Free Trade and its Reception 1815-1960

Andrew Marrison

• Publisher: Routledge
• Year: 2002
• ISBN:
  9781134731817
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Business allgemein

This book examines the Corn Laws and their repeal. It brings together leading international experts working in the field from Britain, Europe and the United States. Their contributions range widely over the history, politics and economics of free trade and protectionism in the nineteenth and twentieth centuries; together they provide a landmark study of a vitally important subject, and one which remains at the top of today's international agenda.

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FREE TRADE AND HIGH WAGES

The economics of the Anti-Corn Law League

Alon Kadish

Roger Lloyd-Jones in Chapter 7, ‘ “Merchant City”: The Manchester business community, the trade cycle and commercial policy c. 1820–1846’ has shown the importance of free trade for the economic survival and prosperity of the Manchester business community. Indeed the question of the role of self-interest featured prominently in the campaign for free trade. A common accusation levelled against the Anti-Corn Law League was that it consisted of manufacturers who sought to repeal the Corn Laws in order to reduce wages and, thereby, improve their competitiveness in foreign markets. The League’s critics assumed the iron law of wages, whereby cheap bread would result in a diminution of nominal wages following the reduction in the price of necessaries while real wages remained the same, so tending towards the minimum necessary for survival.

the inevitable consequence of Free Trade would be the reduction of wages. In fact, the only way under Heaven, that a repeal of the Corn and Provision Laws could benefit [the manufacturers], would be by enabling them to obtain cheaper labour, to reduce the means of production, to lower wages, so as to enable them to compete with foreigners.¹

The criticism was not only of the League’s economic arguments. Free trade was often presented as a class issue, a typical example of the industrialists’ egotism, whereby class interests were to be forced on the nation at the expense of all others. The differences between the manufacturers and the rest of society, especially the landed classes, went well beyond abstract economic reasoning.

The capital invested in land, and the wealth arising from it, are estimated at more than those appertaining to manufacture. The wealth of land is intrinsically permanent; its productions are essentially necessary for the support of life; its occupation conduces to health; its occupiers are peaceable and orderly subjects, and, looking only to this country for employment, they are nationalized.

But, on the contrary, manufacture varying with the change of fashion, or caprice; or affected by advantages of locality, by over trading, foreign competition, or high duties on importation, is not endued with the quality of permanency; and the health and morals of its operatives are injured by confinement and the density of population, which last circumstance renders its masses easy victims to designing demagogues.²

However, Manchester’s businessmen also regarded themselves as leaders of the communities they had helped to create and sustain, and guardians of the moral and material welfare of the working classes placed in their charge by virtue of their economic and social position. An institutional expression of the concern felt by Manchester businessmen for the state of the working classes may be found in the foundation and early work of the Statistical Society of Manchester, established in the autumn of 1833 following the meeting of the British Association for the Advancement of Science in Cambridge and the creation of its statistical section—Section F.³ The founders of the Manchester Society, described by the Society’s historian, ‘consisted of a small group of friends, all under forty years of age, all men of philanthropic and literary taste, and all connected in some degree with local industry or banking.’⁴ They included William Langton (1803–81) and James Phillips Kay (1804–77, from 1842 Kay-Shuttleworth), co-secretaries of the Manchester and Salford District Provident Society, and Kay’s friends Samuel and William Rathbone Greg. The latter’s older brother Robert Hyde Greg joined the Society in 1834.

Manchester Statistical Society’s initial purpose was not the collection of facts for its own sake but as a means of ‘effecting improvement in the state of the people among whom [the members] lived’, by using the information gathered to demand practical reforms.⁵ The Society’s early investigations focused largely on the moral and economic conditions of the working classes in Manchester and Salford compared with other urban (industrial and nonindustrial) communities such as Liverpool, Hull, Bury, Ashton, Bolton, York, etc. and rural districts (Rutland). Its work followed in its general concerns and method Kay’s well-known study, The Moral and Physical Condition of the Working Classes Employed in the Cotton Manufacture in Manchester, published in 1832, and written while Kay served as secretary to the Manchester Board of Health, set up to combat the cholera epidemic. ‘The operative population’, Kay wrote in the pamphlet’s concluding paragraph,

constitutes one of the most important elements of society; and when numerical considered, the magnitude of its interests and the extent of its power assume such vast proportions, that the folly which neglects them is allied to madness.⁶

Kay, the son of a Rochdale cotton manufacturer, regarded his investigation as reflecting the manufacturers’ unique position in industrial society. In an introductory letter to the Revd Thomas Chalmers (1780–1847), the Scottish theologian and political economist, Kay stated that whereas the aristocracy had moved away from the large provincial towns, and the ‘pure’ merchants were ‘seldom in immediate contact with the people’,⁷ it was the ‘enlightened manufacturers of the country’ who were

acutely sensible of the miseries of large masses of the operative body [and] are to be ranked amongst the foremost advocates of every measure which can remove the pressure of the public burdens from the people, and the most active promoters of every plan which can conduce to their physical improvement, or their moral elevation.⁸

Kay’s words may be seen as reflecting the accusations, often made in the course of the Factory Movement’s campaign and later in the public debate on the repeal of the Corn Laws, of the industrialists as responsible for the appalling conditions of the industrial urban working classes. The industrialists and their defenders produced in response a number of answers. The situation was not as bad or as common as widely supposed. Where working and living conditions were irrefutably awful, they were largely the result of external factors such as the landowners’ Corn Laws. Conditions in non-industrial rural districts were worse (an argument not always borne out by the investigations of the Manchester Society). And the industrialists, acutely aware of the problem, were the first to try and solve it. But beyond the rhetoric of the often bitter public debate, Kay’s work reveals a number of serious and genuine concerns.

