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By Toby Baxendale, on 7 October 10
I gave the following presentation at a fringe event during the Conservative conference in Birmingham.
Human Co-operation and the Universal Division of Labour
Adam Smith showed us, and it is not disputed internally within the nation, that specialisation in tasks has led to the explosion of the population and material prosperity. One person the farmer, one the hunter, one the gatherer, one the home maker, etc., with the specialisation always geared to who is best at doing the task.
This is accepted by all rational people.
Ricardo showed us that what applies to the individuals in the nation should also apply to the free trade between the nations of the world. It is always advantageous for each nation to concentrate all its efforts to produce things it is best at, even if it could produce some other lesser goods better than the next best producer.
So why does this idea meet such resistance? Why do we allow crony capitalists and other vested interests to get a privileged, protected position — such as the European Union farmers when they argue for the Common Agriculture Policy (CAP) — that allows them to push up the prices of their goods and services at the expense of you and me, the consumer?
The Irrefutable Case for Free Trade
David Beckham is a super star football player, who also learned the skills of his father the gas fitter.
His father, Beckham senior is a gas fitter who wanted to be a superstar football player
Let’s say that David can hire a gas fitter for £20 per hour. With a little practice, he could be twice as efficient as his father. We will imagine that he could market his own gas fitting services for £40 per hour.
By playing football, we will suppose that Beckham can earn £10,000 per hour. Meanwhile, his father the gas fitter couldn’t make more than £1 an hour playing football.
Beckham Jnr has a 2-to-1 advantage as a gas fitter, but a 10,000-to-1 advantage football star.
If he divides his time equally between gas fitting his own house and playing football, his total output for the week can be valued at:
10 hours gas fitting x £40 per hour = £400
10 hours football x £10,000 per hour = £100,000
Total output: £100,400
If David’s father divides his time the same way we could value his production as follows:
10 hours gas fitting x £20 per hour = £200
10 hours football x £1 per hour = £10
Total output: £210
Between them, David and father have produced £100,610 worth of output.
The Law of Association (Mises) or the Law of Comparative Advantage (Ricardo)
Now let’s examine the situation if, as we expect, David hires his father. David’s production can now be valued at:
20 hours football x £10,000 per hour = £200,000
Total output: £200,000
And his father’s at:
20 hours gas fitting x £20 per hour = £400
Total output: £400
Their total output has risen to £200,400.
The Greatest Protectionist Block in European History: The European Union
With this case proven, our politicians should use the irrefutable law of association to call for the dismantling of fortress Europe as it price gouges its hapless taxpayers.
The Taxpayers Alliance report “Food for Thought” by Dr Lee Rotherham shows us that the EU protectionist food policies costs the UK £10.3 bn per year or £400 of net disposable income per household.
CAP is one aspect of the protectionism sponsored by the EU depriving us of a higher living standard; the real cost of all their interventions is many thousands of pounds per year for the EU taxpayer.
Cobden and Peel
For those interested in free trade, one of Cobden’s finest orations was delivered in the House of Commons on March 13, 1845, and described by John Morley as “probably the most powerful speech he ever made:
Men on the Tory benches whispered to one another, “Peel must answer this.” But Peel crushed in his hand the notes he had made and remarked, “Those may answer him who can.”
The Corn Laws were abolished by persuasive, clear, rational and logical argument. I hope some of the politicians here today will be able to do the same with the protectionist EU, and have that abolished.
By Steven Baker MP, on 8 September 10
This post originally appeared on stevebaker.info.
Dan Hannan and Ruth Lea have launched the EU Referendum Campaign:
The EURC is an organisation that is determined that every adult in Britain should have the right to choose whether our country should be a politically independent self-governing country or a member of the European Union.
With the EU now making the vast majority of laws we must obey and with new plans to take control over the tax and spend policies of its member countries, the British people must be given the right to decide where ultimate political power lies: In Brussels or with our elected parliament.
Unless we win the right to vote on Britain’s membership of the EU within the near future, our democracy is in danger of falling under the total control of the Brussels elite and disappearing for all time.
For the Telegraph, Dan writes:
The question, these days, is not whether referendums are compatible with representative democracy, but what the next one will be about. If we are allowed a vote on how to elect our MPs, why not a vote on whether those MPs run the country? If we can have a referendum on whether to have a mayor in Hartlepool, what about one on whether the majority of our laws should be handed down from Brussels?
Read more here.
By Toby Baxendale, on 7 September 10
There was an excellent article from Liam Halligan in Sunday’s Telegraph:
The stark underlying message from these WTO numbers is that the West’s inability to recover is holding back the rest of the world much less than many predicted. Rather than being reliant on American and European demand, the emerging markets are increasingly making the global economic weather – generating growth organically, by trading among themselves.
Brazil’s biggest trading partner is no longer the US, but China. The same applies in Japan, where rather than being dependent on American demand as they have been for fifty years, Japanese companies are burying the historical hatchet and shackling their economy to that of the People’s Republic. Intra-Asian commerce is the fastest-growing component of global trade.
For a long time now, Economic Agenda has banged-on about the need for the leaders of the world’s biggest economies – particularly those in the West – to show the courage needed to face-down domestic vested interests and make the compromises necessary to secure an over-arching trade liberalization agreement among the WTO’s 153 member-states.
Halligan concludes:
The European Union espouses free trade. America espouses free trade. Yet between them, these two massive trading blocs maintain a vast, sprawling web of barriers and subsidies that not only dump agricultural goods on world markets, condemning countless peasant farmers to poverty, but also seriously undermine global commerce more broadly.
The Chinese needs to compromise to secure Doha. So do the Indians, South Africans and Brazilians. But the West should be leading the charge when it comes to freeing-up world trade – not in the name of charity or “development”, but as a result of cool, dispassionate analysis combined with naked economic self-interest.
We recommend the whole article.
By Toby Baxendale, on 5 July 10
In his latest article for ConservativeHome, Steve Baker responds to comments by the departing Charlemagne columnist of The Economist.
If the outgoing Charlemagne defines nationalism, and it appears he does, as comprising trade and migration barriers, then the EU has merely elevated nationalism to the level of the European continent, has it not?
