19 DECEMBER 1846, Page 10

THE TEA-TRADE.

To THE EDITOR OF THE SPECTATOR.

SIR..4 have attentively considered the letter of Mr. Bland which appeared in the last number of the Spectator; and I am not without hope that, as regards the expediency of a remission of the duty on tea, our opinions may ultimately coin- cide.

I infer from Mr. Bland's admissions, that we are already agreed upon the getjeral principles which I ventured to propound,—namely, that import-duties, im- posed not for protection but for revenue, should be levied, as far as may be prac- ticable, on those foreign commodities of which the supply cannot be increased in proportion to the increase of demand ,• and that when duties can be remitted, the remission should be made upon articles which are not subject to any species of monopoly, natural or fiscal, and the price of which to the consumer must conse- quently fall in proportion to the amount of the remitted duty. Agreeing in these principles, it is not likely that we should continue to differ with regard to their application. My principal, though not my sole objection to any considerable abatement of the duty on tea, rests upon the assumption that the value of tea in the market is mainly determined, not by the cost of production, but by the ex- tent of demand. Your correspondent admits, that if this assumption be conform- able to fact, the objection is valid; and I admit, that if this assumption be con- trary to fact, my principal objection is untenable. Thus the difference between us resolves into a simple question of fact. In reference to the question of fuel, your correspondent states that tea is an in- digenous and spontaneous product, not only of the greater part of China Proper, but of Cochin China, large districts of Tartary, Japan, Burmah, and many other vast regions of territory in the East; that the native consumption baffles all at- tempt at calculation, being multifold in excess of all the foreign tea-drinking com-

munities; and that very e quantities are prepared in many districts for the barter trade at Singapore, whence the hundreds of thousands of tea-consumers throughout the Eastern Archipelago draw their supplies. Now, if we were to admit, upon the authority of 2.1r. Bland, that unlimited sup- plies of tea may be obtained from those extensive regions, the admission of that fact could not subserve his argument, unless he should be able to establish the further fact, that the teas thus obtainable are of the qualities suitable to the markets of England and of the continents of Europe and America. But this further fact Mr. Bland does not affirm. On the contrary, he states other facts which appear to involve its non-existence. He tells us, that the large quantities of tea sent to Singapore undergo an imperfect process—a sort of semi-manipulation; that he has many specimens of rude, unmanufactured tea, all of them partaking of a pungent rancid taste, owing to the juices being absorbed instead of being driven off by the evaporation which a quick and regulated heat would cause; and that the singular contrast presented by the expensively-prepared and highly delicate kinds of tea in vogue with the higher classes, suffices to show the easily

variable qualities producible by the ingenuity and persevering industry of the Chinese.

Thus it would appear,from your correspondent's own facts, that the quantity of tea of a superior quality bears a small proportion to the quantifies of an inferior quality. It is true that he states it as his opinion, that we have only to apply the natural stimulus—demand, to insure, not a quadruple, but a quintuple quan- tity of the properly manipulated, keeping, and exportable commodity. But what are the facts upon which this opinion is based ? Can your correspondent tell us with any approach to precision, what would be the period required to effect any considerable extension of the cultivation of that variety of the tea-tree which yields the exportable commodity ? and what the amount of the labour which would be necessary to give to a quadrupled quantity of the exportable commodity the requisite manipulation for the markets of Europe and America? Your cor- respondent is far too intelligent not to perceive, that it follows as a necessary in- ference from the very facts which he has himself advanced, that during the period which would be required to effect an extensive alteration in the application of la- bour and capital in China, the effect of a remission of the duty on tea would be followed, as shown by Mr. Senior, by a rise of price in favour of the Chinese pro- ducer, rather than by a fall of price in favour of the British consumer.

