THE BRUSSELS CONVENTION.
[To TRH EDITOR OF TRH " SPECTATOR:1 Sin,—Your article in the Spectator of November 29th is most interesting, and I hope, as one who has taken an active part in the matter for thirty years, that you will permit me ta say a few words in reply to the questions you ask. You define Free-trade as "a system which declines to interfere with the natural course of the market." That is exactly what Cobden says. You ask for his exact words; they are as follows :— " Whether corn becomes dearer with a free trade or whether it is cheaper, it matters not to us, provided the people of this country have it at its natural price, and every source of supply is freely opened, as Nature and Nature's God intended it to be."— Speech, July 3rd, 1841.
I could give you several other quotations in confirmation. A bounty enables a foreign producer to "interfere with the natural course of the market," and to prevent "every source of supply" being" freely opened." The result is that he obtains a position in our market similar to that which would result from our levying a differential duty on all producers of the commodity who receive no bounty, and allowing his produce to enter free. Another effect of his bounty is to stimulate overproduction and bring down prices. This is followed by a third result. He can sell below cost price, and yet make a profit. His competitors cannot, and therefore reduce their production. The fourth result is a reduced supply and a rise in price. The history of sugar illustrates this process most distinctly. For more than twenty years we have had constant fluctuations between overproduction with low prices and reduced supplies with high prices. It is believed by those acquainted with the details of production and prices that when bounties are abolished and free competition restored we shall have an average price, which certainly will not exceed, and which probably will be below, the average price of even the more recent bounty period. This shows that the protection of foreign producers on British markets by means of bounties is not, in the long run, a benefit to the consumer. It evidently "interferes with the natural course of the market," and there- fore destroys the Free-trade defined by you and Cobden. You ask: "In what respect does the result of this artificial stimulus or arrangement differ from the result of a natural process?" I think I have answered that question. But you go on to urge that if the foreign producer were to discover a new manure or a new kind of machinery, we should be very pleased to buy from him. Certainly, and we should speedily follow his example and adopt his improvements. I have also answered your further question, whether there is any reason to suppose that a period is approaching when the price will be raised, and the consumer compelled to pay it. As I have stated, we have had repeated periods of reduced production and high prices, brought on purely by the effect of the bounties in discouraging natural competition. Each time the bounty-fed source of supply has squeezed out some competition, until now it constitutes more than two- thirds of the visible supply of the world. At the present moment Germany and Austria, with their new bounties, are prepared to squeeze out not only natural competi- tion, but also the competition of those European countries whose bounties are on a smaller scale. We are, there- fore, within measurable distance of the result indicated by Mr. Chamberlain to which your question refers. Lastly, you draw a parallel between countervailing a bounty to save the West Indies and levying a duty on corn to save the British farmer. In the one case free and open compe- tition is restored and the fittest survives, in the other free competition is destroyed in order to enable the unfittest to survive. I will only add that the sole object of the penal clause is to give the contracting parties security that if they
bind themselves to abolish bounties, they shall not be subject to the competition of bounties from other quarters. It would be impossible to obtain an international Convention without
such security.—I am, Sir, &c., GEORGE MARTINEAU.
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