The History of Free Trade

The struggle of the people to free themselves from the mischievous interference with domestic trade and industry sketched in the last chapter was of the utmost importance to the national progress; but it is the struggle for the reform of our customs and excise laws which is more generally referred to as the free trade battle. That great movement commenced within the lifetime of men now living. Isolated passages have been discovered in early English authors, implying the doctrine of free trade; but the writers were evidently not aware of the importance of the principle they enunciated, nor prepared to follow it into its consequences. The French economists of the last century, generally known by the name of "Physiocrats," amidst much that was vague or erroneous, did indeed plead for liberty of commerce; but their chief object appears to have been to support their mistaken theory that, as the land (so they held) was the source of all production, one tax laid directly on the soil would really tax commodities as much as the customs and excise laws then existing.

Adam Smith was the first to point out clearly the true interest of the nation in these matters. Up to his time our excise and customs laws had been in the greatest possible confusion. Prohibitions had been imposed in innumerable instances, for what was called the protection of British industry - that is, for compelling the people to purchase nothing but home-made commodities. In other cases, high customs' duties were laid on for the avowed purpose of discouraging importation. Our forefathers were under the impression that money, or, what is the same thing, the precious metals, were of far more importance to the country than any other kind of merchandise; and as all goods sent abroad must be paid for either in money or other goods, they believed that by diminishing imports they must increase the quantities of gold and silver brought into the country. Adam Smith's work, " The Wealth of Nations," at length exposed the folly of these views; and the works of subsequent writers, including Bentham, Ricardo, J. B. Say, and Mr. Mill, finally demolished all that was erroneous in these doctrines. As to the principle of what was called "protection" generally, it was shown that it had no effect whatever in increasing the amount of employment for the people, while it laid the consumer under a heavy tax in the increased price of imported articles. The true nature of foreign commerce was for the first time explained, for the guidance of legislators and for the enlightenment of the people generally. It was seen that the sole object of that foreign trade, which our statesmen had regarded with favour simply on account of the large amount of our productions which it caused to be exported, really and truly centred in the commodities brought back in exchange. In short, the nation required annually so much tea. sugar, coffee, silks, corn, and other things; and in order to purchase these, our merchants carried abroad our cottons, woollens, hardware, and other articles. For that which we produced most easily, the foreigner gave us the things in which the facility of production was on his side; and thus both parties were benefited. The folly of the protective system must therefore be apparent. Those who thought that by purchasing of the foreigner we deprived our own countrymen of a demand for their productions, forgot that for every pound's worth of goods purchased abroad, the foreigner necessarily took a pound's worth of our products, while the trade could not go on unless it were profitable to both sides. Even if gold, instead of our goods, were our mode of payment, the case was precisely the same; because, as England is not a gold-producing country, it could only obtain supplies of the precious metals by sending goods, in the first instance, to exchange for them. The notion that it was better to bring back in exchange gold and silver for our own use was also for ever exp10ded. It was shown that gold and silver differ in no wise from other commodities; that for the purposes of coin, and for working up in the arts, we require so much of the precious metals annually, and no more; and that the merchant will always know better than the Legislature, from the state of the markets, when and in what quantities to bring them. In short, it was fully demonstrated that the interests of the merchant must be those of the nation, and that for the prosperity of our trade it required nothing but that he should be free to export and import, according to his own judgment of the supply and the demand in the markets.

