An Essay of the Impolicy of a Bounty on the Exportation of Grain

Front matter

AN

ESSAY

OF THE

Introduction

Corn, being the only necessary article, is affected by certain circumstances which render the trade in Corn somewhat more complicated and mysterious than the ordinary cases of trade. This obscurity however might be easily removed, if the real difficulties of the subject were all that we had to contend with. But a number of theories have been formed with regard to it; these have taken possession of people's minds, and to remove these is the first, and probably the greatest task which we have to perform, to diffuse a general knowledge of the principles which ought to regulate this important branch of the national affairs,

The great object is to procure a proper supply of the necessaries of life. During the scarcity which we endured in this country a few years ago, the minds of men were more turned to the subject than they had been before. By the inquiries then made it appeared that during the last forty years this country had not raised all the Corn necessary for its own subsistence; and it was known that during all periods the country had been occasionally subject to the disadvantages and miseries of scarcity. There were two evils therefore existing in this department of the national interests; that of being, in some measure, dependent upon our neighbours for the necessaries of life; and that of being liable to the hardships of scarcity. It was the policy of the State to contrive means for removing both of those disadvantages. They were acknowledged to be disadvantages of the greatest magnitude.

It was properly, and naturally, the chief object of concern, during the pressure of that scarcity, to find the means of redressing the evils immediately felt. The first of these was the importation of the article wanted. But various other measures were talked of. One became so much applauded that Mr. Burke, a very short time before his death, thought it necessary, in a memorial presented to Mr. Pitt, to prove the utter impolicy of it, under immediate fear that it was about to be adopted by the legislature. This was to fix by authority the rate of labourers’ wages, according to the price of corn; it being understood that at the rate of wages, and the price of corn then existing, the labourer was unable to procure the means of subsistence, and that the farmer was making extraordinary and unreasonable gains.

Besides the means of removing the evils immediately felt, the means were sought of preventing the recurrence of scarcity. For this object also one contrivance, that of public granaries, became so much a favourite, that Mr. Burke thought it necessary to warn the public against it in that performance to which I have already alluded, and in which he has told us many things, which it Is to be lamented so few of us seem to know.

While such projects were devised for removing scarcity, the second of the evils above-mentioned, and for preventing its recurrence, our attention was attracted, in some degree, to the first of those objects too, our dependance upon foreign countries for a part of our supply; and various schemes for the improvement of agriculture were daily discussed. The return of plenty put an end to those speculations; and we should have gone on without any further inquiry, till a new scarcity had overtaken us, if it had not been for an effect of the preceding scarcity which began to be experienced.

During the reign of enormous prices and of high profits, it is well known that the ideas of the farmers became too high. They estimated, as was not unnatural, at much more than its proper value, the continuance of the gains they were then making. They were so eager in their business that they became willing to promise any rent for their farms. New leases were in almost all cases granted upon terms proportioned, or nearly proportioned to the price of corn at that time. When the price of corn fell they found themselves of necessity reduced to distress, having bound themselves in an unwise, and unequal contract. But, as is usual with men, they did not blame themselves for the evils which they felt; they blamed the low price to which corn had fallen; and one of the happiest circumstances which could arrive to this country became the object of their clamour and outcry. The farmers had not sufficient profits; they could not carry on their trade; prices must be raised. Of course the landlords liked this cry much better, than that against unreasonable and ruinous leases. They joined in it; for their interest naturally prevented them from seeing its absurdity. They came to parliament for assistance to export corn, till the farmers could sell it high enough to pay them their present rents; and, wonderful to tell, parliament granted that assistance!

Of course it was not for the declared purpose of enabling them to draw great rents that they sought or obtained the law. The old mercantile theory of politics suggested certain vague ideas of the efficacy of bounties; and they persuaded parliament, and endeavoured to persuade the world, that to grant a bounty on the exportation of corn, and a duty on importation, was one of the most effectual means to promote the interests of the country.

The advocates for the law enacted upon these reasons tell us, that the effects of a bounty upon the exportation of corn are to encourage in such a manner the production of corn, that in all ordinary years we shall not only supply ourselves, but have a surplus to export, and that in deficient years we shall have this surplus in reserve, to prevent the effects of scarcity; that the happy con- sequence of this law therefore will be a deliverance from both the evils under which we labour, of being dependent upon our neighbours for the necessaries of life, and of being subject to the hardships and dangers of scarcity.

