1)CT1MI0:^S MMBMTIMS.&C. FLUCTUATIONS CURRENCY, COMMERCE, MANUFACTURES ; Kl.FERABI.E TO THE CORN LAWS, JAMES WILSON, Esq. LONDON: PUBLISHED BY LONGMAN, ORME, BROWN. GREEN. AJSU LONGMANS. 1840. London : rrluted by William Clowe-j and Son'§, Staniforil Street. ^^044 INTRODUCTION. The frequent recurrence oi" periods of excite- ment and depression in the nionetarial and commercial interests of the country, and the serious evils which have thereby been inflicted on all classes 1^ of society, have become matters of the gravest "^ interest. >- ^ In the numerous inquiries which have been ~ made as to the cause thereof, with a view to re- medial measures, attention has been directed almost ^ exclusively to the operation and management of the ~ currency and banking system of the country ; so - much so, that it appears to be almost implicitly admitted, that somewhere within the range of these ^ subjects the true cause is to be found ; and in cjs consequence, the inquiry appears in a great measure "^^ to have been narrowed into a consideration of the principles upon which they are and ought to be conducted. As yet, however, no satisfactory result has attended these inquiries, and the further they pro- ceed, the more it appears that these influences are too much themselves under the control of the public feeling, and to be regarded as the cause of these constant fluctuatious. 4^4115 IV In the discussions which have recently taken place on the effects of the present Corn Laws, many circumstances have tended to associate their operations upon prices and the general condition of the country with these periodical derangements. We have long thought that they were most inti- mately connected, and that the influences produced on society by the fluctuating character of the price of the first necessaries of life have been sufficiently powerful in themselves to create derangements in all interests and classes of the greatest magnitude. With a view to ascertain how far facts and cir- cumstances, as to time and otherwise, agree with the strong conviction we entertained on this subject, the following investigation has been undertaken : and we trust that this attempt may lead others to a further inquiry on this important subject, as we are now more than ever convinced, both by principle and by facts, that the fluctuating character of the cost of the first and imperative necessaries of life is the chief cause of the whole derangements of the monetarial and commercial interests of this great country, which have been attended with so much distress, disappointment, and ruin. London, March 20, 1840. FLUCTUATIONS CURRENCY, COMMERCE, MANUFACTURES, et In the " Influences of the Corn Laws " our atten- tion was confined to those exerted over the agri- cultural interests ; not only because we consider that class particularly interested therein, but because the primary effects produced on them become the second causes which are productive of all the baneful conse- quences resulting from these laws to the remaining parts of society. We then only glanced at some of the effects pro- duced on the commerce, industry, and morals of the country, as far as they were intimately associated with the agricultural interests, and as far as they appeared necessary to illustrate the influences exerted over this class. It is our intention now to direct our attention more exclusively to the influences which these laws ultimately 2 exert over the currency, commerce, industry, and morals of this country, and of the continental coun- tries, merely glancing as we go along at some of the retributive effects (if we may use the term) which these influences in their turn produce upon the agri- cultural interests. We are the more induced to turn our attention to this part of the subject at this moment, from a con- viction that the present derangement of national pros- perity can be fairly traced to these influences as its exclusive cause. In proceeding to this argument, we take it for granted that the considerations in the " Influences of the Corn Laws" have been carefully perused and understood ; and more especially the most important feature of the whole matter, viz., the necessary ten- dency which these laws have of creating great fluctua- tions in the supply and price of the first necessaries of life. PART I. FLUCTUATIONS OF THE CURRENCY, &c. It is not our intention to detain the reader by entering into any evidence of the rapid and extensive fluctuations which for some years have been continually taking place in this country in the amount of the floating capital, disengaged money, and currency^ which from time to time have been available for car- rying on and conducting the ordinary business and commerce of the country. These facts are so generally known, and have excited so much of the public attention, that we shall content ourselves with merely referring the reader to the table at page 41, showing the amount of bullion and depo- sits possessed by the Bank of England by the returns from 1828 to the present time, as exhibiting an index of the proportions in which these fluctuations have taken place, as well as the periods. The fluctuations shown in this table, however great, are less than those which have actually taken place, owing to the mode in which the Bank's returns are made ; being made once in each month, of the average of the three preceding months. In the case of a di- minishing amount, it is evident that at the moment when it is at the lowest point, that month has the advantage of being mingled with the two preceding b2 months of lart»"er amounts, and therefore showing a larger stock than is actually on hand ; and so also in the case of an increasing stock, it is equally evident that at the moment when it is at the highest point, that month being averaged with the two preceding of smaller amounts, must show a smaller sum than is actually possessed. Thus the smallest and largest amounts of bullion in possession of the Bank is never shown ; and thus the fluctuations are even greater than displayed by these returns. This table furnishes only an index of the proportions in which these fluctuations have taken place, and has little or no reference to the actval amoiint of the fluc- tuations of available capital in the whole communit}'. We must disclaim any intention of entering into the general question of the currency, or of the constitution and management of the Bank of England, further than is necessary to elucidate the causes of these fluc- tuations, and to show what influence the Corn Laws can fairly be said to have exercised over them, or how far they can be proved to have been the chief causes thereof. For some years past, during the exciting and ruin- ous changes which have taken place in the money market, as it is termed, men have eagerly sought for reasons and cures ; but, as is too frequently the case, mistaking effect for cause, mere symptoms for the disease, the extent of that inquiry has seldom pro- ceeded further than all agreeing in denouncing the Bank of England and the caprice of its management (expanding and contracting the currency at pleasure) as the groundwork and base of all the mischief : nor is this a matter of surprise when we consider that these fluctuations and changes must first be made visible to the public eye by the policy of that establishment, however little control it can exercise over them. There is no greater danger to society than arriving at and resting satisfied with an erroneous cause for an existing evil. In the first place, it is apt to preclude further investigation ; and in the second place, a cure to such evils is difficult to effect, when opposed on untrue grounds : there are always some parties who are more or less interested in existing evils ; and to them it is no difficult task to oppose arguments which have not as their base the strength and symmetry which truth alone can afford them : to this reason, we think, may be attributed the continvied existence of many of the most glaring evils long after they have been almost universally acknowledged as such. Whatever are the defects of the constitution of the Bank of England, and however inefficient that estab- lishment may be for the supposed position which it holds as the head of the monetarial system and arrangements of the great commercial country, it is no difficult task to prove that the charge here brought against it cannot be true, that it must indeed be too innocent of any charge of exercising a control over the currency, and that, therefore, the general reasons as- signed for the changes in the money market arc equally erroneous. The Bank of England is an establishment possessed of an enormous capital ; but that capital is more than absorbed by loans to the Government, and therefore not available for the general purposes of business ; but it communicates to it all the credit and security which could be afforded by the government; which, with a certain degree of publicity given to its actions, secures to it an extent of confidence greater than is enjoyed by an other such establishment in the world. In respect of credit, therefore, while the Bank of England ranks highest, in respect of real available, independent means of conducting its usual business it must rank on the lowest scale of solvent establish- ments. It, therefore, necessarily follows, that when money is everywhere abundant and prosperity general, the resources of the Bank of England must be very great : at such times the surplus of every man through- out the country finds its way to his banker ; a portion of the surplus of the bankers throughout the country finds its way to their agents in London for employ- ment ; and the surplus of these agents, as well as all the London bankers, finds its way to the coffers of the Bank of England, as the most accredited place of safety ; and thus constitutes an index not of the wealth and capital of the Bank of England, but of the extent of surplus capital possessed at any given moment by the whole country : at this moment the Bank of Eng- land has no power to prevent money being cheap, as it is termed, because it is universally abundant ; and being obliged to employ its deposits and circulation for the benefit of its proprietory (we speak of the Bank of England as it is), it must do so at the rate estab- lished by the law of supply and demand, or leave all the business to be done by other establishments. In like manner it follows as necessarily that when money is ev^erywhere becoming scarce, the surplus balances of money must be everywhere diminishing ; individuals throughout the country draw a larger portion from their bankers, who, in their turn, retain a smaller amount with their agents in London, and who, with all the London bankers, have less to employ in loans and discounts and smaller balances with the Bank of England. If, then, the cause which has ren- dered money scarce, has proceeded from a demand to send money abroad either to purchase some necessary such as corn, or to conduct some huge speculations into which the public has been tempted, or to carry on an expensive war, the unusual transfer of this capital from this to another country can only be accom- plished by the means of bullion as having a common and well ascertained value everywhere : the Bank of England is, then, not only called upon to give up a large portion of her deposits, but also to redeem a portion of her notes for gold ; and thus, without any independent resources of her own to fall back upon, she becomes the more seriously and dangerously affected by the pressing scarcity than any other solvent establishment in the country. The situation of the Bank of England is, then, not an index of any dimi- nution of its own wealth or means, which remain as safely locked up as before, but of the general dimi- 8 nution of the floating money of the whole country available for trading purposes. The Bank of England is now competent to conduct its transactions as before only in reference to supply and demand; and in the rates of interest to be governed by the general market value, having no control whatever over them at either period. If, at the former period of plenty, the Bank of England were to attempt to charge more than the market value, in order to make money scarce, the consequence would merely be that all the business would be done by other establish- ments ; or if the Bank of England were to attempt to charge less at the latter period than the market rate, in order to make money abundant when it really was not so, two days would exhaust her reduced means ; and in neither case wovild she be able to pay any divi- dends to her proprietors. It must, however, be admitted that there are many circumstances connected with the movements of the Bank, which naturally give rise to the erroneous opi- nion that these movements are the causes which induce fluctuations. From the position which we have just explained the Bank to hold, it is evident that the directors of that establishment must be the first to notice, by their own internal index, any movement which is going on either to render money scarce or abundant ; they must be the first to observe either the eftlux or influx of bullion ; they must first feel either an increasing or decreasing demand for money. And from their own dependent state on these events, re- quiring always the greatest watchfulness to look before them for their own safety and protection, or profit, they are forced into a line of policy, the reasons for which are not visible to the public eye at the moment, and which, as they afterwards become developed, are often mistaken as the effects instead of the inducing causes of the policy of the Bank. These are the simple facts which must ever influence this establishment as at present constituted, however different circumstances, political and civil, are con- tinually occurring to render them intricate and diffi- cult to understand, however a season of prosperity gives rise to speculation and excitement, and however a season of alarm and scarcity creates fears and distrust, which alike aggravate the natural consequences of such occurrences. It must, therefore, appear clear that the conduct of the Bank of England as connected with the fluctua- tions complained of has been merely part of the effects and symptoms, not the cause of the disease — that it is utterly innocent of causing these changes, and as utterly weak and powerless to control them. It would be far different if it traded upon its own real sub- stantial capital, instead of only upon a credit, however good, *or privileges, however valuable, purchased at the cost of locking up that real strength. "We must look to some wider and more extensive first cause for these fluctuations and changes in the condition of a nation the most uniformly industrious, 10 persevering, and enterprising that has ever existed, and we believe that we shall find some more satisfac- tory result in attributing them to the huge fluctuations in the amount of its means which, from time to time, have been required to pay for the necessary subsistence of life ; or, in other words, to the fluctuations of the price of food, which we have shown in a former work to be the necessary consequence of a restriction of the supply of that first great necessary. It may be here useful to examine what is the amount of the national income which is on an average ab- sorbed in the price of wheat ; fluctuations being much more apparent in this than in any other of the great necessaries of existence, we shall confine our attention to it;, merely inferring from the result, the aggravation of the consequences shown, if the consideration had extended over every article. The nearest estimate of the annual production of wheat which we have been able to arrive at is as follows. It is estimated that there are, in average years, in the united kingdom five millions of acres cultivated with wheat, producing on an average three quarters and a half per acre. The following will, therefore, be the annual cost of wheat to the country : — 5,000,000 acres, 3^ quarters per acre, will give 17,500,000 quarters; from which deduct 1,500,000 quarters for seed, &c. ; will leave 16,000,000 quarters to be consumed by the country, which, at the average price of the last seven years, b^2s. per quarter, will amount to the annual sum of £41,600,000. 11 It thus appears that the annual average value oi" the wheat consumed in this country is £41,600,000. In the absence of any accurate and authenticated sta- tistical accounts, this apparently enormous sum is the nearest we can arrive at ; and although it may not be perfectly accurate, it is sufficiently so to elucidate our theory and argument. This amount, then, we say, is absorbed annually from the national income to pay for this first great necessary, calculating the price at the average prices of the last seven years, which, including high and low. may be taken as a fair average price over a longer space. It will, however, be suflRciently evident, that in proportion as the price rises above or falls below the given average, that the amount of the national income and wealth which is then thereby absorbed in this great first necessary, must increase or diminish accordingly, and thus altering in the same proportion the amount left for all other purposes. Thus, in the event of a number of cheap years fol- lowing each other, when prices are below the average rate, the diminished amount of money absorbed in this way, accumulating year after year, cannot fail to give to the community a very greatly increased command of wealth, and to render more abundant the means of employing it in all other ways ; and that, on the con- trary, when a number of years occur when prices are above these average rates, the increased amount of money absorbed in this way, year after year, cannot 12 fail to diminish the general amount of wealth, to be employed for other purposes. It may here be remarked, that the facility with which money is removed from one country to another by in- vestments in public securities, altogether independent of commerce, and that the periods of low prices and high prices, above referred to, having occurred simulta- neously throughout Europe, has tended materially to aggravate the effects of the greater amount of capital let loose in the former^ and absorbed in the latter periods. Another serious aggravation of these changes in this country has arisen from the fact that, in dear years, not only is the sum absorbed much above the average, but a large amount is sent out of the country in the shape of bulhon to purchase supplies abroad; while in cheap years, not only is the sum thus absorbed much less, but the country is in such years deprived of nothing for foreign purchases. In order to show the great fluctuations in the amount of money absorbed in the article of wheat alone, we present the following table, showing the sum in each year which must have been paid for wheat at the average price of the year, calculating the consumption at 16,000,000 quarters, which, whether correct or not, displays with equal truth the proportion of these fluctuations : — also showing the amount in each year paid for foreign wheat; which will be found to be important in the dear years, when we could least afford it, and most trivial in the cheap years, ^yhen the redundancy of means could best afford it. 1817 1818 IS19 1820 1821 1822 1823 1824 1825 1826 1827 1828 1829 1830 1831 1832 1833 1834 1835 lS3f) 1S37 1838 1839 Quantity consumed. Quarters. 16,000,000 Average price. 