Free Trade and Other Fundamental Doctrines of the Manchester School

By Francis W. Hirst

DURING the last decade it has been the fashion to talk of the Manchester School with pity or contempt as of an almost extinct sect, well adapted, no doubt, for the commercial drudgery of a little, early Victorian England, but utterly unfitted to meet the exigencies or satisfy the demands of a moving Imperialism. Many of the authors and abettors of public extravagance, and especially of what is called imperial expenditure upon war and armaments, believed themselves to be champions of free trade. It never occurred to them that protection would trickle into the ship, if the plank of economy were removed. But the commercial system of free trade depends for its political safety upon public thrift, because the more the revenue that is required the stronger is the demand of the governing classes that indirect taxation, which bears most heavily upon the poor, shall be increased. During the last three years we have seen indirect taxation increased–‘a widening of the basis’ it is called–and we have seen how this policy led at last to the revival of protection in the shape of a shilling duty on corn. But the corn tax has only lasted a year. The principle which triumphed in 1846 has survived the challenge of 1902 and received a triumphant vindication in the Budget of 1903. In each case the instrument of victory was a Conservative Premier, under whom the party, the interests, and the opinions opposed to the Manchester School were arrayed in a hostile and apparently invincible phalanx…. [From the Introduction]

Book Cover

First Pub. Date

1820

Publisher

London: Harper and Brothers

Pub. Date

1903

Comments

Collected essays and speeches by various writers, including Richard Cobden and John Bright, 1820-1896

Copyright

The text of this edition is in the public domain.

II.—JOSEPH HUME’S SPEECH ON THE

CORN LAWS, MAY 17, 1833

Part II, Essay II

The following speech was delivered in the course of a debate initiated by Whitmore, then member for Wolverhampton. Whitmore had concluded by moving ‘that the present system of corn laws founded upon a high and ever-varying scale of duty, while it fails in conferring permanent benefit on the agricultural interest, tends to cramp the trade and to impair the general prosperity of this country: that an alteration in the principle of these laws to one of a moderate duty fixed at all periods except those of extreme dearth, while it would indemnify the agriculturist from the peculiar burdens to which he is subjected, would, by restoring the commercial relations between this kingdom and the corn-exporting countries of the world, tend to improve the trade, increase the manufactures, and render more equable the price of agricultural produce.’ This report of Hume’s speech is taken from the
Mirror of Parliament, vol. 21, pages 1850-1853. It has required little editing, as it was evidently corrected by the author. Joseph Hume (1777-1855) was born at Montrose, so that Scotland was to the fore in carrying on the work of Adam Smith.

I AM sorry to say that the conclusion, to which my honourable friend (Mr. Whitmore) has come, appears to me to be totally at variance with the proposition which he laid down at the commencement of his speech, as well as with the arguments which he stated in its support. If I understood that proposition distinctly, it was this: that the present system of corn laws, of averages, and graduated scale of duties, has occasioned great inequality in the price of corn at different periods, and has not effected the object for which they were intended; and the only conclusion that I could draw from
the argument advanced was that it would be necessary for the existing law to be repealed and a fixed duty imposed, upon the payment of which corn might be admitted at all periods. This appeared to be the natural and, I might add, the only conclusion to which my honourable friend’s arguments must bring him. By his resolution he proposes to alter the laws and to adopt a fixed duty, yet he would retain averages, and also a scale of prices and duty under particular circumstances. He would have a fixed duty of 10
s. for wheat, until 67
s., and then, whenever the prices became higher, to make it as at present variable, decreasing the duty as the price advanced, but always retaining the averages.

MR. WHITMORE.—I said, the scale to commence when corn rose to a famine price.

