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causes the market to be under-supplied value in exchange. But to allow that with labour ; and then, of course, the corn regulate the prices of all commocompetition among the purchasers will dities, is at once to crect it into a raise the price above the proportion of standard measure of real value in exthe advance, in order to restore the change ; and we must either deny the supply. In the same manner, if an truth of Dr Smith's argument, or acadvance in the price of labour has ta- knowledge, that what seems to be ken place during two or three years of quite impossible is found to exist ; and great scarcity, it is probable that, on that a given quantity of corn, notwiththe return of plenty, the real recom. Standing the fluctuations to which its pence of labour will continue higher supply and demand must be subject, than the usual average, till a. too rapid and the fluctuation to which the sup. : increase of population causes a compe. ply and demand of all the other com. tition among the labourers, and a con: modities, with which it is compared, sequent diminution of the price of la. must also be subject, will, on the ave bour below the usual rate.

rage of a few years, at all times, and “ This account of the manner in in all countries, purchase the same which the price of corn may be ex quantity of labour, and of the neces. pected to operate upon the price of saries and conveniences of life. labour, according to the laws which “ There are two obvious truths in regulate the progress of population, political economy which have not un. evidently shews, that corn and labour frequently been the sources of error. rarely keep an even pace together, but " It is undoubtedly true, that corn must often be separated at a sufficient might be just as successfully cultivadistance, and for a sufficient time, to ted, and as much capital inight be change the direction of capital. laid out upon the land, at the price of

"* Dr Smith was evidently led into 20 shillings a quarter, as at the price this train of argument, from his habit of 100 shillings, provided that every of considering labour as the standard commodity, both at home and abroad, measure of value, and corn as the mea. were precisely proportioned to the rew sure of labour. But that corn is a duced scale, in the same manner, as very inaccurate measure of labour, the it is strictly true, that the industry history of our own country will amply and capital of a nation would be exdemonstrate, where labour, compared actly the same, (with the slight exwith corn, will be found to have ex- ception, at least, of plate,) if in every perienced very great and striking vari. exchange, both at home and abroad, ations, not only from year to year, but one shilling only were used where five from century to century, and for ten, are used now. twenty, and thirty years together.t . “ But to infer from these truths, And that neither labour nor any other that any natural or artificial causes, commodity can be an accurate mea. which should raise or lower the values sure of real value in exchange, is now of corn or silver, might be considered considered as one of the most incontro- as matters of indifference, would be an vertible doctrines of political economy; error of the most serious magnitude. and indeed follows, as a necessary con. Practically, no material change can sequence, from the very definition of take place in the value of either, with

* Observations on the Corn Laws, by the Rev. T. R. Malthus, p. 11. et seq.

# From the reign of Edward III. to the reign of Henry VII. a day's earnings in corn, tose from a peck to near half a bushel; and from Henry VII. to the end of Elizabeth, it fell from near half a bushel to little more than half a peck.

out producing both lasting and tem- mulus or discouragement to agricul. porary effects, which have a most ture. It is, of course, only to a tem. powerful influence on the distribution porary encouragement, or discourageof property, and on the demand and ment, that any commodity, where the supply of particular commodities. The competition is free, can be subjected.. discovery of the mines of America, We may increase the capital employduring the time that it raised the price ed either upon the land or in the cot. of corn between three and four times, ton manufacture, but it is impossible did not nearly so much as double the permanently to raise the profits of price of labour ; and while it perma. farmers, or particular manufacturers, nently diminished the power of all fix. above the level of other profits; and, ed incomes, it gave a prodigious in. after the influx of a certain quantity crease of power to all landlords and of capital, they will necessarily be capitalists. In a similar manner, the equalized. Corn, in this respect, is fall in the price of corn, from what. subjected to the same laws as other ever cause it took place, which occur. commodities ; and the difference be: red towards the middle of the last tween them is by no means so great as century, accompanied as it was by a stated by Dr Smith.” rise, rather than a fall, in the price of It were superfluous, after what has labour, must have given a great rela. been already said on the subject of a tive check to the employment of capi. bounty on production, to enter into tal upon the land, and a great relative any analysis of Dr Smith's reasocing stimulus to population ;-a state of on that point. A bounty on produc. things precisely calculated to produce tion could never attain the objects of a the reaction afterwards experienced, bounty on exportation, and could, in and to convert us from an exporting no circumstances, serve any good pur to an importing nation.

