An Introduction to the Industrial and Social History of England

by Edward Potts Cheyney

As applied to economic interests this liberty meant freedom for each person to make his living in the way he might see fit, and without any external restriction. Adam Smith says: "The patrimony of a poor man lies in the strength and dexterity of his hands; and to hinder him from employing this strength and dexterity in what manner he thinks proper, without injury to his neighbor, is a plain violation of this most sacred property. It is a manifest encroachment upon the just liberty both of the workman and of those who might be disposed to employ him. As it hinders the one from working at what he thinks proper, so it hinders the other from employing whom they think proper." Government regulation, therefore, in as far as it restricted men's freedom of action in working, employing, buying, selling, etc., was an interference with their natural liberty.

A second influence in the same direction was the prevalent belief that most of the evils that existed in society were due to the mistakes of civilization, that if men could get back to a "state of nature" and start again, things might be much better. It was felt that there was too much artificiality, too much interference with natural development. Arthur Young condemned the prevailing policy of government, "because it consists of prohibiting the natural course of things. All restrictive forcible measures in domestic policy are bad." Regulation was unwise because it forced men's actions into artificial lines when it would have been much better to let them follow natural lines. Therefore it was felt not only that men had a right to carry on their economic affairs as they chose, but that it was wise to allow them to do so, because interference or regulation had been tried and found wanting. It had produced evil rather than good.

A third and by far the most important intellectual influence which tended toward the destruction of the system of regulation was the development of a consistent body of economic teaching, which claimed to have discovered natural laws showing the futility and injuriousness of any such attempts. Adam Smith's Wealth of Nations was published in 1776, the year of the invention of Crompton's mule, and in the decade when enclosures were more rapid than at any other time, except in the middle years of the Napoleonic wars. This was, therefore, one of the earliest, as it was far the most influential, of a series of books which represent the changes in ideas correlative to the changes in actual life already described. It has been described as having for its main object "to demonstrate that the most effectual plan for advancing a people to greatness is to maintain that order of things which nature has pointed out, by allowing every man, as long as he observes the rules of justice, to pursue his own interests in his own way, and to bring both his industry and his capital into the freest competition with those of his fellow-citizens." But the most distinct influence exercised by the writings of Adam Smith and his successors was not so much in pointing out that it was unjust or unwise to interfere with men's natural liberty in the pursuit of their interests, as in showing, as it was believed, that there were natural laws which made all interference incapable of reaching the ends it aimed at. A series of works were published in the latter years of the eighteenth and the early years of the nineteenth century by Malthus, Ricardo, Macculloch, James Mill, and others, in which principles were enunciated and laws formulated which were believed to explain why all interference with free competition was useless or worse. Not only was the whole subject of economic relations clarified, much that had been regarded as wise brought into doubt, and much that had been only doubted shown to be absurd, but the attainment of many objects previously sought for was, apparently, shown to be impossible, and to lie outside of the realm of human control.

It was pointed out, for instance, that because of the limited amount of capital in existence at any one time, "a demand for commodities is not a demand for labor;" and therefore a law like that which required burial in a woollen shroud did not give added occupation to the people, but only diverted them from one occupation to another. Ricardo developed a law of wages to the effect that they always tend to the amount "necessary to enable the laborer to subsist, and to perpetuate his race without either increase or diminution," and that any artificial raising or lowering of wages is impossible, or else causes an increase or diminution in their number which, through competition, soon brings back the old rate. Rent was also explained by Ricardo as arising from the differences of quality between different pieces of land, and as measured by the difference in the productivity of the land under consideration and that of the poorest land under cultivation at the time; and therefore being in its amount independent of direct human control. The Malthusian law of population showed that population tended to increase in a geometrical ratio, subsistence for the population, on the other hand, only in an arithmetical ratio, and that poverty was, therefore, the natural and inevitable result in old countries of a pressure of population on subsistence. The sanction of science was thus given alike to the desires of the lovers of freedom and to the regrets of those who deplored man's departure from the state of nature.

All these intellectual tendencies and reasonings of the later eighteenth century, therefore, combined to discredit the minute regulation of economic society, which had been the traditional policy of the immediately preceding centuries. The movement of thought was definitely opposed to the continuance or extension of the supervision of the government over matters of labor, wages, hours, industry, commerce, agriculture, or other phenomena of production, distribution, exchange, or consumption. This set of opinions is known as the laissez-faire theory of the functions of government, the view that the duties of government should be reduced to the smallest possible number, and that it should keep out of the economic sphere altogether. Adam Smith would have restricted the functions of government to three: to protect the nation from the attacks of other nations, to protect each person in the nation from the injustice or violence of other individuals, and to carry on certain educational or similar institutions which were of general utility, but not to any one's private interest. Many of his successors would have cut off the last duty altogether.

62. Cessation of Government Regulation—These theoretical opinions came to be more and more widely held, more and more influential over the most thoughtful of English statesmen and other men of prominence, until within the first half of the nineteenth century it may be said that their acceptance was general and their influence dominant. They fell in with the actual tendencies of the times, and as a result of the natural breaking down of old conditions, the rise of new, and the general acceptance of this attitude of laissez-faire, a rapid and general decay of the system of government regulation took place.