The history of the great commercial reform in England maybe divided into four periods: the first, in which Mr. Huskisson took so prominent a part, extending from 1822 to 1830; the second from 1830 to 1840, which may be regarded as a continuation of that movement; the third, began in 1840, chiefly characterised by the repeal of the Corn Laws, and for ever associated with the names of Mr. C. P. Villiers, Mr. Cobden, Sir Robert Peel, Mr. Bright, and Lord John Russell; the last, extending from the repeal of the Corn Laws, in 1846, till a recent year, and represented in the person of Mr. Gladstone. Symptoms of the coming change had, indeed, been seen before these periods. Pitt had, in 1787, effected a considerable improvement in the tariff and excise laws. The greatest of his commercial reforms was undoubtedly his consolidation of the Customs Act, in 1787. Previously to that time, customs duties were paid according to a book of rates published in the reign of Charles II., and a new book of rates published in the reign of George I. Besides these, however, many new duties had, from time to time, been added, with innumerable complicated regulations. "The evil," says Mr. MacCulloch, " was increased by the careless manner in which the new duties were added to the old - a per-centage being sometimes added to the original tax, while at other times the commodity was estimated by a new standard of bulk, weight, number, or value, and charged with an additional impost, without reference to the duties formerly imposed. The confusion arising from these sources was still further augmented by the special appropriation of each of the duties, and the consequent necessity of a separate collection for each. The intricacy and annoyance inseparable from such a state of things proved a serious injury to commerce, and led to many frauds and abuses." Such was the care which the Legislature, under the Georges, took of that British commerce which was recognised then as the best sign of the nation's strength. Langham's " Nett Duties and Drawbacks," published about a century since, contains upwards of three thousand distinct articles with infinite fractional duties assigned to them. The Custom House officer of those days was empowered to inquire into the exact nature and quality of everything that came under his eye in the way of imported goods. He was expected to know all shades and differences of strange, outlandish products, from "buffins, Mocadoss and Lisle grograms," to such uncouth commodities as alligars, allibanies, brawls, carridarries, chucklaes, cushtaes, and cuttanees. He was to have his eye on endless articles, which Englishmen were on no account to be permitted to buy. He was to look into all foreign books for a smack of Popish doctrine, which rendered them at once unlawful merchandise. In the matter of brown holland, for an example of his duties, he was carefully to distinguish between Bay holland, Brabant holland, brown holland proper, Embden cloth, Flemish cloth, Gentish cloth, Isingham cloth, Oversisils cloth and others, while these again were nicely to be distinguished according to their breadth. Of paper alone there were no less than sixty varieties. Among these figured atlas ordinary, blue royal, sugar-bakers' blue, cap paper, chancery paper, medium fine, Genoa fine, bastard or double copy, German printing, crown, Lombard, Genoa pot, ordinary pot, superfine pot, and second pot, royal paper, super-royal, Rochelle paper, Holland paper, and ordinary royal. All these were rated, as, indeed, were all the three thousand articles in the list, in minute fractional sums - as for instance, atlas ordinary at fifteen shillings and fourpence, and 21£ hundredths of a penny per ream, besides additional rates. Blue royal, the next on the list, was to pay six shillings and threepence and 97½ hundredths of a penny; sugar-bakers' blue, five shillings and 97½ hundredths of a penny; cap paper, three shillings and threepence, and 54 hundredths and three-eighths of a hundredth of a penny; and so on to the end of the tariff. Among other absurdities "babies, or puppets for children" (dolls), were charged on importation with a duty of three shillings and fivepence, and 19½ hundredths of a penny per gross, with a bounty paid on re-exportation per gross of three shillings and eleven and a quarter hundredths of a penny. "Babies'heads of earth " and "jointed babies" were rated at sums altogether different, but equally minute.

