The History of Free Trade page 3

Happily, abundant harvests served, for some years, to defeat the intended effects of these regulations. The agriculturists pressed for more stringent laws, and several alterations were introduced in their favour, but farmers were little benefited by these changes. In fact, however beneficial to the landlords, the corn laws had done little good for them. They had converted farming into a kind of gambling, in which the gain fluctuated enormously from year to year, to the ruin of thousands who were daring enough to speculate in the growing or in the sale of grain. This, indeed, having regard solely to the interests of the people, was by far the worst feature in these laws. As long as Englishmen are permitted to buy and sell corn where they please, it is impossible that its price can vary very greatly. On occasions of a bad harvest in our small island, the harvests of the whole world are open for our relief. Even if the failure were general in Europe, the vast fields of Canada and the United States are ever ready, upon a slight rise in the profits of the export trade, to send almost unlimited supplies. In like manner, the liberty to export saves the farmer in years of special abundance from the ruinous fall in prices which must result from being compelled to dispose of all his produce for home consumption. It is very different under a restricted trade. The harvest of one year may be only half that of the previous year, or vice versa. Compelled, therefore, to buy of no one but the English landlord, it is not to be wondered at that neither buyer nor seller could predict the price of corn from year to year. Wages, of course, could not vary with every fluctuation in the price of food, and if they did it is easy to perceive that when the supply of corn was enormously deficient, some one must go without; and, of course, this would not be the wealthier class, to whom a rise in the price of bread, however great, is always a matter comparatively unimportant. It is true that, under extreme pressure, the Government found it impossible to face the effects of these laws, and were compelled by order in council to permit, under heavy restrictions, importations of grain. But this only increased the confusion, and added to the danger of dealing in corn. The cry of the farmers, therefore, was not without reason; but where the evil really lay was seen by few except those theoretical writers whom practical statesmen generally affect to despise.

Free trade ideas had, however, really made great progress since the termination of the war. The plea for commercial liberty began to be heard, even within the walls of Parliament. It was no longer urged on the narrow grounds of the manufacturing interest; but on those higher principles of morality and justice, and on that enlightened view of the national welfare which ultimately ensured its success. In 1820 a petition was presented to Parliament from the merchants of London, which marks an important epoch in the history of these reforms. The petition was drawn up by Mr. Tooke, the author of " The History of Prices," who remarks that the doctrines expounded by Adam Smith, though occasionally referred to in controversial tracts on the corn trade and other branches of commerce, had not before this year been distinctly brought under the notice of Parliament and the public, with a view to the general adoption of them as the basis of legislation on commerce. The chief clauses of the petition were as follows: -

" Showeth that foreign commerce is eminently conducive to the wealth and prosperity of a country, by enabling it to import the commodities for the production of which the soil, climate, capital, and industry of other countries are best calculated; and to export, in payment, those articles for which its own situation is better adapted.

" That freedom from restraint is calculated to give the utmost extension to foreign trade, and the best direction to the capital and industry of the country.

" That the maxim of buying in the cheapest market, and selling in the dearest, which regulates every merchant in his individual dealings, is strictly applicable as the best rule for the trade of the whole nation.

"That a policy founded on these principles would render the commerce of the world an interchange of mutual advantages, and diffuse an increase of wealth and enjoyments among the inhabitants of each state.

" That, unfortunately, a policy the very reverse of this has been, and is, more or less, adopted and acted upon by the Government of this and on every other country, each trying to exclude the productions of other countries, with the specious and well-meant design of encouraging its own productions; thus inflicting on the bulk of its subjects, who are consumers, the necessity of its submitting to privations in the quantity or quality of commodities, and thus rendering what ought to be the source of mutual benefit and of harmony among states, a constantly recurring occasion of jealousy and hostility.