MR. HUME.—Ay; but then comes the question, what is a famine price? Looking at the ordinary prices in England and the rest of Europe, I certainly should not consider 67
s. a famine price. I recollect that 80
s. was demanded by the landed interest in 1815 and 1822, as the remunerating price, and I believe they would be pleased to get 60
s. now. So that a famine price is vague, and the plan subject to all the inconvenience now experienced. I consider a fixed duty on import at all prices, without regard to averages, as the simple and only plan to be tried. I did not rise, however, to discuss that point. It is, and long has been my opinion, and I have heard honourable members in this House declare it to be theirs—that it is the duty of Parliament equally to protect all the different interests in the country. The question, therefore, that I wish to put to this House is this: Are we warranted in giving to one particular interest a monopoly against the other interests? I see no reason for giving the capital employed in agriculture greater protection than the capital vested in other branches of trade, manufacture, or commerce. I maintain that the existing corn laws are bad, because they have given
a monopoly of food to the landed interest over every other class and over every other interest in the kingdom. I ask, is that right? Ought it to be longer continued? The honourable member for Wolverhampton alluded to the particular burdens which fall upon the agriculturist, as entitling him to protection; but I am ignorant of any burden borne by him in particular with the exception of the highway-rate.

SEVERAL HONOURABLE MEMBERS.—Oh! The poor-rates—the land-tax—tithes.

MR. HUME.—I deny that the poor-rate is a tax peculiarly levied on the agriculturist. All property is assessed to it. The tithes are chiefly paid by the consumer under the existing system; and the land-tax was imposed before the corn laws were enacted; it was laid on all property.

SEVERAL HONOURABLE MEMBERS.—No! No! The funds are not taxed.

MR. HUME.—what! do you call the funds property that you ought to tax? That which is your own debt—property? It would be a pretty thing, indeed, if a man were allowed to say to his creditor, ‘I will deduct 25 or 30 per cent. from the interest of the debt I owe you, in order that I may be enabled to pay the principal.’ That would be an extraordinary doctrine, indeed, if debtors were to determine what part of their debts they were to pay. The question of the funds, however, is not under consideration at present. That is matter for future debate. I contend that this country does not grow sufficient corn to supply its own wants, and that it is a regular importing country. This is proved by the fact that, for the last five years, from July, 1828, to April last, the average yearly importation of foreign corn has amounted to 1,500,000 quarters. By the Parliamentary Paper in my hand (No. 243 of the Session), it appears that, from the 15th of July, 1828, when the 9th Geo. IV., c. 60, the present law, came into operation, up to the 5th of April, 1833, one quarter less than five years, there have been 8,336,983 quarters of different kinds of grain,
and 2,154,768 cwts. of meal and flour, imported and consumed in Great Britian, which clearly establishes that we are a country regularly importing corn; and as long as it is excluded by a high protecting duty varying from 24
s. 8
d. when the price is 62
s. to 1
s. when the price rises to 73
s. and upwards, a monopoly is given to the grower of corn against the rest of the community. The amount of that monopoly I will not now discuss, but it must be large, and the consequences, I am confident, have been more injurious to the people than profitable to the landowners. I am willing to admit that if the agriculturists are oppressed by peculiar burdens, they ought to be relieved from them, or be allowed a fair and just protection equivalent to all such peculiar burdens. But if the agriculturists suffer no peculiar hardships, it is the duty of Parliament to declare that corn shall be imported free of all duty except such as may be imposed for the purposes of revenue. I do not, and never would, advise the raising a revenue for the State by laying a duty on the importation of corn, or on the food of man; but if a duty is to be levied, as it now is, to raise the price of corn, it ought to be a duty applicable to the service of the Government and the community at large, and not for the particular interest of one class of the people—the landlords—who have had the influence in the late Parliaments to impose that unjust law for their own benefit. On the supposition, therefore, that there are some burdens borne by the land which other capitals do not bear, I am willing to allow a fixed duty to that amount; and, until the exact amount can be ascertained, I shall not be very nice. We have heard, at various times, different sums—from 28
s. to 10
s. per quarter—stated as the amount of protecting duty which ought to be imposed on foreign corn. As times have altered, however these ideas have changed also, and will further change, according as the remunerating price for British grain has been, or shall be fixed. At present I wish to call the attention of the House to a plain and simple fact; with the view of showing
that we can never give the farmer that degree of confidence in the market which he has a right to expect, if we leave it open to the chances of the present system of varying in the course of a few months from 76
s. to 51
s. 3
d. per quarter.