This is unquestionably a very lofty promise. It is not a trifling benefit which the inventors of this expedient will have the honour of bestowing upon their country. Their merit is not diminished by the simplicity of the means employed to attain so important an end. But it may be reckoned somewhat wonderful, that a discovery of this magnitude should so long have escaped the intellectual eyes of all the great men who have spent their days in studying the means of national prosperity; and should be reserved to distinguish and immortalize those profound thinkers, and indefatigable inquirers who brought forward the late corn law. From the infinite diligence with which they have been long known to study all the profoundest questions of political economy, it was to be expected that they would go much deeper than any of their predecessors; and things of no small importance which had escaped all who went before them we justly hoped that they would bring to light. But a discovery so extraordinary as this even the great hopes which they had raised did not entitle us to expect. So much the greater therefore are our obligations.

They present their reasons to us in abundance of words, and they arc composed of various par- ticulars. They may all however be reduced to two heads; and it will assist us in obtaining a clear idea of them to consider them under division. The first may be denominated their argument from experience; the second their argument from the nature of the case. Under these heads will be included every thing which has been advanced in favour of the bounty upon exportation by Dirom and Mackie, by Dr. Anderson, and Mr. Malthus, and indeed every thing which the author of this essay conceives it to be possible to adduce in behalf of this doctrine. It is his intention to examine these arguments in every light in which they can be presented. And he has distributed the different parts of that examination under separate titles in the chapters which follow.

ESSAY

ON

THE CORN LAWS.

CHAP. I, Of the History of the Corn Laws

To prove from experience the good effects of granting a bounty on the exportation of corn and of imposing a duty on importation, the advocates for that measure give us a chronological account of the corn trade, from the time of Edward the 3d. It will contribute to distinctness, if I make a division of this period. In the year 1688, a law was passed for the first time, granting a bounty on the exportation of corn, and imposing a duty on importation. This law continued in force till about the year 1770, when it was in a great measure repealed. And since the year 1770, the exportation of corn has scarcely been encouraged. We may therefore consider the history of the corn trade, as comprehending three great periods; 1st. That preceding the enactment of the exportation law in 1688; 2d. The period during which that law was in force; and 3d. The period during which that law has been repealed. According to this division we may state the argument from experience, adduced by the patrons of the law, very shortly, thus:

During the first period, exportation was either not permitted at all, or was at least burthened with a duty. No register was kept of exports and imports during this period; so that no conclusion can be drawn from the balance of this account, with regard to the quantity of corn produced. But we have a register of prices. During the last forty years of this period, the average price of the quarter of wheat was £2 14s. 9d. whereas during forty years posterior to 1720, while the law of 1688 was in full force, the price of the quarter of wheat was £1 16s. 2d. This is sufficient to prove that the cultivation of corn was much more prosperous during the latter than during the former period.

At the commencement of the second period, a bounty for the first time was granted upon the exportation of corn; and importation was subjected to a duty, or altogether prohibited. During this period our exports of corn rose greatly above our imports; and at the same time the price of corn was very low,

During the last period, the operation of this law of bounty on exportation and duty on importation has not been steady; sometimes it has been suspended, sometimes permitted, and some times even inverted. And during this period our exportation of corn has fallen greatly below our importation, and the price of corn has become very high.

It appears then, that during the time when the law of bounty was in full force, the exportation of corn was great, and the price low; and that during the times both before and after, when that law was not in full force, the exportation was little or none, and the price high. From this they conclude that to grant a bounty on the exportation of corn, and to impose a duty on the importation, is proved by experience to be wise and politic.

No arguments are more satisfactory than those from experience when the conclusions are legitimate. But no species of false reasoning is more deceitful than that from experience; nor is any more common. Lord Bacon, the great father of the Philosophy of Experience well understood this source of error; and when he divided all false philosophy into three species, he represented those who reason fallaciously from experience as composing, the second of the three classes; and their errors, he said, were still more monstrous and deformed than those of the hypothetical, or speculative philosophers. Some of the greatest and most fatal errors which have ever been offered to the world have been the fruit of an imperfect argument from experience. Such was Mr. Hume's famous argument against Christianity. This too was the origin of the monstrous doctrines of Mr. Hobbes both in religion and politics. How often does false reasoning from the immoral lives of persons who profess to be very religious lead others to become infidels? or how often does false reasoning, from the abuses observed in the management of existing governments, lead people to wish for the subversion of government? What was it but an argument from experience of this sort which brought forward all the horrors of the French revolution? Nothing is more common, since the honours of the experimental philosophy were so generally acknowledged, than to find shallow thinkers bring forward their arguments from experience on every subject. Among the common herd too of readers or hearers you very often find them with the most absurd pretensions of this sort gaining absolute credit. There is no species of pretension, however, against which the man of sense ought to be more on his guard. He will find, if he takes the trouble to examine, that one half of the popular errors which at present prevail are derived from no other source.

