & Slave Labour
- Martineau’s Primer on Laissez-Faire Economics
- Marx’s Works
- McCulloch on Smuggling
- McCulloch on the Balance of Trade
- McCulloch on the Corn Laws
- O'Driscoll, Spontaneous Order and Coordination
- Polanyi and Spontaneous Ordering
- Political Ideas of the Classical Economists
- Rae on the publication of the Wealth of Nations (1776)
- Richard Cobden’s “I have a Dream” speech (1846)
- Rothbard on the Prehistory of the Austrian School
- Rothbard on the Public Sector
- Say on Colonial Slave Labor
- Say on Markets
- Say on Property Rights
- Selgin on Free Banking
- Sennholz, The Chicago Monetary Tradition
- Sirc, Problems of Economic Resposibility
- Smart on Boehm-Bawerk
- Smart on Wieser’s theory of value
- The Economic and Ethical Thought of Paul Heyne
- The Manchester School of Economics by William Grampp
- Tullock and Scientific Inquiry
- Tullock, Application of Economics in Biology
- Viner on International Trade
- Walker on Public Revenue (1899)
- Walker on the Wage Fund (1899)
- Walker on Wages (1899)
- Wicksteed on the Psychology of Choice
- Yeager & Smith on Central Banking