By reference to the Returns on the Table of the House, it will be seen that on the 19th of September, 1828, the average price of wheat was 58
s. 6
d., and on the 24th of October following, 76
s. per quarter; that on the 5th of June, 1829, the price was 71
s. 5
d. On the 6th of August, 1830, the price was 74
s. 11
d., and on the 17th of September following, 60
s. 2
d.; and if we look at the prices under the present corn laws, we shall find that the highest average price was 76
s. 7
d. on the 14th of November, 1828, and the lowest average price 51
s. 3
d. on the 19th of October, 1832. Such extraordinary alterations in price are not to be found in any article of import, where the ports are always open at a fixed duty, and therefore it is fair to attribute the changes in the price of corn to the defective law which I seek to alter, not to modify.

It appears to me, therefore, that, under the existing corn laws of averages and varying duties, the farmer is placed in a very uncertain and dangerous situation, which no experience or care on his part can enable him to avoid: there are scarcity and high prices one month, and large importations, but low prices, in another. What farmers require is, that the prices should be moderate, and the markets steady; and for this reason I did, in 1826, 1827, and 1828, take the course which I would now recommend to the House. In 1827 I proposed that all foreign corn should be admissible at all times at a fixed duty, which I made high in the first instance, beginning with 15
s. and coming down 1
s. every year till the duty reached 10
s. At 10
s. I proposed it should rest until a committee of this House should have ascertained the exclusive burdens pressing on the land. The division on that proposition gave me little
encouragement to proceed. I, however, proposed in 1828, when the present corn laws were passed, that, instead of the varying scale of duties adopted in them, there should be a fixed duty of 10
s. a quarter on the importation of foreign wheat, of 8
s. on barley, 6
s. on oats, and on other grain in proportion. Now, let the House mark the different result which would have taken place had this proposition, instead of that of the Government, been adopted.

The total amount of revenue raised since the passing of the existing law upon the importation of wheat, barley, and oats alone was £2,284,557; whereas it would have been £3,261,495 had my rates been adopted. Thus the Exchequer would have received a million more, and the community at large would have received great advantage from the improvement which it would have produced in the prospects of our manufacturing interests, by creating a regular trade in corn, and a corresponding export of goods to pay for the corn to the countries producing it; whereas, under the present system, the payment for corn is often by gold.

I will undertake to prove that the present corn laws have been detrimental to the public, without being beneficial to the agricultural interest. The want of employment for our population is the great evil at the present time—for they are made dependent on the poor-rates, the most demoralizing of all systems, for their support, instead of being supported by wages, which an increase of our trade would give. The mass of the population consists of agricultural and manufacturing labourers; and as the number that can be employed on the land is limited, whilst the number to be employed in manufactures is limited only by the demand, that demand, again, being limited only by the means of payment which the world, who are our consumers, have—it ought to be our study and our policy to take from them every article they can supply which we want in exchange for the manufactured articles which are useless to us except as a means of payment for what we want. We generally import raw
articles, into the price of which little, for wages, enters, whilst the prime cost of all the articles we export consists chiefly of the money paid for wages. Our manufacturing population are generally not three-quarters fed. Many have nothing but a parish allowance to live on, and all are willing to work. A foreign nation producing corn has nothing else to give for our manufactures, and thus by bad laws the populations of both countries are injured. They want manufactures. Our people are unemployed and anxious to work for the food which foreigners can give us. But our laws forbid corn to be introduced, save at monopoly prices for the benefit of the landed interest. Thus the population that might be healthily employed in producing manufactures to pay for corn is starved and thrown on the land for support, and the amount paid in poor rates by the land greatly exceeds the profit which the corn laws give to the landowners. The farmers are not benefited, nor are the agricultural labourers benefited by this course. No. All suffer, and the community at large suffers most. With an open trade in corn and a fixed duty we should have every man in the country fully fed and happy, instead of our present situation in which so much distress exists—distress of our own producing.