When we come to examine a little closely this experience of the advocates for the exportation bounty, we find it to consist in the single circumstance of being co-temporary. The law price of corn, and a great exportation was co-temporary with the law for the bounty; and this is all. To make their argument good then, they must prove every thing which is co-temporary with another, is absolutely owing to that other. The national debt began about the very time when the bounty law was passed. Do they maintain therefore that the exportation and low price of corn during 50 years was owing to the existence and progress of the national debt? A very pretty theory however we think might be formed on this idea. It is the opinion of a numerous class of speculators, that a national debt is advantageous; but that it may be increased so far as to become burthensome and ruinous. Now observe; Great Britain had a national debt from the beginning of the eighteenth century; it went on gradually till the middle of that century, and during that time she continued to export corn and the price of it fell; but about that time the national debt passed the bounds of propriety, and ever since, the importation of corn has increased, and the price has risen. Is not this a demonstration from experience, that a national debt is advantageous till it amount to a certain sum, and is disadvantageous when it goes beyond that sum? It was not from any idea of assistance to the cultivation of corn, or any intention to benefit the nation, that the king's ministers in 1688 proposed, and obtained the law for granting a bounty on the exportation of corn. We are expressly informed in the history of that time, that it was passed to give a premium to the country gentlemen, in order to obtain their consent to the imposition of the land tax. This land tax, therefore, has been co-temporary with the bounty law. Accordingly we may argue that the prosperous state of the corn trade, during the period described, was owing to the land tax. The only very disastrous period too that trade has been since the alteration was introduced into the state of the land tax. The benefit of the land tax then for the encouragement of agriculture is fully proved. I see not why the poor laws should not be entitled to the same distinction, They were in full force during all the time of this prosperity. Some time ago, however, Mr. Pitt introduced certain alterations of the poor laws; and since agriculture has been terribly on the decline. Agriculture has never flourished too since the sinking fund was established; indeed it has declined ever since his present Majesty came to the throne. But it flourished greatly during the reigns of the first two princes of the Brunswick line. Why, therefore, should we not conclude that the existence of those two princes was very favourable to agriculture, but that the existence of the last is very unfavourable to it? Or what if we should say, that the administration of Sir Robert Walpole, the Duke of Newcastle, &c. was very favourable to agriculture, but that of Mr. Pitt is very unfavourable to it; let us, therefore, have done with him, that we may export plenty of corn, and have it cheap! Were nothing more proposed than to refute the patrons of the bounty law, what has been already said, is fully sufficient ’ to shew the futility of their argument from experience. But as it is of importance that the public should receive as complete information as possible, respecting a subject so interesting as this, I shall examine a little more particularly the different periods which I have assigned; and we shall see whether the circumstances of the times do not point out to us causes of the variations in the state of the corn trade, altogether different from the law of exportation.

In the first period, the 40 years immediately preceding the year 1688, are particularly specified. This was that period of tumult, contention, distraction, and distress which succeeded the death of Charles the First; the period of the Protectorate, during which the affairs of the nation were in a state, of so much derangement; and that of the reigns of Charles the Second and James the Second, during which the nation was kept in continual agitation by the fears of popery and arbitrary power. The unhappy circumstances of those times are surely sufficient and more than sufficient to account for the state of the com trade, which was not more unprosperous than any ether branch of national affairs. We have therefore no reason whatever to have recourse to the want of a bounty on the exportation of corn, to explain all the appearances in this first period.