It appears to me that your correspondent, in common with other advocates of an extensive remission of the duly, attaches undue importance to the tea-trade. The nature and extent of the advantage which the country derives from this traffic are well shown by Mr. Senior in his Treatise upon Political Economy. The advantage results from the diminished quantity of labour by which we are ena- bled, through the international division of employment, to supply ourselves with an agreeable superfluity. We bring from China, in exchange tor commodities pro- duced by the labour of forty thousand, a quantity of tea Which it would require the labour of one million two hundred thousand to produce at home. This is the whole advantage. Were the ports of China hermetically sealed against us, the forty thousand who now produce goods to be exchanged for tea, would produce goods to be exchanged for coffee. The change in the direction of industry would be attended, in the first instance, by disadvantage; and the substitution of coffee for tea would for a time be disagreeable. But after the temponny,derangement should have passed, there would be no diminution of capital, and no reduction of wages. The amount of wages and the wellbeing of the labouring classes depend, as Mr. Senior has shown, " on the extent of the fund for the maintenance of la- bourers, compared with the number of labourers to be maintained." This fluid could be neither increased nor diminished by the substitution of coffee for tea. Apart from the temporary evils of which sudden changes in the direction of in- dustry are ever productive, the total annihilation of the tea-trade would not throw a single operative out of employment. The leaders of the Anti-Tea-tax agitation appear to think that an extension of the tea-trade would have the same effect upon the progress of our manufacturing industry with that which would result from an equivalent extension of those branches of our foreign trade which augment our supply of food and raw mate- rials. According to their arguments, or rather according to their declamation, an increase of the trade with China, giving us a quadruple supply of tea, would cause an extension of manufactures equal to that which would follow from an increase of trade with the United States, furnishing us with a quadruple supply of cotton and of corn. The comparative advantages of our trade with North America and with China are examined at some length in Colonel Torrens's "Letters on Com- mercial and Financial Policy." The following passage appears to have a prac- tical bearing on the question now under discussion in the manufacturing districts.

"The most beneficial commerce carried on by independent states, is that be- tween a densely-peopled country, possessed of manufacturing advantages, and a thinly-peopled country, pmsessed of fertile wastes. Every exchange of products between two countries thus circumstanced tends to enlarge the field of employ- ment in both. The reason is obvious. Every interchange of their respective com- modities replaces, by a direct operation, the elements of capital by which they were produced. When themanutacturer gives to the farmer the wrought articles— clothing and implements—expended on the farm, in exchange for the raw produce —food and materials—consumed in the factory; the elementary cost of production is replaced to both; and the two great divisions of industry may be carried to an indefinite extent. In a densely-peopled manufacturing country, importing raw produce, the field of employment is extended, and the demand for labour increased, not by exporting a greater quantity of finished goods, but by importing a greater quantity of food and materials. Measure the comparative importance of our trade with America and China by this criterion. Our principal return from the United States is cotton-wool; from China, tea. Stop our imports from the United States, and our manufacturing millions perish; suspend our imports from China, and not a band will be thrown out of work. Establish a free trade with the thinly-peo- pled continent, capable of furnishing you with unlimited supplies of food and Ma- terials in exchange for finished goods, and the field of employment, and the de- mand for labour, receive an indefinite extension. Establish free trade with the densely-peopled continent, supplying, in exchange for your finished goods, an agreeable beverage, not an element of reproduction, not an article upon which labour can be employed, or by which it can be subsisted while at work, and you

may diminish to the consumer the price of a comfort regarded by many as a semi-necessary, but you cannot thereby secure the substantial advantages at' rais-

ing profits, advancing wages, and preventing destitution. These advantages, no extension of foreign trade, save that with a country capable of giving raw produce in exchange for finished goods, can by possibility confer."—Commercird and Fi- nancial Policy, p. 275.

Your correspondent asks me to qualify the concluding sentence in my former communication, that "traders may urge, but thinkers will oppose any consider- able reduction of the duty on tea." I shall be happy to comply with his request if he can show me that the correctness of the o on therein expressed cannot

be established upon the principles developed in . J. S. Mill's" Essay on the Laws of Interchange between Nations, and the Distribution of the Gains of Commerce among the Countries of the Commercial World." According to the theory of international exchange presented by this eminent thinker, the opening of the ports of China to British goods at low duties ought to have been accom- panied by the following results,—first, a balance of payments in favour of England, causing an importation of the precious metals from China; second, a fall in the money value of Chinese commodities; third, a restoration of the com- merce between the two countries to a trade of barter under an altered scale of

prices, causing the produce of a given quantity of British labour to exchange for the produce of a greater quantity of Chinese labour than before. Now these theo- retical inferences have been verified by actual results. Since the opening of the ports of China to British goods at low rates of duty, there has been an abstraction of the precious metals and a general fall of prices in China, cawing a marked diminution in the importation of cotton-wool from India, and a considerable in- crease in the exportation of raw silk to England. The increased demand for Bri- tish manufactures in China has caused the produce of a given quantity of British

labour to exchange for the produce of a greater quantity of Chinese labour than before. Alter these commercial rektions—increase our demand for tea by a diminution of the duty—the value of the produce of Chinese labour will rise as compared with the produce of British labour, and we shall obtain a less proportion than at present of the increased productiveness of industry consequent upon the international divisions of employment. In some of its results the high duty on tea is positively, advantageous to the British manufacturer. It relieves him from a competitor for the cotton-wool of China, and it enables him to obtain from China increased quantities of raw silk at diminished prices. Here fact and theory coincide; and the deductions of science are actual events. I have the honour to be, Sir, your obedient servant, LOONOMM.