Although many people associate the EU with free trade, the reality is quite different:
Of course the EU has delivered free trade within its borders – it is a customs union after all – but anyone who thinks the EU genuinely promotes global free trade should look at the TARIC database. TARIC (Integrated Tariff of the European Communities) includes not just tariffs, but also tariff suspensions, tariff quotas and tariff preferences. You might enjoy searching the database for wheat for example. Do click through and survey the subdivisions of each tariff, noting provision for variations according to country of origin or destination.
Richard Cobden might well wonder why he bothered with the Anti-Corn Law League.
Steve puts these protectionist measures in context, with reference to Omnipotent Government, by Ludwig von Mises:
Mises’ thesis, in a nutshell, is that aggressive economic nationalism is the inevitable consequence of increasing government intervention in the economy. For reasons he explains, he calls this ultimate cause “etatism”:
The most important event in the history of the last hundred years is the displacement of liberalism by etatism.
Etatism appears in two forms: socialism and interventionism. Both have in common the goal of subordinating the individual unconditionally to the state, the social apparatus of compulsion and coercion.
Steve concludes:
The Brussels elite certainly have some historic achievements behind them, but I can’t help wondering whether they put their faith in the wrong god. Perhaps their folly has been to choose etatism plus the unification of European government when a better choice would have been a post-war return to unhampered social cooperation, that is, classical liberalism.
I recommend the whole article.
By Toby Baxendale, on 7 June 10
We are pleased to republish here an excellent article by Dr. Richard Ebeling, Professor of Economics at Northwood University. The article originally appeared in Freedom Daily (June 1996), published by the Future of Freedom Foundation, Fairfax, Virginia.
Adam Smith’s Wealth of Nations is justly considered one of the intellectual fountainheads of economic liberty. With a brilliant combination of logic and historical example, Smith demonstrated, like few others had up to his day, that governmental controls, regulations, and restrictions on economic freedom were the fundamental causes of extensive poverty, misuse of resources, and pervasive political corruption. He declared that what England — and indeed any country — needed, if it desired increased prosperity for all, wise use of its resources, and greater justice in human relationships, was a “system of natural liberty.”
Under such a system, Smith argued,
Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men . . . The sovereign is completely discharged from a duty . . . of which no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and of directing it towards employments most suitable to the interest of society.
In this system of natural liberty, the government, in Adam Smith’s view, would be limited to three functions: protection of the citizenry from foreign aggression; the protection of the citizenry from domestic robbery and murder, along with a judicial system to administer justice; and the provision of a number of limited public works that Smith believed might not be profitable for private citizens to provide but which might have a wider usefulness for the society.
In spite of the eloquence and rigor with which Adam Smith demonstrated the harm and futility of the mercantilist forms of planning and regulation in his day, he despaired that economic freedom would never be triumphant. “To expect, indeed, that the freedom of trade should ever be entirely restored to Great Britain,” he said, “is as absurd as to expect that an Oceana or Utopia should ever be established in it. Not only the prejudices of the public, but what is much more unconquerable, the private interests of many individuals irresistibly oppose it.”
Wartime Regulations and the Emergence of the Free Trade Movement
The several decades following Adam Smith’s death in 1790 seemed to bear out his pessimism. While under the prime ministership of William Pitt in the 1780s, Great Britain moved in directions that were consistent with the types of trade policies advocated by Smith; they were reversed in the 1790s with the advent of the wars fought between Great Britain and France. New protectionist trade barriers were imposed in the name of the war effort. Britain and France both tried to enforce naval blockades against each other. Only a pervasive network of smuggling throughout Europe prevented many from going without food or clothing. As Francis W. Hirst explained in his book From Adam Smith to Philip Snowden: A History of Free Trade (1925), “When peace came in 1815 it found Great Britain exhausted by twenty-two years of war and Protection.”
However, instead of reversing the controls and regulations, the British Parliament passed the Corn Laws of 1815, which were meant to assure a protected market for British agricultural interests. No foreign wheat could be imported into the British Isles unless the domestic price reached an exorbitantly high level. This condemned the low-income industrial workers of British towns and cities to a meager and expensive diet. The trade barriers also acted as a restraint on the development of the emerging British manufacturing industries.
In 1820, a group of British industrialists issued a Merchant’s Petition declaring that they were “against every restrictive regulation of trade, not essential to the revenue, against all duties merely protective from foreign competition.” In 1830, Sir Henry Parnell, a longtime chairman of the finance committee of the House of Commons, published a book entitled, On Financial Reform. In it, he declared:
If once men were allowed to take their own way, they would very soon, to the great advantage of society, undeceive the world of the error of restricting trade, and show that the passage of merchandise from one state to another ought to be as free as air and water. Every country should be as a general and common fair for the sale of goods, and the individual and nation that makes the best commodity should find the greatest advantage.
In 1836, the Anti-Corn Law Association was formed in London, which in 1839 was renamed the Anti-Corn Law League in Manchester. For the next seven years, under the masterful and powerful leadership of Richard Cobden and John Bright, the league fought unstintingly for the repeal of the Corn Laws and for the establishment of total free trade in the British Empire.
Throughout the cities, towns, and villages of Great Britain, Anti-Corn Law League chapters were opened. Hundreds of thousands of dollars in voluntary donations were collected to fund rallies, meetings, public lectures, and debates. The league organized a vast publishing campaign of books, monographs, and pamphlets advocating the repeal of all protectionist restrictions and the freeing of all trade and commerce from government control.
The Case for Unilateral Free Trade and the Goal of Peace
From the beginning, in making his case for free trade, Richard Cobden saw the breaking down of trade barriers as a powerful avenue for depoliticizing human relationships. By privatizing all market transactions between individuals of different countries, he said, free trade would assist in removing many of the causes of war. “As little intercourse as possible between Governments,” Cobden declared, “as much connection as possible between the nations of the world.” To emphasize this, the slogan of the Anti-Corn Law League became “Free Trade, Peace and Good-Will Among Nations.”
