WHAT IS THE REAL INCIDENCE OF THE CORN-LAWS? WOULD THEIR
ABOLITION BE THE MEANS OF KEEPING THE PEOPLE IN CONSTANT EMPLOYMENT?
TO THE EDITOR OF THE SPECTATOR.
Edinburgh, 17th November 1893.
Sin—In my letter contained in your number of the 11th instant, I stated, that previous to entering into an inquiry into the circumstances which regulate the employment of the labouring population, I would endeavour to show that the abolition of the Corn-laws would not suffice to keep them in constant work. This appears to me absolutely necessary : for if it be admitted, as so many loudly assert, that the removal of all taxes on the importation of corn would not only afford the people a cheap and plentiful supply of food, but would, at the same time, preclude the possibility of commercial crises, secure an ever-flourishing trade and a constant demand for labourers, accompanied. by large profits and good wages, then it is altogether unnecessary for me to enter into the inquiry I propose to myself.
The position which I intend to support in this letter is this—The Corn-laws are injurious, because, by enhancing the price, they either stint the labourer in his food, or oblige him to abridge his other comforts, in order to enable him to obtain the necessary quantity of food: but the Corn-laws are not the cause of commercial crises, and their abolition would not necessarily call into employment a single additional labourer.
In order to illustrate my position, I shall suppose, first, that the whole corn consumed in England, in consequence of restrictive laws, was grown within the island ; that the average price was 60s. a quarter, and the quantity of corn consumed was 30 millions of quarters annually. I shall next suppose that the Corn-laws were abolished ; and that in consequence the price fell from 60s. to 30s. a quarter, and that the consumption was doubled, and rose from 30 mil- lions quarters annually to 60 millions. I shall then proceed to show, that this change would not necessarily bring into requisition any additional manufac- turing labourers. If I make out this result, arising out of a supposition most favourable to those who maintain the all-in-all effect of the abolition of the Corn-laws, I think it will be conceded to me that I have made good my case. I shall now proceed.
Previous to the repeal of the Corn-laws, when the consumption of the country was entirely supplied by the home-grower, as assumed by me, the ma- nufacturers bought their corn from the English farmers by means of an ex- change of 60s. worth of manufactures for every quarter of corn they consumed.
I may here remark, that in using the expression manufacturer I use it in contradistinction to that of agriculturist, and comprehend under it all those engaged in industrial pursuits—as well tailors, shoemakers, masons, &c. as those engaged in what are called the great branches of manufacture. The English manufacturers, therefore, in the first case supposed—previous to the repeal—disposed of 90 millions of pounds sterling worth of goods in exchange for their 30 millions quarters of corn. These 90 millions worth of goods may therefore be said to be the exact measure of the amount of manufactures dis- posed of by means of the corn-trade, previous to the abolition of the Corn-laws. The question then is, will more than 90 millions worth of manufactured goods be disposed of in the corn-trade after the repeal ? Let us next take the second case, in which the Corn-laws are abolished. The manufacturers here, we have supposed, consume 60 instead of 30 millions of quarters : but then they only exchange 30s. instead of 60s. worth of goods for every quarter of corn; and thus the quantity of manufactured goods required for the corn-trade would be precisely the same as before-90 millions worth of goods. This appears to me incontrovertible. Every one knows that the manu- facturer obtains his corn, whether he buys it from the foreign or home grower, by an exchange of the commodities which he fabricates ; and that according to the price of the corn is he obliged to manufacture and give away a larger or smaller quantity of those commodities. It is evident that ifs greater consump- tion of corn takes place from a fall of price, this arises not from the manufac- turer disposing of more goods, but from his being enabled to obtain a greater quantity of corn for that amount of his labour which he can afford to devote to the purchase of corn. He has other wants, and he must reserve a certain amount of his labour for the supply of those wants.
I have not hitherto considered, whether after the repeal of the Corn-laws the supply would be obtained from the foreign or home grower. I shall now
proceed to show that this would make no difference to the English manufac- turer,. It is a fully recognized principle in political science, that the breadth of soil in a country which will be cultivated for raising corn will always depend, other things being the same, upon the price at which the corn is sold : and it is certain that a fall of price from 60s. to 30s. a quarter would throw out of corn cultivation a considerable quantity of the poorer soils of England. I think, therefore, in the case supposed, after the repeal, we may assume that instead of 30 millions quarters, 20 millions quarters only would be raised in England, and for which 30 millions worth of manufactures would be exchanged. The remaining 40 millions quarters, and for which 60 millions worth of goods would be given, would be brought from abroad, say from America. It is evident in this case, that our trade with America would only be in- creased in proportion to the corn which we took from her, and for which she would take our manufactures to the amount of 60 millions: for every thing else would be exactly the same as previous to the repeal of the Corn-laws. America would not, in the case supposed, take from us one pound of additional manufactures except in exchange for the corn which we took from her. Now, if we were, previous to the repeal of the Corn-laws, supplied entirely with home- com, and which the manufacturers bought from the British farnws in exchange for their manufactures, in the same way as with a free trade they would buy their corn from America with a like exchange, the effect of buying two thirds from America, instead of the whole, as formerly, from the British farmer, would merely be the substitution to that extent of a foreign corn-trade for a home corn-trade. If the manufacturers sold 60 millions of additional goods to the American farmer, they would sell 60 millions less to the English farmer. The advantage of a foreign corn-trade over a home corn-trade, consists entirely in our being able to obtain the article at a lower price, or for the ex- change of fewer manufactures. If corn was to be bad cheaper from America than at borne, of course there would be a gain to the people in this respect, although no additional employment was afforded. In such a case, the manu- facturing labourer would be enabled to obtain a greater quantity of corn than he formerly obtained for the same quantity of goods; or if he did not want more corn than he previously consumed, he would be able to buy the same amount with a less quantity of goods than formerly ; and he would have the surplus of his manufactures to exchange for something else, either in the home-market or in sonic other foreign market. This would undoubtedly improve his con- dition; but still there would be no greater quantity of manufactured goods disposed of, nor more employment afforded to the manufacturing labourer, than previous to the repeal.