The old regulation had never been so complete in reality as it was on the statute book, and much of it had died out of itself. Some of the provisions of the Statute of Apprentices were persistently disregarded, and when appeals were made for its application to farm work in the latter part of the eighteenth century Parliament refused to enforce it, as they did in the case of discharged soldiers in 1726 and of certain dyers in 1777. The assize of bread was very irregularly enforced, and that of other victuals had been given up altogether. Many commercial companies were growing up without regulation by government, and in the world of finance the hand of government was very light. The new manufactures and the new agriculture grew up to a large extent apart from government control or influence; while the forms to which the old regulation did apply were dying out. In the new factory industry practically the whole body of the employees were without the qualifications required by the Statute of Apprentices, as well as many of the hand-loom weavers who were drawn into the industry by the abundance and cheapness of machine-spun thread. In the early years of the nineteenth century a strenuous effort was made by the older weavers to have the law enforced against them. The whole matter was investigated by Parliament, but instead of enforcing the old law they modified it by acts passed in 1803 and 1809, so as to allow of greater liberty. The old prohibition of using fulling mills passed in 1553 was also repealed in 1809. The Statute of Apprentices after being weakened piecemeal as just mentioned, and by a further amendment removing the wages clauses in 1813, and after being referred to by Lord Mansfield as "against the natural rights and contrary to the common law rights of the land," was finally removed from the statute book in 1814. Even the "Combination Acts," which had forbidden laborers to unite to settle wages and hours, were repealed in 1824. Similar changes took place in other fields than those of the relations between employers and employees. The leading characteristics of legislation on questions of commerce, manufactures, and agriculture during the last quarter of the eighteenth century and the first half of the nineteenth consist in the fact that it almost wholly tended toward freedom from government control. The proportions in which the influence of the natural breaking down of an outgrown system, of the new conditions which were arising, and of pure theory were combined cannot of course be distinguished. All were present. Besides this there is always a large number of persons in the community who would be primarily benefited by a change, and who therefore take the initiative or exercise a special pressure in favor of it.

The Navigation Acts began to go to pieces in 1796, when the old rule restricting importations from America, Asia, and Africa to British vessels was withdrawn in favor of the United States; in 1811 the same permission to send goods to England in other than British vessels was given to Brazil, and in 1822 to the Spanish-American countries. The whole subject was investigated by a Parliamentary Commission in 1820, at the request of the London Chamber of Commerce, and a policy of withdrawal from control determined upon. In 1823 a measure was passed by which the crown was empowered to form reciprocity treaties with any other country so far as shipping was concerned, and agreements were immediately entered into with Prussia, Denmark, Hamburg, Sweden, and within the next twenty years with most other important countries. The old laws of 1660 were repealed in 1826, and a freer system substituted, while in 1849 the Navigation Acts were abolished altogether. In the meantime the monopoly of the old regulated companies was being withdrawn, the India trade being thrown open in 1813 and given up entirely by the Company in 1833. Gradually the commerce of England and of all the English colonies was opened equally to the vessels of all nations.

A beginning of removal of the import and export duties, which had been laid for the purpose of encouraging or discouraging or otherwise influencing certain lines of production or trade, was made in a commercial treaty entered into by Pitt with France in 1786. The work was seriously taken up again in 1824 and 1825 by Mr. Huskisson, and in 1842 by Sir Robert Peel. In 1845 the duty was removed from four hundred and thirty articles, partly raw materials, partly manufactures. But the most serious struggle in the movement for free trade was that for the repeal of the corn laws. A new law had been passed at the close of the Napoleonic wars in 1815, by which the importation of wheat was forbidden so long as the prevailing price was not above ten shillings a bushel. This was in pursuance of the old traditional policy of encouraging the production of grain in order that England might be at least partially self-supporting, and was further justified on the ground that the landowners paid the great bulk of the taxes, which they could not do if the price of grain were allowed to be brought down by foreign competition. Nevertheless an active propaganda for the abolition of this law was begun by the formation of the "Anti-Corn Law League," in 1839. Richard Cobden became the president and the most famous representative of this society, which carried on an active agitation for some years. The chief interest in the abolition of the law would necessarily be taken by the manufacturing employers, the wages of whose employees could thus be made lower and more constant, but there were abundant other arguments against the laws, and their abandonment was entirely in conformity with the spirit of the age. At the close of 1845, therefore, Peel proposed their repeal, the matter was brought up in Parliament in the early months of 1846, and a sliding scale was adopted by which a slight temporary protection should continue until 1849, when any protective tariff on wheat was to cease altogether, though a nominal duty of about one and a half pence a bushel was still to be collected. This is known as the "adoption of free trade."

It remains to be noted in this connection that "free trade in land" was an expression often used during the same period, and consisted in an effort marked by a long series of acts of Parliament and regulations of the courts to simplify the title to land, the processes of buying and selling it, and in other ways making its use and disposal as simple and uncontrolled by external regulation as was commerce or any form of industry.