Books: Importation of Foreign Corn
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Thomas Malthus >> Importation of Foreign Corn
As we have clearly, therefore, our choice between two systems, under
either of which we may certainly look forwards to a progressive
increase of population and power; it remains for us to consider in
which way the greatest portion of wealth and happiness may be
steadily secured to the largest mass of the people.
1. And first let us look to the labouring classes of society, as the
foundation on which the whole fabric rests; and, from their numbers,
unquestionably of the greatest weight, in any estimate of national
happiness.
If I were convinced, that to open our ports, would be permanently to
improve the condition of the labouring classes of society, I should
consider the question as at once determined in favour of such a
measure. But I own it appears to me, after the most deliberate
attention to the subject, that it will be attended with effects very
different from those of improvement. We are very apt to be deceived
by names, and to be captivated with the idea of cheapness, without
reflecting that the term is merely relative, and that it is very
possible for a people to be miserably poor, and some of them
starving, in a country where the money price of corn is very low. Of
this the histories of Europe and Asia will afford abundant
instances.
In considering the condition of the lower classes of society, we
must consider only the real exchangeable value of labour; that is,
its power of commanding the necessaries, conveniences, and luxuries
of life.
I stated in the Observations, and more at large in the Inquiry into
rents,(11*) that under the same demand for labour, and the same
consequent power of purchasing the means of subsistence, a high
money price of corn would give the labourer a very great advantage
in the purchase of the conveniences and luxuries of life. The effect
of this high money price would not, of course, be so marked among
the very poorest of the society, and those who had the largest
families; because so very great a part of their earnings must be
employed in absolute necessaries. But to all those above the very
poorest, the advantage of wages resulting from a price of eighty
shillings a quarter for wheat, compared with fifty or sixty, would
in the purchase of tea, sugar, cotton, linens, soap, candles, and
many other articles, be such as to make their condition decidedly
superior.
Nothing could counterbalance this, but a much greater demand for
labour; and such an increased demand, in consequence of the opening
of our ports, is at best problematical. The check to cultivation has
been so sudden and decisive, as already to throw a great number of
agricultural labourers out of employment;(12*) and in Ireland this
effect has taken place to such a degree, as to threaten the most
distressing, and even alarming, consequences. The farmers, in some
districts, have entirely lost the little capital they possessed;
and, unable to continue in their farms, have deserted them, and left
their labourers without the means of employment. In a country, the
peculiar defects of which were already a deficiency of capital, and
a redundancy of population, such a check to the means of employing
labour must be attended with no common distress. In Ireland, it is
quite certain, that there are no mercantile capitals ready to take
up those persons who are thus thrown out of work, and even in Great
Britain the transfer will be slow and difficult.
Our commerce and manufactures, therefore, must increase very
considerably before they can restore the demand for labour already
lost; for the and a moderate increase beyond this will scarcely make
up disadvantage of a low money price of wages.
These wages will finally be determined by the usual money price of
corn, and the state of the demand for labour.
There is a difference between what may be called the usual price of
corn and the average price, which has not been sufficiently attended
to. Let us suppose the common price of corn, for four years out of
five, to be about L2 a quarter, and during the fifth year to be L6.
The average price of the five years will then be L2 16s.; but the
usual price will still be about L2, and it is by this price, and not
by the price of a year of scarcity, or even the average including
it, that wages are generally regulated.
If the ports were open, the usual price of corn would certainly
fall, and probably the average price; but from at has before been
said of the existing laws of France, and of the practice among the
Baltic nations of raising the tax on their exported corn in
proportion to the demand for it, there is every reason to believe,
that the fluctuations of price would be much greater. Such would, at
least, be my conclusion from theory; and, I think, it has been
confirmed by the experience of the last hundred years. During this
time, the period of our greatest importations, and of our greatest
dependence upon foreign corn, was from 1792 to 1805 inclusive; and
certainly in no fourteen years of the whole hundred were the
fluctuations of price so great. In 1792 the price was 42s. a
quarter; in 1796, 77s.; in 1801, 118s. a quarter; and, in 1803, 56s.
Between the year 1792 and 1801 the rise was almost a triple, and in
the short period from 1798 to 1803, it rose from 50s. to 118s. and
fell again to 56s.(13*)
I would not insist upon this existence as absolutely conclusive, on
account of the mixture of accident in all such appeals to facts; but
it certainly tends to confirm the probability of those great
fluctuations which, according to all general principles, I should
expect from the temper and customs of nations, with regard to the
egress of corn, when it is scarce; and particularly from the
existing laws of that country, which, in all common years, will
furnish us with a large proportion of our supplies.
To these causes of temporary fluctuations, during peace, should be
added the more durable as well as temporary, fluctuations occasioned
by war. Without reference to the danger of excessive scarcity from
another combination against us, if we are merely driven back at
certain distant intervals upon our own resources, the experience of
the present times will teach us not to estimate lightly the
convulsion which attends the return, and the evils of such
alternations of price.
In the Observations, I mentioned some causes of fluctuations which
would attend the system of restrictions; but they are in my opinion
inconsiderable, compared with those which have been just referred
to.