The second period began with the establishment of that admirable constitution, of that balanced system of liberty and coercion, which unites the freedom and the protection of the individual more effectually than has ever yet been done by any other government on the face of the earth. This extraordinary advantage gave an encouragement to every species of industry which could not fail to be speedily and powerfully felt. It was felt accordingly; and the nation went forward in a career of prosperity, of which there is hardly any example. Agriculture experienced the first effects of the happy change, as necessarily happened from the circumstances in which the country was placed. Agriculture was that species of industry which was then best known in the nation, and to which the greatest capital was applied. Manufactures, at least for foreign trade, had previous to this time been very little known. During the tempestuous period too which preceded, when the security of property was greatly impaired, the capital employed in manufactures was the most easily dispersed; and manufacturing industry and enterprize, being most easily discouraged and checked, necessarily suffered more in proportion than the more hardy and indispensable business of agriculture. Agriculture then was in a much better condition to take advantage of the happy circumstances of the revolution; and advanced with very rapid strides for many years. Whoever considers duly these circumstances will not be surprized at the prosperous state of agriculture during this period. He will not find any occasion to account for it by any extraordinary cause, as that of a bounty on exportation. He will rather, if he is surprised at any thing in the case, wonder that, great as the prosperity was, it was not still greater. It will not then I think be denied that all the appearances of the first two periods which afford our experience of the corn trade, may be completely accounted for without the operation of the bounty law.

But what, it may be asked, can be said with regard to the third period? The operation of that law was interrupted during this period, and the prosperity of the Corn trade declined. To what other cause could this be owing but to the want of the duty on exportation? Let me finish the historical sketch which I have begun, and a cause will appear which will probably be judged satisfactory. While agriculture was advancing in the manner I have above described, all other branches of national industry began, from the same causes, to make progress. The movements of commerce were feeble at the beginning, from the extreme state of debility in which they began. It gathered strength however every day; and in a short time its progress appeared evidently to be more rapid than that of agriculture. Agriculture was greatly before commerce at the beginning of the century; but commerce continued to gain ground till toward the middle of the century, or perhaps a little after the middle; when it may be fairly reckoned to have got the start, and it has continued to increase its distance ever since. Whoever is acquainted with the 3d book of the Nature and Causes of the Wealth of Nations, in which Dr. Smith explains so admirably how much more commerce has been encouraged in modern Europe than agriculture, will be at no loss to account for the more rapid progress of commerce than that of agriculture in Great Britain during the last century.

Of the different states of thing here described the necessary effects were these; during the time that agriculture kept before commerce, the produce of argriculture was more than sufficient to supply all those who were employed in agriculture, and those who were employed in manufactures, and in the other business of the nation; it furnished therefore a surplus to export; but when commerce on the other hand advanced greatly before agriculture, then agriculture could no longer afford enough to maintain all those who were employed in manufactures and the other business of the nation, and a deficiency remained to be supplied by importation. This is the cause that since the middle of the last century our importation of corn has exceeded our exportation, and not the temporary suspensions of the bounty on exportation.

If this conclusion be just, all the appearances in the three periods into which they divide the history of the corn trade are then fully accounted for; and the bounty on exportation had nothing to do with them. Let us examine still farther if there is any objection which they can possibly bring to that conclusion. They cannot pretend to doubt that this country was much farther back as a manufac- turing country than as an agricultural country at the time of the revolution. This is a point which is too well known to admit of any dispute. They will readily admit too that this country is now much farther forward as a manufacturing country than as an agricultural country; for this is the thing of which they complain. The particular point of time likewise at which manufacturing industry got before agricultural, they will probably be willing to grant, was that time when exportation of corn began to be changed for importation. We are agreed then with regard to all the facts. We can only dispute therefore concerning causes. Perhaps they will say that the manufacturing business got the start of the agricultural, not on account of those general discouragements imposed upon agriculture, which are so ably illustrated by Dr. Smith, and to which we have referred; but on account of the suspension of the bounty on the exportation of corn. If we saw two ships, the one a great way behind the other, but sailing in the same direction; if we saw too that the last was the fastest sailer, and gradually advanced upon the other, till at last she overtook her; and if we saw that at this time the slow sailing vessel dropt a sail, and the fast sailing vessel advanced before her, but did not increase her distance any faster than she diminished it before, should we say that the lowering of that sail was in any degree the cause why the fast sailing vessel got before the slow sailing one? Surely not. As the comparative velocity of the two ships was exactly the same both before and after that sail was down, we cannot assign to it any influence whatever in the progress of either.

