The Grounds of an Opinion on the Policy of Restricting the Importation of Foreign Corn

With regard to this great majority, it is impossible that they should not feel very widely and severely the diminution of their nominal capital by the fall of prices. We know the magic effect upon industry of a rise of prices. It has been noticed by Hume, and witnessed by every person who has attended to subjects of this kind. And the effects of a fall are proportionately depressing. Even the foreign trade will not escape its influence, though here it may be counterbalanced by a real increase of demand. But, in the internal trade, not only will the full effect of this deadening weight be experienced, but there is reason to fear that it may be accompanied with an actual diminution of home demand. There may be the same or even a greater quantity of corn consumed in the country, but a smaller quantity of manufactures and colonial produce; and our foreign corn may be purchased in part by commodities which were before consumed at home. In this case, the whole of the internal trade must severely suffer, and the wealth and enjoyments of the country be decidedly diminished. The quantity of a country's exports is a very uncertain criterion of its wealth. The quantity of produce permanently consumed at home is, perhaps, the most certain criterion of wealth to which we can refer.

Already, in all the country towns, this diminution of demand has been felt in a very great degree; and the surrounding farmers, who chiefly support them, are quite unable to make their accustomed purchases. If the home produce of grain be considerably diminished by the opening of our ports, of which there can be no doubt, these effects in the agricultural countries must be permanent, though not to the same extent as at present. And even if the manufacturing towns should ultimately increase, in proportion to the losses of the country, of which there is great reason to doubt, the transfer of wealth and population will be slow, painful, and unfavourable to happiness.

3. Of the class of landholders, it may be truly said, that though they do not so actively contribute to the production of wealth, as either of the classes just noticed, there is no class in society whose interests are more nearly and intimately connected with the prosperity of the state.

Some persons have been of opinion, and Adam Smith himself among others, that a rise or fall of the price of corn does not really affect the interests of the landholders; but both theory and experience prove the contrary; and shew, that, under all common circumstances, a fall of price must be attended with a diminution of produce, and that a diminution of produce will naturally be attended with a diminution of rent.¹⁴

Of the effect, therefore, of opening the ports, in diminishing both the real and nominal rents of the landlords, there can be no doubt; and we must not imagine that the interest of a body of men, so circumstanced as the landlords, can materially suffer without affecting the interests of the state.

It has been justly observed by Adam Smith, that 'no equal quantity of productive labour employed in manufactures can ever occasion so great a reproduction as in agriculture.' If we suppose the rents of land taken throughout the kingdom to be one fourth of the gross produce, it is evident, that to purchase the same value of raw produce by means of manufactures, would require one third more capital. Every five thousand pounds laid out on the land, not only repays the usual profits of stock, but generates an additional value, which goes to the landlord. And this additional value is not a mere benefit to a particular individual, or set of individuals, but affords the most steady home demand for the manufactures of the country, the most effective fund for its financial support, and the largest disposable force for its army and navy. It is true, that the last additions to the agricultural produce of an improving country are not attended with a large proportion of rent;¹⁵ and it is precisely this circumstance that may make it answer to a rich country to import some of its corn, if it can be secure of obtaining an equable supply. But in all cases the importation of foreign corn must fail to answer nationally, if it is not so much cheaper than the corn that can be grown at home, as to equal both the profits and the rent of the grain which it displaces.

If two capitals of ten thousand pounds each, be employed, one in manufactures, and the other in the improvement of the land, with the usual profits, and withdrawn in twenty years, the one employed in manufactures will leave nothing behind it, while the one employed on the land will probably leave a rent of no inconsiderable value.

These considerations, which are not often attended to, if they do not affect the ordinary question of a free trade in corn, must at least be allowed to have weight, when the policy of such a trade is, from peculiarity of situation and circumstances, rendered doubtful.

4. We now come to a class of society, who will unquestionably be benefited by the opening of our ports. These are the stockholders, and those who live upon fixed salaries.¹⁶ They are not only, however, small in number, compared with those who will be affected in a different manner; but their interests are not so closely interwoven with the welfare of the state, as the classes already considered, particularly the labouring classes, and the landlords.

In the Observations, I remarked, that it was 'an error of the most serious magnitude to suppose that any natural or artificial causes, which should raise or lower the values of corn or silver, might be considered as matters of indifference; and that, practically, no material change could take place in the value of either, without producing both temporary and lasting effects, which have a most powerful influence on the distribution of property.'