But I am told that with our heavy taxes it is impossible we can receive the corn of a lightly-taxed country; and therefore, we reject all corn from countries where it is cheap. That is the statement of the interested landowners who will not understand the operation of commercial exchanges, and, in reality, act against their own interests. I will prove that it is only by extending our trade, increasing the export of our manufactures, and importing corn and other articles of food, that we can expect to lighten our heavy load of taxation. These are conclusions clear in my mind, and I shall endeavour shortly to make them so to the House.

There are one or two points which I shall presently notice, because it is on them that I ground my reasoning upon this subject. I apprehend it is a general principle which cannot
be denied, that every import must be paid for by an export. If so every quarter of wheat imported puts into employment some manufacture to pay for that import, I wish the House to answer this question: ‘Can the employment of hands in agriculture be now increased?’ I should say ‘very little,’ for there is a limit to the cultivation of land; but there is no limit to the increased employment of hands in manufactures, save a want of demand. Now, what produces a want of demand? A refusal to take from other countries the commodities which they produce. Fortunately for England, all her imports are raw materials. The cost of the raw material, generally speaking, is not more than 9, 10, or, at the outside, 20 per cent. of the finished article; all the rest is the profit on capital and wages laid out in this country. As the cost of the finished article consists from 20 to 50, 60, or even 70 per cent. of wages, it consequently is most important that every device should be adopted to increase the export of the manufactured articles of the country, by which means the population would be employed in the manufacturing of goods, and in the transactions connected with it, whilst the agricultural parishes would be relieved of the burden of maintaining the loads of unemployed poor with which they are at present filled. Gentlemen who have not given particular attention to the subject may not be aware that whenever stagnation takes place in Manchester, Birmingham, or any of those towns in which there is an immense number of artisans and labouring men, there is a decrease of wages to those employed; and the prices of meat, butter, and other products of the soil fall, whilst the unemployed, however great their number may be, are immediately thrown back on the country parishes to be maintained by the poor rates, in the worst possible manner. The consequence necessarily is to burden the land with an increased amount of poor rates, and to lessen, at the same time, the demand for its produce, the profits of the manufacturer and farmer, and also the taxes to the Government
by the decreased consumption of exciseable articles. All thus suffer. Hence the agriculturists are directly interested in the success of the manufacturer, and any check to the prosperity of the latter proves more injurious to the former than any monopoly of the corn laws was ever found to be beneficial. I do not expect to hear it disputed that when wages are high, and the price of food dear, industry is proportionably checked; as it is now generally admitted that any disparity between the price of provisions in two countries has a direct tendency to give encouragement in that country in which the subsistence of man is lowest, and to impose difficulties upon the manufacturers of that country which has food at a higher rate; and the extent of encouragement will be in proportion to the difference of price of food. In Great Britain the price of food is at a higher level than in any other country, and consequently, the British artisan labours at a disadvantage in proportion to the higher rate of his food. In England, therefore, if you have wages higher and corn 30 per cent. dearer than on the Continent, it follows that you are checking the activity and paralyzing the energy of our manufacturers. The manufacturers of Belgium, France, Switzerland, and the United States of America are all actively employed in manufacturing articles of various descriptions, which come into competition with the same kind of articles of our manufacture. Now, if I take the continent of South America as a common market, into which they all enter with us, it is clear that the buyer would not consider the cost at which the manufacture had been produced, but the quality and the price of what he is going to buy. If we are obliged to feed our population 30 per cent. dearer than the population of our rivals is fed, by paying 50
s. a quarter for corn, which in Europe and America can be purchased for 30
s. a quarter, the consequence is clear, that the manufacturers of England are placed in a situation, worse by 30 per cent. in the expense of manufacturing their goods, than their continental and
transatlantic brethren. Consequently, the rate of profit which they would otherwise derive from their superior machinery, and their more easy supply of coal, carriage, etc., is ground down by their meeting in the foreign market the manufacturers of cheaper corn countries. What, then, do I ask the House to do? To place the workmen of England on the same footing as the workmen of other countries, and then I have no doubt that we should extend our commerce in every market in the world, and should supply them with better goods at as cheap, if not a cheaper rate, than any of our rivals. We should thus be able to employ a greater number of workmen in proportion to the greater consumption of the goods we manufacture. I ask—would this hurt the agricultural interest? Quite the reverse. At the present moment the people of England are only three-quarters fed, and the result of this improvement in the export of our manufactures would be, that they would be entirely fed. Thus not only would all the corn now consumed be still consumed, at a price equal to that now paid for it, but there would also be a demand for an additional supply to feed those who are now unemployed, and a burden to the country—which could not fail to prove advantageous to the agricultural interests.