During the first part of the last century, the bounty on the exportation of corn was in full force; during the latter part it was interrupted. But if it appears that the progress of manufacturing industry in its advancement upon agricultural was just as rapid during the time the bounty was operating, as it was in getting before agricultural industry after the bounty was interrupted, it will be ridiculous to ascribe the more rapid motion of manufacturing industry to the want of the bounty on the exportation of corn. Because it will appear that this motion is equally rapid both when the bounty acts, and when it does not act. We have fortunately a series of facts which place this matter beyond all doubt, and prove most decisively that it is not to the bounty on the exportation of corn that we are to ascribe the comparatively slow progress of agricultural industry.

Let us observe the comparative progress of agricultural and commercial industry, during the period when the bounty on the exportation of corn was operating. The test to which the example of the advocates for the bounty leads us to apply is the account of the exports and imports. In the year 1697, the first in which a register was kept of the quantity of corn exported and imported, the of the exports above the imports was 101,643 quarters: in the same year the general exports from Great Britain, including this corn, were £3,525,906 official value. In the year 1764, the last year of the full operation of the corn bounty, the excess of the exports above the imports of corn was 535,528 quarters; and in the same year the general exports from Great Britain amounted to £17,756,831; that is to say, during this period of nearly 70 years, the corn trade exhibits an improvement of about 400,000 quarters for one year, worth not so much as £800,000, while the general commerce of the country exhibits an improvement of more than fourteen millions. Such then was the comparative progress of commercial and agricultural industry, while the bounty on the exportation of corn was in full operation; the progress of commercial industry was many times more rapid than that of agricultural. Let us next observe what was the case after the operation of the bounty was interrupted. I shall only examine it down to the commencement of the war with republican France, because the extraordinary changes then experienced are not to be explained according to the ordinary course of events. The general exports from Great Britain then in the year 1792 amounted to £24,905,200. This compared with the account of the exports in 1764, exhibits an improvement of rather more than seven millions in thirty years, which is almost exactly the rate of improvement during the period in which the bounty operated. I have not immediately before me the state of the corn trade for the precise year 1792, but I have an account of the average of the five years immediately preceding.

That makes the excess of imports amount to 411,819 quarters. This added to the 535,528 quarters exported in 1764, makes a difference of 947,847 quarters. But let us recollect what has to be done with this quantity of corn. It has to maintain all the persons who are employed in preparing merchandise for exportation to the amount of seven millions annually; for which it is not half sufficient. If we consider this we shall be at no loss to account for the necessity of importation without supposing any decay in the state of agriculture. If we consider too the vastly increased consumption of finer food for man, and of corn for horses, to which our great wealth has given occasion, we shall see how a still greater quantity of corn is rendered necessary; and from all these circumstances we shall be forced to conclude that unless agriculture had made rapid advances during the period since the suspension of the bounty on exportation, a much greater importation must have been necessary than we have experienced.

But we need not pursue these comparisons. The advocates for the bounty admit all that is necessary for their own refutation. They do not pretend that agriculture has declined. They would only expose themselves to ridicule if they did. There are too many proofs that it has not declined for any one to dare to dispute it. These advocates therefore do not deny that so far from declining, agriculture is improving. I know not that there is one among them who will hesitate to admit that it has improved as fast during the last 50 years, as it did during the 50 years preceding. But whether they will admit this willingly or not, the fact is certain. And every document we have tends to prove that the augmentation of capital, of skill, and by consequence of produce in agriculture, has been much greater during the latter period than during the former. Agriculture, instead of declining, has advanced therefore since the suspension of the bounty, and has advanced more rapidly since it was suspended than before.

Observe then the admirable consistency of the advocates for the bounty. They say that this law greatly promoted agriculture, and that agriculture, suffered much when it was repealed; yet they allow that agriculture has been more rapidly improved since that law was repealed, than it was during the time when that law was in operation. An ordinary reasoner would think that a contrary conclusion were fully as reasonable; that because agriculture has been more improved since the bounty law was repealed, therefore the bounty law was injurious to agriculture. Oh! but, say those ingenious speculators, we then could export corn, and we now must import it. What can be concluded from this but that we have more people to eat corn? They want however to bring the quantity of corn we raise on a level with the quanity of people we have to eat it; that is to say, they want to make agriculture increase as fast as commerce. So do I; and so does every one who understands and wishes well to the interests of his country. But is granting of a bounty on the ex- portation of corn the way to do this? Certainly not. Have we not shewn by the fact that commerce encreased as much faster than agriculture while such a bounty existed, as it has done since that bounty was taken away?