TO THE EDITOR OF THE SPECTATOR.
Chesham, 1st October 1841.
SIR—As I have peculiar views on the subject of the great commercial questions by which the country is now agitated, and as I have nowhere dis- covered any reasonings or arguments in reference to the Corn-laws and Im- port-duties which at all amount in my mind to a solution of the difficulties of the question, I beg the favour of your permission to insert in your paper the following remarks.
1st. It is utterly immaterial whether the general money-prices of a country or of the world at large be high or low, so long as the prices at which we buy and the prices at which we sell are proportionable to each other, the purpose of money being merely to measure. 2d. It is Impossible between two markets which lie side by side freely open to each other, and with ready means of transport between them, that there can be any considerable diversity of price; for if any such diversity could for a time exist, there would immediately be a profit obtainable upon an importation of goods into the dearer market, and as money would be taken back in ex- change, the goods and the money of the two markets would speedily be restored to equilibrium. This is an universal principle. 3d. In proportion as money increases in the world by supplies of gold from the mines, so do the prices of the whole world rise. In proportion also as money, whether consisting of gold or bank-notes, is increased in a particular country, so do the prices of that country rise. 4th. There is no restraint to the banking issues of this country except that which arises from the necessity imposed on the Bank of England to hold her motes convertible into gold.
5th. Accordingly, when issues are increased, prices rise; when prices rise, goods are imported and gold exported ; and when the exportation of gold puts in jeopardy the convertibility of Bank paper, the issues must be contracted. It is thus that our circulation and our prices are limited, so that they cannot be increased ad infinitum. 6th. But in England we have hedged round our shores with a wall of pro- tecting-duties, varying in amount from 5 to 500 per cent., and comprising every article which can be grown on English soil or wrought by English labour ; and these duties have the effect of preventing the importation of goods and the
consequent exportation of money, unless our prices are so high as to yield a profit after payment of the duty, or, as it were, to overflow the wall of pro- tection.
7th. It is the natural tendency of our system of banking to increase the cir- culation of the country until the issues are checked by a drain of bullion. Free trade in banking necessarily leads to this. Accordingly, our banks do in- crease the circulation and raise the prices of the country beyond the natural level of the prices of the world, until the circulation does overflow the wall of protection. This is tie reason why the prices of England are higher than the prices of the Continent. 8th. Our import-duties vary in amount from 5 to 500 per cent., and, as it i were, constitute a wall of irregular height round our shores. When, therefore, the prices of the country are raised by banking-issues, the circulation generally overflows where the wall is lowest,—that is, importations take place of those goods which are the least protected, or which from accidental circumstances are most required, as corn ; and as our money thus escapes, our prices can never rise so high as to afford the foreigner a profit on the importation of those goods which are most protected. This is the reason why low duties produce revenue and high duties produce none—the reason why 17 articles produce twenty- two millions and 1,134 articles only one million of Customs revenue. 9th. All the while, it is utterly immaterial to domestic commerce whether the general prices of the country are high or low ; for as we buy so we sell. There is no advantage iu having wages high if food also be high, nor any detriment in low wages if food also be low. Labour probably yielded as much to the la- bourer when wages were 2d. a day as now when they are 2s. ; for then a sheep could be bought for 10d., and now only for 30s. or 40s. The same principle holds good with regard to rents and all other contracts. 'We gain nothing, therefore, by the inflation of our prices, for our contracts among ourselves both as huyers and as sellers are proportioned to each other : but it is not so with regard to foreign commerce. As we manufacture at high money-prices, paying inflated wages to our labourers, we exclude ourselves from selling in all foreign markets, unless we are able by the extraordinary assistance of machinery to produce goods, notwithstanding our high prices, cheaper than foreigners can produce them with low prices. This we can do in the case of cotton ;'but with regard to the bulk of the productions of England, we have from this cause no market but our own. The consequence is, that we are becoming daily more and more insulated ; and though the actual quantity of our exports does in fact go on increasing, the 'value of them does not increase.
10th. The result of this system (over and above the injustice inflicted on particular trades—cotton, for instance) is simply this, that the Tariff enables us to maintain a larger circulation of money and higher prices in this country than we could maintain without it.
