TO THE EDITOR OF THE SPECTATOR.
Mauchester, 30th January 1843.
SIR—I have read with considerable edification the able letter of your corre- spondent " X " in the Spectator of 28th January, and ain satisfied that the subject which he so ably treats will become of much greater importance in public estimation ere any long time elapses. The increasing amount of the produce of industry which annuitants have long been and are still receiving, has been one great cause of the difficulties and distresses which the country has experienced. Productive industry is over- burdened, as well as fettered, by restriction ; and the magnitnde.of the evils resulting from each of these causes should be duly estimated by those who have the guidance of the affairs of this great country. An opportunity pre- sented itself at the termination of the French war to alter the standard of value to the advantage of the industrious classes, by fixing the metallic standard at the rate to which the paper currency had then been depreciated ; but this opportunity was allowed to pass away, and the country is now feeling the in- jurious effects, through having to pay at least one-third more of commodities to the public creditor, in the yearly interest now paid in the present standard. We had then reached a state, perhaps through ignorance of all the parties con- cerned in the management of the business of the country, when a determina- tion had to be made, founded on principles of equity : the currency had either to be increased in value by returning to the old standard, or to be taken as it was then found, and a new standard fixed in accordance with the extent of the depreciation. The former course was pursued: iodustry was loaded, and we are now suffering the consequences. It is true that a reduction of the standard of value at that time, to the extent of the depreciation of the paper currency, would not have prevented that rise in the value of gold as compared with com- modities which has been going on ever since ; but the evil would have been less : we should not then have bad to pay an ounce of gold for every 31. 17s. 10d. of debt, while the gold had so much increased in value as to command arid re- present twice the amount of labour or of the produce of labour. Equity, and even policy, would even now require that an alteration should be made in the standard of value, so as to do fair and equal justice to both debtor and cre- ditor : but it is a subject surrounded with great practical difficulties, such as public men do not like to encounter ; and the probability is that we shall go on from one expedient to another without grappling with the evil, leaving to circumstances to determine our future fate. Your correspondent gives due importance to the value of gold in a country situated like ours, but seems not to estimate accurately the causes which determine that value in any particular country. He appears to think that protection, as it is called, keeps down the value of gold, and consequently keeps up money-prices. Now this may or may not be the case : protection or restriction, so far from necessarily keeping up money-prices, may lower them. The restrictive system prevents the full de- velopment of industrial power, and it may render a country less able to com- mand a large portion of the precious metals than it would obtain under a system of free trade, and therefore prices might fall under the restrictive system. This, I apprehend, has occurred in Spain. Free trade in Spain would, by stimulating industry, give that country a greater command over the gold of the commercial world than she has at present. And the restrictive system may take away the superior command of the precious metals which Great Britain now possesses. Restriction prevents labour from going to that de- partment of industry where it could be most productively employed, and of course renders it less productive. Let restriction be carried sufficiently far to cripple the productive power of this country, while the industry of other countries is on the advance, and this country must in no long time lose that superior command over the gold of the commercial world which makes it com- paratively abundant and prices high. Here then a question arises—can we rely on restriction as a means of keeping up money-prices ? This is an im- portant inquiry, and has a direct bearing on the question of Free Trade which now agitates the country. Prices, it is admitted by all, have been long falling— probably from the year 1814, and this too in spite of a restrictive system carried to a great extent. This goes to prove that restriction alone cannot keep up prices. And if restriction has been proved incapable of keeping up prices during the last thirty years, why should it keep them up in the next thirty, or the next twenty, ten, or five ? It is not skill and industry alone that can keep up prices, but skill and industry superior to other countries. Each country, by offering the products of its industry in the gold-markets of the commercial world, draws to itself some certain supply of gold; and the amount of the supply is determined by the relative productive power of each country furnishing commodities for the gold. If Great Britain can with little labour furnish commodities for gold, whilst other countries cannot furnish them ex- cept by employing much labour, gold will be comparatively abundant in Great Britain ; but let other countries equal or excel Great Britain in the supply of the market, and the superior supply of gold will go to those other countries. Restriction in Great Britain cannot prevent France, Germany, or America, from improving their industrial powers, and thereby drawing more of the gold of the commercial world to those three countries, leaving less for Great .Bri- tain. Our superiority over other countries has become less and less from about 1814; that superiority is still diminishing; and there is nothing in our restric- tions that can insure a continuance of that degree of superiority which we still retain. We may conclude, then, that there is nothing in our present arti- ficial state which can insure a continuance of a high range of money-prices; and therefore there is no reason why it should be adhered to on that account.