pose. Sounder views, therefore, in· “ It is by no means sufficient for Auenced the legislature to confer a Dr Smith's argument, that the price bounty on exportation than that preof corn should determine the price of posterous regard for the mercan:ile labour under precisely the same cir- system, which is imputed to them by cumstances of supply and demand.. the author of the Wealth of Nations. To make it applicable to his purpose, But if the bounty: on exported corn, he must shew, in addition, that a na. which Dr Smith reprobates with so tural or artificial rise in the price of much severity, be, in truth, a branch corn, or in the value of silver, will of this exploded system, it affords make no alteration in the state of pro- perhaps the only instance in which the perty, and in the supply and demand principles of that system can be recog. of corn and labour ;a position which nised with advantage. experience uniformly contradicts. A very elaborate paper on the sub

“ Nothing then can be more evident, ject of bounties appeared some time ago both from theory and experience, than in a well known periodical publication. that the price of corn does not imme. After a minute account of the effects diately and gencrally regulate the of a bounty on production, the followprices of labour and all other commo. ing observations were made as to the dities ; and that the real price of corn nature of a bounty on exportation. is capable of varying for periods of "* A bounty granted out of the pub. sufficient length to give a decided sti. lic revenue upon the exportation only

* * Edinburgh Review, vol. V. p. 196, et seq. Observations on the Bounty upon Exported Corn,

of corn, will operate according to the more than compensate that difference. same principles; but, from the differ. In all these cases, too, it is to be obent manner in which the bounty is served, the exporter will actually unthen applied, its effects will be consi- dersell the foreign dealer by very nearderably different. It will produce no ly the whole difference by which he immediate change of prices in the home can afford to undersell him. He would market. The national consumer will be willing enough to do it by as small continue to pay what he did before ; a portion of that difference as possible, no part of this payment being made in order that the remainder might be for him by the public, there will be added to his profits ; but the force of no diminution to hiin of the real price competition, as upon all other occaof corn, consequently no enlargement sions, will restrict his profits very of consumption and demand, and there. nearly to the lowest rate at which he fore no new encouragement on this can afford to trade. They will not be side to agricultural investments. But brought quite down to this rate, howevery foreigner, who shall purchase ever; the exporter will not be forced part of the exported grain, will pay to undersell the foreign dealer by quite so much less for it as the bounty the whole difference by which he could amounts to, than he otherwise would afford to do it, in consequence of a have paid. Whether he will purchase competition that will act in the oppo. any part of it or not, will, of course, site direction ; for, by the reduction depend upon this condition, that the of the real price to the foreign consu. price of the exported grain, reduced mers, their effective demand will be

not greater than the price of other will prevent that reduction, which the grain in the market. Now, the price bounty has a tendency to effect, from at which the exported grain could be being wholly completed. The differsold in the foreign market, independ. ence will be received by the exporter ently of a bounty, may either be equal, in an addition to the adjusted rate of or less, or greater, compared with the his profits; and the extension of foprice of other grain in that market. reign demand being communicated to If equal, the bounty will enable the the home market, will raise at home exporter to undersell the foreign deal. both the price of corn and the profits er by the whole amount of that boun- of farming. By, raising the profits of ty. If less, he would be able, without farming, it will operate as an encoua bounty, to undersell him by the ragement to husbandry ; by raising the whole difference of the prices; and price of corn, to the consumers at the bounty will enable him to under. home, it will diminish, for the time, sell by the sum of that difference and their power of purchasing this necesthe bounty added together. If the sary of life, and thus abridge their price at which the exported grain real wealth. It is evident, however, could be sold in the foreign market, that this last effect must be tempora. independently of a bounty, is greater ry: the wages of the labouring con. than the price of other grain in that sumers had been adjusted before by market, then, to enable the exporter competition, and the same principle to undersell the dealer in that other will adjust them again to the same grain, the bounty must be more than rate, by raising the money-price of lasufficient to compensate the difference bour, and, through that, of other comof the prices ; and a bounty may no modities, to the money-price of corn. doubt be made large enough to do The bounty upon exportation, there, fore, will ultimately raise the money. the labouring consumers. That ea. price of corn in the home market; not couragement to husbandry will not be directly however, but through the followed by any increase of the num. medium of an extended demand in the ber of the people, because the addi. foreign market, and a consequent en- tional production is excited by a fohancement of the real price at home; reign demand. And this diminution and this rise of its money-price, when of the comforts of the labouring peo. it has once been communicated to other ple, from being temporary, may be commodities, will, of course, become come almost a permanent diminution, fixed.