Furthermore, Cobden and the Anti-Corn Law League made the case for unilateral free trade. “We came to the conclusion that the less we attempted to persuade foreigners to adopt our trade principles, the better,” Cobden explained in later years, “for we discovered so much suspicion of the motives of England, that it was lending an argument to the protectionists abroad to incite the popular feeling against the free-traders . . . To take away this pretense, we avowed our total indifference whether other nations became free-traders or not; but we should abolish Protection for our own selves, and leave other countries to take whatever course they liked best.”
In 1841, Sir Robert Peel became prime minister, determined to maintain the Corn Laws as a cornerstone of British foreign economic policy. But through one of those ironies of history, the man appointed to lead the defense of protectionism ended up advocating and overseeing the abolition of protectionism in Great Britain.
Over the next several years, Peel’s government lowered and, in some cases, eliminated many of the trade restrictions on manufacturing and industrial goods, but he would not reduce the trade barriers on agriculture. Under the unrelenting arguments of the free traders, Peel finally admitted, in 1843, during a debate in the House of Commons, “I am bound to say that it is our interest to buy cheap, whether other countries will buy cheap or no.” In 1845, of the 813 commodities on the import tariff restriction list, 430 were placed on the free-trade list. But, still, Peel was unwilling to give way on the Corn Laws.
The Rains Came and the Trade Barriers Finally Fell
In the fall of 1845, the worst rains in living memory hit the British Isles, and the domestic food crops were devastated. Food supplies declined, bread prices rose dramatically, and the potato harvest was destroyed in Ireland, threatening mass starvation. Young boys could be heard in the cities saying, “I be protected and I be starving.” Daniel O’Connell led demonstrations in Ireland, in which a cannon would be dragged through the streets to which was attached a sign saying, “Free trade or this.”
In November 1845, the leaders of both the Tory and Whig parties came out for repeal of the Corn Laws. In January 1846, Robert Peel told the House of Commons that the Corn Laws would be abolished. On February 27, the resolution was approved, and the Corn Importation Bill left the House of Commons on May 16, after passing on the third reading. The Duke of Wellington speedily ushered the bill through the House of Lords, and free trade became the law of the land in Great Britain on June 25, 1846.
Angered by his surrender to the free traders, the protectionist Tories forced Robert Peel to resign from the prime ministership the very same day free trade was triumphant in Britain. In his final speech before stepping down, Peel declared that he hoped that whatever government was now formed, it would continue the “application of those principles which tend to establish a freer intercourse with other nations.” And he went on to say:
If other countries choose to buy in the dearest market, such an option on their part constitutes no reason why we should not be permitted to buy in the cheapest. I trust the Government . . . will not resume the policy which they and we have felt most inconvenient, namely, the haggling with foreign countries about reciprocal concessions, instead of taking the independent course which we believe conducive to our own interests. Let us trust to the influence of public opinion in other countries — let us trust that our example, with the proof of practical benefit we derive from it, will at no remote period insure the adoption of the principles on which we have acted, rather than defer indefinitely by delay equivalent concessions from other countries.
Within three years — by 1849 — not only were the Corn Laws gone, but also were the remaining Navigation Acts carried over from the 18th century that had required goods being imported into Britain to be carried on British ships. From then on, both goods and merchant vessels from any land could arrive in Great Britain “as free as air and water,” as Henry Parnell had wished it to be in 1830.
The Importance and the Lesson of the Free Trade Movement
On June 25, 1846 Great Britain became the first country in the world to institute a unilateral policy of free trade. For the rest of the 19th century — indeed, until the dark forces of collectivism enveloped Europe during World War I — the British Empire was open to the entire world for the free movement of men, money, and goods. Its economic success served as a bright, principled example to the rest of the globe, many of whose member countries followed the British lead in establishing, if not complete free trade, at least regimes of much greater freedom of trade and commerce.
The triumph of free trade in 1846 in Great Britain was one of the shining jewels in the crowning achievements of 19th-century classical liberalism. It represented more than just the opening of the door to material prosperity among an expanding group of nations of the world. It also heralded an epoch of greatly depoliticized relationships that, in fact, made international trade the private affairs of individuals and not concerns of the state.
The emergence of socialism and neo-mercantilism towards the end of the 19th century eventually brought about the end of the classical-liberal era and its epoch of free trade. Nevertheless, the victory of 1846 demonstrates that an uncompromising, principled belief in the freedom of man can triumph and change the course of human events.
Dr. Ebeling’s new book, Political Economy, Public Policy, and Monetary
Economics: Ludwig von Mises and the Austrian Tradition is now available through Routledge and Amazon.
By Toby Baxendale, on 24 March 10
Food is on the whole cheap to us as an advanced or even a post industrial nation. Richard Cobden, with a small group of fellow manufacturers, took on the whole might of the Aristocracy in putting forward the case to abolish the Corn Laws and have unilateral free trade.
For those interested in free trade, I have dug out possibly one of Cobden’s finest orations delivered in the House of Commons, on March 13, 1845, and described by John Morley as:
“probably the most powerful speech he ever made.” Men on the Tory benches whispered to one another, “Peel must answer this.” But Peel crushed in his hand the notes he had made and remarked, “Those may answer him who can.”
For economic history buffs, you will love it. For its relevance today, we must remember we have one of the most economically insane policies that covers agricultural production in the United Kingdom and through the whole of Europe: the Common Agricultural Policy. The Tax Payers Alliance has shown us here the utter madness of the policy. Here is part of their executive summary.
“With the onset of a recession, family budgets are tight. Despite agricultural commodity prices falling from their recent exceptional high, there are still global concerns at a food crisis. Saving £400 a year, over one per cent of average household, post-tax income, would be a welcome boost for many families struggling in a these tough economic times. The Common Agricultural Policy (CAP) imposes a significant burden on families both by costing significant amounts of taxpayers’ money and by pushing up food prices: The CAP costs the UK £10.3 billion a year, £398 per household. That is equivalent to adding around £7.65 per week to family food bills.”
Abolish CAP; it serves no purpose for the public of this nation. Let farmers use cheap food and make cheaper products for the people of our nation.
Let farmers invest long term in things that people want to consume.
The following speech, made one full century and a half ago, could be made today by one of our politicians. Sadly, we seldom see such oratory in the House of Commons nowadays.
Enjoy.