On the other hand, it is evident, if corn were to be permitted to be imported freely without duty, that the import would have a tendency to drain us of a part of our gold, and to lower the general range of money-prices. Here, then, we find ourselves in a state where we cannot afford to pay our incumbrances except we have high money-prices, and yet in which we cannot insure those high prices, either by a continuance of restrictions or apparently by a system of free trade. What is then to be done? We have only to do the best we can. Surrounded by evils, the results of former misconduct, we have only to look our difficulties in the face, and adopt that course which, on the whole, seems to promise the best results. An alteration of the standard of value is talked of by some ; but no one has the hardihood to say plainly how it should be done, or to what extent it should be carried. That desperation may at some future period lead to it, is not improbable ; but it n ill be very extraordinary if any direct attempt to effect it does not convulse society to its very core. As- suredly, we have no reason to presume that it will be had recourse toss a prac- tical measure until other means have been tried and failed; whether it will be too late then, time alone can determine.
A gradual relaxation of our restrictive system may be said to be the course adopted by the practical statesmen and legislators of the day ; and under the operation of this course we have been oscillating from comparative prosperity to distress, but on the whole sinking into a lower state, and having succes- sively lower ranges of money-prices. Free trade is now the remedy recont• mended ; and of this your correspondent " X" says, " To those, then, who ask for free trade as a means of paying the taxes, 1 tell them they are self- deceivers if they think that that alone will mend their pockets." Haring been long alive to the great evils inflicted on this country by having to pay such immense sums annually in gold constantly increasing in value, and agreeing with much of what is advanced on the subject by " X," I am yet of opinion that free trade is the only available expedient we have to enable us to surmount our present difficulties, and place the country on a safe basis: and I will just glance at some few of the considerations which induce we to come to this conclusion.
Free trade would increase our imports, lower the prices of the articles im- ported; and as far as the effect of these imports went, they would tend to take money out of the country and lower the general range of money-prices. But, concurrently with this process, there would he an increase in the demand for our exports, arising out of the increased means of paying for them which the people of other countries would have in consequence of our having imported their commodities. Our manufacturers would now find ample employment ; and as a new career of prosperity would present itself, the industrial power of the coun- try in this department would be developed more fully. Additional improve- ments would be made ; and as manufacturing and commercial business would be conducted on a more extensive scale, we should excel other countries which now compete with us in the markets of the world, more than we do at present ; and our command over the gold of the commercial world would be greater than it now is. This increased command over gold might, and probably would, coun- teract and more than counteract the effects of our increased imports, and prices might rise; the rise extending itself probably to those markets the most favourably situated for furnishing us with our imports, whilst prices would somewhat lower in other less favourably situated parts. That this would be the effect of free trade is sufficiently evident, as is seen within our own country where no impediment to it exists. In London and the manufacturing districts, where the greatest command over money exists, the prices of the great mass of ordinary commodities arc the highest. As we proceed from those localities to- wards Wales, Scotland, and Ireland, prices are found to be lower, the produc- tive power of the inhabitants of those parts not enabling them to obtain an equally abundant supply of money with which to exchange their commodities ; they, therefore, have such prices as arise from the overflow of money from the
%fette ntres,towadswhthitis regilatdrawnthcstrrgforce. But e P:cesaresomuchtihigherastieymewit teinuneeoftiee great centres. And if free trade existed, and the power of this country to draw money from the rest of the world was increased, the prices of the Western coast
,o0 of Europe might also increase in some degree, as well as of those other mar- kets from which we draw our supplies of food. But Great Britain might he the centre or area where the precious metals would he accumulated in the greatest degree, and where prices would be high, even higher than they are at present, notwithstanding that a large amount of food might be imported.
