Blackwood's Edinburgh Magazine—Volume 62, No. 386, December, 1847

by Various

But a fettered currency is not the only evil for which the country demands a remedy. Far more perilous influences have been at work—influences which must be thoroughly probed and exposed at whatever cost of mortification to the dupes, or loss of credit to the schemer. We are willing, even in this age of free trade, when new principles are applauded to the echo and adopted with unseemly precipitation, to incur the odium of maintaining that protection to native industry is the foundation of the prosperity of Great Britain, and that in departing from it we have adopted a wrong course, which, if wise, we shall speedily abandon. Fortunately there is yet time; for the measures to which we allude have been so rapidly productive of their effects, that very little demonstration is required to open the eyes of all men to their baneful nature. Glad indeed shall we be if experience can work conviction.

To prevent all misconception, we beg leave to premise, that we do not enter now into any discussion upon the subject of the repeal of the corn-laws. Our sentiments with regard to that measure have been stated in another place; and although we have seen no cause to alter them, they are unnecessary for our present argument. We have always maintained that the success or failure of that measure in so far as the interest of our agricultural population, no unimportant section of the community, was concerned, could not be immediately tested—that its effects would necessarily be slow, but not on that account the less insidious. Agriculture cannot decline in one day like commerce, and even were it otherwise, extraneous circumstances have since occurred to delay the period of trial. The operation of the tariffs introduced by Sir Robert Peel, with the full sanction of the free-trade party are far more open to comment, and, as we shall presently show, all classes have an interest in the national wager. It is, therefore, the nearer and more engrossing topic of free trade, as affecting commerce and the legitimate wages of the workman, with which we now propose to deal.

Burthened as he is with taxes, poor-rates, and every species of local impost, it would naturally be supposed, that the British manufacturer could hardly be able to compete with the foreigner even in an alien market. But we unquestionably possess great counterbalancing advantages in the abundance of our coal and iron, the skill and energy of our people, and above all, in our accumulated riches. These, if properly managed, are sufficient to enable us to maintain our old supremacy undiminished.

The whole manufactured produce of Great Britain may be estimated in round numbers, and on an average at two hundred millions yearly, whereof three-fourths are consumed at home, and about fifty-one millions or one-fourth of the whole are destined for exportation. The home market, therefore, being by far the most important, is the first province of the manufacturer: the foreign and lesser market, however, is to a certain extent the index of the nation's wealth, because we have a direct interest to see that our exports are larger than our imports, in other words, that we are not annually paying away a greater value than we receive. The home market is certain, or at all events we can render it so if we choose, and the field is constantly increasing. The foreign market, on the contrary, is fluctuating, and over it we have little control. Without an entire change in our colonial system, which, to say the least, would be attended with much difficulty and danger, we must continue to compete with the foreigner abroad on no other vantage ground than that of offering an article equal to or better than his at a smaller price and profit.

It has always been the policy of England, to enlarge this latter field as much as possible, and unquestionably the policy is sound. We give and take with foreign nations as freely as may be, sending out articles which we have produced, and bringing home cargoes for our own consumption. The balance of the two operations must be taken as the estimate of our increasing wealth.

We have paid in manufactures for the specie which constitutes great part of our currency, and which is no product of our own, certainly not less than forty millions. When any portion of that coinage is withdrawn from the country we become so much the poorer, because we are forced to replace the deficit by another exchange of manufactures and that at a diminished price.

The doctrines of the free-trade party may shortly be stated as follows: Sweep away, they say, all restrictions, and do every thing you can to encourage imports, that is, to swell the amount of consumption of foreign produce at home. The inevitable result of this policy will be an increased demand from abroad for the staple commodities which we produce, and an enlarged field for our operations. Therefore reduce the duties levied at the custom-house as much as possible, and let the revenue be raised either directly by income tax, or in some other mode which may not interfere with the progress of trade.

Sir Robert Peel, who has adopted these doctrines, has acted upon them to a certain extent, and the history of his financial proceedings since he last assumed the reins of office is curious and characteristic of the man. He commenced by laying on an income tax, which we were assured was not to last beyond the period of three years, and he promised the public not only to relieve them from the load at the expiry of that time, but to exhibit the national revenue in a more flourishing condition than ever. Proposals so confidently made were cheerfully and even gratefully accepted, for no one could have supposed that there lurked a deception concealed beneath so plausible a scheme.

To the amazement of many, the adoption of an income tax was shortly followed by a reduction of revenue duties, an experiment which has since been repeated. The effect of those reductions was as follows:—the ordinary revenue of the country, at the time when Sir Robert Peel came into power, was within a fraction of forty-eight millions. Ten millions and a half were derived from certain articles, which were subsequently dealt with on free trade principles. These articles under the reduced duty now yield only six millions, whilst the other sources, that have not been tampered with, contribute, as is shown by late returns, forty-one and a half, instead of thirty-seven and a half millions to the revenue. The gain therefore to the country on those items which were left under the operation of our former system was four millions,—the loss upon the articles reduced by Peel was four millions and a half, whereof the greater part has gone into the pocket of the foreigner; and, as Lord George Bentinck well remarked, it is material, with such facts before us, to consider "what would have been the situation of the country if Sir Robert Peel had tried his experimentary hand upon the whole of what are called the ordinary sources of revenue to the country?" There must then have been a huge mistake somewhere. If Sir Robert really believed that in three years he would be enabled to dispense with the income tax, he must have calculated that the reduction of the duties would have the effect of increasing the consumption of imports to such a degree that the revenue would be largely augmented—a result which, we are sorry to say, has by no means arrived. On the contrary, the revenue has fallen off, and the income tax, far from being removed, will, in all human probability, be extended.

The avowed object of these reductions, which have curtailed our revenue, and saddled us permanently with a war tax, was to increase the amount of our exportations in exchange. If this effect has not been produced, or if there is no likelihood of its being produced within a reasonable period of time, then we are entitled to conclude, from the arguments of the free-traders themselves, that the experiment has been a total failure. We must never lose sight of the fact, that the sure test of free-trade, for which object we have sacrificed our revenue, is augmented export. Let us see how far this branch of the scheme has succeeded. We shall take the exports and imports for the years 1845 and 1846, which will afford a sufficient indication of the manner in which the new tariff is likely to work.