“SIR, the object of this motion is to appoint a select committee to inquire into the present condition of the agricultural interests; and, at the same time, to ascertain how the laws regulating the importation of agricultural produce have affected the agriculturists of this country. As regards the distress among farmers, I presume we cannot go to a higher authority than those honourable gentlemen who profess to be the farmers’ friends and protectors. I find it stated by those honourable gentlemen who recently paid their respects to the prime minister, that the agriculturists are in a state of great embarrassment and distress. I find that one gentleman from Norfolk [Mr. Hudson] stated that the farmers in the county are paying their rents, but paying them out of capital, and not profits. I find Mr. Turner of Upton, in Devonshire, stating that one-half of the smaller farmers in that county are insolvent, and that the others are rapidly falling into the same condition; that the farmers with larger holdings are quitting their farms with a view of saving the rest of their property; and that, unless some remedial measures be adopted by this House, they will be utterly ruined.
The accounts which I have given you of those districts are such as I have had from many other sources. I put it to honourable gentlemen opposite, whether the condition of the farmers in Suffolk, Wiltshire, and Hampshire, is better than that which I have described in Norfolk and Devonshire? I put it to county members, whether—taking the whole of the south of England, from the confines of Nottinghamshire to the Land’s End—whether, as a rule, the farmers are not now in a state of the greatest embarrassment? There may be exceptions; but I put it to them whether, as a rule, that is not their condition in all parts?
The distress of the farmers being admitted, the next question which arises is, What is its cause? I feel a greater necessity to bring forward this motion for a committee of inquiry, because I find great discrepancies of opinion among honourable gentlemen opposite as to what is the cause of the distress among the farmers. In the first place there is a discrepancy as to the generality or locality of the existing distress. I find the right honourable baronet at the head of the government [Sir Robert Peel] saying that the distress is local; and he moreover says it does not arise from the legislation of this House. The honourable member for Dorsetshire declares, on the other hand, that the distress is general, and that it does not arise from legislation.
Now, there are these very different opinions on the other side of the House; but there are members upon this side representing very important interests, who think that farmers are suffering because they have this legislative protection. There is all this difference of opinion. Now, is not that a fit and proper subject for your inquiry? I am prepared to go into a select committee, and to bring forward evidence to show that the farmers are laboring under great evils—evils that I would connect with the legislation of this House, tho they are evils which appear to be altogether dissociated from it. The first great evil under which the farmer labours is the want of capital. No one can deny that. I do not mean at all to disparage the farmers. The farmers of this country are just the same race as the rest of us; and, if they were placed in a similar position, theirs would be as good a trade—I mean that they would be as successful men of business—as others; but it is notorious, as a rule, that the farmers of this country are deficient in capital; and I ask: How can any business be carried on successfully where there is a deficiency of capital?
I take it that honourable gentlemen opposite, acquainted with farming, would admit that 10l. an acre, on an arable farm, would be a sufficient amount of capital for carrying on the business of farming successfully. I will take it, then, that 10l. an acre would be a fair capital for an arable farm. I have made many inquiries upon this subject in all parts of the kingdom, and I give it you as my decided conviction, that at this present moment farmers do not average 5l. an acre capital on their farms. I speak of England, and I take England south of the Trent, tho, of course, there are exceptions in every country; there are men of large capital in all parts—men farming their own land; but, taking it as a rule, I hesitate not to give my opinion—and I am prepared to back that opinion by witnesses before your committee—that, as a rule, farmers have not, upon an average, more than 5l. an acre capital for their arable land. I have given you a tract of country to which I may add all Wales; probably 20,000,000 of acres of cultivable land. I have no doubt whatever that there are 100,000,000l. of capital wanting upon that land. What is the meaning of farming capital? There are strange notions about the word “capital.” It means more manure, a great amount of labor, a greater number of cattle, and larger crops. Picture a country in which you can say there is a deficiency of one-half of all those blessings which ought to, and might, exist there, and then judge what the condition of laborers wanting employment and food is.
But you will say, capital would be invested if it could be done with profit. I admit it; that is the question I want you to inquire into. How is it that in a country where there is a plethora of capital, where every other business and pursuit is overflowing with money, where you have men going to France for railways and to Pennsylvania for bonds, embarking in schemes for connecting the Atlantic with the Pacific by canals, railways in the valley of the Mississippi, and sending their money to the bottom of the Mexican mines; while you have a country rich and overflowing, ready to take investments in every corner of the globe, how is it, I say, that this capital does not find its employment in the most attractive of all forms—upon the soil of this country? The cause is notorious—it is admitted by your highest authorities; the reason is, there is not security for capital in land. Capital shrinks instinctively from insecurity of tenure; and you have not in England that security which would warrant men of capital investing their money in the soil.
Now, is it not a matter worthy of consideration, how far this insecurity of tenure is bound up with that protective system of which you are so enamored? Suppose it can be shown that there is a vicious circle; that you have made politics of Corn Laws, and that you want voters to maintain them; that you very erroneously think that the Corn Laws are your great mine of wealth, and, therefore, you must have a dependent tenantry, that you may have their votes at elections to maintain this law in Parliament. Well, if you will have dependent voters, you can not have men of spirit and capital. Then your policy reacts upon you. If you have not men of skill and capital, you can not have improvements and employment for your labourers. Then comes around that vicious termination of the circle—you have pauperism, poor-rates, county-rates, and all the other evils of which you are now speaking and complaining.
Now, sir, not only does the want of security prevent capital flowing into the farming business, but it actually deters from the improvement of the land those who are already in the occupation of it. There are many men, tenants of your land, who could improve their farms if they had a sufficient security, and they have either capital themselves or their friends could supply it; but with the absence of leases, and the want of security, you are actually deterring them from laying out their money on your land. They keep everything the same from year to year. You know that it is impossible to farm your estates properly unless a tenant has an investment for more than one year. A man ought to be able to begin a farm with at least eight years before him, before he expects to see a return for the whole of the outlay of his money. You are, therefore, keeping your tenants-at-will at a yearly kind of cultivation, and you are preventing them carrying on their businesses in a proper way. Not only do you prevent the laying out of capital upon your land, and disable the farmers from cultivating it, but your policy tends to make them servile and dependent; so that they are actually disinclined to improvement, afraid to let you see that they can improve, because they are apprehensive that you will pounce upon them for an increase of rent.