"That the prevailing prejudices in favour of the protective or restrictive system may be traced to the erroneous supposition that every importation of foreign commodities occasions a diminution or discouragement of our own productions to the same extent; whereas it may be clearly shown that, although the particular description of production which could not stand against unrestrained foreign competition would be discouraged, yet as no importation could be continued for any length of time without a corresponding exportation, direct or indirect, there would be an encouragement, for the purpose of that exportation, of some other production to which our situation might be better suited; thus affording at least an equal, and probably a greater, and certainly a more beneficial, employment to our own capital and labour.

" That of the numerous protective and prohibitory duties of our commercial code, it may be proved that, while all operate as a very heavy tax on the community at large, very few are of any ultimate benefit to the classes in whose favour they were originally instituted; and none to the extent of the loss occasioned by them to other classes.

" That, among the other evils of the restrictive or protective system, not the least is that the artificial protection of one branch of industry, or source of production, against foreign competition, is set up as a ground of claim by other branches for similar protection; so that, if the reasoning upon which these restrictive or prohibitory regulations are founded were followed out consistently, it would not stop short of excluding us from all foreign commerce whatsoever. And the same train of argument, which, with corresponding prohibitions and protective duties, should exclude us from foreign trade, might be brought forward to justify the re-enactment of restrictions upon the interchange of productions (unconnected with public revenue) among the kingdoms composing the union, or among the counties of the same kingdom.

"That an investigation of the effects of the restrictive system at this time is peculiarly called for, as it may, in the opinion of your petitioners, lead to a strong presumption that the distress which now so generally prevails is considerably aggravated by that system, and that some relief may be obtained by the earliest practicable removal of such of the restraints as may be shown to be most injurious to the capital and industry of the community, and to be attended with no compensating benefit to the public revenue."

More than half the court of directors of the Bank of England signed this petition, which, probably, forty years earlier would have been regarded as a strong evidence of the lunacy of its framer. A number of eminent merchants of the city of London also added their names; and a deputation upon the subject waited upon Lord Liverpool, then the head of the Administration. The Premier, after reading the petition aloud, replied as follows: - "Gentlemen, there is not a principle, not a sentiment in the paper I have now read in which I do not entirely and most cordially concur; and if I had to legislate for this country de novo, or for a country like the United States of America, having little or no public debt, these are the principles upon which I would act. But in this country, which is burdened with p heavy a debt, in which so many vested interests have grown up, and are so connected and complicated with the existing commercial system, the case is very different, and the question of any change in that system ought not to be approached but with the utmost caution. I cannot, therefore, on the part of the Government, hold out the prospect of any great or immediate alteration." The free trade petition was, however, presented to the House of Commons by a merchant, Mr. Alexander Baring (afterwards Lord Ashburton), on the 8th of May, 1820; and similar petitions from Glasgow and Manchester were presented during the same month. It is a remarkable fact that Lord Stanley (afterwards Earl of Derby), who subsequently became the leader of the Protectionist party, spoke in favour of the petition from Manchester, adding - " I hope that the liberal and enlightened views of the petitioners on the subject of our commercial policy will be acted upon. "Whenever any such measure shall be brought forward, I will give it every support in my power." " There cannot," says Mr. Tooke, " be any reasonable doubt that the merchants' petition may be considered as having been the originating impulse to the movement which by progressive steps has led to the final establishment of the principles therein enunciated as the rule of conduct to be followed in the commercial legislation of this country."