94/0 83/8 72/3 65/10 54/5 43/3 51/9 62/0 66/6 56/11 56/9 60/5 66/3 64/3 66/4 58/8 52/11 46/2 39/4 48/6 55/10 64/7 70/8 Total amount of Cost. £ 75,200,000 66,933,333 57,800,000 52,666,666 43,450,000 33,600,000 41,400,000 49,600,000 53,200,000 45,533,333 45,400,000 48.250,000 53,000,000 51,400,000 53,066,666 46,916,666 42, 316, €66 36,933,333 31,400,000 38,800.000 44,666,666 51,666,666 56,533,333 Quuntity of Foreign Wlieut taken into Con- sumption. Quarters. 1,020,949 1,593,518 122,133 3-1,274 2 12,137 15,777 525,231 315,892 572,733 842,052 1,364,220 1,701.885 1,491 631 325,435 82,346 64,653 28,-!83 30,554 244,619 1,853,048 2,700,131 4,032,748 5,471,018 349,605 87,113 5 22,301 31,075 1,352,469 662,056 1,195,580 1,912,159 3,495,813 4,190,891 3,828,519 710,533 156,114 101,750 34,654 51,177 499,430 4,594,014 7,515,S64*i <^>^ ^J.i^^U// * It is necessary to remark, witn respect to this table, that the quantity of sixteen millionsof quarters, being taken as the annual consumption, in the absence of any statistical information that can be relied upon, is the nearest approximation to the truth to which we can arrive, as the average consumption of the last few years: — but there is not the slightest doubt that it exceeds the real quantity consumed in the early period embraced in the table, and perhaps falls short of the quantity consumed in the last three 14 The facts which are brought to view in this table demand the most minute attention and the gravest consideration. We find the entire cost of the wheat consumed in this country representing in one year, 1817, upwards of seventy-five millions of pounds ster- ling: — with a payment for foreign-grown wheat", in the same year, of four millions sterling, gradually fall- ing, for five years, to thirty-three million pounds ster- ling in 1822, without any expenditure for foreign wheat ; then again gradually advancing until, in 1829, fifty- or four years ; but still it serves the purpose of comparing the fluc- tuations of the amount of national means absorbed in this article, better than if we had been able to ascertain the actual quantities consumed in each year, and calculated accordingly : for although the whole quantity annually consumed has gradually increased during that time with the increase of population, yet it is assumed that the consumption of wheat, the first necessary of life, not an article of fashion, luxury, or caprice, has always borne the same relative proportion to the population and its means: — and that, therefore, the fluctuations in the total annual price of it, whether the consumption were larger or smaller, but still bearing the same proportion to the wealth of the community, would have the same influence in increasing or diminishing proportionably the general wealth of the country available for other purposes. As has been already remarked, the fluctuations in the price of wheat having been simultaneous in every part of Europe with those in England, it becomes a difficult task to compute the stupendous amount of capital let loose at one period, and absorbed at another, in this article alone. In France, where bread forms so large a portion of the diet, and the population is one-third greater than in this king- dom, it would appear a moderate estimate to state the capital thus fluctuating at the same amount as in this country : in other parts of Europe the fluctuations of price have been as great as in this country, but the consumption of wheat-bread is comparatively 15 three millions sterling is the entire cost, with a sum of nearly three millions and a half paid for foreign-grown wheat; then declining gradually until, in 1835, thirty- one millions is the whole cost, with the insignificant sum of thirty-four thousand pounds paid for wheat of foreign growth; and, lastly, gradually advancing un- til, in 1839, the entire cost to the community for wheat is fifty-six millions and a half sterling, with no less a sum than seven millions and a half paid to foreign growers, chiefly in bullion. These extreme points will stand thus : — (See next page.) limited. The following table will show the uniformity, in regard to time, which has prevailed in diflFerent parts of Europe, in the changes of price : — Average price Average price Average price Years. in in in Great Britain. France. Danzig. 1817 94/0 • • 75/8 1818 83/8 .... 64/7 1819 72/3 34/1 43/9 1820 65/10 45/7 33/3 1821 54/.i 34/3 31/7 1822 43/3 36/9 29/1 1823 51/9 35/10 26/8 1824 62/0 34/4 22/9 1825 66/6 35/6 23/3 1826 56/11 36/5 23/1 1827 56/9 49/7 22/5 1828 60/5 52/6 24/4 1829 66/3 48/2 36/10 1830 64/3 51/0 34/3 1831 66/4 50/10 37/3 1832 .55/8 41/3 37/7 1833 52/11 34/1 29/4 18.34 46/2 35/9 25/5 1835 39/4 33/8 23/0 1836 48 6 39/8 28/7 1837 55/10 41/0 29/0 1838 64/7 51/6 45/0 1839 70/8 .... 16 Whole cost of Wheat. Cost of Foreign Wheat consumed. 1817 . £75,200,000 £4,032,748 1822 . 33,600,000 nothing. 1829 . 53,000,000 3,495,813 1835 . 31,400,000 34,654 1839 . 56,533,333 7,515,864 It is impossible to look at these facts — to consider that the sum absorbed in the consumption of wheat alone, in this country only, has been more than twenty- one millions of pounds sterling greater, during the last year, than it was only four years ago; that in France the increase must be in the same propor- tion ; that independent of this additional absorption for our own purposes, that upwards of seven millions of it has actually gone out of the country for the purchase of foreign wheat, while, in the former year, only about thirty-four thousand pounds was required on this ac- count : — it is impossible, we say, to have these facts placed before our eyes without feeling at once the strongest conviction that they are sufficient to produce enormous fluctuations in the currency, in the wealth and prosperity of the country. It shall now be our task to endeavour to trace the influences exerted by such striking causes, to endea- vour to discover, by fair and close investigation, how far the facts which have occurred, during the last few years, agree with and corroborate the conviction which has been produced by the simple details before us ; and if, in the course of this investigation, we may have oc- casion to allude to the pohcy pursued by any of the different classes of banking establishments, it shall 17 only be, as far as is necessary, for elucidating our prin ciples ; as we again disclaim any intention, in our pre- sent inquiry, to mingle with it the general question of currency or banking, as they exist or have existed. We have already intimated that it is not to high prices or to low prices that we attribute the evils complained of ; but to a constant and incessant changeableness ; to periodical fluctuations ; to a series of years of great cheapness, followed by years of very high prices. There is no more striking truth in political, mercantile, and social existence than there is in human nature a strong tendency to adaptation ; to conform every arrangement and plan, as well for the present as the future, in re- ference to existing circumstances ; to enact laws, to enter into engagements, and to contract habits con- sonant with the wants and the means of the present : for, however the mind may indulge in the retrospective, or delight in speculative views of the future, it is the present onl} which has sufficient substantiality and form to constitute the great cause of all our actions. If, then, that present has no endurance ; if great and important changes are ever going forward, it follows that there is no security in the most prudent calcula- tions for the future ; that circumstances, over which persons have no control, may interfere with engage- ments and habits contracted with the most justifiable reasons ; and thus, by constant fluctuations, security in the future, the greatest moral tie which Providence has pleased to link to the human constitution, is mate rially weakened. 18 From these remarks it will naturally follow, that we regard the seasons of extreme low prices as productive of as much mischief, of being accessory to as great an amount of evil, as we do the seasons of extreme high prices : the two are naturally and necessarily linked together as cause and effect; and although distress and disappointment are more apparent in the latter than the former period, yet it remains to be seen how far the former period has been accessory to the neces- sary cause of the great evils experienced in the latter period ; and if the causes of the mischief are equally identified in the two periods, they must equally share the blame. It may be imagined by many who have not well considered the subject, that as far as the fluctuations which we have shown to exist in the amount of money absorbed in payment of the necessaries of life are of an internal nature ; that is, as far as the additional amount paid by the community in a series of years goes only from one portion of the commvinity to another; from the general consumers to the agricul- turists, that there should be little or no interruption of national prosperity — that there should be little or no derangement of the currency : this point deserves and will obtain our close attention as we go forward with the investigation in this and the following proposi- tions. Every person, however, easily understands that inasmuch as these fluctuations have called for only £34,654 in one year, and for £7,515,864* in another * Although the sum of £7,515,864 is put down as paid for 19 year, only four years apart, to be remitted to foreign countries for our consumption of bread, great and im- portant evils must ensue. In order to go into the investigation proposed, it is obvious that we must discover, that we must conde- scend to some given sum which, could it be main- tained steadily, would be the correct amount of the means of the country absorbed for this particular purpose annually, namely, for the pvirchase of wheat ; in order that we may determine what the fluctuations really have been ; how much too cheaply the com- munity have been served at one time, and how much too dearly at another time. Now we know of no principle so accurate to determine this point, and, at all events, it is sufficient for a fair and full considera- tion of our case, as to take the actual average price which has been obtained in a currency of years amidst all these oscillations and fluctuations. Relying as we do upon the excitement being in exact proportion to the depression, and the depression, in its turn, being in exact proportion to the excitement ; to the vibra- tion of the pendulum being to the left in the same proportion that it was to the right, and on the right that it obtained on the left, we take the average price of the whole period as a fair and just point from which foreign wheat in 1839, yet from Oct. 10, 1838, to Oct. 10, 1839, one year, the sum of £12,126,369 was paid; this large amount, crowded into the short space of twelve months, and not as it appears diffused over two years, is an important feature in re- ference to the effects produced on the currency. c 2 20 to date all our calculations in elucidation of the princi- ples we advocate. It has already, in a former work, been shown that the average price of seven years, from 1832 to 1839, was 52*. 2c?. per quarter for wheat, and that price is, therefore, without hesitation, taken as a fair average on which to ground our calculations. At this rate the average amount of the national means absorbed in wheat will be £41,600,000 sterling, and, therefore, as the actual sum paid in each year differs from this, either in excess or diminution, must we regard it as a fluctuation of the general wealth or means of the community, whether the difference may be felt in the increased or diminished amount of de- posits in bankers' hands, the increased or diminished demand for manufactured goods or other luxuries, or in any other way. By way of illustrating these principles, we would claim especial attention to the occurrences since the year 1831, in relation to the points under consi- deration. On referring to the table, page 13, it will be seen that 1828, 1829, 1830, and 1831, were years of very high prices of wheat, in which large importations took place, at an enormous cost to the country : during these four years, it must be obvious that the means of the country must have been absorbed to a great extent as compared with previous years ; and there is no diffi- 21 culty in reconciling, with such state of matters, the great scarcity of money which was felt during these years, the contraction of circulation especially felt in 1829, and the languishing condition of the general pursuits of industry and commerce at this period. It may be imagined that as far as the excess of national income paid in these years went chiefly to enrich the agriculturist, no derangement of the cur- rency, of the means of conducting the great com- mercial operations of the country, should have been experienced, as the amount only passed from one part of the community to another, from one kind of in- dustry to another ; this notion, however, is false ; and we will show that this excess, as well as the three to four millions sterling annually transmitted to the con- tinent during these years, could not fail to impair the general active capital of the country. At the com- mencement of this period there was a given distri- bution of the entire capital of the country ; so much in mercantile operations — so much in manufacturing establishments — so much in government securities — so much in agricultural property and industry, &c., &c. ; and, for the sake of illustration, let us suppose that the capital thus sunk in these various ways bore the exactly proper proportion to each other to supply the wants of the community — that all at once an un- usual proportion of the income of the country begins to flow into the agricultural interests, in consequence of very high prices. What follows ? — some one or all of the other public interests must suffer an abstraction of their previous share of the annual expenditure in 22 the like proportion ; the demand for their products must become more Umited, and their ability of pro- duction too great for the wants of the country. ; and as far as this ability is in excess does it show a portion of the general capital unprofitably and idly invested— in fact, so much abstraction from the national wealth while it remains unemployed. Well, but how is the currency affected ? — if there is, in reality, nearly the same amount of annual income — if all the excess of expenditure which flowed into the agricultural interest remained in circulation, the currency would not be much curtailed, although it would experience a dif- ferent distribution. But what is the fact ? — high prices and high profits in every pursuit stimulate extended production, and we consequently find that the excess of the nation's income, which in the three years went into the agricultural interest, was invested in improved and extended cultivation ; and thus went to increase the entire amount of the whole capital stock embarked in this industry, while it diminished, as has already been explained, the value of the capital stock pre- viously invested in other interests ; inasmuch as it absorbed, for the creation of its new capital stock, the portion of the national income which alone gave the previous existing value to all the other invested capitals. During the four years at present under review, it is evident, from these principles, that the amount of ca- pital employed both in extending and improving the cultivation of the land must have been materially in- creased, and that in nearly the same proportion must 23 have been the tendency of the currency to diminish, but for the following reason. The increased absorption of national income in agricultural produce had two obvious tendencies ; first, to reduce the demand for the produce of all other capital and industry, and con- sequently the profits ; and, secondly, to diminish the amount of the circulation, or money, by increasing the amount of its fixed capital stock, and thus to cause a rise in the rate of interest at the moment of the greatest depression of commerce. A higher rate of interest, and a greater reduction of profits would then, no doubt, have a tendency, in the course of time, to cause an abstraction of capital from such pursuits, where an abstraction was practicable, to fill up the blank created in the currency. But such abstrac- tion is only practicable to a certain extent, while in many of the chief objects of investment it is quite impracticable ; for example, in the capital repre- sented by manufactories, machines, mines, ships, &c., &c., which must all at such periods assume a deterio- rated value. The floating capital, or currency, of the whole country must, under such circumstances, have very materially diminished ; or, in other words, at this period our means must have become very much con- tracted for commercial enterprise, and the value of property must have assumed a very reduced rate. Let any one ask himself what was the fact, and how far our theory agrees with it ? But four years is a period sufficiently long for a community in a considerable degree to adapt ilself to 24 existing circumstances, however they might have changed for the worse ; and, having suffered a great diminution of its capital^ to turn to the best account what still remained. But let us now narrowly watch what occurred, and how these occurrences (the na- tural oiSspring of cause and effect, and therefore not peculiar to this period, but alike applicable to every recurrence of similar causes) acted on the currency. At this time, when it might have been expected that much of the evil of such a change of national wealth had passed away, by the aptness of adaptation to circumstances, it proved that we were on the eve of an era, of greater and more sudden expansion of avail- able floating capital than we had for the four previous years suffered its contraction. The immense increase of fixed capital which had become absorbed by the agricultural interest had stimulated production so much, that in 1832 the amount of national income absorbed in the price of wheat was reduced upwards of six millions sterling, as compared with 1831 : and instead of nearly four mil- lions being sent abroad for this article in the latter year, only seven hundred thousand pounds were re- quired in the former. Such an amount of the national income (accom- panied by such a diminution of the export of our means for this purpose) becoming available for all other purposes, could not fail to give a fuller cur- rency, part of which would remain available as cur- rency! and part would be absorbed in the products 25 of other industrial pursuits, which, in their turn, would give a stimulus to industry and credit, and ultimately to a further extension of the currency. It appears here necessary to show why the reaction in the price of wheat, and a lesser amount of income thereby absorbed and thrown into other industry, acts differently on the currency than when a larger portion of income is taken from other pursuits and thrown into the price of wheat. Wheat is the first necessary of life, and, whatever may be its price, differs less than any other article in the quantity consumed. The variations in price, therefore, may be considered only owing to the varia- tions in quantity produced, and not in any material variation in consumption. We always consider that wheat has the first and imperative claim on our income, to which all other productions must yield ; it is, there- fore, a scarcity of wheat which drags capital from all other uses, and an abundance which again gives it back : therefore, when capital is flowing into the agri- cultural interest in a greater than average proportion, it is owing to great scarcity, and an absorption imme- diately