Now, I do not know why we should not in this country have leases for land upon similar terms to the leases of manufactories, or any “plant” or premises. I do not think that farming will ever be carried on as it ought to be until you have leases drawn up in the same way as a man takes a manufactory, and pays perhaps a thousand pounds a year for it. I know people who pay four thousand pounds a year for manufactories to carry on their business, and at fair rents. There is an honourable gentleman near me who pays more than four thousand pounds a year for the rent of his manufactory. What covenants do you think he has in his lease? What would he think if it stated how many revolutions there should be in a minute of the spindles, or if they prescribed the construction of the straps or the gearing of the machinery? Why, he takes his manufactory with a schedule of its present state—bricks, mortar, and machinery—and when the lease is over, he must leave it in the same state, or else pay a compensation for the dilapidation. [The chancellor of the exchequer: “Hear, hear!”]
The right honourable gentleman, the chancellor of the exchequer, cheers that statement. I want to ask his opinion respecting a similar lease for a farm. I am rather disposed to think that the Anti-Corn-Law Leaguers will very likely form a joint-stock association, having none but free-traders in the body, that we may purchase an estate and have a model farm; taking care that it shall be in one of the rural counties, one of the most purely agricultural parts of the country, where we think there is the greatest need of improvement—perhaps in Buckinghamshire,—and there shall be a model farm, homestead, and cottages; and I may tell the noble lord, the member for Newark, that we shall have a model garden, and he will not make any boast about it. But the great object will be to have a model lease. We will have as the farmer a man of intelligence and capital.
I am not so unreasonable as to tell you that you ought to let your land to men who have not a competent capital, or are not sufficiently intelligent; but I say, select such a man as that, let him know his business and have a sufficient capital, and you can not give him too wide a scope. We will find such a man, and will let him our farm; there shall be a lease precisely such as that upon which my honourable friend takes his factory. There shall be no clause inserted in it to dictate to him how he shall cultivate his farm; he shall do what he likes with the old pasture. If he can make more by plowing it up he shall do so; if he can grow white crops every year—which I know there are people doing at this moment in more places than one in this country—or if he can make any other improvement or discovery, he shall be free to do so. We will let him the land, with a schedule of the state of tillage and the condition of the homestead, and all we will bind him to will be this: “You shall leave the land as good as when you entered upon it. If it be in an inferior state it shall be valued again, and you shall compensate us; but if it be in an improved state it shall be valued, and we, the landlords, will compensate you.” We will give possession of everything upon the land, whether it be wild or tame animals; he shall have the absolute control.
Take as stringent precautions as you please to compel the punctual payment of the rent; take the right of reentry as summarily as you like if the rent be not duly paid, but let the payment of rent duly be the sole test as to the well-doing of the tenant; and so long as he can pay the rent, and do it promptly, that is the only criterion you need have that the farmer is doing well; and if he is a man of capital, you have the strongest possible security that he will not waste your property while he has possession of it.
Now, sir, I do not stop to connect the cause and effect in this matter, and inquire whether your Corn Laws or your protective system have caused the want of leases and capital. I do not stop to make good my proof, and for this reason, that you have adopted a system of legislation in this House by which you profess to make the farming trade prosperous. I show you, after thirty years’ trial, what is the depressed condition of the agriculturists; I prove to you what is the impoverished state of farmers, and also of labourers, and you will not contest any one of those propositions. I say it is enough, having had thirty years’ trial of your specific with no better results than these, for me to ask you to go into committee to see if something better cannot be devised. I am going to contend that free trade in grain would be more advantageous to farmers—and with them I include labourers—than restriction; to oblige the honourable member for Norfolk, I will take with them also the landlords; and I contend that free trade in corn and grain of every kind would be more beneficial to them than to any other class of the community. I should have contended the same before the passing of the late tariff, but now I am prepared to do so with tenfold more force.
What has the right honourable baronet [Sir R. Peel] done? He has passed a law to admit fat cattle at a nominal duty. Some foreign fat cattle were selling in Smithfield the other day at about 15l. or 16l. per head, paying only about seven and one half per cent. duty; but he has not admitted the raw material out of which these fat cattle are made. Mr. Huskisson did not act in this manner when he commenced his plan of free trade. He began by admitting the raw material of manufactures before he admitted the manufactured article; but in your case you have commenced at precisely the opposite end, and have allowed free trade in cattle instead of that upon which they are fattened. I say give free trade in that grain which goes to make the cattle. I contend that by this protective system the farmers throughout the country are more injured than any other class in the community.
I will go further and say, that farmers with thin soil—I mean the stock farmers, whom you will find in Hertfordshire and Surrey, farmers with large capitals, arable farmers—I say those men are deeply interested in having a free importation of food for their cattle, because they have thin, poor land. This land of its own self does not contain the means of its increased fertility; and the only way is the bringing in of an additional quantity of food from elsewhere, that they can bring up their farms to a proper state of cultivation. I have been favoured with an estimate made by a very experienced, clever farmer in Wiltshire—probably honourable gentlemen will bear me out, when I say a man of great intelligence and skill, and entitled to every consideration in this House. I refer to Mr. Nathaniel Atherton, Kingston, Wilts. That gentleman estimates that upon 400 acres of land he could increase his profits to the amount of 280l., paying the same rent as at present, provided there was a free importation of foreign grain of all kinds. He would buy 500 quarters of oats at 15s., or the same amount in beans or peas at 14s. or 15s. a sack, to be fed on the land or in the yard; by which he would grow additional 160 quarters of wheat, and 230 quarters of barley, and gain an increased profit of 300l. upon his sheep and cattle. His plan embraces the employment of an additional capital of 1,000l.; and he would pay 150l. a year more for labour.