It is contended then, that free trade might raise prices instead of lowering them : but suppose that it only prevented their further fall, that is more than can be expected under our restrictive system, as experience has proved that under that system they are declining, and no reason can he assigned why they should not continue to decline under it. But the great benefit which would result from free trade would arise from the increase which it would cause in the productive power of the people. When every one from experience has ascertained in what way he can best employ his capital and his labour to bene- fit himself, more wealth will be created for the whole community. A certain portion of this wealth has to be paid annually to annuitants ; but if the whole amount produced is increased, the portion paid to the annuitants can he the better spared, and more will be left to reward industry. Under a system of free trade in this country, there seems no reason why. the industry of our people richest should not command an abundant supply of the chest soils of the world in return for the products of their labour. Free trade might do that which would be equal to adding millions of fertile land to those which we have at present. It might give us not only a greater abundance of food, but of timber, sugar, coffee, and numerous raw materials of manufacture, with the exercise of only an equal amount of labour to that which we bestow at present to obtain an insufficient return.
With a free trade, population would certainly increase faster than it has done, without want of employment being experienced,—for why should there be any deficiency of employment in such a country as ours, when the world was open to the exchange of our products ? These products will be taken by millions upon millions, if we will take theirs in exchange. There seems no reason why double the population should not exist in this country, and their labour be more pro- ductive than at present. What was Lancashire a century ago ? And why should not all England undergo the same kind of alteration in the next cen- tury that Lancashire has experienced in the one that has passed ? There is no natural impossibility in this, nor ail improbability in it under a system of free trade. Our taxation, heavy as it is, is borne, and we live—poorly, it is true—but still we do live : but, if we had additional population, all well employed and abundantly supplied, each individual would contribute his share towards the aggregate amount of the taxes, and the portion required to be paid by each would be reduced. The burdens that now press so heavily on the present population, struggling under restrictive embarrassments, might become light when borne by an additional number at liberty to exercise their industry in such way as experience proved to be the best. Had we that large amount of productive industry which has within a few years been driven from the country, exercising its beneficial influence within it under a system of free trade, that industry would now assist largely in bearing the national burdens, instead of straggling in the wilds of Australia, where it is an additional burden to England. Had we those emigrants who have gone to America to become manufacturers exercising their industry in this country and exchanging its products for the food of America, they, in the taxed articles they consumed, would have borne their share of our great burdens, and of course rendered them lighter to us. Had we all the manufacturers for export of France, Germany, and America, living and exercising their industry in Eng- land, exporting their products and importing food, it is clear that they would assist us to bear our burdens; and had we had a system of free trade since 1814, such a set of manufacturers might have grown up in England exporting their products and importing their food, and paying their share of the taxes which must be paid by those who are in the country, whether they be few or many. Free trade may yet possibly create such a population, and extricate the country i from its difficulties; and s therefore the experiment to be had recourse to under our present embarrassments. It is to be hoped that it is not too late— but delay is dangerous. America, or France, or Germany, may possibly occupy the ground on which we have hitherto stood, and to a greater or less extent beat us in the markets of the world. And if we lose our 'vantage-ground, we have the worst to fear—falling prices, paralyzed labour, reduced capital, and greatly in- creased burden of taxation ; when scenes may arise, which to think of will try the strongest nerves.
[It is obvious that this discussion is now carried from newspaper columns—at least from columns overcrowded as ours are—to the arena of Parliament; whence it returns to us, with embarrassing redundancy, in the shape of long speeches that leave no room for long letters. The space, therefore, is closed against a host of correspondents who have sent us more communications on this exhaustless sub- ject. It is the less to be regretted, as some of them do not take the pains even to understand what they write about and comment upon. One, for instance, who calls himself " A Limb of the League," in a discussion which requires the utmost attention and clearness, permits the grossest confusion of ideas to make him say, that the correspondent whose letter we published last week "clamours for a Cora .law." No discussion can be advanced by arguments so reckless of facts.—ED.]
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