takes place to stimulate a larger production, and the currency is thereby contracted ; whereas, when capital is again flowing back by a reaction in the price of wheat, it is caused by a redundant supply of that article, and not by a too limited supply of the results of other industrious pursuits : they only ultimately become stimulated by the expanded currency which is thus effected, and a consequent greater ability to con- 26 sume their products on the part of the community ; but the first influence is to enlarge the currency or available capital of the country. We may consider 1832 as the beginning of a new era — as the change in the tide when the excess of capital which had, under an artificial stimulus of high prices and a legal promise of their continuance, began to flow back into all the channels from which it had been absorbed. It is not here our place to inquire how much was actually wasted in the operation ; we will confine our attention to its necessary influence on the currency, or floating available capital of the country. As we have already remarked, upwards of six millions sterling was required less of the national expenditure this year than the previous to pay for the consumption of bread alone ; and more than three millions sterling, which had been the year before sent abroad for wheat, was retained at home ; so great a difference could not fail sensibly to affect the amount of surplus money at the end of that year, and to render that commodity more abundant. The same causes still acting, the following year, 1833, another reduction took place of more than four millions and a half sterling in the total cost of bread, with another reduction of more than half a million sterling in the sum remitted for foreign supplies : to- wards the close of this year we consequently find that the currency became very full — money very abundant ; for as yet commerce had not shown sufficient symptoms of recovery to induce an extension of operations equal 27 to the disengaged capital. In the following year, 1834, we find another reduction of nearly five millions and a half sterling ; and again, in 1835, another re- duction of upwards of five millions and a half sterling took place in the cost price of this one first necessary of life. Thus we find that in the short space of four years the portion of the national expenditure absorbed in this way was reduced from fifty-three million pounds sterling, with an import at the cost of three millions eight hundred thousand pounds sterling, in 1831, to thirty-one millions four hundred thousand pounds sterling, with an import at the cost of only thirty-four thousand pounds, in 1835 ; making a dif- ference of upwards of twenty-one millions of pounds sterling in the cost of wheat in these two years. But the following table will show still more the accumulated effects of the two different periods of years, viz., the four years from 1828 to 1831 both inclusive, and the four succeeding years : — Years. Total Cost of Wheat. Total Cost of Foreign Wheat. Years Total Cost of Wheat. Total Cost of Foreign Wheat. 1828 1829 1830 1831 Total, 4 years £ 48,250,000 53,000,000 51,400,000 53,066,666 £ 1,912,154 3,495,8)3 4,190,891 3,828,519 1832 1833 1834 1835 difTer- ence £ 46,916,666 42,316,666 36,933,333 31,400,000 £ 710,533 156,114 101,750 34,654 205,716,666 13,427,377 157,566,665 48,150,001 1,003,326 12.-124,326 205,716,666 13,427,652 This table shows that during the first four years the huge sum of forty-eight millions sterling was paid for 28 wheat more than in the same period next succeeding ; and in the former period twelve millions sterling was paid for the foreign wheat which was taken into con- sumption more than in the latter years. It will be seen, by a further examination as we go along, that the sum paid in the latter period was as much too little as that in the former period was too much ; judging by what should be the annual sum spent according to the average of a number of years, by which the different interests have been sustained amidst all these changes. Can it, then, be a matter of surprise that extraordinary changes and fluctuations were visible in the currency with such facts before us — that the increasing abun- dance of money which every year was experienced from 1832 to 1835 should have given rise to all manners of speculations, many of which tended only still more to increase the already surcharged currency, especially the establishment of joint- stock banks, one of the favourite schemes of the times, all eager in the pursuit of business ? But it is evident that this state of the currency had in itself the principles of its own cure. The abundance of money reduced its value so much, with a growing eagerness to invest, that not only were all the usual channels of absorption and occupation greatly expanded — not only were new and extensive internal improvements undertaken, especi- ally in railways — but speculators in foreign countries, particularly in America, attracted by the facility of obtaining loans in this country at a low rate of interest, were induced to embark in the wildest undertakings. In short, at home and abroad, the plethora of money in this country, at the period we now speak of, pro- 29 duced a spirit of speculation, in every possible way so formidable in its extent and ramifications, that by the middle of 1836 there were symptoms of a reaction, by an unfavourable turn in the foreign exchanges, a de- crease of bullion, and a growing scarcity of money, which ended in the panic of the autumn and winter of that year. The derangement which then occurred in the currency can be regarded in no other light than the mere reaction of the unnatural abundance of money and credit which had existed for the two or three previous years, and the necessary consequences arising therefrom. We term it an unnatural abun- dance, because it was created by a price of wheat, which could not possibly be sustained as it was below the cost of production. The influences of this panic were chiefly felt, as was to be expected, by the highest monetarial interests ; the channels through which foreign loans had been negotiated ; by those who bore the enormous responsibilities arising out of the over- heated and excited engagements called into existence between this country and America ; by the great abun- dance and cheapness of money here, and by the spirit of speculation which was fostered in that country by the facilities afforded in raising money on their secu- rities in this market. At this period it was evident that a great part of the rapidly accumulating surplus capital of the few pre- vious years had been absorbed by the extension of private enterprise, by the huge number of public un- dertakings at home, and by investments in foreign securities ; and that thus the actual available currency 30 of the country had become much contracted. We find^ however, that a few months' caution and quietude gradually restored confidence ; the price of wheat and other provisions was still comparatively low in 1836 and 1837; and by the end of the latter year, a suffi- cient abundance of money, for all useful purposes, was found to be in circulation ; we were then, as nearly as possible, the proper medium condition of relative prices and expenditure, which the experience of a number of years has shown to be the correct average price at which the different interests of this great community could be sustained in these different pos- tures and advantages which on an average of years they have enjoyed. We consequently find that from the autumn of 1837 to that of 1838 every circumstance indicated a sta- tionary, but healthy condition of the currency, whether we regard the character of the business of that year — the absence of all speculation — of any depression or complaints from the numerous interests of the com- munity — of the uniformity of the amount of bullion held by the Bank of England ; all concur in giving the strongest evidence that the currency was more equally proportioned to all the wants of the commu- nity than had been experienced for many years. But just at this moment we discover that the appa- rent calm and healthy equanimity which was then enjoyed was only leading to another great, but na- tural and imperative reaction. We have seen that from 1833 up to 1837 capital to an enormous amount 31 had annually been flowing from the agricultural in- terests ; and, while it left that interest, year after year, more and more weakened and impoverished, had, by its unnatural abundance in other channels, produced much evil. The advance of the price of wheat in 1837, although only to what may be deemed the correct average, showed that the low prices of previous years had produced an effect on the productive powers of the land; and the harvest of 1838 being not only backward, but deficient, found us with an exhausted stock of the first great necessary of life. This is a moment which demands the most attentive consideration. In the whole range of society there was not one evidence of a disturbing cause to the currency ; a year more void of speculation never ex- pired ; a year of more healthy and legitimate business was never enjoyed, when all the industrial classes, of whatever denomination, had a full and satisfactory share of prosperity ; or when the monetarial engines of commerce maintained so much equality and uni- formity of action : a year in which nothing disturbed our prospects of peace abroad ; in which the uniform and prosperous condition of the working classes gave the greatest guarantee for contentment and quiet at home. But, notwithstanding all these securities, we find that we are once more on the eve of a great convulsion of the currency. As the harvest of 1 838 approached, its lateness and supposed deficiency began to excite some alarms ; the diminished stock of wheat caused 32 prices to advance rapidly ; and the exhausting in- fluence of the prices of 1834, 1835, and 1836, on the productive ability of the soil was now seen as the inevitable consequence of prices having been pressed below the cost of production. In the end of 1837 and the early part of 1838 the average price of wheat was maintained about 52s. (the actual average price of a number of years) ; towards the autumn of 1838 it rose until it reached in August 75s., and, with some fluc- tuations, ranged nearly that rate until the middle of last year. It therefore follows that, calculating the national consumption at sixteen millions of quarters annually, or upwards of three hundred thousand quarters weekly, that, in the autumn of 1838, we commenced an ab- sorption of the national income of more than 300,000/. weekly, in addition to the fair average price of wheat ; and, as compared with the expenditure of 1835, the additional weekly sum now required to pay for wheat, was upwards of 450,000/., or nearly half a million sterling. This cause, sufficient as it may appear to account for any amount of derangement in the currency — the abstraction of 300,000/. weekly from the channels in which, by all the existing arrangements of society and commerce, it was at this moment finding useful and convenient employment — was accompanied by the usual attendants on high prices, a large foreign importation. For some years a most trivial portion of the re- 33 sources of the country had been abstracted for the purpose of importing wheat, and therefore, by the universal law of adaptation to circumstances, no ar- rangement whatever existed by which any money could be spared, or our labour exchanged, for the growth of other countries: but bread is an article of overruling necessity, to the possession of which every other con- sideration, whether mercantile or political, must give way. In the three last months of 1838, in addition to the enormous advance of the price of provisions ; in ad- dition to the abstraction of upwards of 3C0,000/. weekly from the accustomed channels of convenient occupa- tion ; our currency had to suffer an abstraction of more than five millions sterling, for the payment of 1,812,294 quarters of foreign wheat, introduced into consumption from the 10th of October till the 5th of January inclusive. Nor did it stop here : even this enormous sum made no visible impression in filling up the deficiency, we shall not say of one bad harvest, but of a number of successive insufficient harvests, as shown by the almost exhausted stock before the har- vest of 1838. At the commencement of last year, prices still went on increasing until they reached an average of 80^". per quarter ; the weekly absorption of capital became greater and greater ; the importa- tion of foreign supf»lies continued, until the whole quantity of foreign wheat introduced into consumption, from the 10th of October, 1838, to the 10th of Octo- ber, 1839, inclusive, amounted to 4,355,778 quarters, at a cost of more than twelve millions sterling. D 34 Now admitting, as we always do in these views, that about 52^. per quarter is the fair average price at which all interests in this country have been sustained, and that the average of this period was about 20^-. higher, it follows that not only have sixteen millions sterling of the national income, during this year, been paid and consumed in bread, more than the average, and thus abstracted from other employment, but that three- fourths of this excess of price has actually been paid for wheat, the produce of other countries, and ab- stracted, for reasons we have already considered, from the available currency of the country. We only com- pare this with what should be an average; but, in order to show again the great extent of fluctuations in our available current means, to which these charges subject us, let us put the three last years in compa- rison with the three preceding years : — Years. Total cost of Wheat. Total cost ot Foreign Wheat. Years. Total cost of Wheat. Total cost of Foreign Wheat. 1834 1835 1836 £. 36,933,333 31,400,000 38,800,000 £. 101,750 34,654 51,177 1837 1838 1839 period £. 44,666,666 51,666,666 56,533,333 £. 499,430 4,594,014 7,515,864 107,133,333 More 187,581 paid in this 152,866,665 43,733,332 12,609,308 12,421,721 107,133,333 187,681 This table shows that, during the last three years, we have nationally spent in wheat 45,733,332Z. more than in the three preceding years, and paid the sum of 35 12,421,727/. more in the latter than the former period for foreign wheat. In order to place the operation of these principles, during the last two years, more clearly before the reader, we submit to his attention the following Table, showing the quantity of wheat which entered into con- svimption in each month in 1838 and 1839; the general average price at which the same was cleared ; the cost in sterling money of each such monthly clearance, calcu- lated at 15s. per quarter less than the general average of the time ; and the amount of bullion and deposits^, as shown by the Bank returns in each month during that period. {See next page.) d2 36 Wheat and Wheat flour ( cleared for consump- tion. General iverage price. (Jost of Foreign Wheat taken into consumption. — At \hs. less than the average. Bullion held by the Bank of England. Deposits ill the Bank of England. 1838. Jan. 5 Quarters. 1,619 53/0 3,076 1838. Jan. 11 £. 8,895,000 £. 10,992,000 Feb. 5 1,569 53/3 3,000 Feb. 8 9,543,000 11,266,000 Mar. 5 759 54/11 1,514 Mar. 8 10,015,000 11,535,000 April 5 1,081 56/4 2,234 April 5 10,126,000 11,262,000 May 5 1,914 58/3 4,139 May 4 10,002,000 11,006,000 June 5 2,939 61/3 6,796 June 1 9,806,000 10,786,000 July 5 851 64/7 2,109 „ 29 9,722,000 10,426,000 Aug. 5 9,584 67/8 25,237 July 26 9,749,000 10,424,000 Sept. 5 14,891 68/0 39,461 Aug. 24 9,746,000 10,298,000 Oct. 5 *1, 514, 046 72/11 4,334,424 Sept. 21 9,615,000 10,042,000 Nov. 5 12,537 65/10 31,864 Oct. 19 9,437,000 9,327,000 Dec. 5 7,295 71/6 20,603 Dec. 13 9,362,000 9,033,000 1839 Jan. 5 278,416 76/ 1 850,32^ Jan. 10 9,336,000 10,315,000 Feb. 5 168,130 79/7 542,924 Feb. 7 8,919,000 10,269,000 Mar. 5 234,183 74/5 695,718 Mar, 7 8,106,000 9,950,000 April 5 517,848 72/1 1,478,024 April 5 7,073,000 8,998,000 May 5 188,191 70/1 518,309 CT> May 2 6,023,000 8,107,000 June 5 July 5 153,777 504,536 71/1 71/4 431,216 1,421,109 ' !D 00 „ 30 July 1 5,119,000 4,344,000 7,814,000 7,567,000 Aug. 5 23,821 70/0 65,507 "« ,. 25 3,758,000 7,955,000 Sept. 5 4,242 71/6 12,483 1 Aug. 22 3,255,000 8,029,000 Oct. 5 811,679 71/9 2,303,139 Sept. 19 2,816,000 7,781,000 Nov. 5 123,160 67/2 321,242 Oct. IS 2,522,000 6,734,000 Dec. 5 17,468 67/5 45,780^ Dec. 12 2,887,000 5,952,000 This table deserves close examination, and affords a most instructive illustration of the action of the theory and principles of which we are treating. * Of this 630,000 quarters had been imported, and paid for in former years, before 1838, leaving 884,046 quarters of this quan- tity of the import of that year. 37 It will be seen that during the first half of 1838 the prices of wheat were moderate and tolerably steady (although gradually advancing), and that a most trivial quantity was cleared for consumption. From this time until September prices advanced so rapidly that, early in that month, the averages had risen so that wheat was admitted at the lowest duly, at which time more than one million and a half of quarters were cleared for consumption. During the whole of this year (1838), the bullion and deposits, and especially the former, display a very uniform condition ; and the large clearance of foreign wheat, which took place during September, appears to have had little influence on them This fact may be satisfactorily explained in the fol- lowing manner : — Of the quantity cleared up to this period, 630,000 quarters had been imported, and the payment therefore provided for in former years ; a further quantity of 869,245 quarters had been im- ported during the six weeks preceding this large clear- ance ; of this a considerable portion was held in con- tinental ports on English account of former purchases, and therefore not to be then provided for; and a further large portion of this quantity was imported from near ports during the month of September, when the low duty became a matter of certainty (the quan- tity imported in this month amounted to 533,771 quarters) ; and as the practice is for the shipper to draw upon the importer at three months, the payment for such new purchases would not become due until the close of the year, or the beginning of the year M *->.