Now, I undertake to say, in the name of Mr. Atherton, of Wiltshire, and Mr. Lattimore, of Hertfordshire, that they are as decided advocates for free trade in grain of every kind as I am. I am not now quoting merely solitary cases. I told honourable gentlemen once before that I have probably as large an acquaintance among farmers as any one in the House. I think I could give you from every county the names of some of the first-rate farmers who are as ardent free-traders as I am. I requested the secretary of this much dreaded Anti-Corn-Law League to make me out a list of the farmers who are subscribers to that association, and I find there are upward of one hundred in England and Scotland who subscribe to the league fund, comprising, I hesitate not to say, the most intelligent men to be found in the kingdom. I went into the Lothians, at the invitation of twenty-two farmers there, several of whom were paying upward of 1,000l. a year rent. I spent two or three days among them, and I never found a body of more intelligent, liberal-minded men in my life. Those are men who do not want restrictions upon the importation of grain. They desire nothing but fair play. They spy: “Let us have our Indian corn, Egyptian beans, and Polish oats as freely as we have our linseed cake, and we can bear competition with any corn-growers in the world.” But by excluding the provender for cattle, and at the same time admitting the cattle almost duty free, I think you are giving an example of one of the greatest absurdities and perversions of nature and common sense that ever was seen.
Upon the last occasion when I spoke upon this subject, I was answered by the right honourable gentleman, the president of the Board of Trade. He talked about throwing poor lands out of cultivation, and converting arable lands into pasture. I hope that we men of the Anti-Corn-Law League may not be reproached again with seeking to cause any such disasters. My belief is—and the conviction is founded upon a most extensive inquiry among the most intelligent farmers, without stint of trouble and pains—that the course you are pursuing tends every hour to throw land out of cultivation, and make poor lands unproductive. Do not let us be told again that we desire to draw the labourers from the land, in order that we may reduce the wages of the work-people employed in factories. I tell you that, if you bestow capital on the soil, and cultivate it with the same skill as manufacturers bestow upon their business, you have not population enough in the rural districts for the purpose. I yesterday received a letter from Lord Ducie, in which he gives precisely the same opinion. He says: “If we had the land properly cultivated, there are not sufficient labourers to till it.” You are chasing your labourers from village to village, passing laws to compel people to support paupers, devising every means to smuggle them abroad—to the antipodes, if you can get them there; why, you would have to run after them, and bring them back again., if you had your land properly cultivated. I tell you honestly my conviction, that it is by these means, and these only, that you can avert very great and serious troubles and disasters in your agricultural districts.
On the last occasion when I addressed the House on this subject, I recollect stating some facts to show that you had no reasonable ground to fear foreign competition; those facts I do not intend to reiterate, because they have never been contradicted. But there are still attempts made to frighten people by telling them: “If you open the ports to foreign corn, you will have corn let in here for nothing.” One of the favourite fallacies which are now put forth is this: “Look at the price of corn in England, and see what it is abroad; you have prices low here, and yet you have corn coming in from abroad and paying the maximum duty. Now, if you had not 20s. duty to pay, what a quantity of corn you would have brought in, and how low the price would be!”
This statement arises from a fallacy—I hope not dishonestly put forth—in not understanding the difference between the real and the nominal price of corn. The price of corn at Dantzic now, when there is no regular sale, is nominal; the price of corn when it is coming in regularly is the real price. Now, go back to 1838. In January of that year the price of wheat at Dantzic was nominal; there was no demand for England; there were no purchasers except for speculation, with the chance, probably, of having to throw the wheat into the sea. But in the months of July and August of that year, when apprehensions arose of a failure of our harvest, then the price of corn in Dantzic rose instantly, sympathizing with the markets of England; and at the end of the year, in December, the price of wheat at Dantzic had doubled the amount at which it had been in January; and during the three following years, when you had a regular importation of corn,—during all that time, by the averages laid upon the table of this House, wheat at Dantzic averaged 40s. Wheat at Dantzic was at that price during the three years 1839, 1840, and 1841. Now, I mention this just to show the fact to honourable gentlemen, and to entreat them that they will not go and alarm their tenantry by this outcry of the danger of foreign competition. You ought to be pursuing a directly opposite course—you ought to be trying to stimulate them in every possible way, by showing that they can compete with foreigners; that what others can do in Poland, they can do in England.
But we are told that English agriculturists can not compete with foreigners, and especially with that serf labour that is to be found somewhere up the Baltic. Well, but flax comes from the Baltic and there is no protective duty. Honourable gentlemen say we have no objection to raw materials where there is no labour connected with them; but we can not contend against foreigners in wheat, because there is such an amount of labour in it. Why, there is twice as much labour in flax as there is in wheat; but the member for Shoreham favours the growth of flax in order to restore the country, which is sinking into this abject and hopeless state for want of agricultural protection. But the honourable baronet will forgive me—I am sure he will, he looks as if he would—if I allude a little to the subject of leases. The honourable gentleman on that occasion, I believe, complained that it was a great pity that farmers did not grow more flax. I do not know whether it was true or not that the same honourable baronet’s leases to his own tenants forbade them to grow that article.
Now, I have alluded to the condition of the labourers at the present time; but I am bound to say that while the farmers at the present moment are in a worse condition than they have been for the last ten years, I believe the agricultural labourers have passed over the winter with less suffering and distress, altho it has been a five-months’ winter, and a severer one, too, than they endured in the previous year. [Hear!] I am glad to find that corroborated by honourable gentlemen opposite, because it bears out, in a remarkable degree, the opinion that we, who are in connection with the free trade question, entertain. We maintain that a low price of food is beneficial to the labouring classes. We assert, and we can prove it, at least in the manufacturing districts, that whenever provisions are dear, wages are low; and whenever food is cheap, wages invariably rise. We have had a strike in almost every business in Lancashire since the price of wheat has been down to something like 50s.; and I am glad to be corroborated when I state that the agricultural labourers have been in a better condition during the last winter than they were in the previous one. But does not that show that, even in your case, tho your labourers have in a general way only just as much as will find them a subsistence, they are benefited by a great abundance of the first necessaries of life? Altho their wages may rise and fall with the price of food, altho they may go up with the advance in the price of corn, and fall when it is lowered; still, I maintain that it does not rise in the same proportion as the price of food rises, nor fall to the extent to which food falls. Therefore in all cases the agricultural labourers are in a better state when food is low than when it is high.
