MR. COBDEN'S THEORY OF THE IMPROVEMENT IN TRADE.
TO THE EDITOR OF THE SPECTATOR.
London, 23d October 1843.
SIR—Your paper of the 14th instant contains a letter from " A Liberal Elec- tor," in which are advanced what seem to me rather strange doctrines con- cerning the operation of the Corn-laws. Alluding to the speech delivered by Mr. COBDEN at the recent meeting of the Anti-Corn-law League in the Covent Garden Theatre, the "Liberal Elec- tor" says, "I shall take it for granted that the corn-consumers have had to pay, &c and that as much labour will be called into employment in the one case, when corn is dear, as in the other, when corn is cheap."—Spec- tator, 14th October 1843, p. 970, "Liberal Elector's" letter. I had expected that the number of your paper for the 21st instant would have contained some answer to the doctrines here set forth ; in which case I should not have troubled you. But as in this I have been disappointed, and as I should be sorry to see what appears to me errors in the very principles of Free Trade promulgated in the Spectator, allow me, without regularly joining issue with the " Liberal Elector," to show, in opposition' to what seem the principal doctrines of his letter—first, that the corn-growers do not gain all that is lost by the corn-consumers when grain is dear; and in the second place, that the dearness of food is (as all indeed feel) injurious, and in exact proportion to its intensity destructive of the prosperity of a country. When a country is in its infancy, and there are but a few mouths to feed, it makes use only of its best land to raise its food upon; and on this land food is produced easily and abundantly. As the population increases, and more food is required, this must be supplied by taking inferior lands into cultivation. On these inferior lands food is raised less easily or less abundantly, and has therefore become a dearer commodity, and risen in price. There is also another way in which the increased demand for food is in part met,—that is, by invest- ing additional labour in the lands already cultivated. If ten men cultivate an estate, and produce a certain crop, and ten men more be added to their number, they will indeed be enabled, by more elaborate cultivation, to produce a much larger crop than before, but not twice as large. Here, then, we have twice the expenditure, but not twice the crop ; which denotes that it is growing more difficult to raise the requisite food, and that food, therefore, is growing dearer. Whether, then, we proceed by having recourse to inferior lands, or by more elaborate cultivation—and practically, of course, we proceed in both ways— we find that our food grows dearer in proportion to our increasing population. The population of this country is so much greater, in proportion to its super- ficial extent, than that of most other countries, that we have been driven much more rapidly than other countries to have recourse to our inferior lands ; and, consequently, food is much dearer with us than with them. This could not be the case were free importation of food allowed : for, as soon as the price of Corn rose in this country so high above the price in other countries as to equal the expense of importation, food would flow in upon us from abroad. Hence- forward, as long as free importation continued, the price of food in the country would be its foreign price together with the cost of importation; and no food could be raised in the country that cost more than this aggregate. Just pre- vious to the enactment of laws against the importation of food, let us suppose this aggregate to have been 21. a quarter for wheat : at that time, then, 21. would have been the price of wheat in the country. The consequences of prohibiting importation would be that the wheat that formerly came from abroad would now have to be raised at home, and that on the inferior lands. Wheat would therefore speedily rise in price from 21. to (say) 31. a quarter. Here then is the public loss occasioned by the laws against importations : it amounts to 11. a quarter on all the wheat they consume.
Now, that portion of the wheat that was formerly imported is now raised in
the country ; and being raised on inferior lands, the coat of its production is great, and it necessarily sells at 31. a quarter : but it is not on this portion alone of the wheat which they consume that the public pay 31. a quarter, for there being bat one price in the market they pay 3/. also on that portion which has all along been raised in this country. This latter portion, however, being raised at no greater expense than before, and yet selling for 1L more a quarter, there results to the corn-grower a clear gain of 11. a quarter on each quarter of wheat contained in this portion. This, then, is the gain of the corn-grower or landlord, viz. 11. a quarter, on so much of the wheat consumed by the public as has all along been raised in the country; but the loss of the public is 1L on all they consume. Hence, the public loss exceeds the corn-growers gain by II. on all that portion of the wheat which was formerly, and but for the laws against importation would still be imported. And the reason of this is plain.
The effect of these laws on the public is to make them pay for all their food as if it were all raised on bad land. But some of it is raised on good land; and this, though selling as high as that raised on bad land, is raised at less cost, and this difference in cost is the corn-grower's gain. But a great portion of the country's food is now actually raised on bad land, and really costs, making the usual allowance for interest, what it sells for. That this portion of the coun- try's food is dear, is gain to no man.
It is indeed a dead loss. It is a loss arising from false investment ; from bestowing labour where it will not be well repaid; from calling on the land to do more than it can do well.
I have assumed throughout RICARDO'S theory of rent, and for brevity's sake I have treated the subject in a very abstract manner. I, however, still hope, that what I have said will serve to show what a large proportion of the 60,000,0001.,* stated by Mr. COBDEN to be annually overpaid for food, does not come back to the corn-growers, but is dead loss to the coun- try, I may say to mankind. It is just the same as if money, or goods, or bread, equal in amount to this portion of the public loss, were annually thrown into the sea.
I shall now, in the second place, proceed to show how the dearness of food assails the prosperity of a country: and this is by reduction of the rate of profits; for a permanent rise in the price of food is caused by the land of a country being called upon for a larger supply of food than before. As this call is from time to time repeated, it is each time answered with increasing difficulty.
Thus, if an estate be called upon to produce 1,000 quarters more than it used, and this be effected by putting ten additional labourers on it, the net proceeds will be the difference between 1,000 quarters and the maintenance of ten men.
Again, suppose the estate is called upon for 1,000 quarters more, it will not now suffice to put ten additional men on it, for it will be more difficult to ex- tract from the land this second 1,000 additional quarters than it was to obtain the first. It will be now necessary to place, say fifteen additional men on the land. The net proceeds therefore of raising this second 1,000 additional quarters, are the difference between the 1,000 quarters and the maintenance of fifteen men.
Thus, as we proceed, the net proceeds continually diminish, and we gradually approximate the limiting point where they cease altogether ; the number of men required to raise the rain having become so great as to consume all that is raised. At this limiting point capital, at least that invested in food, yields no return ; and inour progress towards this point—and our progress is hastened by every difficulty thrown in the way of raising food—capital invested in food yields daily a decreasing return. But the returns of all the capital of the country diminish paripassu with those of the capital invested in food; for the profits of all investments are, taking every thing into consideration, the same, otherwise the bad investments would soon be abandoned and the good ones soon choked. Now every other investment may be abandoned at will ; that for raising food must proceed. Hence this is the governing investment. The returns, therefore, of all the capital of the country have a tendency to keep pace, and ultimately do keep pace, with the returns of the capital invested in food. The Corn-laws, then, compelling us, whether for the benefit of a: class or from blindness, to raise our food under disadvantages, force an unnatural scantiness of return on the capital invested in food. This scantiness of return is soon communicated to the rest of the capital of the country : hence a universal diminution in the rate of profits, and generally in the interest of money. Trade remaining still open to all her risks, is daily stinted in her gains, the accumulation of capital is retarded, and the prosperity of the country impaired.
With many apologies for the length of this letter, I remain, Sir, your
• Mr. COBDEN states, and the " Liberal Elector" allows, that we have for the last five years paid annually 60,000,0001. more for food than we are doing auw, in conse- quence of the low prices produced by the good harvests. Now the abolition of the laws against importation would bring about still lower prices than the present: so that, for my purpose, 1 might estimate the public lomat 100,000,0001. instead of 60,000,0001.
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