In dealing with the particular problem of cholera, Kay found that the disease ‘can only be eradicated by raising the physical and moral condition of the community, in such a degree as to remove the predisposition to its reception and propagation, which is created by poverty and immorality.’⁹ Indeed poverty and immorality were two symptoms of the same disease— ‘The sources of vice and physical degradation are allied with the causes of pauperism. Amongst the poor, the most destitute are too frequently the most demoralized—virtue is the surest economy—vice is haunted by profligacy and want.’¹⁰ Accordingly Kay’s research revealed that

those among the operatives of the mills, who are employed in the process of spinning, and especially of fine spinning, (who receive a high rate of wages and who are elevated on account of their skill) are more attentive to their domestic arrangements, have better furnished houses, are consequently more regular in their habits, and more observant of their duties than those engaged in other branches of the manufacture.¹¹

The moral and physical well-being of the working classes was a source of concern not only for religious or philanthropic reasons. It was the only safe means of ensuring the very survival of society in general. The most immediate threat was to the industrial communities themselves:

a turbulent population, which, rendered reckless by dissipation and want,—misled by the secret intrigues, and excited by the inflammatory harangues of demagogues, has frequently committed daring assaults on the liberty of the more peaceful portions of the working classes, and the most frightful devastations on the property of their masters. Machines have been broken, and factories gutted and burned at mid-day.¹²

But the danger from a growing, ignorant working class, maddened by want and incited by unscrupulous agitators, was not confined to its immediate environment.

The wealth and splendour, the refinement and luxury of the superior classes, might provoke the wild inroads of a marauding force, before whose desolating invasion, every institution which science has erected, or humanity devised, might fall, and beneath whose feet all the arts and ornaments of civilized life might be trampled with ruthless violence.¹³

Appropriately Kay suggested two general solutions, education and free trade. He condemned the Corn Laws

chiefly because they lessen the wages of the lower classes, increase the price of food, and prevent the reduction of the hours of labour:because they will retard the application of a general and efficient system of education, and thus not merely depress the health, but debase the morals of the poor.¹⁴

In a state of free trade the increase in the employers’ profits would enable them to reduce the hours of labour thereby providing time for ‘the education and religious and moral instruction of the people.’¹⁵

Not surprisingly the League insisted on high wages as an inevitable result of free trade, an issue of political and social as well as economic importance. However, while the League’s position on high wages might seem a propaganda necessity, it had been employed earlier, in the 1820s and 1830s, by free trade Whig landowners. In 1826 James Robert George Graham (1792– 1861), then a Whig owner of a large debt-ridden estate in Cumberland, and the future Home Secretary in Peel’s 1841 government, published a pamphlet in which he identified the Corn Laws as one of the causes of economic, and consequent social, instability. The Corn Laws encouraged speculation and caused artificial and extreme price fluctuations and should be replaced by a fixed duty of 15s. a quarter and a general policy of free trade.¹⁶

Graham subscribed to the traditional physiocratic belief that the well-being of agriculture reflected on the economy as a whole. By the 1820s Liverpool’s government had changed its position on the matter, placing commerce and industry before agriculture as the prime guarantors of the nation’s prosperity.¹⁷ The change is reflected in a pamphlet by Graham’s Cumbrian friend John Rooke (1780–1865) from 1828, in which Rooke argued that the prosperity of agriculture depended on commerce. Rooke maintained that prices were solely determined by the amount of money in circulation. Commerce increased the supply of money thereby creating full employment, resulting in higher wages, higher effective demand, and higher prices. Free trade would have a similar effect abroad of raising prices, enabling England to maintain its competitiveness despite high wages. Trade, Rooke found, ‘carries its own multiplying powers along with it, reduces the wilderness to the highest state of culture, civilizes society, and places a multitude of new products at the command of human desire.’¹⁸

According to Rooke, trade also allowed for an increase in the size of the population without the economy suffering from diminishing returns. Every additional pair of hands would mean a proportionate addition of wealth, and a further increase in effective demand for agricultural produce. Furthermore, the expansion of trade would raise the demand for land for urban and industrial development, thereby further increasing the landlords’ profits.

The most prominent Whig landowner and politician to embrace the cause of free trade in the years preceding the League’s formation was Charles William Wentworth Fitzwilliam, fifth Earl Fitzwilliam (1786–1857). Fitzwilliam sat in the House of Commons from 1806 to 1833, when he became the fifth Earl and was elevated to the Lords.¹⁹ He was converted to free trade in the mid-1820s and published his first pamphlet on the subject in 1831.

Unlike Rooke, Fitzwilliam blamed the uneven harvests, whose effect was aggravated by the Corn Laws, for the fluctuations in the price of corn during the period 1815–22. But like Rooke he believed that the key to the state of the economy in general, and agriculture in particular, was in the prosperity of trade and industry. The price of provisions affected the cost of production, and thereby the competitiveness of Brit...