There is not such a charm in foreign trade as many seem to imagine. On the contrary, if the article was to be had as cheap at home as abroad, there might be said to be some advantage in the trade being a home trade rather than a foreign one. For instance, if the manufacturer buys his food from the English farmer by an exchange of his manufactures, there is here a double class of labourers—the manufacturing and the agricultural—equally fed and clothed, &c., by means of the corn-trade. Whereas, when the corn is brought from America, the manufacturing labourer is alone employed; and the American agriculturist has the consumption and enjoyment of those commodities which, with a home corn-trade, would be consumed by the English agriculturists. Still, such a consideration as this ought never for a moment to prevent the Legislature from passing such laws as would enable every person to choose his own market, and to buy where he can obtain cheapest, and sell where he can do so to the greatest advantage. Under a proper state of things, as I hope to be able to show in my subsequent letters, every labourer in the country ought to be fully employed; and, with free trade, all would at the same time have the advantage of being able to obtain what they wanted with the least possible coot of labour.
It is evident, if I am correct in the supposition that the abolition of the Corn-laws would not create a greater demand for manufacturing labour, that the money amount of wages would not be in the slightest degree raised by the repeal. The workman who formerly received his two shillings a day would not receive a farthing more. But his two shillings would enable him to buy a larger amount of bread; and so far his condition would be improved. Neither would the capitalist or employer derive higher profits. His gain, like that of the labourer, would merely consist in the saving made by himself and family by the fall in the price of the bread he consumed : unless, indeed, taking ad- vantage of the cheapness of food, be succeeded in reducing the wages of his workmen, and thus obtained for himself the whole profit of the fall in the price of bread; leaving them in the same condition in which they existed previous to the repeal of the Corn-laws. I may here remark, that a particular class of manufacturers might perhaps, in the first instance, derive greater profit than that arising from the fall in the price of bread,—I mean that ekes who work chiefly for the foreign market. A substitution of a foreign trade for a home trade would undoubtedly benefit them : but then their gain would be counter- balanced by the loss of those who fabricated chiefly for the home market ; and thus there could not be said to be a gain to the manufacturers in the aggre- gate otherwise than by the fall in the price of bread they consumed. Having pointed out that the manufacturing labourers would not have more employment by the abolition of the Corn-laws, it is hardly necessary for me to show that the agricultural labourers would not have more. The abolition of the Corn-laws, by lowering the price of grain, and by the substitution, to a certain degree, of a foreign corn-trade for a home corn-trade, would most un- doubtedly throw out of grain-cultivation a certain extent of our poorer soils. The agricultural labourers at present employed upon these tracts of land would, as a matter of course, be thrown out of their present occupations, and be obliged to seek work in some trade or factory. This, it cannot be denied, would be a hardship to them in the first instance. But every improvement by which cheapness of production is promoted must always draw after it partial injury to some particular class of the community. The spinning-jenny threw out of employment the common-wheel-spinners, and the power-loom has done the same with the hand-loom weavers. It would be absurd to say that the great mass of the population should be stinted in their food, merely because a number of labourers are at present most unprofitably employed in raising grain from sterile soils, at double the cost of labour at which it could be obtained by an exchange of manufactured goods. Having now discussed the question of the Corn-laws, I have shortly to re- quest your attention to the effect which the removal of the Sugar-duties would produce in creating a demand for more manufactures. In consequence of our differential duties, we are obliged to buy dear sugar from our own Colonies instead of cheap sugar from the Brazils. I shall sup- pose that Jamaica sugar costs 60s. a hundredweight, while the Brazilian sugar might be bad at 30s. The removal of those duties would enable the popula- tion of this country to consume double the quantity of sugar at present used ; and that simply because only half the price or half the amount of manufac• tined goods would be required to be given for the same quantity of sugar. The advantage in this case would be precisely that which I have pointed out would result from the abolition of the Corn-laws. We should obtain our sugar twice as cheap as before; but there would be no advantage on the score of more manu- factures being taken off our hands, or more employment being afforded to our working population. It is the same with all other restrictive laws. The evils arising from such laws are simply that of rendering certain articles dearer, and compelling us to give a larger amount of manufactures for them : and the advantage to be de- rived from removing those restrictions, would simply be that of enabling us to obtain the different commodities we required by the exchange of a less amount of manufacuring labour. Having now pointed out what in my opinion is the real incidence of the Corn-laws and other restrictions upon our commerce, I shall with your per- mission, in my next letter, proceed to the principal subject of inquiry I have Proposed to myself—an inquiry into the causes of the frequent stagnations of trade and want of employment, by which the labouring population of this country are so frequently afflicted. In this letter I have avoided every question regarding money, and have carried on my argument by the supposition of a direct exchange of goods ; although those exchanges are always of course affected through the interven- tion of a circulating medium. But this, when properly considered, makes no difference in the result. I shall continue to follow the same course, that I may not be involved in currency fallacies and in the theories of the currency- doctors ; which in reality are the great obstacles to arriving at a correct judg- ment in questions relating entirely to labour and production.