Now, I hold that this duty begins nearer home, and that the landed proprietors are the parties who are responsible if the labourers have not employment. You have absolute power; there is no doubt about that. You can, if you please, legislate for the labourers, or yourselves. Whatever you may have done besides, your legislation has been adverse to the laborer, and you have no right to call upon the farmers to remedy the evils which you have caused. Will not this evil—if evil you call it—press on you more and more every year? What can you do to remedy the mischief? I only appear here now because you have proposed nothing. We all know your system of allotments, and we are all aware of its failure. What other remedy have you? For, mark you, that is worse than a plaything, if you were allowed to carry out your own views. [Hear!] Aye, it is well enough for some of you that there are wiser heads than your own to lead you, or you would be conducting yourselves into precisely the same condition in which they are in Ireland, but with this difference—this increased difficulty—that there they do manage to maintain the rights of property by the aid of the English Exchequer and 20,000 bayonets; but divide your own country into small allotments, and where would be the rights of property? What do you propose to do now? That is the question. Nothing has been brought forward this year, which I have heard, having for its object to benefit the great mass of the English population; nothing I have heard suggested which has at all tended to alleviate their condition.
You admit that the farmer’s capital is sinking from under him, and that he is in a worse state than ever. Have you distinctly provided some plan to give confidence to the farmer, to cause an influx of capital to be expended upon his land, and so bring increased employment to the labourer? How is this to be met? I can not believe you are going to make this a political game. You must set up some specific object to benefit the agricultural interest. It is well said that the last election was an agricultural triumph. There are two hundred county members sitting behind the prime minister who prove that it was so.
What, then, is your plan for this distressing state of things? That is what I want to ask you. Do not, as you have done before, quarrel with me because I have imperfectly stated my case; I have done my best, and I again ask you what you have to propose? I tell you that this “Protection,” as it has been called, is a failure. It was so when you had the prohibition up to 80s. You know the state of your farming tenantry in 1821. It was a failure when you had a protection price of 60s., for you know what was the condition of your farm tenantry in 1835. It is a failure now with your last amendment, for you have admitted and proclaimed it to us; and what is the condition of your agricultural population at this time?
I ask, what is your plan? I hope it is not a pretense—a mere political game that has been played throughout the last election, and that you have not all come up here as mere politicians. There are politicians in the House—men who look with an ambition—probably a justifiable one—to the honours of office. There may be men who—with thirty years of continuous service, having been pressed into a groove from which they can neither escape nor retreat—may be holding office, high office, maintained there probably at the expense of their present convictions which do not harmonize very well with their early opinions. I make allowances for them; but the great body of the honourable gentlemen opposite came up to this House, not as politicians, but as the farmers’ friends, and protectors of the agricultural interests. Well, what do you propose to do? You have heard the prime minister declare that, if he could restore all the protection which you have had, that protection would not benefit agriculturists. Is that your belief? If so, why not proclaim it? And if it is not your conviction, you will have falsified your mission in this House by following the right honourable baronet out into the lobby, and opposing inquiry into the condition of the very men who sent you here.
With mere politicians I have no right to expect to succeed in this motion. But I have no hesitation in telling you that, if you give me a committee of this House, I will explode the delusion of agricultural protection! I will bring forward such a mass of evidence, and give you such a preponderance of talent and of authority, that when the blue book is published and sent forth to the world, as we can now send it, by our vehicles of information, your system of protection shall not live in public opinion for two years afterward. Politicians do not want that. This cry of protection has been a very convenient handle for politicians. The cry of protection carried the counties at the last election, and politicians gained honours, emoluments, and place by it. But is that old tattered flag of protection, tarnished and torn as it is already, to be kept hoisted still in the counties for the benefit of politicians; or will you come forward honestly and fairly to inquire into this question? I can not believe that the gentry of England will be made mere drumheads to be sounded upon by a prime minister to give forth unmeaning and empty sounds, and to have no articulate voice of their own. No! You are the gentry of England who represent the counties. You are the aristocracy of England. Your fathers led our fathers; you may lead us if you will go the right way. But, altho you have retained your influence with this country longer than any other aristocracy, it has not been by opposing popular opinion, or by setting yourselves against the spirit of the age.
In other days, when the battle and the hunting-fields were the tests of manly vigor, your fathers were first and foremost there. The aristocracy of England were not like the noblesse of France, the mere minions of a court; nor were they like the hidalgos of Madrid, who dwindled into pigmies. You have been Englishmen. You have not shown a want of courage and firmness when any call has been made upon you. This is a new era. It is the age of improvement; it is the age of social advancement, not the age for war or for feudal sports. You live in a mercantile age, when the whole wealth of the world is poured into your lap. You can not have the advantages of commercial rents and feudal privileges; but you may be what you always have been, if you will identify yourselves with the spirit of the age. The English people look to the gentry and aristocracy of their country as their leaders. I, who am not one of you, have no hesitation in telling you that there is a deep-rooted, an hereditary prejudice, if I may so call it, in your favour in this country. But you never got it, and you will not keep it, by obstructing the spirit of the age. If you are indifferent to enlightened means of finding employment to your own peasantry; if you are found obstructing that advance which is calculated to knit nations more together in the bonds of peace by means of commercial intercourse; if you are found fighting against the discoveries which have almost given breath and life to material nature, and setting up yourselves as obstructives of that which destiny has decreed shall go on,—why, then, you will be the gentry of England no longer, and others will be found to take your place.
And I have no hesitation in saying that you stand just now in a very critical position. There is a wide-spread suspicion that you have been tampering with the best feelings and with the honest confidence of your constituents in this cause. Everywhere you are doubted and suspected. Read your own organs, and you will see that this is the case. Well, then, this is the time to show that you are not the mere party politicians which you are said to be. I have said that we shall be opposed in this measure by politicians; they do not want inquiry. But I ask you to go into this committee with me. I will give you a majority of county members. You shall have a majority of the Central Society in that committee. I ask you only to go into a fair inquiry as to the causes of the distress of your own population. I only ask that this matter may be fairly examined. Whether you establish my principle or yours, good will come out of the inquiry; and I do, therefore, beg and entreat the honourable independent country gentlemen of this House that they will not refuse, on this occasion, to go into a fair, a full, and an impartial inquiry.”