In fact, it is perfectly impossible to suppose that, in any change in the measure of value, which ever did, or ever can take place practically, all articles, both foreign and domestic, and all incomes, from whatever source derived, should arrange themselves precisely in the same relative proportions as before. And if they do not, it is quite obvious, that such a change may occasion the most marked differences in the command possessed by individuals and classes of individuals over the produce and wealth of the country. Sometimes the changes of this kind that actually take place, are favourable to the industrious classes of society, and sometimes unfavourable.

It can scarcely be doubted, that one of the main causes, which has enabled us hitherto to support, with almost undiminished resources, the prodigious weight of debt which has been accumulated during the last twenty years, is the continued depreciation of the measure in which it has been estimated, and the great stimulus to industry, and power of accumulation, which have been given to the industrious classes of society by the progressive rise of prices. As far as this was occasioned by excessive issues of paper, the stockholder was unjustly treated, and the industrious classes of society benefited unfairly at his expense. But, on the other hand, if the price of corn were now to fall to 50 shillings a quarter, and labour and other commodities nearly in proportion, there can be no doubt that the stockholder would be benefited unfairly at the expense of the industrious classes of society, and consequently at the expense of the wealth and prosperity of the whole country.

During the twenty years, beginning with 1794 and ending with 1813, the average price of British corn per quarter was about eighty-three shillings; during the ten years ending with 1813, ninety-two shillings; and during the last five years of the twenty, one hundred and eight shillings. In the course of these twenty years, the government borrowed near five hundred millions of real capital, for which on a rough average, exclusive of the sinking fund, it engaged to pay about five per cent. But if corn should fall to fifty shillings a quarter, and other commodities in proportion, instead of an interest of about five per cent. the government would really pay an interest of seven, eight, nine, and for the last two hundred millions, ten per cent.

To this extraordinary generosity towards the stockholders, I should be disposed to make no kind of objection, if it were not necessary to consider by whom it is to be paid; and a moment's reflection will shew us, that it can only be paid by the industrious classes of society and the landlords, that is, by all those whose nominal incomes will vary with the variations in the measure of value. The nominal revenues of this part of the society, compared with the average of the last five years, will be diminished one half; and out of this nominally reduced income, they will have to pay the same nominal amount of taxation.

The interest and charges of the national debt, including the sinking fund, are now little short of L40 millions a year; and these L40 millions, if we completely succeed in the reduction of the price of corn and labour, are to be paid in future from a revenue of about half the nominal value of the national income in 1813.

If we consider, with what an increased weight the taxes on tea, sugar, malt, leather, soap, candles, etc., etc. would in this case bear on the labouring classes of society, and what proportion of their incomes all the active, industrious middle orders of the state, as well as the higher orders, must pay in assessed taxes, and the various articles of the customs and excise, the pressure will appear to be absolutely intolerable. Nor would even the ad valorem taxes afford any real relief. The annual fourty millions, must at all events be paid; and if some taxes fail, others must be imposed that will be more productive.

These are considerations sufficient to alarm even the stockholders themselves, indeed, if the measure of value were really to fall, as we have supposed, there is great reason to fear that the country would be absolutely unable to continue the payment of the present interest of the national debt.

I certainly do not think, that by opening our ports to the freest admission of foreign corn, we shall lower the price to fifty shillings a quarter. I have already given my reasons for believing that the fluctuations which in the present state of Europe, a system of importation would bring with it, would be often producing dear years, and throwing us back again upon our internal resources. But still there is no doubt whatever, that a free influx of foreign grain would in all commonly favourable seasons very much lower its price.

Let us suppose it lowered to sixty shillings a quarter, which for periods of three or four years together is not improbable. The difference between a measure of value at 60 compared with 80 (the price at which it is proposed to fix the importation), is 33 1/3 per cent. This percentage upon 40 millions amounts to a very formidable sum. But let us suppose that corn does not effectually regulate the prices of other commodities; and, making allowances on this account, let us take only 25, or even 20 per cent. Twenty per cent. upon 40 millions amounts at once to 8 millions—a sum which ought to go a considerable way towards a peace establishment; but which, in the present case, must go to pay the additional interest of the national debt, occasioned by the change in the measure of value. And even if the price of corn be kept up by restrictions to 80 shillings a quarter, it is certain that the whole of the loans made during the war just terminated, will on an average, be paid at an interest very much higher than they were contracted for; which increased interest can, of course, only be furnished by the industrious classes of society.