11th. Now what would be the result of a total abolition of the whole Tariff, or (since taxes must be paid) of such a reduction of it as should make it most profitable for the purposes of revenue? We should pull down the wall which upholds our circulation, and forthwith the prices of this country would descend to the prices of the Continent. This would happen, first, by the impcirtation of foreign goods at present prohibited, and the consequent exportation of gold ; secondly, by a panic among the banks in consequence of the drain of bullion, and ultimately by a very considerable and permanent contraction of the paper- issues of the country, leaving our prices at the Continental level. The dimi- nution of the money of the country may be estimated at fifteen millions—not by absolute exportation of gold, but by contraction of issue. 12th. And what would be the good consequences of this measure? First, Smuggling would cease; for the prices of England would no longer afford a temptation to fraud, and therefore the Preventive Service might be dismissed. Secondly, Absenteeism would cease ; for the low prices of the Continent would no longer tempt our citizens to spend their fortunes abroad. Thirdly, The very lowness of our prices would protect us from foreign competition, and our agriculturists would be more than protected by the expense of transporting so bulky a commodity as corn from so great a distance as America or the Baltic. Fourthly, The employment of industry would be incredibly increased; for as our money-prices would be the same as those of other nations, and as our industry, mechanical skill, and natural resources, are fargreatcr than theirs, we should be able to sell all goods, in which labour is the chief ingredient, cheaper than any nation in the world. And as for all we export we necessarily import in return, we should be overflowing on all sides with the abundance of the whole earth. Why do we deny ourselves these blessings, thwarting the manifest and bounti- ful intentions of Providence to make all his creatures happy in the enjoyment of the fruits of each other's industry, and of the friendship which commercial intercourse creates ? Why, in order that we may maintain a circulation of money fifteen millions more than our share/ Only for this ; for protections benefit no one; one protection neutralizes the effect of another, and where all are protected there is no monopoly. 13th. But there are evil consequences which would also result from the mea- sure : all the contracts of the State and of the People bear reference to the in- flated state of prices which has so long existed. When Sir ROBERT PEEL, in 1819, contracted the circulation and reduced the prices of the country by a return to cash-payments, by the same measure he effectually added 50 per cent. at least to the burden of the National Debt, and to every mort- gage-debt, bond-debt, portion, and legacy, which had been created on the faith of the continuance of the high prices occasioned by the Bank Restriction Act. It is in the memory of thousands now that mortgages created and legacies charged on estates, which were of double value during that inflated period, became after the return to cash- pay- ments of more value than the estates themselves not that the estates came to produce less corn, but that money, being made scarce, became worth more corn, for the value of money was not understood. So, if by an abolition or reduction of the Tariff, the prices of this country were reduced to the level of the Conti- nent, although industry would indeed be set free, every burden of the State and every contract of the People would be increased thirty or fifty per cent. by the change. This, therefore, is not a measure to be easily adventured ; but it is to. be adventured notwithstanding. It would even be better to incur this evil than to go on as we do. But it is not necessary to incur this evil at all. There is one and only one method to avoid it—a means most certain and infallible in its effects. It would, however, occupy far too much space to enter upon it here, as it is connected with the most intricate parts of the question of Cur- rency. I have explained it at large, in a treatise entitled Currency and Import- Duties, published by RICHARDSON, Cornhill, and RUMSEY, Wellington Street, Strand. At present, I have done sufficient if I have shown that the connexion between the question of currency and the other important commercial ques- tions which now agitate the country cannot with impunity be overlooked. In conclusion, let me observe, that I believe all parties, agriculturists as well as manufacturers, are suffering from the continuance of the present system ; and that if only the true bearings of the questions at issue were properly understood. by them, their unreasonable hostility and animosity would utterly cease. I should extremely lament, to see the sacrifice of any particular interest to the blind force of faction. I believe that a repeal of the Corn-laws, without other extensive contemporaneous modifications of our commercial system, would be a measure of the utmost injustice • but I am also convinced, that, accompanied by the modifications suggested, they, as well as all the rest of the monstrous system under'the operation of which the country ii now withering and wasting, might and ought to be swept away, with the utmost advantage to every class in the community. I am, Sir, your most obedient servant, jOSEPII HEATS.