Now, sir, the next question is, what would be the operation of a free trade in corn upon the price of corn in foreign nations? Why, the effect would be this—that every country, knowing the rate of duty at which we suffer its importation, would estimate the expense at which they could transport it to England; and adding the expense of transport to the rate of duty, would calculate the expense at which they could supply our market. Our market would thus obtain a regular supply from every country capable of growing corn, and would consequently, by the constancy of the supply, be free from fluctuations such as we have of late witnessed. Would the price of corn fall in this country in consequence? I think, certainly not. There is abundant proof that the opening of our ports always tends
to raise the price of foreign corn to the price in the English market, and not to sink the price of British corn to the price in the continental market. The effects of a free trade in corn, at a fixed duty, in England, would be to place the workmen of England on the same footing as to price as the workmen of Europe and America, and give free scope to our capital, skill, and enterprise—the price of food would rise everywhere to the price in England, because no person would sell food in any other country, if he could obtain a better price at all times in England. By the present disparity in the price of food, the profits of the British manufacturer are so much reduced, that he is obliged to exact from the workman fourteen, fifteen, or sixteen hours of labour to make up for the difference between his and the foreign manufacture. If the corn laws were altered, the British artisan might again be able to subsist by twelve hours’ labour, a most desirable event.

If the House will allow me, I will very shortly state one or two instances which appear to me proof, almost to demonstration, in favour of my argument; and these occurred on occasions when we have been suddenly compelled to allow our ports to be thrown open to foreign corn. When there is a reduction of the price of corn in the English market, so as to bring it below the rate of importation, except at a great sacrifice of duty, the owners of this perishable article in the foreign ports will submit to a depreciation to the extent of 20 or 30 per cent., or, I had almost said, to any amount, rather than allow the article to remain on their hands at the risk of ultimate loss. And thus the price of corn in foreign ports when the English ports are shut falls to a degree that is much below the expense of production; and the low prices of corn in foreign ports, when England, their only, or chief, port for export is shut, cannot be taken as an example of what the prices would be if the trade in corn was free, and our ports always open. I know that the low quotations of prices abroad have been the means of alarming our farmers as to the consequences that would take place if the ports were open; but the instances I shall
state ought to remove all such fears. In the spring of 1828, the price of wheat in Dantzic was from 22
s. 6
d. to 24
s. 6
d. per quarter, and in Hamburgh, 23
s. to 24
s.; in England the price was about 56
s. In November and December the price rose in England to 76
s., and we were compelled to admit foreign corn free of duty. The price of wheat in Dantzic rose in one fortnight from 24
s. to 50
s., and afterwards, when it could be exported, to 70
s. In Hamburgh, from 23
s. and 24
s., the price rose to 68
s. per quarter. We have, therefore, a right to consider this as a distinct proof that, instead of the prices in England being brought down to a level with those of the Continent, the prices of the Continent were raised—less only by the expense of transport to this country—to those of England; thus tending to prove that England did then, and must continue to, regulate the price of corn throughout the whole world.