% A A d 38 1839; accordingly towards the close of the year we remark a gradual though not extensive diminution of bullion. During the two months succeeding the 10th of Octo- ber, the clearances and imports were alike trifling, and it is not until the month ending January 5th, 1839, that we find an important quantity imported or cleared, and from this time forward, until the 5th of Novem- ber, the quantities imported and cleared for consump- tion continued unprecedentedly large. The greatest part of old purchases, held on British account, as well in this country as abroad, having been now exhausted, the transactions of the following periods show their full natural action on the currency and the floating capital of the country. We accordingly find, that month after month dis- plays a rapid diminution both in the bullion and deposits of the Bank during the whole of this period ; the former falling from 9,336,000/., on the 10th of January, to 2,522,000/. on the 18th of October; and the latter falling from 10,315,000, on 10th of January, to 5,952,000/. on the 12th of December. Adding together our estimated amounts of the cost of the wheat cleared from the 5th of December, 1838, during the following year, it amounts to 8,685,779/. In this period we find a most uniform correspond- ing reduction taking place in the amount of bul- lion, until we find, from January till October 5th, 6,814,000/. abstracted from the country. To this sum 39 should be added the credit of 2,500,000/., which the Bank obtained on Paris, tlie drafts for which may be said to represent so much bulhon exported. In this way we see clearly how our imports of wheat have been provided for, and how our bullion has been disposed of We would crave attention to the reduction in the amount of the deposits on two grounds : — First. — For the same reason that so large an im- portation of wheat finds no corresponding commo- dity of exchange except bullion, as having a common value every where, viz., its being uncertain and acciden- tal; we believe that its amount must always be ab- stracted, in great measure, from that portion of the capital of the country constituting the currency, or convenient medium of exchange ; or from that portion which constitutes the stock of what is termed the money-market. This is chiefly represented by the deposits with bankers throughout the kingdom ; the whole amount of which, it has been shown, is in some measure indicated by the deposits in the Bank of England. These transactions being accidental, a small portion of the usual fixed commercial capital is directed into this channel, or kept available for its uses ; and, therefore, when the demand does arise, it can only be abstracted from the sources referred to ; were the demand equal and certain, the same amount of trans- actions thrown over a large space of time with any degree of uniformity, not only would a regular medium of exchange in other commodities be the necessary consequence, but also would a suitable share of the 40 capital of the country find its way into that trade, liT >> London . . . 46,764 „ „ Glasgow ... 53,156 1,429,062 Total supply .... 1,838,119 Deduct exported 102,370 Stock left, December 31st . . . 498,929 601,299 Total number of bags consumed, 1,236,820 At an average weight of 3461bs., making 426,090, 1161bs. 81 of cotton wool spun in this year, of which was ex- ported firom England in manufactured goods as follow : — * Wkight df Yarn in Manukacturku Cotton Goods Exported KROM England in the Ykak 1838. Deiciiption. Number ol yards. Sic. of each description. Length of each piece. Number of pieces of each description. Weight o yarn in each piece Total weight 01 yarn exported in goods. Calicoes, Printed & d)'ed Yards. ■264,724,867 Yards. 28 9,45 J, 459 Ibfl 4 4 lbs. 40.181,451 Calicoes, Plain . . . 282,847,754 24 11785,323 6 70,711.938 Cambrics and Muslins. 5,845,521 20 292,276 3 876,828 Velvettton & Linen, mixed 1,870,473 40 46.762 8 374,086 Ginghams and Checks 2,516,576 20 125,829 3 8 440,401 Ticks, checked ' and striped 212,553 50 4,251 20 85,020 Dimities 89,802 60 1,497 12 17,964 Dama--ks and Diapers . 18,332 36 509 10 5,090 Nankeens 383,786 50 7,676 8 8 65,246 Lrwus and Lenos, . . 18,250 •20 912 9, 8 2,280 Imitation Shawls . . . 106,572 12 8,881 2 8 22,202 Lace, &c 81.987.421 40 2,049.685 8 1,024,842 Ciainterpants & Quilts 96.307 No. 96,307 7 674,149 Shawls & Ilanil kerchiefs 8u8,924 Doz. 808,924 2 8 2,022,310 Tapes, Bobbins. &c.. . 1,-05 51,205 1 51,205 Hi)s;ery 44 -,391 447.391 o 8 1.118,477 Unenumerateil . . . . 119,190 £. Sterling. 10 1.191,900 Total Weight of Yarn Exported in Manufaciured Goods, in 1838, 120,784,629. * FortLe data of these calculations, &c., in this table, we are indebted *o Mr. Burnes, of Manchester (so deservedly known as a great authority in cotton statistics), obtained through Richard Cobden, Esq. G 82 lbs. Total of yarn in manufactured goods . . 120,784,629 as such 113,753,197 „ „ Thread 3,362,983 Total weight of yarn exported .... 236,900,809 To which add f th, to show the quantity of Wool 33,842,972 Total weight of cotton wool exported in goods and yarn 270,743.781 Shows cotton wool consumed at home, in manufactured goods, and the Scotch trade 155,346,335 426,090,116 COTTON TRADE OF GREAT BRITAIN. 1839. BAGS. Jan. 1st, 1829, Stock on hand 498,929 Imported into Liverpool . 1,015,357 „ ,, London . 51,231 „ „ Glasgow 41,962 1,109,550 Total supply . 1,608,479 Deduct exported , 121,659 Stock left, Dec. 31 . . . . 370,276 491,935 Total number of Bags consumed 1,1 16,544 Or, at the average weight of 346 lbs. : — making 384.928,079 lbs. of cotton wool, spun in 1839,— of 83 which was exported from England, in manufactured soods, as follows : — WEIGHT UK YAKN IN M *Ni: FACTURKD COTTON GOODS, EXPOKIKIJ KUOM ENOI.ANU IN THK YKAR 1839. Description. Number of Yards of each descriplion. Length of each piece. Number of pieces of each description. Weight ot yarn in each piece. Total weight of yarn exported in kjODds. Calicoes. Printed and Dyed .... Yards. 278.064,831 28 9,9.i0,887 lbs. 4 oz. 4 lbs. 42,207,019 Calicoes, Plain 316,001,128 24 13,166,713 5 12 75,708,599 Cambrics and Muslins .^,168,734 20 ■-'58,437 3 775,311 Velveteens, &c. . 4,396,77; 60 73,279 22 12 1,667,096 Qmltiugs and Ribs 215,373 60 3,. 589 18 4 6'>,599 Cotton and Lineu . 1,910,745 40 47,769 8 382,152 Ginfjhams and Checks 2,681,394 20 134,070 3 8 469,245 Ticks, checked, &c. . 326 ,981 50 6,540 20 130,800 Dim ties .... 92,254 60 1,538 12 18,456 Dam sks and Diapers 24,108 36 679 10 6,790 Nankeens .... 121,258 50 2,425 8 8 20,612 Lawns and Lenos . 47,8-10 20 2,392 2 8 5,980 Imitation Shawls . 27,6,)2 12 2,304 2 8 5,760 Lace, &c 91,531,094 40 2,283,277 8 1,144,138 Counterpanes, &c. . 142,708 No. 142,708 7 998,956 Shawls and Handker- chiefs .... 686,616 Doz. 686,616 2 8 1,716,560 Tapes, Bohbns, &c. 81,432 .. 81,4.'^2 1 8 1,43 J Hosiery .... 516,156 .. 516,156 2 8 1,300,390 Unenumeratid 159,341 £ Sterling. 10 1,593,341 Total Weight of Yarn Exjioried in Manufacttired (ioods m 1539,-128,298,236 Total weight of yarn in manufactured lbs. goods 128,298,236 „ Exported as such . 99,04.3,.'')39 „ Thread .... 2,711,798 230,053,673 G 2 84 lbs. Total weight of Yarn exported . . 230.053,673 To which add | to show the quantity of Wool 32,864,810 Total weight of Cotton wool exported in goods and yarn 262,918,483 Shows Cotton wool consumed at home in manufactured goods, and the Scotch trade 122,009,596 3b4,928,079 Which leads us to the following comparison of the Cotton trade of 1838 and 1839 :— Quantity of cotton wool exported in a lbs. manufactured state, in 1838 . . 270,743,781 do. do. 1839 . . 262,918,483 Deficient in the latter year, all in yarns 7,825,298 Quantity of cotton wool consumed at home in manufactured goods, and the Scotch trade, in 1838 . . . 155,346,335 do. . 1839 .. . 122,009,596 Deficiency in the latter year, in home consumption 33,336,739 do. do. Export 7,825,298 Total deficiency of cotton wool manu- factured in 1839 41,162,037 Of this deficiency the whole of the portion in the export is in yarns, which, in that state, may be esti- 85 mated at one ■sldlluig per lb. for the weiglit of wool. The deficiency shown in the home trade must be con- sidered altogether as manufactured goods of every kind ; the value of which, as a fair general average, is calcucated at 2.?. 4lain that the home consumption of the whole of our leading articles of manufacture has been greatly reduced during the past year, not only to the extent of the diminished quantity actually manufactured, as shown by the falling; off of consumption of the raw material, but also by the additional quantities exported to relieve this market of a pressing excess. But although this pressing excess has apparently been disposed of, it is not 89 in reality so. It has only been removed from this mar- ket, and diffused over other markets, where it has also created an excess; tlie consequence of which is, at this time, that ijreat sacrifices are being made in these distant markets, which all fall upon the British merchant and manufacturer, on whose account such goods were ex- ported.* It is therefore obvious that, although the effect of the diminished ability to consume the produce of manufac- turers, in consequence of the increased portion of the national means absorbed in a high price of provisions, is first apparent on the home consumption, it must ulti- mately tend also to destroy and to derange our foreign markets in a twofold manner ; first, by tiie large excess thrown upon them from this country, by which they become glutted, and the niore healthy demand of direct purcha.ses superseded ; and, secondly, in consequence of the great fallmg off" of the consumption in this country of such articles of their growth as form their ability of ex- change, their power of consumption neces,sarily becomes contracted. There is still one other mode by which the mercantile * Illustrative of this operation, we may quote the following from an American correspondent to one of our leading journals : " I would wish to give a hint to those of British manufacturers wht) continue to send over goods to this cou7itry to be sold at forced sales, at almost any price. If the practice is continued, the loss u^'ll be enormou-s." The forced sa^es are, ho -vever, only the effect of forced exports. 90 interest becomes greatly injured at such periods. When, by the sudden demand for grain, the import can only be secured in exchange for bullion, then , according to every authority on the currency question, it becomes a duty with the managers of the currency, whoever they are, to contract it in the same proportion that there appears a tendency for the bullion to lessen, in order to raise the value of money, an<] [)revent a further abstraction of bullion. Well, be it so, and admit that they succeed : what is the result? The same quantity of wheat must still be obtained, and it must be paid for : the principle is that by raising the value of money so high, the price of goods is depressed so low, that at last, instead of taking gold at a very high price, they take goods at a very low price ; instead of taking a small quantity of bullion, they are induced to take a large quantity of goods, as compared with the ordinary and real compa- rative value of the two commodities. If, therefore, this attempt of raising the value of money means anything, it is simply depressing the value of goods so low, comparatively, that the foreigner is induced to take the latter, instead of the former, in exchange. Suppose this to be true — it is obvious that this is another motive from the same common cause of forced exports, at ruinous prices ; and it is not necessary to accomplish the object that the exports should lake place to the countries from whence we derive the grain : these countries may require none of our products at that par- 91 ticular time; or we may find intermediate countries with whom a forced exchange may be made of our goods for bullion, at a smaller sacrifice than could be with the pro- ducer of grain ; but it is nevertheless the forced exports of our goods at a low price that enables us to satisfy such purchases of grain with bullion so obtained.* We will not here inquire whether any part of the de- pression of prices and the forced exports have arisen from a voluntary contraction of the currency, or whether they are altogether referable to a diminished demand for home consumption, as in either case the first cause is the same; and the ultimate effect is to charge the mercantile and manufacturing interest with the whole cost of correcting the derangement. Having now, we are afraid rather tediously, traced the course of trade since 183*2, we would now crave * In speaking of the monetarial derangement in the United States last year, Mr. Biddle says : " There remains to be added the vast quantity of foreign merchandise which has been poured in upon us for a market to swell the amount of our imports, during the present year, far beyond the proceeds of our exports. Im- mense amounts of the precious metals have already been exported within that period ; it is believed that the port of New York alone has witnessed the departure of probably not less than twelve mil- lions of dollars, the fruits chielly of her collections, for the sales of foreign goods, here and elsewhere ; the packets of England, de- parting every five days, all lake their quota ; and the great steamers, each with her millions, vie with each other in accele- rating their speed to replenish with our means, ere it be too late, the exhausted vaults of the Bank of England." 02 attention while we shortly apply our general principle to the facts. We say that the chief cause of the fluctuating charac- ter of our trade and manufactures arises from the great fluctuation in theamountof the national income which is absorbed in a number of consecutive years, as com- pared with others, for payment of the first and im- perative necessaries of life ; thus leaving in some years a much larger portion of the national means to be expended in manufactured goods, than can be regularly and eventually maintained. Considering wheat as the most universal first neces- sary of life, we regard it as an article which fluctuates less in the amount of consumption than any other ; with all classes of society, not absolutely in want, the consumption is nearly the same at all times ; and with the very poorest classes everything else is curtailed or given up before bread. As therefore the consump- tion does not materially increase with low^er prices, or diminish with higher prices, and as we have seen that these prices fluctuate very much, it follows, that the whole amount of means absorbed in the purchase of this article must fluctuate at the same rate as the price. It also follows that as the means of the community to purchase manufactures, and other articles of a secondary consideration, must depend entirely upon the amount of income left, after securing the first necessaries, the demand for the former must fluctuate 93 exactly in proportion to the price of the latter. Ad- mitting these obvious principles, it follows that if we could maintain a uniform price of wheat, by which the amount of income necessarily absorbed would be always the same, then only could we expect a uniform condition of the trade. But, if by the operation of our Corn Laws, we have alternately periods of very high prices, and of very low prices, the general condition of trade must oscillate correspondingly. Thus, if the price of wheat continues unusually high for three or four consecutive years, trade must remain restrained and stationary ; and thus, if prices fall much below the average late, the demand for manufactures must receive a great impulse; and, as in both cases, the effect is accumulative, if low prices continue for a number of years, the influence is correspondingly great. Referring to the table page 1-3, we find that, during the extremely high prices which ruled from 1817 to 1820, trade was extremely depressed ; great distress existed in our manufacturing districts, and the peace of the country was materially interrupted ; but no sooner did prices fall in 1820, than an improvement was visible; — a further decline took place in 1821; all complaints vanished, and trade became active : in 1S22, a further decline took place,— the influence was more and more evident on manufacturing industry which, in this year, received a great impulse, the effect of which, with moderate prices, continued until the speculative 94 iiiania of i8'25, with a high price of wheat and a con- siderable importation, caused a most serious re-action, and which [)roduced the panic of 1825-26. The great excitement which had prevailed, and the increased demand which had been experienced for the products of our manufactories, during the two or three preceding years of very low prices of wheat, had naturally called into existence an amount of productive power, equal to the demand. In the beginning of 1826, when the effects of the crisis and the high price of grain greatly reduced the demand, the increased productive ability which had thus been called into existence from a temporary cause, added to the other existing circumstances, created a great depression in all branches of business. In 1827, there was a general sign of improvement, but in 1828, the price of wheat advanced materially, and continued very high, Avith extensive importations, until 1831, during which period, especially in 1829 and 1830, trade was reduced to an extremely low ebb ; and the peace of the country was once more threatened by an ill employed population.* * The following table shows the sum expended in each year in support^of the Poor in England and Wales, and bears a remarkable coincidence with the principles under consideration, and the description we have just given of this period : — YEAR. £>• 8. d. 1818 7,822,733 Following 1817 Price of Wheat 94 1819 7,468,383 „ 1818 , 83 8 1820 7,330,256 „ 1819 „ 72 3 1821 6,959,249 ,. 1820 „ 65 10 95 The rapid extension of business which took place under the influence of low prices from 1832 to 1830, and forward until the autum of 1838, with the sudden and disastrous check it received in 1839, in conse- quence of the rapid advance in the price of wheat, have already been sufficiently considered. Having now fully considered the fluctations to which commerce and manufacturing industry are subjected, by the fluctuating price of wheat, we will shortly examine the relative results of these fluctuations to this and the agricultural interests. We have found that each interest, at opposite periods, have experienced similar effects — each interest has had periods of alternate excitement and depression — which have been attended by equally ruinous consequences to each. The landed interest has had periods of very hi^h prices (as from 1828 to 1831) — much above the average prices, 1822 6,358,702 „ 1821 54 5 1823 5,772,958 1822 43 3 1824 5,736,898 18-23 51 9 1825 5,786,989 1824 62 1826 5,928,50) 1825 66 6 1827 6,441,088 1826 56 11 1828 6,298,000 1827 56 9 1829 6,332,410 1828 60 5 1830 6,!<29,042 1829 66 3 1831 6,798,888 1830 64 3 96 whicli ciiew into it u much larger portion of the national income than could t)e sustained. The natural conse- quence, however, was (and the natural corrective), profits being thus forced much above the ordinary rate, the greatest part of the excess of capital which thus flowed into the agricultural interest was invested in improved and extended cultivation; and just in proportion as the price, and consequently the profit, was above the average, did the inducement exist to improve and extend cultivaton to secure these advantages. This natu- allv led to an over productionin the exact proportion to which prices had been forced above the average and remunerating rate ; and which, as a necessary conse- quence, led to a reduction of prices as much below the average and remunerating rate, as they had before been above it : and thus we find that after this period from 1831 prices regularly fell every year until 1835, from 66/3 per quarter in the former to 39/4 in the latter year. Of what advantage, therefore, did the high profits made from 1828 to 1831 prove, when, by the necessary tendency of such profits, losses to a corre- sponding amount arose from 1832 to 1836? On the other hand, manufacturers have had periods of very extensive demand increasing year after year, as the prices of wheat became lower and more ruinous to the farmer (as from 1832 to 1836). He was then enjoying a demand for his products as much above the proper average rate as provisions were below it. We have given abundant evidence of the rapidly increasing demand for such products, while wheat fell from 66/3 per quarter 97 in 1831 to 39/4 in 1835. In the history of the world there is not an instance of so rapid an increase of manu- facturing production as arose out of the unnatural stimu- lus afforded by these extreme low prices. The great and profitable demand which existed under the excitement had the natural effect of forcing into existence a suffi- ciently increased productive power not only to accom- plish all the demand of the time, but to provide for a further increase at the rate experienced by each indi- vidual party. We consequently find that productive ability to a most unexampled extent was called into existence at this period, but which did not come into full operation until 1838. In 1835, when most of the cotton- mills not only worked very long hours, but in very many instances with two distinct sets of work-people, continued in full operation night and day, with the greatest possible effort under a most excited demand, the whole productive ability of our cotton manufactures was equal to a weekly consumption of cotton wool of 18,157 bags ; but in 1838 it had advanced to a weekly consumption of 24,312 bags, showing an increased power of working up 6,155 bags every week by the great extension of manu- factories and expensive improvements in machinery.