From these specimens of the legislative wisdom of our forefathers, it may be seen how largely commerce was indebted to Mr. Pitt for sweeping away all the old customs duties by three thousand distinct resolutions, and substituting in their place one single duty on each article, equivalent to the aggregate of the duties by which it had previously been visited. Unlike his political contemporary, Fox, who held political economy in contempt, as the silliest of all attempts to found a new moral science, the son of the great Lord Chatham had imbibed some of the views of the " Wealth of Nations." There can be little doubt but that for the outbreak of the war with France, he would have carried still further these wise measures. We have already given some account of his liberal treaty negotiated with France in 1786. In 1792 he announced a surplus revenue, which permitted him to diminish the duties upon articles consumed by the poorer classes. But the kind of crusade against the growth of what was called "French principles," or the doctrines of the French Revolution, which the frenzied pamphlets of Burke at this time awakened, rapidly threw into the shade all such pacific and benevolent schemes. The war, which for more than twenty years deluged Europe in blood, soon brought the minister into financial difficulties. Instead of continuing his customs reforms, by which the trade with France which we have seen springing up under the effects of Mr. Cobden's treaty might have been established more than seventy years since, probably to have attained in these days gigantic proportions, Pitt was compelled to raise the duties. At the close of the war in 1814, the greater part of all foreign merchandise had to pay three kinds of customs dues - the permanent imposts, the temporary war duties, equal to two-thirds of the former, and finally an additional tax, which amounted also to two- thirds of the permanent imposts on all French goods, by way of reprisal for Napoleon's " Berlin Decrees," which excluded British commerce from the entire Continent. On other foreign goods these additional dues amounted to one-fourth only of the permanent imposts. During that dark period of our domestic annals, certain restrictions had indeed been removed, and free trade may be said to have gained a few steps. The union of England with Ireland had brought with it a somewhat more liberal system of trade between the two countries. The system of bonded warehouses, which Sir Robert Walpole had failed to establish, was carried out in a modified form in 1803. In 1813 the great monopoly of the East India Company was partially broken through; and the East India trade was for the first time thrown open to the spirit of enterprise of private individuals. The company, however, preserved the monopoly of the trade with China, including the monstrous privilege of being the sole channel through which the English public were permitted to obtain their supplies of tea. In 1814, the number of articles of which the importation was absolutely prohibited numbered about two hundred; and it is stated in the report of the select committee of the House of Commons in 1820, that the Acts of Parliament on this subject in force in 1815, amounted to no less than eleven hundred, to which many additions had since been made. The British merchant was naturally bewildered amidst this mass of prohibitions, restrictions, and statutory regulations. Instead of being able to undertake his operations, and avail himself of new channels of trade as they arose, he was compelled to obtain the advice of skilful lawyers before he could be sure that he was not about to incur some formidable penalties. When it is remembered that a trivial, unintentional deviation from the strict letter of the Acts of Parliament exposed ship and cargo to seizure, always attended with delay and expense, and frequently with long litigation, it cannot be doubted that such a state of things had a most injurious influence on British mercantile enterprise, and tended, as all such interferences with commerce do, to render commodities dearer.

All these evils would probably have flourished much longer than they did, but for the attention called to the vicious character of our commercial laws by the crowning abuse of the Corn Law which existed from the year 1815 up to the year 1846. To understand that law, its glaring injustice, and its pernicious effects on the welfare of the poorer classes, it is necessary to take a view of the history of legislation in England affecting corn. Cruel as was the spirit of the Statute of Labourers, the legislators of Edward III.'s reign had not hit upon the device of making the food of the people artificially dear for the benefit of landowners. On the contrary, the laws respecting the corn trade before that period, though mistaken and mischievous in their tendency, were at least intended for the benefit of the poor. In the earliest times the merchants had been practically free, both to bring in corn when our own harvests were deficient, and to send it abroad when superabundant; but at the period referred to regulations began to be made for restricting the trade. These regulations, however, seldom interfered with importation. Generally, the idea of our rulers had been to keep the food of the people cheap, by making it unlawful to export our own produce. In the seventeenth century a new system was adopted. In 1689, under the pretence of promoting the interests of agriculture, but really, as may easily be perceived, for the benefit of English landlords, the legislature came to the extraordinary determination of encouraging the sending away of the produce of our fields by positive bribes to the exporter. It was settled that, however abundant the harvest with which the country might be blessed, the people ought not to get any wheat for less than 48s. a quarter. To insure this result, it was enacted that whenever wheat began to get below that price, the carrying it out of the country should be deemed a meritorious action, and that the exporter should be rewarded out of the taxes with a present of five shillings for every quarter of wheat so carried away. Similar regulations were made in respect to barley, oats, and rye, by which the very poorest class who ate bread made from those inferior kinds of grain, were equally prevented from sharing the blessing of an abundant season. A previous act, passed in 1670, prevented the importation of foreign wheat, whenever corn had not reached the famine price, for those days, of 53s. 4d. a quarter.