On the labouring classes, therefore, the effects of opening our
ports for the free importation of foreign corn, will be greatly to
lower their wages, and to subject them to much greater fluctuations
of price. And, in this state of things, it will require a much
greater increase in the demand for labour, than there is in any
rational ground for expecting, to compensate to the labourer the
advantages which he loses in the high money wages of labour, and the
steadier and less fluctuating price of corn.
2. Of the next most important class of society, those who live upon
the profits of stock, one half probably are farmers, or immediately
connected with farmers; and of the property of the other half, not
above one fourth is engaged in foreign trade.
Of the farmers it is needless to say anything. It cannot be doubted
that they will suffer severely from the opening of the ports. Not
that the profits of farming will not recover themselves, after a
certain period, and be as great, or perhaps greater, than they were
before; but this cannot take place till after a great loss of
agricultural capital, or the removal of it into the channels of
commerce and manufactures.
Of the commercial and manufacturing part of the society, only those
who are directly engaged in foreign trade, will feel the benefit of
the importing system. It is of course to be expected, that the
foreign trade of the nation will increase considerably. If it do
not, indeed, we shall have experienced a very severe loss, without
anything like a compensation for it. And if this increase merely
equals the loss of produce sustained by agriculture, the quantity of
other produce remaining the same, it is quite clear that the country
cannot possibly gain by the exchange, at whatever price it may buy
or sell. Wealth does not consist in the dearness or cheapness of the
usual measure of value, but in the quantity of produce; and to
increase effectively this quantity of produce, after the severe
check sustained by agriculture, it is necessary that commerce should
make a very powerful start.
In the actual state of Europe and the prevailing jealousy of our
manufactures, such a start seems quite doubtful; and it is by no
means impossible that we shall be obliged to pay for our foreign
corn, by importing less of other commodities, as well as by
exporting more of our manufactures.
It may be said, perhaps, that a fall in the price of our corn and
labour, affords the only chance to our manufacturers of retaining
possession of the foreign markets; and that though the produce of
the country may not be increased by the fall in the price of corn,
such a fall is necessary to prevent a positive diminution of it.
There is some weight undoubtedly in this argument. But if we look at
the probable effects of returning peace to Europe, it is impossible
to suppose that, even with a considerable diminution in the price of
labour, we should not lose some markets on the continent, for those
manufactures in which we have no peculiar advantage; while we have
every reason to believe that in others, where our colonies, our
navigation, our long credits, our coals, and our mines come in
question, as well as our skill and capital, we shall retain our
trade in spite of high wages. Under these circumstances, it seems
peculiarly advisable to maintain unimpaired, if possible, the home
market, and not to lose the demand occasioned by so much of the
rents of land, and of the profits and capital of farmers, as must
necessarily be destroyed by the check to our home produce.
But in whatever way the country may be affected by the change, we
must suppose that those who are immediately engaged in foreign trade
will benefit by it. As those, however, form but a very small portion
of the class of persons living on the profits of stock, in point of
number, and not probably above a seventh or eighth in point of
property, their interests cannot be allowed to weigh against the
interests of so very large a majority.
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.
I own it appears to me that the necessary effect of a change in the
measure of value on the weight of a large national debt is alone
sufficient to make the question fundamentally different from that of
a simple question about a free or restricted trade; and, that to
consider it merely in this light, and to draw our conclusions
accordingly, is to expect the same results from premises which have
essentially changed their nature. From this review of the manner in
which the different classes of society will be affected by the
opening of our ports, I think it appears clearly, that very much the
largest mass of the people, and particularly of the industrious
orders of the state, will be more injured than benefited by the
measure.
I have now stated the grounds on which it appears to me to be wise
and politic, in the actual circumstances of the country, to restrain
the free importation of foreign corn.
To put some stop to the progressive loss of agricultural capital,
which is now taking place, and which it will be by no means easy to
recover, it might be advisable to pass a temporary act of
restriction, whatever may be the intention of the legislature in
future. But, certainly it is much to be wished that as soon as
possible, consistently with due deliberation, the permanent policy
intended to be adopted with regard to the trade in corn should be
finally settled. Already, in the course of little more than a
century, three distinct changes in this policy have taken place. The
act of William, which gave the bounty, combined with the prohibitory
act of Charles II was founded obviously and strikingly upon the
principle of encouraging exportation and discouraging importation;
the spirit of the regulations adopted in 1773, and acted upon some
time before, was nearly the reverse, and encouraged importation and
discouraged exportation. Subsequently, as if alarmed at the
dependence of the country upon foreign corn, and the fluctuations of
price which it had occasioned, the legislature in a feeble act of
1791, and rather a more effective one in 1804, returned again to the
policy of restrictions. And if the act of 1804 be left now
unaltered, it may be fairly said that a fourth change has taken
place; as it is quite certain that, to proceed consistently upon a
restrictive system, fresh regulations become absolutely necessary to
keep pace with the progressive fall in the value of currency.
Such changes in the spirit of our legislative enactments are much to
be deprecated; and with a view to a greater degree of steadiness in
future, it is quite necessary that we should be so fully prepared
for the consequences which belong to each system, as not to have our
determinations shaken by them, when they occur.