* * While the foregoing was at press, we have received a most in- teresting communication from John Sturrock, Esq., banker, in Dundee, to whom we had addressed inquiries relating to the pro- gress that town had made since 1828, the period which we have so closely examined ; and the statistical facts which he furnishes, with his observations thereon, are so truly illustrative of our prin- ciples, that we must crave the reader's particular attention to the following extract from them : — In 1828 the productive ability of Dundee in tlax-spinning was II 98 But, as the fundamental cause of this excitement was too great to be permanent — as this extensive demand equal to 500 horse-power ; it advanced very slowly until the end of 1832, when it was equal to 615 horse-power : from this time until 1836 the progress was very rapid, having in these three years increased to 1309 horse- power. The continued impulse of the great demand in 1835 and 1836 induced a still further extension, until it amounted in 1839 to 1695 horse-power. The progress stands thus : — Flax-spinning power in 1828 — 500 horse-power. Advanced in four dear years to 1832—615 „ „ „ „ cheap years to 1836 — 1309 ,, „ 1839—1695 Up to the end of 1836 the whole productive ability of the town was kept in full operation. The reaction which took place in 1837 threw about 200 horse-power out of working ; part of which were again set to work in 1838 : but by the end of 1839, and up to this time, out of the whole existing 1695 horse-power, only 951 are employed, and 744 are standing idle. The comparison is thus : 1828, existing, 500 horse-power; employed, 500 horse-power. 1832 „ „ 615 „ „ 615 „ 1836 „ „ 1309 „ „ 1309 1837 „ „ 1456 „ „ 1256 „ 1839 „ „ 1695 „ „ 951 We thus see, by the excited prosperity of the cheap years, a productive ability was called into existence which could not ultimately be used, and there is no doubt that a large portion, if not the whole, of the advantages obtained in the good years, have been since lost and sunk in unproductive power. The cost of flax-mills is about 400/. per horse-power. The portion now standing in an unproductive state shows a sunk loss of 297,000/. ; but, large as this sum may appear, to it must be added the depre- ciation which the existence of this surplus necessarily inflicts on all those that are employed ; as well as the losses which must arise from a branch of industry of which there must always be. 99 was based on a price of provisions much below the cost at which they could be produced, — a reaction sooner or later was an imperative consequence ; and we find that prices gradually rose, but continued moderate, until the end with such an excess of productive ability, a large surplus in the market. The depreciation in the value of the existing mill property, since 1836, is thus stated : — These mills have cost . . . £678,000 Of which are employed £380,400 „ unemployed 297,600 678,000 Their present value is not above . 339,000 To which add depreciation on manufactories and machine- shops of all descriptions . 121,000 Makes a loss in sunk capital, since October, 1836, of . . 460,000 This loss to individuals is a loss to the nation ; therefore what benefit can years of prosperity be either to individuals or the community, when they are, necessarily, succeeded by a loss of the whole advantages, and producing innumerable evils in the de- rangement and ruin which ensue ? Mr. Sturrock observes, with great truth, in reference to this loss — " The value can never be restored, unless our rulers adopt measures for having a free trade with all the world — admitting at the (,ame duty the same articles from every quarter — and, above all, a free trade in corn, that our population may be freed from the situation in which they are at present placed, when they eat as much as they can get, but do not get as much as they can eat. " Thus, by the starvation of the people, are the two ends of the year made to meet. 11 2 100 of 1838 (the very year in which the increased productive abiUty first showed its great power), when it was dis- covered that low prices and a lessened production had exhausted the ordinary stock of wheat ; prices rose sud- denly, and large imports were required from abroad; and so much did the enhanced prices of wheat reduce the consumption of manufactures in 1839, that the productive ability, which we have seen was capable of working up 24,312 bags of cotton weekly in 1838, was only called to exercise its powers to the extent of 20,348 bags weekly in 1839, and that at ruinous prices to the " Tlie long-continued depression of mercantile affairs is breaking down the spirits of the people and demoralising them. They are become callous — think nothing of becoming bankrupts — and many of them have failed twice since 1836. " The disastrous consequences which have resulted can only be first alleviated, and then eventually removed, by allowing all nations freely to exchange with us, that markets may be found for the necessaries and luxuries of life, which, from our not-to-be-esti- mated productive powers, can be furnished to an unlimited extent — for what bounds are there to human wants ? — and what reason is there why the population of our country should not be quadru- pled? •* By a free intercourse the status of the world would be gene- rally raised, and our own country, from its wealth, from the con- fidence which exists between man and man, its ingenuity, perse- verance, and skill, would assuredly progress in a much greater ratio than any other. ^' The state of things we have described as existing in Dundee, leads us naturally to the consideration that, if so much mechanical power be stagnant, how much physical power and skill must be stagnant with it. We learn from this report that wages are now twenty-five per cent.loicer than they were in 1836, when wheat was half the present price. 101 producers. It is therefore plain that a productive ability equal to working about 4000 bags of cotton, weekly, or 200,000 bags in this year, remained stagnant, unprofit- able, and just as useful as if it had never existed. The extraordinary excitement which cheap years of wheat produce in the demand for manufactures, and the great profits which are then secured by this interest, lead only to a time and consequences correspondingly ruinous, by calling into existence a productive ability which cannot be regularly maintained, and which is not only so much positive loss of capital, but, by the general law of competition, when the supply is greater than the demand, reduces the whole product to ruinous prices. The result, therefore, is, that each of these leading in- terests is alternately introduced into periods of great prosperity, but which necessarily lead to periods of equal depression, Avhen all the advantages obtained in the former period are lost and destroyed. There is no permanence in the success of either ; and these fluctua- tions are always proceeding in their course of operation, although it is only at the extreme points that public attention is much attracted by the consequences. The only way in which these crying evils could be remedied would be by maintaining a uniformity of the price of the first necessary of life, which we have shown is the great acting impulse. If this happy object could be obtained, then the two interests, commercial and agricultural, could only go on hand in hand — progress 102 together or recede together. As there would exist no undue exciting causes for over-production on either side, each would produce regularly and uniformly nearly the precise quantity required for consunoption ; no re-action would, therefore, take place, which, while it depressed the one interest, unduly excited the other ; but they would advance steadily together, regularly affording to each other additional means of extension, and tending continually to the benefit of each other, instead of as it is at present — that the two interests are alternately rising on the ruin of each other. We have sufficiently shown in a former work that this most desirable uniformity never can be experienced under the operation of the present law, or any other law which tends to restrict the supply of a regular and uniform quantity — which forbids the excess of one coun- try to flow into another to equalise a deficiency created by accident or a change of circumstances ; but which, on the contrary, by holding out delusive promises of a maintenance of extremely high prices, tends to give a most unnatural and excited impulse to production, and thus imperatively induces a course of violent fluctua- tions which are ruinous to all and beneficial to none. When these laws were first enacted in 1815, Lord Grenville, and the other peers who subscribed his cele- brated protest against them, with great sagacity foresaw all these effects. The following extract from that en- lightened document is so true in principle, has proved so true in practice, and is so universally applicable to all 103 mercantile legislation, that it well deserves to be sus- pended in every senate-house in the civilised world : — " We cannot persuade ourselves that this law will ever contribute to produce plenty, cheapness, or steadi- ness of price. So long as it operates at all, its effects must be the opposite of these. Monopoly is the parent of scarcity, of clearness, and of uncertainty. To cut off any of the sources of supply can only tend to lessen its abundance ; to close against ourselves the cheapest market for any commodity must enhance the price at which we purchase it ; and to confine the consumer of corn to the produce of his own country is to refuse to ourselves the benefit of that provision which Providence itself has made for equalising to man the variations of climate and of seasons." 104 PART III. FLUCTUATIONS OF COMMERCE, MANUFAC- TURES, &c., OF THE CONTINENT. The effects which our Corn Laws produce on continental industry and commerce, and the tendency that these effects necessarily have to re-act again on this country, are well deserving of our consideration. By the imperative operation of our Corn Laws we have clearly seen that the demand for foreign grain can only be at uncertain periods, considerably apart from each other. For years successively these countries are altogether excluded from our markets, and, when at last they are admitted, it is at the very highest prices. This circumstance necessarily produces in these countries fluctuations even to a greater extent than are experienced in this country. The extensive demand which was experienced from 1828 to 1831 for continental wheat, at very high prices, gave a similar impulse to its production that the high prices of that period exerted in this country ; and the consequence was that, as soon as our prices fell to the point at which foreign wheat could no longer be ad- mitted, the continental producers had two difficulties to 105 contend with — first, a greatly increased production sti- mulated by high prices ; and, secondly, the entire loss of the market which they had enjoyed to some extent for three years. Under this two-fold cause the price of wheat fell to an extremely low point ; the average price in Dantzig, in 1835, being only 23*. per quarter. During these years of low prices on the continent the same effect on manufacturing industry was experienced as in this country. Throughout Germany, Russia, France, and Belgium a very rapid progress was made in the industrial arts; a great quantity of capital, which would otherwise have been invested in agriculture, being diverted to these objects. The very low prices of the first necessaries of life leaving a large surplus to con- sume other products, an excited demand arose in exact proportion to this lowness of price. With the continuance of low prices, and exclusion from the market, a re-action in agricultural production necessarily ensued, which became reduced to a limit of their own consumption. When, therefore, a large demand arises for this coun- try, such as was experienced last year, the prices on the continent are raised, even in a much greater proportion to their average prices than those of this country, by the inevitable process which we have examined in the Appendix to the second edition of the " Influences of the Corn Laws," &c. By this means the income of the continental countries, 106 especially of France, Belgium, and others, which con- sume chiefly wheaten bread, is absorbed in a proportion- ably greater degree in payment for the first necessaries of life ; and leaving, therefore, so much less to expend in the products of other industries. The same reasons, therefore, that are acting in this country to contract the demand for manufactures, are acting in a stronger degree in the very countries from which we abstract, by the compulsary force of high prices, the quantity of food needed to make up our deficiency. In proportion, therefore, to the amount of our acci- dental necessity of importing their produce, we raise the prices so much on them, that we reduce their means, for the time being, to consume their own ma- nufactures, and therefore the difficulty is still greater to induce them to take any portion of our manufactures in return. At first sight this may appear a strange con- tradiction ; that, by paying a country high prices for its produce, its power of consumption is thereby dimi- nished ; but we do the same in this country ; we pay one class of producers a very high price for their pro- duce, and are unable to consume the usual quantity of the produce of another class ; and, although in this country the evil is rendered greater by our having to pay for the deficiency, while the continental countries receive the price of their surplus, yet, as concerns the ability of the masses of consumers, it is very much the same ; in both cases the advantage of these high prices, being altogether accidental and not regular, goes to enrich the few, while the great masses, who are the chief con- sumers everywhere, suffer merely so much abstraction 107 from their ordinary means to enjoy other things. Hence we find (hat during the past year the falling off of ma- nufacturing industry on the continent has been as great as in this country, and in many instances greater; for not only have they had a diminished ability of consump- tion, but they have also had to contend against the forced exports from this country ; as an intelligent corre- spondent in Belgium writes, in relation to the decrease of the cotton trade of that country during the past year, that it was " partly owing to the high prices of bread-corn, but more especially to the competition of British manufactures, which, notwithstanding a high protective duty, have been imported and sold at such low prices as to compel our manufacturers materially to curtail their operations." The following comparative statements of the trade of some of the most important continental countries, in 1838 and 1839, will show that the same corresponding effects have attended extremely high prices of provisions as in this country. TRADE OF BELGIUM, 1838 & 1839. COTTON wool.. BAGS. Stock, January 1, 1838 . 2,566 Total imports in 1838 . 39,552 Total supply „ „ . 42,118 Stock left, December 31 . 3,881 January, 1839 Consumption, 1838 . . . 38,237 Showing a falling off of lri,797 bags in 1839 BAGS- . 3,881 . 22,766 . 26,647 . 5,207 . 21,440 108 SHEEP S WOOL. BAGS. Stock, January 1, 1838 . 4,600 Imports in . . . 1838 . 9,756 Stock, December 31 14,356 2,460 BALES. January, 1839 2,460 „ » _7>982 10 442 „ ,, 52.150 8,292 Consumption of 1838 11,896 Showing a falling ofif of 3,504 bales in 1839. This table refers only to the wool imported by sea ; of that brought by land from Germany and the north of France we have no account. These are the chief articles of manufacture in Bel- gium, except linen, the raw material of which being produced in the country, we cannot ascertain the quan- tities ; but in all the leading articles, contributing to ma- nufactures, dye stuffs, oils, &c., the falling oflF has been on the same scale. COTTON TRADE OF FRANCE 1838 & 1839. COTTON WOOL. BAGS. BAGS. Stock on hand, Jan. 1, January, 1839 . . . . 62,000 1838 . . 63,500 Imported in „ . 390,978 j» « • • • . . 342,100 Total supply „ . 454,478 Stock, December 3 1,1838 62,000 Consumption 392,478 Total „ 400,100 Stock, December 31, 1839 75,000 Consumption 329,100 Showing a falling off' of 63,378 bags in France and the neighbouring parts of Switzerland, in 1839, 109 The woollen and silk trades of France are so much of an inland character that we cannot arrive at any com- parative statement ; but the consumption of dye stuffs, &c., has also fallen off greatly in 1839. COTTON TRADE OF HAMBURG FOR THE SUPPLY OF GERMANY in 1838 & 1839. COTTON WOOL. BALES. Stock, January 1, 1838 16,600 Impoits in „ Total supply „ Stock, December 31, Total „ 42,224 58,824 7,960 , 50,864 January, 1839 BALES. . 7,960 40,956 Total „ 48,916 Stock, December 31, 1839 8,880 Total „ „ 40,006 Showing a falling off of 10,828 bales in 1839. And, in addition to all these deficiencies of the con- sumption of cotton wool, the continental countries have purchased from this country less cotton yarn to manu- facture into cloth, by 14,700,000 lbs., in 1839, than in 1838. But not only does it appear that a great falling off has taken place in the consumption of manufactured goods in the continental countries during the last year, but also that the same effect has been experienced with re- ference to other articles of colonial produce, of which we may quote coffee, as one of the chief articles of con- sumption. The consumption of Belgium, as shown by the deliveries no in Antwerp ; of France, as shown by the dehveries in Havre, and of the parts of Germany, drawing their supply from Hamburgh, as shown by the dehveries of port, were : — 1838. Antwerp . 17,642 Tons Havre . 20,044,000 Demi Kils. Hamburgh r)6,256,000 lbs. 1839. Antwerp . 15,411 Tons. Havre . 