The petitions led to the appointment of committees of both Houses of Parliament to inquire into the state of our foreign trade. Their reports, presented in 1820 and 1821, did essential service, by presenting a mass of evidence on the impolicy of the existing laws, such as had never been collected before. Nor was the language of the committee, in their comments on the evidence, less encouraging. " Your committee," says one report, "beg to observe that without now questioning the wisdom of a restrictive or protective policy as necessary to the state of our trade at an earlier period of our history, as applicable to the circumstances of the present day, it appears very doubtful. The time when monopolies could be successfully supported, or would be patiently endured, either in respect to subjects against subjects, or particular countries against the rest of the world, seems to have passed away." They added, however, "Your committee are sensible that at once to abandon the prohibitory system would be of all things the most visionary and dangerous. It has long subsisted; it is the law not only of this kingdom, but of the rest of the European world; and any sudden departure from it is forbidden by every consideration of prudence, safety, and justice. No such sudden change is in the contemplation of your committee; nor, indeed, the adoption of any change, without the utmost circumspection and caution." The various improvements in our tariff introduced during Lord Liverpool's administration, are sketched in the next chapter; and though these may seem of small importance compared with the sweeping changes of twenty years later, their value in dispelling the illusions under which even our most liberal statesmen laboured on these subjects was, nevertheless, very great. The labours of Mr. Huskisson and Mr. Canning certainly contributed more than those of any other statesmen to prepare the way for the final triumph. The reduction of the duties on coals, and of the oppressive excise dues on salt; the alteration in the duties upon silk; the various other remissions during this period of taxes, which, though not strictly protective duties, weighed heavily on our commerce, all marked the new spirit of the times.

The Protectionist party were now thoroughly alarmed; for though the corn laws were not for the present in question, their abolition was necessarily involved in the success of the free trade party. It must not be forgotten that the tariff of that time was not merely beneficial to the landlord from the restrictions on the corn trade. Innumerable articles were comprised in it which were wholly or in part the produce of agricultural industry. The heavy duties on cattle and salted meats, on leather, boots and shoes, timber, butter, tallow, cheese, cider, eggs, flax, hair, hides, lard, perry, potatoes and other kitchen vegetables, hay, seeds of all kinds, wool, and other articles, were all beneficial to the proprietors of land, who were, of course, sheltered by these barriers against foreign competition at the expense of their fellow- countrymen who purchased such articles. That the landed interest, now awakened, would band together for the preservation of these artificial regulations was to be expected. A wise and far-seeing view of their interests would no doubt have dictated a different policy. Happily, the interests of the manufacturing and agricultural classes are so interwoven that it is hardly possible to benefit the one without improving the circumstances of the other; nor could a system which contributed to keep the great bulk of the people in poverty really be beneficial either to the farmer or the landed gentry. The pauperism of the country was, during the early part of this century, an evil which burdened the land with constantly increasing poor-rates, and threatened to eat up the profits of all industry. Those sudden fluctuations in the price of food were not difficulties which passed away and left no trace save in the remembrance of the privations which they had brought upon the people. Every fresh year of dearth left a new stratum of pauperism, from which only the most self - reliant afterwards extricated themselves. Between the position of an independent labourer and that of the recipient of parish relief there is an enormous gulf. That horror of the workhouse, so conspicuous in the labouring classes of our country, is, as a rule, permanently weakened after one lapse into the miserable condition of pauperism. This was the condition to which those laws which had been passed from a mistaken view of class interest were bringing the country - their advocates being forgetful of the fact that a prosperous people are the best customers of the farmer; and that the growth of an industrious population in the long run is the true cause of extended cultivation, improved husbandry, and higher rents.

Sir Henry Parnell, in the third edition of his celebrated work on financial reform, published in 1832, gives a clear and forcible account of the evils of our laws for protecting British agriculture, as then existing, after all the extensive reforms of the previous twenty years. The duties imposed for the purpose of promoting the interests of landowners, by excluding foreign competition, then comprised no less than thirty-eight distinct articles - in addition to positive prohibitions upon the importation of beef, lambs, mutton, pork, sheep, and swine. At that time the state of the markets abroad showed that in the fifteen years since the passing of the Corn Law of 1815, wheat might have been sold in England on an average at ten shillings a quarter cheaper than it had been during the whole of that time. The effects of the laws in keeping up the price of other kinds of grain were no less striking. It was calculated that, during the period referred to, the consumers of corn in England had paid for that article nearly two hundred millions sterling more than they need have paid, if our merchants had been free to bring in the abundant supplies of other countries. To this loss must, of course, be added all that had been paid for meat, fresh and salted, cheese, butter, potatoes, and other articles of food beyond the price which free trade would have reduced them to. All this enormous sum was, necessarily, secured by the landowners, while rents throughout the country had more than doubled since the beginning of the century.