if the successive advances of the price , " The fixed advance of the moneyof corn shall follow each other withprice at home, will necessarily affect out interruption, and so keep always the price at which the exported corn a-head of the successive advances in can afterwards be sold in the foreign the wages of labour. market. It will of course diminish « If it should be felt expedient to that difference, whatever it is, by which remove such a bounty as this upon ex. the exporter can undersell the dealer portation, and to restore the commerce in foreign grain. That difference, and production of grain to their natuhowever, may still be large enough, ral order, such a repeal would be atwith the assistance of the bounty, to tended with some temporary inconallow the exporter still to undersell veniences. The sudden destruction that dealer; and to occasion, in the of that part of the foreign demand, same manner as before, a farther ex- which had been forced by the bounty, tension of demand. This will be folwould throw an excess upon the home lowed as before by a series of effects, market, and would reduce the profits ultimately terminating in a farther ad. of farming for a time below their ac, vance of the money-price at home. tual and just rate. The national conAnd this series will be constantly re- sumers would for a time be more easi. newed, until the advance of that mo. ly and plentifully supplied ; until, by ney-price becomes so high as to cover the abstraction of capital from tillage, the whole difference by which the ex. the supply of corn was once more ac. porter was before able to undersell commodated to the real demand, and other dealers abroad. By a new boun the profits of the farmer raised again ty, however, granted in addition to to their natural rate.” the former, a new range may be cre. Those who have followed this very ated for the repetition of another se. elaborate analysis with attention, will ries of the same effects. But, what be at no loss to discover the fallacy on ever limits we suppose to the amount which the whole reasoning turns. of the bounty, its complete and ulti- « The price," it is said, o at which mate effect will always be found to be the exported grain could be sold in a corresponding rise of the money- the foreign market, independently of price in the home market, both of a bounty, may either be equal or lese, corn, of labour, and of all commodi. or greater, compared with the price of ties. In the interval that must each the grain in that market. If equal, time elapse before wages are equalized the bounty will enable the exporter to with each successive rise in the price undersell the foreign dealer by the of corn, there will be a certain degree whole amount of that bounty. If of new encouragement held out to less, he would be able, without a boun. husbandry, and some diminution in the ty, to undersell him by the whole dit. wealth and comfortable subsistence of ference of the prices; and the bounty

will enable him to undersell by the sumption of his own country-On sum of that difference and the bounty the supposition again, the price added together. If the price at which at which the 'exported corn can be the exported grain could be sold in sold in the foreign market is greater the foreign market, independently of than the price of other grain in that a bounty, is greater than the price of market, the bounty must be such as to other grain in that market, then, to compensate the difference of price be. enable the exporter to undersell the twixt the foreign and home markets--dealer in that other grain, the bounty the expence of carriage--and the slight must be more than sufficient to com- difference also by which it will be nepensate the difference of the price.”- cessary for the British exporter to unAl this parade of distinctions, how. dersell the foreign merchant. Yet the ever, is unnecessary, since in practice British exporter could not, even in this we can have no other case to consider, case, put more in his pocket by exportexcept that which is last put by the ing his corn, than by selling it at home; writer. If the British exporter can, and he would of course carry abroad without a bounty, sell his corn for less only that surplus, which could not in foreign markets than the foreign be dispose of in his own country. merchants cán do, it were absurd of When the author says, that “ the ex. course to think of granting him a porter will actually undersell the fox bounty; if he can even afford to sell reign dealer ty very nearly the whole at the same price, the aid of a boun. difference by which he can afford to ty can scarcely be required. If a undersell him," he assumes that the bounty in such a case were bestowed bounty is so preposterously large, as at all, it could never exceed the sum to give the British merchant a great required to compensate to the Bri. latitude in this respect, and to commutish exporter the small reduction of nicate to the foreign a great advantage price, which would be necessary to over the home market. The whole give him an advantage over the fo. of his reasoning, therefore, applies to reign merchant in his own market, bounties, which are fixed without rean advantage evidently attainable by gard to the circumstances of the couna very trifling sacrifice. What would try; not to those which have been acbe the result of this measure? The curately ealculated with reference to British merchant would in the fo- the state of the British and foreign reign markets receive exactly the markets, the details of which may at same price for his corn which he ob- all times be well known to the legislatains at home; since the bounty, by ture. Nor is it necessary to give the the hypothesis, would merely compena foreign this assumed advantage over gate to him the slight difference by the home market, with the view of which he might undersell foreigners. encouraging the growth of a surplus But how could this raise the prices in of grain ; for the same temptation the home market, as the author has the same profits which induced the supposed ? It will require a very in farmer to raise corn for the home margenious argument to prove, that the ket, will tempt him to raise the surplus British corn merchant, by receiving required to answer a more extended precisely the same gains in a foreign demand. The inferences deduced in market, which he can obtain at home, the above passage as to the increase will prefer the remote to the con- of prices in the home market the tiguous market, and thus narrow the rise in the wages of labour--and all supply of corn required for the con- the other imaginary evils so carefully

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