15,550,000 Demi Kils. Hamburgh 48,000,000 lbs. The faUing off of the consumption of manufactures and colonial produce on the continent has a two-fold effect on our manufactures and commerce : first, the excess which is everywhere experienced in the manu- facturing districts on the continent compels them to force their goods into foreign markets, at the time that we are doing the same, and thus tends still further to deluge these markets; and secondly, as in ordinary times, a considerable portion of the supply of raw ma- terial, as well as colonial produce, consumed on the continent is furnished, either directly or indirectly, by means of British commerce, and in exchange for British manufactures, it follows that, in proportion as the con- sumption falls off on the continent, our trade must be lessened with those countries which originally produce these articles. For example, a large portion of the cotton wool consumed in Belgium and Germany is im- ported from the East Indies and America by us, in ex- change for our manufactures, and re-exported by us to those countries. The same is the case, to a very large extent, with respect to indigo and many other articles. The returns for nearly the whole of our exports to the HI Brazils, and other parts of South America, as well as St. Domingo and many other places, are made in pro- duce ultimately consumed on the continent; the discri- minating duties in favour of our own possessions ex- cluding the produce of these countries from consump- tion here. It is thus seen that the extremely high prices to which food is accidentally raised throughout Europe by the necessary actions of our Corn Laws, inflicts the most serious and extensive evils to our commerce in many ways not visible at first. If we had not the continental countries as customers for the coffee and sugars which we receive in exchange for our manufactures from St. Domingo (where coffee is the only exchangeable commodity they can offer), and the Brazils where it is the chief one, and the same ex- clusive principles continued which at present exist in favour of our own colonies, we should necessarily be deprived of these markets for our manufactures alto- gether. The extent of our trade with neutral countries is, we believe, very generally under- rated : we find that about three-fourths of the whole of our exports of British produce and manufactures go to foreign countries, with which we have no other relationship than the strong bond of mutual interest ; while only one-fourth of such exports go to our own colonies. This very extensive foreign trade, being carried on to a great degree, in exchange for commodities which we are practically prohibited from using in this country, we are only enabled to continue it by finding consumers in other countries for such produce. 112 Independent, therefore, of the vast quantity of foreign produce which is shipped, direct, on British account, to the continent, the re-exports of such articles from this country forms one of the largest branches of our trade. In 1838, we re-exported, in the latter mode, chiefly to the continent : — Coffee . . . . 1 1,293,290 ibs. Sugar . . 374,697 cwt Tea . . 2,577,877 lbs. Cotton . . 30,644,469 „ Sheep's Wool . 1,897,860 „ Raw Silk 166,767 „ Indigo . 5,143,891 „ Pepper . . 3,077,109 „ Tobacco . . 13,294,212 „ Besides gums, dye stuffs, wines, spices, furs, and other articles to a vast amount, all of which may be considered as the payment for our manufactures sent to the various places from which they were imported ; thus the con- sumption of cotton wool on the continent is one of the modes by which the growers in America are able to pur- chase our manufactures. It must, therefore, be obvious, that if any circumstance occurs materially to diminish the rate of general con- sumption, on the continent, of those articles which we receive from other countries, in exchange for our ma- nufactures, it must tend to reduce the consuming ability of our customers, by lessening the demand for their pro- duce, and, ultimately, the demand for our manufactures. 113 It is therefore clear that we are intereste*! in the uniCorni pros[)erity of the continental countries equally as mer- chants and as manufacturers ; and we cannot but think that the popular jealousy which exists against the advancement of those countries not only displays a spirit of culpable selfishness but at the same time ill accords with a true and enlightened view of our own interests. In proportion as any country improves and advances, the general field of consumption is expanded, and must be beneficial, directly or indirectly, to producers every- where : indeed two nations might exist, who had not one transaction directly with eachother, and yettheir prosperity might most materially depend on each other; and while either was vising means to injure the other, the greatest force of such injurv might fall upon itself: such are the indirect and insensible modes by which different coun- tries act upon each other. Neither national nor indi- vidual interests require to be guarded by a policy result- ing from jealousy or envy ; but are best promoted by the exercise of a free, liberal, and benevolent principle, by which all are rendered prosperous and happy, and are only thus capable of again reflecting prosperous in- fluences. 114 PART IV. FLUCTUATIONS OF LABOUR. It is im[)Ossible that these violent fluctuations in the demand for labour and the price of food can exist, without exercising effects equally violent on that portion of society whose only exchangeable commodity for their daily bread is their labour. Very little reflection will shew us that the changes which take place in the condition of the working-classes, must be exactly corresponding in character and time with the fluctuations in the industrial world which we have examined : a little investigation on this subject may prove very useful. It is a plain and easily-understood principle that the value of labour, like money, or any other merchantable article, must be regulated entirely by the proportion which the supply and demand bear to each other. These two elements, however, of regulating value^ are acted upon by numerous secondary causes; and, like all other arti- cles, there will always be a tendency for an adjustment between the two. If the supply be larger at any one time than the demand requires, the price of the whole must necessarily fall in proportion to the excess, until, in course of time, low prices increase the demand, or, failing this, until the supply itself was reduced ; if, on the other hand, the demand materially exceed the 115 supply, the price of labour would rise until the en- hanced cost reduces the consumption, or until the supply was increased, so as to be equal to the demand, to which there would be a strong tendency. So far as to the price of labour generally, and with respect to any particular kind of labour, the principle is exactly the same. There are many considerations which influence the supply ; — the time and expense necessary to acquire the knowledge ; — the degree of certainty of demand and remuneration when acquired ; — the healthiness and agreeableness, the respectability and station which society accords to the occupation. The demand for all or any must depend on the power of consumption ; but as we have before seen that this power must ultimately be regulated by productive ability only, the proportion between the demand and supply ought always to remain nearly the same ; and there can be no doubt that they would, were it not for the violation of their regulating laws by the inter- ference of partial legislation attempting to promote particular interests; by which^ although the object intended never was and never can be accomplished, a derangement ensues which leads to ruinous changes and fluctuations, afflictive of serious injury in their operations to all parties. The two great distinctions into which we have seen society severed by such violence, are the agricultural and manufacturing [t will be useful for the purpose of illustration to know I 2 116 the relative proportion which these two classes of labour bear to each other. In 1831, the proportion of labour in England, in the two great sululivisions of industry, was 761,348 families agricultural, and 1,182,912 manu- facturing, or about 50 per cent, more of the latter than the former; and there is every reason to think that at this moment the difference is even much greater in favour of the latter industry. In 1811 the difference was only 33 per cent., but gradually rose to 50 per cent, in 1831, and there is no doubt has still continued to advance since the last census. This IS important to know in a consideration of how and when labour is likely to be influenced by these fluctuations : for it is clear that labour generally must be influenced by the condition of that interest which retains and consumes the largest portion ; and that, therefore, the position of manufacturing industry as employing the largest portion, must always be the index to the general state of labour. If the manufacturing interest be prosperous, as in 1835, the great improvements and extensions which in such periods take place in our sea-ports and manufactur- ing towns, and by public undertakings of various charac- ters, such as railways, canals, Sfc, give a great impulse not only to the demand for manufacturing labour, but also for what may be called common labour; and therefore, at such moments when iiroxiisions are at the lowest price, and the landed interest in the most de- pressed state, wages of all kinds of labour have been highest. In 1835 and 1836, when the agricultural 117 interest was at the lowest point of depression, one of the great causes of complaint was, that labour was higher than it had been some years before, when the price of wheat was double. At this period, therefore, the whole of the labouring classes have three great advantages, — full employment, high wages, and a low price of pro- visions ; they experience to its full extent the excite- ment which then prevails in the commercial world ; labour of every description becomes greatly in demand, and commands high [>rices ; the condition of the labourer everywhere becomes greatly improved ; he inhabits a better class and a better furnished house; he contracts habits of comparative luxury. In every way his expenditure and engagements rise in proportiotj to his means; — marriages are numerously contracted; a great impulse is given to the increase of population by the extraordinary demand for labour. So great was this demand, that at this period there were instances of large manufacturing establishments standing still only for a want of work-people. In this state of prosperity, the working classes made great progress in intelligence and taste ; and, generally speaking, their condition was materially advanced. This would certainly be a most pleasing picture, arous- ing most gratifying reflections, if it were not alloyed by a conviction that this state arose out of a false and arti- ficial excitement which could not be maintained, bur which, on the contrary, mu>^t, ere long, lead to a depres- sio7i as great as was the excitement. But it can be no matter of sur[)rise that this class should fail to discover, that the enjoyments and pros- 118 perity of the present could not last — that they should act as if it were to continue so forever — that they should do all things in relation to the existing causes of the moment, without looking forward to the future. It can- not be matter of surprise that this class should do so, when we have seen all classes in their turns have com- mitted the same error; — that the agrictdturist cultivated during dear and excited year:, in reference only to the existing state of things, and found, by doing so, that he brought loss and ruin upon himself by calling into exist- ence a power of production at an expensive rate, greater than could be consumed at prices consistent with the cost ; that the manufacturer, in his turn, used every eflfort to create a productive power equal to the demand he experienced, at the time of the greatest excitement, but which, by the time it was ready for full operation, was not required, and therefore may be called so much sacrifice of the profits of past years — that, in fact, all mankind are governed by the influences of the present, without much reference to the future. We have already shown how delusive and ruinous to all [)arties such policy had proved, with what certainty a re-action succeeded such excitement; and it is now our melancholy duty to trace this re-action on the con- dition of I he labourer. We have already seen that from obvious reasons the fluctuations in the condition of the labourer (even agri- cultural) must correspotid with those of the manufac- turing classes; and, in addition to those reasons already given, it must also be obvious that when the latter in- 119 terest is greatly depressed, there must l)e a larye quan- tity of labour usually employed in it, which, at such times, will come in competition with common labour, which, being of a less skilled character, is easily taken up by many not usually employed therein. It therefore necessarily happens, from all we have seen, that when provisions are at the highest point, manufacturing industry at the greatest depression, labour is least in demand and lowest in price. Our manufacturing and seaport towns, instead of absorbing and drawing towards them a portion of the country labour as before, (and so preventing any redundancy which might otherwise have been felt in the agricultural districts during depressed times,) now throw back upon the country a considerable amount of labour — there is no longer any great demand for internal improvements ; and thus, when the agricul- tural interest is in a high state of prosperity and exten- sion, the increased supply of labour prevents any in- crease of price.* Then comes the reverse of the la- bourer's former position ; he is injured — he is compro- mised in three most distressing ways — deficient emjAoy- ment, low wages, and a high price of provisioihs. The experience of the past year and the present • We are quite iiware that in some solitary instances during high prices, a shght advance has taken place in the price paid for agricultural labour : but this has not !)een general by any means, and may be termed rather the exception than the rule ; and in no case has wages been raised at all in proportion to food ; and in many cases among agriculturists have the money wages been lowered. 120 moment furnishes a most melancholy evidence of this deplorable experience of the whole labouring classes —of the existence of these ill-assorted elements of their condition : they are now called upon to relinquish all the habits of comparative comfort and luxury into which prosperous years introduced them ; thousands of com- fortable cottages built for them in the manufacturing districts and suitable for their means a few years ago are now empty, while several families are crowded into single garrets and cellars : the intellect that was par- tially expanded, the taste that was a little cultivated, are now of no use but to render less endurable the degra- dation which has come over them : the impulse that was given to an increase of population and physical productive ability only tends now by its consequences to swell the amount of evil and difficulty. Instead of the com- parative plenty which was in all ways enjoyed only a few years ago, the most deplorable stHrvation and want now exists. Their marriages are denounced as " improvi- denty' because the altered state of affairs renders the obligations arising from them a burthen to themselves and the public. Improvident ! Let the landowner ex- cuse the improvidence of making laws which give de- ceptive promise of high rents which last for a year or two, and then fall lower than before, but on the strength of which an extraordinary scale of expenditure is in- curred, which ends in embarrassment and mortgage — let the farmer excuse the improvidence of being led to an expensive culture of waste and barren lands, by the excitement of high prices and an expectation of their continuance, but which produce only ruin and dis- 121 appointment — let the manufacturer excuse the imjirovi- dence of creating factory after factory, and swelUng the amount of his productive power equal to the wants of the moment, but which prove superfluous when done ; and then will there be no difficulty in finding much more excuse for the misfortunes of these poor innocent victims of such laws — laws which teem with mischiefs of the gravest character to every possible class of the commu- nity, but which weigh with the heaviest and most op[)res- sive anguish and suffering on the unemployed and starv- ing labourer — doomed to see the only relicts of better times, the fruits of an " improvident " marriage, endeared to him the more from their it\nocent suffering, daily pining away before his eyes by want and disease. There is surely an awful responsibility for all this human suf- fering resting somewhere ; and wherever it rests, a wilful ignorance of these facts can be no excuse; if investi- gation be petitioned for, he imjdored for, information offered, evidence tendered, and all disdainfully rejected, the responsibility for the consequences^ for every pang of suffering, and for every crime arising therefrom, must rest upon the inflictors of this wrong. There are two ways in which these times of depression act with increased hardship upon this class of sufferers : first, they are more than any other class innocent either of the original or immediate cause ; and second, with this class only it becomes a consideration of daily sup- port. The landowner, the farmer, and the manufacturer, are not immediately dependent upon the present moment for their daily food, but the poor labourer relies only 122 from day to day on the result of his toil for the existence of himself and those dependent upon him; when his labour, therefore, fails him, he is at once reduced to want. That a serious amount of crime and disease should arise out of such a slate of destitution is only to be expected. We find that there never have been times of serious and alarming crime, of public commotion and disturb- ance, of disregard to the laws of the country, excepting at such periods of high prices and want of employment. The disturbances which threatened the peace of the country in 1818 and 1819, the frame-breakers, the Ludites, and the serious occurrences in Manchester, were all promoted by this cause ; but how soon all trouble and anxiety ceased on a return to low prices and full work. Again in 1829 and 1830 the same reason can be justly assigned for the violence of that period. The great distress and consequent discontent which prevailed in France in the manufacturing districts during 1829-30 led to the disturbances, and at length to the revolution in the latter year. By referring to the table, page 15, of the prices of wheat in France, it will be found that it was dearer for the two years preceding 1830 than had been the case for many years. Although on such occasions many engaged most prominently in agitation are not of a suffering class, yet all the attempts of such men would ever be in vain, if idleness, want, and starvation did not predispose the mind to crime, partly from desperation — partly from a delusive hope to alleviate their grievances and improve their future condition. 