By Toby Baxendale, on 12 March 10
Sweden, that Democratic Socialist paradise that is the role model of all progressives, is compared to the UK, whose state sector is the same size and whose over-extended housing sector is similar.
 Material Evidence, 5 Mar 2010 (click to read) Corrigan points out how in the USA the “cash for clunkers” scheme has had the only effect of bringing consumption forward. Something we all knew would happen when this half-brained scheme was launched both in the USA and in the UK post Lehman. When policy makers will ever learn, I do not know.
World trade is back to where it was three years ago, most of it being driven by the next giant credit bubble boiling to burst: China.
By Dr Tim Evans, on 12 February 10
As a liberal free trade internationalist and speaking personally, I have always been suspicious of the state paraphernalia that goes with increasingly endless attempts to centrally plan where people can or cannot live on this planet. Passports, ID cards and point-based immigration visa systems all seem pretty potty to me – as do the massive state welfare systems that are required to legitimate their draconian deployment (“we can’t allow foreigners here to take our (nationalised) schoolsnhospitals” - http://www.libertarian.co.uk/lapubs/polin/polin061.pdf – and the like!).
Recently, I was working with an organisation in London that wanted to hire a US intern for a while but found that it could not do this because it could not afford the time and effort now required by the Home Office to fill in all its forms. And even if they did, they were pretty sure from the outset that their request would be turned down. What sort of national and socialistic craziness is this? Why turn away the money, know how and potential of bright eager people?
Now, while this concerns me, it is not really my bag. I don’t obsess about this issue day to day. But I am pleased that other people do. For example, I am really pleased that Jose Appleton and her excellent Manifesto Club- http://www.manifestoclub.com/about -
have just produced this marvelous new report, Fortress Academy - http://www.manifestoclub.com/files/FortressAcademy.pdf – which shows how the Home Office is insanely barring thousands of students from coming here. It is also mentioned in the Guardian here - http://www.guardian.co.uk/uk/2010/feb/11/clamdown-overseas-student-visas-funding.
Bravo, I say people of the world unite!
By Steven Baker MP, on 29 December 09
 Razeen Sally’s Trade Policy, New Century (PDF) succeeds magnificently in explaining the 21st-century case for free trade and, specifically, unilateral trade liberalisation to the interested, non-specialist reader.
From the IEA home page of the book:
The World Trade Organization (WTO) is failing to deliver the trade liberalisation desperately needed to bring prosperity to developing countries, according to a new study released today by the Institute of Economic Affairs. The WTO is hamstrung by a cumbersome negotiating model and the influence of vocal protectionist lobbies who oppose free markets. At the same time, increasingly popular regional ‘free-trade agreements’ often create as many barriers as they remove by erecting new obstacles to trade with countries outside the blocs concerned.
In the context of policy paralysis at the WTO, the author, LSE trade expert Dr Razeen Sally, argues that governments must take back the initiative from supranational institutions. The priority must be unilateral liberalisation – removing trade barriers to benefit domestic consumers rather than waiting for tortuous international negotiations to be resolved. Governments can also help maximise the benefits of free trade by liberalising their economies and strengthening key institutions.
But what is the imperative for the UK? Surely, European Union citizens enjoy free trade?
The EU is a customs union: we trade ostensibly freely within it, but, as can be seen from the EU’s TARIC database, we find ourselves behind a complex system of tariffs on, for example, wheat, notwithstanding the battle long since won by our inspiration, Richard Cobden, to repeal England’s Corn Laws in the general interest.
And this is the key point: free trade is in the general interest. We may make the political and economic arguments in detail, but the public good is our ultimate aim, and not just at home. Razeen Sally explains (pp179-180, emphasis mine):
Adam Smith fortified his presumption in favour of free trade with an explicit political argument. Protectionism is driven by ‘the clamorous importunity of partial interests’ who capture government and prevent it from having ‘an extensive view of the general good’. Free trade, in contrast, tilts the balance away from rent-seeking producer interests and towards the mass of consumers. It is part of a wider constitutional package to keep government limited, transparent and clean, enabling it to concentrate better on the public good.
As important to Smith and Hume was the moral case for free trade, centred on individual freedom. Individual choice is the engine of free trade, and of progressive commercial society more generally. It sparks what Hume called a ‘spirit of industry’; it results in much better life-chances, not just for the select few but for individuals in the broad mass of society who are able to lead more varied and interesting lives.
To sum up: free trade is of course associated with standard economic efficiency arguments. But the classical-liberal case for free trade is more rounded, taking in the moral imperative of individual freedom and linking it to prosperity. Finally, free trade contributes to, though it does not guarantee, peaceful international relations. Freedom, prosperity, security: this trinity lies at the heart of the case for free trade.
In a short article, I can scarcely do justice to this monograph’s insight in relation to the case for classic liberalism nor to its observations on emerging geopolitics: I heartily recommend the book.
Further reading
By Steven Baker MP, on 30 November 09
Via Protectionism, Regulations and Globalization — ECIPE:
Economic history tells us many lessons. One particular lesson of contemporary relevance is that the internationalization of economies should not be taken for granted. It should not be viewed as a perpetuum mobile; a force that is impossible stop. The current crisis – and the responses to it – has triggered fears of a replay of the 1930s when tit-for-tat protectionism and economic nationalism followed hard on the heels of a financial crash. The world economy then experienced a giant process of deglobalisation that took almost 40 years to unwind.
The current crisis has been far from as severe as the crisis in the 1930s. Nor have crisis measures been ostensibly protectionist. Many protectionist measures have been introduced (still counting), but they have been far from as drastic as the spiraling tariffs of the 1930s. This is comforting knowledge, and it testifies to the disciplining effects on protectionist sentiments offered by WTO agreements. However, it might be less comforting than we are led to believe by most modern accounts of the crisis and globalization. To understand what is currently happening in the global economy we might have to release ourselves from traditional concepts of the integration of markets. In the past centuries, markets have been integrated through trade and cross-border movement of production factors. For most of the time, it has been a process of internationalization: one country after another have linked up with the global economy as it has become a destination for production and the origin of inputs and products for final consumption at home. In such an internationalized economy, trade barriers have damaged flows across borders and imposed costs on producers and consumers.
Read more: Protectionism, Regulations and Globalization — ECIPE
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