1-23 Nor is it to the labouring classes of this country alone that these fluctuations in the price of food exercise so severe a wrong. We have already shown that the manu- facturing industry of the continent must necessarily suffer a depression as great as that of this country from the same cause ; and therefore we find that during the last year, and up to the present moment, the working classes in France and Belgium particularly are suffering propor- tionably with those in this country ; and we believe that sooner or later a similar action and re-action will be ex- perienced in the productive labour of the whole world, de- ranging the whole social economy of this class, creating a great mass of misery, disease, and crime, and inter- fering most materially with the onward progress of moral and intellectual improvement. Who, then, we ask, have been benefited by the Corn Laws? Who are interested in their maintenance? Every class of society under their operation has been artificially excited in an extraordinary manner at par- ticular times by false prosperity, which has been followed by an imperative re-action, bringing with it ruin and disappointment to all in their turn. The deceit began with the law itself; — it professed, it promised what it never could fulfil ; and just in pro- portion as people believed it could fulful its pretensions, did it fail ; just in proportion as the landowner and his dependants believed it would secure to them the high prices it professed to uphold, was the eflort made by 124 each to secure to himself as large a portion of the benefit as possible. High rents were promised; extensive and enriched cultivation ensued, an immense increase of production was the consequence, in the great eagerness to reap the advantages of this law. This law was passed in 1828 : before 1833 the struggle to reap its benefits and the competition for its promises had been so great, that overproduction, disappointment, and distress already were visible as the result. A parliamentary committee inquired into the agricultural distress of this period without any satisfactory result as to its cause ; the tendency of the law still went on for two years more ; the competition which had been created in productive power for high prices still so much further depressed the condition of the landed interest, farmer and landlord equally, that m 1836 another parliamentary committee was obtained to inquire into their distress. The evidence before this committee teems with the most instructive lessons of the necessary operation of such laws. The whole tendency of this evidence was to prove that the Corn Laws had, by in- ducing an expectation of high prices, raised rents very high; had called into cultivation a vast quantity of new land ; had increased, by expensive modes, the produc- tiveness of that which was in cultivation ; had produced thereby a greatly increased supply, which being much more than could be consumed, reduced prices to a destructive rate ; to the ruin of the farmer, to an im- possibility of collecting the rents in full, to an ultimate reduction of rents, to a depreciation in the quality of cultivation ; and, in many instances, to a complete abandonment. (See Appendix.) 1-25 With such evidence before us, how can we doubt the baneful effects that these laws have produced on the landed interest? We have already sufficiently considered how the necessary re-action of these laws influenced the whole of the other classes of society ; the capitalist, the merchant, the manufacturer, and the labourer ; — to all they have been productive of constant and most injurious fluctuations and derangements. It may how- ever be said that these fluctuations may be accounted for by the natural tendency which the human mind has to excitement and depression ; each state necessarily producing the other by simple re-action. We are free to admit that such impulses are evident and visible in the daily transactions of the world : but we cannot conceive that any one large class of men of one given pursuit should always be uniformly, and at the same time, and for periods of considerable duration, under the same impulses. We cannot suppose that the whole agricultural classes continue excited simultane- ously for a few years, while the whole manufacturing classes are depressed — that the latter should thence become all excited, while the former become all de- pressed, except by supposing that some strong influ- encing cause existed which acted upon each as a class. We must admit that there are some of the appa- rently more immediate causes of the depressions and excitements both of the money market and manu- .126 facturing pursuits, which we may be charged with having passed over without sufficient consideration, more par- ticularly the derangements which have been so con- stantly occurring in our connexions with the United States, which, from the great extent of our business with them, cannot fail to exercise a most important effect upon us : but if we have passed them slightly over, it has not been because they have not seriously engaged our attention, but because the more we have examined and considered them, we can only treat them as part of the effects ; in the first place, as owing their origin altogether to the first great influencing causes of the fluctuations in this country. But, for the great excitement and unnatural abundance of money which prevailed in this country in 1834, 1835, and 1836, could the American crisis of 1837 have occurred ? — and there would be little diffi- culty to show, if our limit admitted, that most of the speculative spirit which has existed in America, has been promoted in a great degree by the unnatural and extensive facilities afforded in this country at particular times, and consequently re-action and depression have never been experienced here without producing even to a more intense degree similar effects there, as they rely in every way so much upon their credit with this country. To trace all the evils of the necessary tendency which we have shown these laws have in rendering the whole existence of present circumstances uncertain and fluc- tuating, would be a task of too serious a magnitude to undertake. From what we have seen, we must feel assured that they are opposed in their operation to every 127 effort of civilisation, to every effort of advanced and improved society, to every effort of science and dis- covery. The first and great object of all being to render uniform and certain the present and future supply of the great necessaries of life, by distributing and equalising with certainty and speed the gifts which Providence plentifully bestows upon some parts of the earth to other places where they are required, and thus producing a feeling of reciprocal benefits and mu- tual reliance which cannot fail to advance the best and most enlightened interests of the whole human race. 12'.) APPENDIX. The following extracts from the Evidence given before the Parliamentary Committee in 1836, will show how far the opinions of the parties selected to be examined on the condition of agriculture, and the facts which they speak, agree with our theory. It will be borne in mind that this is the period in the fluctuation of great depression in wheat. As may be expected, from a number of men selected from all parts of the country, the different notions and opinions relative to the value and eff"ect of the Corn LaAvs which are entertained will be found in all their difi^erent shades and forms ; but what we want chiefly to show is the facts to which they speak : — that the Corn Laws gave delusive hopes to the landlord and farmer of high prices, which never could be maintained — that both were thereby entrapped to press their productive powers to an extent incon- sistent with the consumption of the country by an expensive and ruinous outlay ; that a reaction took place, in conse- quence of the excess of supply, by which prices were reduced as much below the fair average price, as the temptation had been held out of obtaining a price above it ; that by this state of things the farmers had expended much capital on these im- provements, and become ruined : the landlord was disappointed in the rent he expected : another reaction took place, land fell into bad cultivation and became unproductive — the excess of previous years became gradually consumed, after which the lessened production is inadequate to the consump- tion of the country — prices rise, and at the highest point the K 130 foreign grower pours in his accumulated excess of several years. The Enghsh farmer had forced, by great additional expense, large crops of wheat, which he sold below the cost of produc- tion. He then lessens his production until it is very small, and when prices consequently rise very high, the foreign grower is chiefly benefited by selling his large excess at a price double that at which the English grower sold his excess a few years before. It is curious to observe in this evidence, that wheat, the chief object to which protection has been directed, and which was so much encouraged in 1829-30 and 1831, was at this period, 1836, the only article that was pointed to as the certain ruin of the farmer ; and that now, at a distance of four years, fluctuation has placed it in the same position again in which it stood in the first-named period: — From the Evidence of Mr. John Ellis. Mr. Loch. With regard to the question of low prices, have you ever considered how those low prices might be affected by the present system of Corn Laws? — Latterly they have not been affected at all by the Corn Laws, because we are living entirely on our own growth. I have thought a good deal upon the Corn Laws, and if I had been asked that question two years ago, I should have said, without hesitation, that it would be desirable to abolish the present system so as to have a fixed duty ; but since 1 have seen that we can grow so much more than we want ourselves, 1 doubt whether that would be a safe plan to resort to. But I think the present duty is too high — for this reason, that I think it gives a fictitious value to land, that it gives the farmers an expectation that something is to come to their relief that can never arrive, and on that account it holds up the value of land fictitiously. Then you think it induced the tenants to make larger offers 131 than in the result they have been able to pay? — I think so; farmers are naturally prone to expect high prices, and they have been expecting something that was not likely to happen. Then what alteration would you recommend? — Mine is a vague opinion, but I should propose to retain the fluctuating duty, and to reduce it one-half. I think that that would be all the protection that we ought to have. Mr. Clay. When you say " reduce it one-half," do you mean that you would make it begin at 60s. instead of 70^. ? — Yes. Mr. Clive. Would you take off the extreme ends of the duty altogether ? — I think it might be left where it is, only changing from lOs. to 60*. Chairman. Would you stop at the two last stages of the scale, and have a fixed duty of 5^. and never a lower duty than 5,y. ? — That is a point upon which I have not thought; but I should not think that would be a bad plan, because I think the 5^. would be no injury to anybody. Mr. B. Baring. You object to the present scale of Corn Laws, because it encovirages delusive hopes in the farmer's mind ; is not the farmer undeceived at present ? — I think the farmer is anxious for some change in the Corn Laws, he does not know what ; but he finds that he has not got the advan- tage that he expected to get. The fact is, that it is the seasons and himself that have brought these low prices upon him. The present Corn Laws no longer continue to raise their de- lusive hopes? — I cannot say ; the men that occupy the poor soils are not very intelligent men. Would not any change encourage other delusive hopes ? — Not if you were to lower the duty. It is for the advantage of the farmer to raise prices, is it not? — I do not think so, I am not of that opinion, I do not think it is the advantage of the farmer to have very high prices. k2 132 What do you consider most advantageous to the farmer ? — A steady price ; that the farmer when he goes to take land should look to some steady price, and not look to adventitious circumstances to help him out of a difficulty. What is the effect upon the market of the present Corn Laws? — It has no effect at all now; the supply of corn is a mere supply and demand amongst ourselves. In the long run what has been the effect of the present Corn Laws ? — It has tended to keep up the price when we have had bad seasons. Do you think the present scale has had the effect of creating greater fluctuations of price than there would have been under a more reduced scale? — That is a question that I cannot an- swer, not having been in the corn trade, but I am certain that the Corn Laws have raised delusive hopes in the farmers. Mr. Clay. You are decidedly of opinion that steadiness of price is the circumstance most important to the farmer ? — My opinion is not in accordance with that of most people with respect to the interests of landlord and tenant ; up to a certain point I hold that they go together, that it is the interest of the tenant to keep the land in good condition, as it is of the landlord that he should do so ; but his landlord's interest is to have a high price to enable him to pay a high rent ; I do not think it is the tenant's interest to be clamorous about a high price ; it makes very little difference to me whether I pay a high price or a low price, and 1 think the country thrives better all round me if the price is a moderate one ; it is better for me not to have a high price, provided my expenses are in proportion. The farmer is a capitalist, and it is of importance to him to be able to calculate the returns upon his capital ? — Just so. He would do that better and feel more certainty if he were sure of a steady price of wheat? — Yes, he would. Supposing that the present system or any system of Corn Laws tends to produce fluctuation in the price of wheat, that 133 must be ruinous in its consequences to the farmer ? — There is no doubt of it. Mr. Miles. Do you think you could do without protection altogether ? — Not in the present state of things ; I think we must come to that ultimately, but we must go by easy steps. But you think that the poorer class of farmers at present look at Q)Os. as the price at which wheat can be maintained ? — Yes. Is it your opinion that upon the average of years prices can attain to that height ? — It is my opinion that they cannot, and that they will not attain 50*. with fine seasons. And the consequence is that the poorer farmers have falla- cious hopes raised ? — Yes. From the Evidence of Mr. John Hancock. Mr. Sanford. — Have you any observations to make with regard to the state of agriculture in the neighbourhood with which you are acquainted, which you would wish to add to the evidence which you gave in 1833 ? —Yes, certainly it is worse than it was. Wheat has gone down from 1*. 6d. to 2*. a bushel. In consequence of the low price of wheat has there been much less land sown to wheat the last year? — I should think much less ; one-fourth, and from that to one-fifth. From the Evidence of Mr. Robert Hatch Stares. Chairman. Are you acquainted with the condition of the farmers of a considerable district of Hampshire ? — Yes, I value the land occasionally, therefore I have an opportunity of know- ing the situation of many of them in our own county. Comparing their condition at the present time with their condition in 1833, is it better or worse? — Decidedly worse. To what do '-m,i attribute that? — Low prices. 134 From the Evidence of Christopher Comyns Parker, Esq. Chairman. What is the condition of the farmers in that part of the county of Essex with which you are so well ac- quainted ? — The condition of the farmers in part of my neigh- bourhood has been very bad. Where farms have been re-let to new tenants, have those tenants gone on in improvements in draining, and so on? — I have never seen more improvements in draining, liming, and chalking, than within the last three years. Do you consider that the distressed state of those farmers can be at all attributed to the rents not having been lowered sufficiently in time? — I should say very materially, the land- lords not prudently lowering their rents earlier than they have done. Do you think the total reduction of rent would have been less if the rents had been lowered sooner ? — I know farms that men of capital were occupying that were 25^. and 305. an acre, and they offered a pound, and they have since been let for 12^. to \4:S. and 15.?. an acre, and I believe that had they been reduced to \l. at that time, those tenants would now have been in possession of them, and they would never have been im- poverished in their cultivation. From the Evidence of Mr. William Cox. Chairman. For the last three years have you been farming that land to a profit ? — Decidedly not to a profit. Are the farmers doing well or ill that occupy land of that description ? — A great part have failed : and more than half the rest, if they were to reckon, would be insolvent. Chairman. What is the condition of the labourers in your neighbourhood? — The labourers are not well off in Bucking- hamshire. Are there many out of employment ? — We have not so many 135 out of employment as we had ; there are very few out of em- ployment now. in consequence of the railroads and other public works. Chairman. Have new tenants been found for unoccupied farms? — For some of them there have, and some of them are in the landlord's hands ; a nobleman has two on hand near Aylesbury. Were those farms exhausted by the tenants before they left them? — One of those alluded to had as good a tenant upon it as any in the country. Have those farms been offered to be let at a reduced rent ? — I cannot say; but I know the landlord would not occupy that description of land, if he could get good tenants. Mr. Loch. Are those farms in a good state of cultivation ? — One was in the hands of a very excellent farmer. In what condition did he leave it ? — I think it was left in good condition. Has there been any draining or other improvement made in the farm ? — The proprietor has drained it since he had it on hand. Was the other farm in good condition ? — I think it was.. Mr. Clive. Were the buildings in good repair ? — Yes, they were new. Adapted for the convenience of the farm in all respects ? — Yes. Mr. Loch. Then why did the tenants go? — They went because they had lost a good deal of money. Chairman. If the rent of those farms had been reduced after the war to a proper level, do you think those farmers would have left those farms? — There is one of them that I would not have without rent at all. Sir Robert Price. What was the rent? — I suppose lbs. an acre. 136 Chairman. Why would you not have it without rent?— Be- cause I should lose money. Frovi the Evidence of Mr. John Brickwell. Marquis of Chandos. What is the state of the part of the county in which you reside? — I hear complaints from the farmers whom I meet, that they cannot pay their way ; that produce is selling so low, they are very much distressed : that is the general complaint when I meet them. Was there not a farm in the neighbourhood of Buckingham which was thrown entirely out of cultivation ? — There are two ; this was in the parish adjoining that in which I live ; one adjoin- ing my own farm let three years ago at 5.5. an acre, and wheat was then 7s. per bushel, and now wheat is 4^. 6d., that farm can be of course worth nothing ; the persons who see it all refuse it at any rent. On what ground do they refuse it ? — Because the price of j)roduce will not answer. At Avhat did that farm let several years ago ? — At about 20s. an acre ; it was a poor farm, rather wet clay land. How many years ago? — I should think about 1826 or 1827 ; I do not know what the exact rent was ; I believe it might have been about 20s. an acre, and now it is worth nothing. Should you say that the cultivation of Buckinghamshire has fallen off within these last eight or ten years ? — I should say so in the neighbourhood in which I live. In what respect ? — The land is getting very foul and over- cropped ; in some places driven further than it should be. From the Evidtnce of Mr. John Houghton. Marquis of Chandos. Have you not arable farms in the county of Buckingham, over which you are steward ? — Yes, I have. What is their htate now, compared with the state of the 137 grazing farms to which you allude? — On the heavy clay lauds the distress is very great, more than it is on the turnip and barley lands, or grass land. How do you account for that distress upon the clay lands ? From the low price of wheat. Do you find that the capital of the farmers has been diminish - ing ? — Certainly ; I think the great distress has been on the heavy land farms. Have the farmers been paying their rents out of their produce, or out of their capital?— If you take the heavy clay land, cer- tainly out of their capital. The chief complaint is on account of the depression in the price of wheat ? — Yes, that is where the farmer is suffering most ; that is where he looks for his rent in the spring of the year, when he should have the price of his wheat to raise the money for his rent; when he is looking for a large sum of money to meet his payments ; when he comes to thresh out and carry to market, his expenses almost take the whole price. Mr. Cayley. Can you assign in your mind any particular reason for the estate alluded to becoming so much diminished in value as to fall within the grasp of the mortgagee ? — My opinion is this, that it is that description of soil that will grow nothing in its present state but wheat, and wheat has been so very low in price that persons have not been found to purchase it. From the Evidence of Mr. John Rolfe. Marquis of Chandos. What is the rent you pay for land ? — Twenty shillings per acre. Do you use wheat for any other purpose but that of human food now ?— I have not done it ; some have ground wheat for the pigs : some have given it to their horses, but that was principally the grown wheat of the last harvest but one. What is the cost of the cultivation of your farm per acre now, 138 as compared with what it was some years ago ? — The cost of cultivation is very much the same ; there is a little difference in the price of labour. Mr. Cayley. Can you state how rents are paid in your dis- trict ? — Rents have heretofore, till the last two years, been very well paid. How have they been paid since 1833 ? — They have been paid very badly. Even on the light soils you speak of? — Yes. What will become of the landlord? — We shall be all beggars together. Do you think then that the tenants of this country to a great extent hold their farms upon sufferance only, and at the mercy of the landlords ? — Yes, I do. To what extent should you say that was the case? — I should say that one-half at least in your neighbourhood are subject to that. In the parish where I reside, to my own certain knowledge, if the landlord was to say, I will have the whole of the rent that is now in arrear, the tenant must give up. Then you mean to say that one-half of the tenantry in your district are insolvent? — Yes, I do. Has the reduction in rent been equal to the fall in price of corn ? — Certainly not : nor if the whole of the rent was reduced it would not be equal. Mr. Miles. When any farms are untenanted in your district, is there any difficulty in getting tenants ? — Yes. Frovi the Evidence of Mr. John Kemp. Marquis of Chandos. With regard to wheat, you state that the market is down as regards that ; can you assign to the Committee any cause for that depression in the wheat market ? — No, I cannot ; unless it is from the productions of the seasons ; in the last three years there has been a great im- 139 provement in the average quantity per acre on our growtli, and consequently the supply has been greater. Do you consider, then, the quantity of wheat in the market has been the cause of the depression of the price ? — I should say so. Has the capital of the farmers in your neighbourhood, and under your knowledge, diminished or not ? — Very much dimi- nished. Has any land gone out of cultivation in your neighbour- hood ? — No, I believe not ; there has been a great quantity of land left on hand with the landlords, and they have taken it and farmed it themselves ; that has been very much out of condition. What is the state of the small farmer about you; the man who rents an hundred acres? — As bad off as the poor man. Are farmers paying rents from their profits or their capital ? — From their capital. Have the rents been sufficiently reduced in your neigh- bourhood, do you think, compared with the reduction in the price of corn ? — Certainly not, compared with the price of com ; I think in many instances, if the tenants were farming without paying any rent, they would not be able to do more than to keep themselves up. Suppose the landlords sued their tenants for all arrears, what do you think would be the consequence to the landlords ? — They would have all the farms on their hands. You consider then that the tenants now are merely holding their farms on the sufferance and at the mercy of the laud- lords ? — In many cases that is the case ; where they are not, they have borrowed capital to carry on their farms with. From the Evidence of Mr. William Thurnall. Mr. Cayley. Do you think that as yet they have reduced rents equivalent to the reduced price of corn ? — If my landlord 140 would ofi'er me my farm rent-free, as we have had the prices lately, I would not accept it. Do you know many farms similarly circumstanced that you would not take rent-free ? — I scarcely know one. What, in your opinion, is the condition of the tenantry generally in your neighbourhood ? — I think verging on insol- vency, generally in the most desperate state that men can possibly be. You say that you are an oil-crusher, do you sell as much oil-cake as you used to do .'' — Not a fourth ; I have sold more oil-cake than all the crushers in my neighbourhood do now ; there are five in that trade, and in rape-dust, which is very considerably used in our neighbourhood ; the trade is reduced to a mere nothing, in consequence of the farmers not being able to purchase it. In consequence of the farmers not using this rape-dust, can they grow as good crops as they used to do ? — Certainly not, and the land will feel it in the course of a year or two very materially indeed. You say that you sell less oil-cake and less rape-dust ; do you get as well paid for that as you used to do?— No, that has caused me many unhappy moments ; I believe at this moment my book debts with the farmers are not worth ten shillings in the pound ; there are two farmers in the Cambridge gaol at this moment, and I dare scarcely open a letter, knowing the state of the farmers, fearing that it may contain notice of some bad debt or other. Are those men who are verging on insolvency, men of pru- dent character and industrious habits ? — I am speaking only of that class of men. And yet those men are on the verge of luin ? — Yes, not only in Cambridge, but, generally speaking, great part of Nor- folk, Suffolk, and Essex. HI From the Evidence of Mr. Robert Babbs. Marquis of Chandos. Do you believe whether the farmers are paying their rent out of their capital or out of the profits of their farms ? — I believe the farmers have been paying their rents out of the capital they employ. Is that your case ? — It has been my case. Has the land been cropped harder in your neighbourhood than it used to be ? — I think it has. What is the state of the small farmer as compared with the man that occupies largely ? — I think he is very little better than a ])auper, a 40 acre farmer. From the Evidence of Mr. Charles Howard. Mr. Cayley. Taking the period since the last Committee sat in 1833, what do you consider to be the comparative state of the farming interests now and at that time ? — Decidedly and progressively worse. Do you take into your consideration every species of land, or one species of land more than another ? — I think upon the sheep farms, the upland farms, from the increased demand which there has been for sheep, the distress has rather de- creased ; sheep have been very high. Then with respect to the low land farms? — Their situation has been progressively much worse. Have the Holderness farmers in your opinion been paying much rent, or has the cultivation paid the expenses in the last three years ? — The rents have been considerably reduced ; but those reduced rents have been paid from the capital of occupiers. From the Evidence of Mr. James Grinding Cooper. Chairman. Where do you reside? — At Blythburgh, in Suffolk. What is the state of the farmer? — The condition of the 14-2 farmer I consider to be bordering on ruin ; he is not so well off as he was in 1833. Do you know any farms untenanted in that part of Suffolk ? — I know a farm that has been untenanted till within the last month or so ; the landlord could not let it ; but I think he has let it within the last month or six weeks. Was it let at a reduced rent ? — I believe at a very reduced rent. To a man of capital ? — I believe to a man of capital at the present time. Do you know any other farms that have been without tenants ? — I have known a small farm last year without a tenant ; it was a considerable time in letting. What sort of land was that? The principal part of it very heavy land. From the Evidence of Mr. Samuel Byron. Chairman. Do you rely entirely or mainly upon your wheat crop ? — The small farmers do rely almost entirely on the wheat crop. To what do you attribute the low price of wheat ? — I attri- bute it in the first place to an abundantly great harvest, in the next to the great quantity of grazing land that has been con- verted into tillage. From the Evidence of Mr. Robert Hope. Mr. Loch. Have you ever thought anything about the pre- sent Com Laws, whether they are beneficial to the farmer, or not? — Yes, they have been often discussed; but it is a very general feeling among those that pay Corn-rents, that they have not been hitherto beneficial, but the very reverse of being beneficial. What is your reason for that opinion ? — It induced men to offer more than has been well realised by the price of corn, because it was generally expected from the Corn Laws, that 143 prices would be kept up to something like what they promised ; that the import of foreigti corn would be restricted, and by that means keep up the price of the home growth to 705, or so. Is it the operation of the law, or some other cause, that has made the price of wheat so low, in your opinion ? — I think the law has had nothing to do in bringing down the price of wheat ; I think it is the favourable seasons and the abundant crops. The favourable seasons and the abundant crops have affected the price of wheat, not the Corn Laws ? — Yes. Then how has the Corn Law disappointed your expecta- tion? — Because it led those that took farms at money-rents to give a much higher rent than they would have done. Then they did not calculate upon such favourable seasons ? — They did not expect that a series of favourable seasons would ever reduce prices at the rate we have seen the last six months. Then is it the opinion of you and those other gentlemen that have considered the subject in the way you mention, that the present Corn Law ought to continue, or do you think that that any change would be beneficial to the farmer? — From what we experienced in the year 1831, I am disposed to think that a change would be more beneficial to the farmer, by reducing the scale at which foreign corn is imported. By reducing the limit? — Yes. How would that be more favourable to you? — Because prices were run to the top of the scale in 1829; before any foreign corn could be imported, they were run up so high as 70s. a quarter ; when we could not grow so much wheat as we paid in rent, and had the price only run up to 60^. a quarter, we should just have had so much less money to make up the deficient quantity of wheat. Then it is as affects corn-rents that your observation applies? — It applies entirely to that. 144 Mr. Sanford. You have stated that the existing Corn Law you consider is prejudicial to the farmer ; is your opinion founded upon the circumstance of there having been a miscal- culation as to the effects to be produced by the Corn Laws, or upon the working of the Corn Laws themselves ? — I think by the present working of the Corn Laws that it may run prices too high for the interest of the farmers in years of scarcity ; before any foreign com can be admitted into the country, prices may be run up so high as to be prejudicial to the interest of the farmer ; because in such a year as we had in 1831, we could not grow so much wheat as we had to pay in rent. Mr. Clay. If the result of this Corn Law should be to produce great fluctuations in price, you would think that effect would apply to all farmers ? — I think it has been prejudicial to those that even pay a money-rent, because I am sure that if it had not been for the Corn Laws, they would not have given so high a money-rent. Mr. Sanford. That proceeded from a miscalculation, upon their part, as to the effect to be produced by the Corn Law ? — It was merely a miscalculation. From the Evidence of Mr. Andrew Howden. Mr. Cayley. If you had been sold off in 1 820, do you think you would have been better off than you are now ? — I do not know that mine is a fair case to be taken as a general case, because I started very poor in life, and I have had a hard struggle, and other circumstances that contributed to assist me: I am the only remaining farmer in the parish where I was brought up ; except myself, there is not a farmer nor the son of a farmer remaining within the parish but myself. What is the reason of their having all gone away ? — The money-rents that were exacted of them; they all conceived that they were to have 8O5. a quarter, and their calculations 145 were made upon that ; it soon appeared that that could not be realised, and they were not converted, and ruin has been the consequence. Then there has been a great change of tenantry in your neighbourhood ? — ^There has been. And that has been caused by the fall of prices? — Yes, and the want of accommodation on the part of the proprietors. The proprietors have not reduced their rents in proportion ? — They now have generally done so ; but they were later in doing it than the circumstances required, and therefore the tenantry fell. In your opinion, did the Corn Law that was made in 1815 deceive both the landlord and the tenant? — It did ; I believe that the calculation upon which they took at that time was almost universally 4/. a quarter. The general impression was, that the Corn Laws then made would have the effect of keeping wheat at the price of 80.y., and both landlord and tenant were deceived in that? — Yes. There was some other cause at work, which brought the price down ? — I do not know. If the Corn Law had not the effect of keeping up the price, something must have reduced the price ? — It did reduce ; but as to the cause, I shall not pretend to say. The Corn Law having promised a price of 80^. failed to perform it ? — Yes. From the Evidence of Lawrence 0/iphant, Esq., M.P. Mr. Cayley. Have you ever made a comparative estimate of the increase of the grow^th of wheat, and the increase of the popu- lation since the fall of prices ? — I believe it was a very general opinion, at the time of the first Corn Law in 1815, that this country could not produce anything like what it consumed. The consequence was, both the farmer and the proprietor conceived L 146 that, by getting the ports shut up at a particular price, the mo- nopoly would be complete with regard to our own produce. It certainly was so, but the increase of cultivation has far out- stripped the consumption, and our low prices are now attribut- able simply to two or three good years, and the increased cultivation by bone manure and furrow-draining. From the Evidence of Mr. William Bell. Mr. Loch. In yuur opinion, can Parliament do anything to relieve the farmers ? — I am not satisfied that they have the power of doing anything ; if they did anything, I think it would only shift the burthen to the consumer. Have you ever thought whether the Corn Laws affect the farmer beneficially or otherwise? — ^The present Corn Laws have operated of late as a complete prohibition against the sale of foreign corn, and I cannot conceive that any other protection can be given beyond a monopoly of the market. Do you conceive that a system of average, such as the present, or a fixed duty, would be beneficial to the farmer ? — I am not sure that a fixed duty would not be ultimately the most satisfactory ; but it is a difficult question, because a fixed duty in scarce seasons would not be submitted to. Upon the whole, are you satisfied with the present Corn Law ? — I should consider it a complete protection against foreign corn. And you would make no alteration? — Unless an alteration was made to a fixed duty. Mr, Handley. What is your reason for supposing a fixed duty vvould be preferable ? — By the present Corn Law, when- ever the price approaches near the rate at which the foreign corn can be brought into the market with a profit, the prices may possibly be run up to that rate by artificial means ; thus a great quantity of corn would be improperly liberated and 147 thruwn upon the market, and this might probably depress the market for the whole season ; now at a fixed duty that could not take place. Do you consider that a fixed duty would have the effect of preventing fluctuation ? — I think so; I think it would make the price more uniform. You are aware that there are two articles of agricultural pro- duce that for years were subject to a fixed duty, namely, wool and tallow ; are you aware whether or no they have not fluctu- ated very considerably in price? — They have fluctuated verv much ; but I understand that wool was only at a penny a pound, a mere nominal duty. Has the foreign corn imported into this country been the surplus corn of Europe, or has it been grown expressly for this market .'' — I believe that it is the surplus corn of Europe ; this is the best market they can bring it to. If by a fixed duty you made this market a certain market, is it Your opinion that considerable tracts of country might not be brought into cultivation on the Continent expressly to supply this market ? — Perhaps they might to a certain extent. Would not that be prejudicial to the farmers of this country? — They would probably take something else from us in lieu of that. Under the present system of Corn Laws, when a prohibition lasts so many years as it has done, is not that the best protec- tion against the growth of foreign corn for the supply of this market ? — I have stated distinctly that I think the farmer has no reason to complain of the present law ; that it is a sufficient protection to him. Have you ever considered what would be the proper amount of fixed duty ? — My notion would be, if a fixed duty was to take place I would lay it on as high as the country could bear it, and I would reduce it gradually Is. or 2s. every year, till it came to a nominal duty ; and during the operation of that, the l2 148 landlord and tenant would come to an adjustment, and the land would find its natural value. If such then be the effects on those interests, which were intended to be benefited and supported by the present Corn Laws, on what principle can their continuance be defended or sought for ? London : Printed by William Clowes and Sons, Duke Street, Stamford Street. UNIVERSITY OF CALIFORNIA, LOS ANGELES THE UNIVERSITY LIBRARY This book is DUE on the last date stamped below 1 1 f^OV 15 1946 ^HC'D LO-URL -;^^ 4HB18MI .jO^Ef^^ JUNIH964, »•'* AUG2 9t96 7 MJ622^987 WSCWRGF-URt ^PR 5r# 3 1980 OUCHARK OCT 2 9 li m A. JAN 11 23m-2, '43(3205) 1988 3 1158 00576 3197 t PLEA«^ DO NOT REMOVE THIS BOOK CARDnl ,^^y\tllBRARYQ^ University Research Library INAL LIBRARY FACILITY 13 768